Net Income for the Quarter and Year Increased 65% YoY and 67% YoY, Respectively
SANTA CLARA, Calif., Jan. 27 /PRNewswire-FirstCall/ -- DSP Group, Inc. (Nasdaq: DSPG) today announced its results for the quarter and year ended December 31, 2003.
Fourth Quarter Results:
Revenues for the fourth quarter of 2003 were $38,136,000, an increase of 36% from revenues of $28,128,000 for the fourth quarter of 2002. Net income for the fourth quarter was $5,961,000, an increase of 65% from net income of $3,604,000 for the fourth quarter of 2002 (which included net loss of $22,000 related to the discontinued operations of the DSP cores licensing business). Diluted earnings per share (EPS) for the fourth quarter of 2003 was $0.20, an increase of 54% from $0.13 for the fourth quarter of 2002.
Year End Results:
Revenues for the year ended December 31, 2003, were $152,875,000, an increase of 22% over 2002 revenues of $125,158,000. Net income for 2003 was $25,355,000, an increase of 67% from $15,142,000 for 2002 (which included net income of $2,470,000 related to the discontinued operations of the DSP cores licensing business). Diluted EPS for 2003 was $0.86, an increase of 59% from $0.54 for 2002. Diluted EPS for 2002 included an amount of $0.09 related to the discontinued operations.
Pro Forma Results:
Results for 2003 included a one-time write-off in the second quarter of 2003 in the amount of $2,727,000 for in-process research and development related to the Teleman Multimedia Inc. acquisition announced by the company on May 19, 2003 and a capital gain of $241,000 from the sale of Tower Semiconductor Ltd. shares. Results for the fourth quarter and year ended December 31, 2002, included an unusual loss item for impairment of available-for-sale marketable securities of $414,000 and $10,229,000, respectively, mainly associated with a decline in value of the company's holdings in AudioCodes Ltd. shares (Nasdaq: AUDC) in the second quarter of 2002. In addition, the company recorded in the first quarter of 2002, an amount of $865,000 as an unusual expense related to the abandoned IPO expenses of the DSP Cores licensing business.
Pro forma net income and diluted EPS for the company for the year ended December 31, 2003, excluding the unusual loss and expense items described above, would have been $27,569,000 and $0.93, respectively. The company achieved an increase of 38% and 31% for pro forma net income and diluted EPS, excluding the discontinued operations and the unusual loss and expense items, as compared to $19,930,000 and $0.71, respectively, for the same period in 2002.
The company believes that this pro forma presentation of net income and diluted EPS is useful to investors in comparing results for the quarter and year ended December 31, 2003 to the same periods during 2002, because it excludes items that management does not consider meaningful for purposes of analyzing the company's operating results and budget-planning decisions.
Eli Ayalon, Chairman and CEO of DSP Group, stated: "We are very satisfied with our achievements in 2003. We reached record revenue and operating profitability levels, and increased diluted EPS, as compared to 2002. We are also pleased with our solid fourth quarter 2003 performance, and the continuing strong demand for our wireless residential products, resulting in strong bookings and good visibility into the first quarter of 2004."
Mr. Ayalon further stated: "During 2003 we also completed a strategic move into the multimedia communication market through the acquisition of Teleman Multimedia, finalized the development of a new chip set for the European markets and added new advanced features to our products. We are now well positioned to face the exciting challenges of the future, and take advantage of new market opportunities."
Moshe Zelnik, CFO of DSP Group, stated, "Our gross margins for the fourth quarter of 2003 reached a record level of 49% of revenues, a significant improvement over previous quarters. Approximately $900,000 or 2% was due to our ability to use previously scrapped inventory. In addition, it should be noted that an amount of approximately $700,000 related to the accelerated depreciation of equipment was included in research and development expenses recorded in the fourth quarter of 2003."
Mr. Zelnik further stated, "During the fourth quarter of 2003 we repurchased 100,000 shares of our common stock for a total amount of $2,310,000 at an average price of $23.1 per share. During the year ended December 31, 2003, we repurchased 746,000 shares for a total amount of $16,157,000 at an average price of $21.66 per share. As of December 31, 2003, our cash position, consisting of cash, cash equivalents and marketable securities, reached a level of approximately $276.4 million, reflecting approximately $34.3 million of positive cash flow from operations during the year 2003."
About DSP Group
DSP Group, Inc. is a fabless semiconductor company that is a worldwide leader in the short-range wireless market. By combining its DSP core technology with advanced RF CMOS, communication technology, video technology and speech-processing algorithms, DSP Group develops and provides a wide portfolio of short-range communication solutions, which are utilized for residential, SOHO, SME, enterprise and automotive applications. DSP Group solutions include digital 900MHz, 2.4GHz, DECT (1.9GHz), 5.8GHz and Bluetooth for voice, data and video communication as well as solutions for DVRs (Digital Voice Recorders) and MP3 applications. DSP Group also develops and markets embedded, integrated silicon/software solutions for Voice-over-Digital-Subscriber Line (VoDSL) and Voice-over-Internet-Protocol (VoIP) applications, as well as other Voice-over-Packet applications for Integrated Access Devices (IAD) and IP phones. More information about DSP Group is available at www.dspg.com.
This press release may contain statements that qualify as "forward-looking statements" under the Private Securities Litigation Reform Act of 1995, including statements made by Mr. Ayalon relating to continuing strong demand for DSP Group's wireless residential products, strong booking for and good visibility into the first quarter of 2004, and DSP Group being well positioned to face the exciting challenges of the future and take advantage of new market opportunities. 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 unexpected delays in the introduction of new products; failure to achieve broad market acceptance of existing and new products by existing and potential OEM customers; DSP Group's inability to add new customers and develop and produce new products at competitive costs and in a timely manner; decline or fluctuations in gross margins and the effect on revenues and profitability; 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 the year ended December 31, 2002, as well as other reports, including Form 10-Qs, DSP Group has filed with the Securities and Exchange Commission and which are available on DSP Group's Web site (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 fourth quarter and annual 2003 results 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 www.dspg.com or link to: http://phx.corporate-ir.net/phoenix.zhtml?c=101665&p=irol-necalendar .
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: 19616340)
-- International Dial-In # 617-801-6888 (passcode: 19616340)
For more information, please contact Yaniv Arieli, President of US Operations, Investor Relations, DSP Group at 408-986-4423; or e-mail: firstname.lastname@example.org
DSP GROUP, INC. CONSOLIDATED STATEMENTS OF INCOME -- US GAAP (In thousands, except per share amounts) Three Months Ended Year Ended December 31, December 31, 2003 2002 2003 2002 Product revenues and other $ 38,136 $ 28,128 $ 152,875 $ 125,158 Cost of product revenues and other 19,451 16,213 83,077 74,412 Gross profit 18,685 11,915 69,798 50,746 Operating expenses: Research and development 8,197 4,621 25,599 19,745 Sales and marketing 3,361 2,767 11,977 10,745 General and administrative 1,947 1,523 6,953 5,048 In-process research & development write-off -- -- 2,727 -- Aborted spin off expenses and other -- -- -- 865 Total operating expenses 13,505 8,911 47,256 36,403 Operating income 5,180 3,004 22,542 14,343 Other income : Interest and other income, net 2,002 1,886 7,947 9,452 Capital gains -- -- 241 -- Income after financial and other income 7,182 4,890 30,730 23,795 Impairment of available-for-sale marketable securities -- (414) -- (*)(10,229) Income before provision for income taxes 7,182 4,476 30,730 13,566 Provision for income Taxes 1,221 850 5,375 (**)894 Net income from continuing operations 5,961 3,626 25,355 12,672 Net income (loss) from discontinued operations -- (22) -- 2,470 (***) Net income $5,961 $3,604 $25,355 $15,142 Net earnings per share for continuing operations: Basic $ 0.21 $ 0.13 $ 0.91 $ 0.47 Diluted $ 0.20 $ 0.13 $ 0.86 $ 0.45 Net earnings (loss) per share for discontinued operations: Basic $ 0.00 $ (0.00) $ 0.00 $ 0.09 Diluted $ 0.00 $ (0.00) $ 0.00 $ 0.09 Net earnings per share (combined): Basic $ 0.21 $ 0.13 $ 0.91 $ 0.56 Diluted $ 0.20 $ 0.13 $ 0.86 $ 0.54 Weighted average number of shares of Common Stock used in computing of: Basic 28,615 27,188 27,912 27,070 Diluted 30,344 28,028 29,593 28,041 (*) Related to impairment of marketable securities (**) Included a tax credit related to impairment of marketable securities (***) Related to the DSP cores licensing business (Ceva) which was discontinued in November 2002 following the combination of Ceva with Parthus Technologies plc to form ParthusCeva, Inc. DSP GROUP, INC. CONSOLIDATED STATEMENTS OF INCOME -- PRO FORMA (In thousands, except per share amounts) Three Months Ended Year Ended December 31, December 31, 2003 2002 2003 2002 Product revenues and other $ 38,136 $ 28,128 $ 152,875 $ 125,158 Cost of product revenues and other 19,451 16,213 83,077 74,412 Gross profit 18,685 11,915 69,798 50,746 Operating expenses: Research and development 8,197 4,621 25,599 19,745 Sales and marketing 3,361 2,767 11,977 10,745 General and administrative 1,947 1,523 6,953 5,048 Total operating expenses 13,505 8,911 44,529 35,538 Operating income 5,180 3,004 25,269 15,208 Other income: Interest and other income, net 2,002 1,886 7,947 9,452 Income after financial and other income 7,182 4,890 33,216 24,660 Provision for income taxes 1,221 929 5,647 4,730 Net income from continuing operations 5,961 3,961 27,569 19,930 Net income (loss) from discontinued operations -- (22) -- 2,470 (***) Net income $5,961 $3,939 $ 27,569 $22,400 Net earnings per share for continuing operations: Basic $ 0.21 $ 0.15 $ 0.99 $ 0.74 Diluted $ 0.20 $ 0.14 $ 0.93 $ 0.71 Net earnings (loss) per share for discontinued operations: Basic $ 0.00 $ (0.00) $ 0.00 $ 0.09 Diluted $ 0.00 $ (0.00) $ 0.00 $ 0.09 Net earnings per share (combined): Basic $ 0.21 $ 0.15 $ 0.99 $ 0.83 Diluted $ 0.20 $ 0.14 $ 0.93 $ 0.80 Weighted average number of shares of Common Stock used in computing of: Basic 28,615 27,188 27,912 27,070 Diluted 30,344 28,028 29,593 28,041
The above pro forma consolidated statements of income have been adjusted to exclude the following items to US GAAP reported net income:
Reported net income per US GAAP $ 5,961 $ 3,604 $ 25,355 $ 15,142 Adjustments: Aborted spin off expenses and other -- -- -- 865 Impairment of available-for-sale marketable securities -- 414 -- 10,229 In-process research & development write-off -- -- 2,727 -- Capital gains -- -- (241) -- Tax benefit -- (79) (272) (3,836) Pro forma net income $ 5,961 $ 3,939 $ 27,569 $ 22,400 DSP GROUP, INC. CONSOLIDATED BALANCE SHEETS - US GAAP (In thousands) December 31, December 31, 2003 2002 Assets (Audited) (Audited) Current assets: Cash and cash equivalents $ 36,812 $ 39,919 Marketable securities 42,490 45,371 Trade receivables, net 15,844 4,873 Inventories 8,466 6,916 Other accounts receivable 1,462 1,352 Deferred income taxes 1,326 1,685 Assets of discontinued operation, net -- 4,737 Total current assets 106,400 104,853 Property and equipment, net 7,108 4,690 Long term marketable securities 197,071 150,692 Investment in equity security of traded companies 47,138 12,031 Severance pay fund 2,360 1,616 Long term pre-paid expenses and lease deposits 513 386 Goodwill 5,804 5,804 Other intangible assets 911 -- Total Assets $ 367,305 $ 280,072 Liabilities and Stockholders' Equity Current liabilities: Trade payable $11,221 $6,745 Other current liabilities 34,556 21,552 Total current liabilities 45,777 28,297 Long term liabilities: Accrued severance pay 2,555 1,686 Deferred income taxes 14,592 2,371 Total long term liabilities 17,147 4,057 Stockholders' equity: Common Stock 29 27 Additional paid-in capital 174,700 156,443 Accumulated other comprehensive income 23,045 476 Retained earnings 107,799 90,772 Loss -- Cost of Treasury stock (1,192) -- Total stockholders' equity 304,381 247,718 Total liabilities and stockholders' equity $ 367,305 $ 280,072
SOURCE DSP Group, Inc.
/CONTACT: Yaniv Arieli, President of US Operations, Investor Relations of DSP Group, +1-408-986-4423, or email@example.com/
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