DSP Group, Inc. Reports Second Quarter 2008 Earnings
SAN JOSE, Calif., July 24 /PRNewswire-FirstCall/ -- DSP Group, Inc. (Nasdaq: DSPG), a worldwide leader in developing and providing chip-set solutions for residential wireless connectivity, announced today its results for the second quarter ended June 30, 2008.
Second Quarter Results:
Revenues for the second quarter of 2008 were $74,152,000, an increase of 41% from revenues of $52,436,000 for the second quarter of 2007. Net loss for the second quarter of 2008 was $7,355,000 as compared to net income of $2,964,000 for the second quarter of 2007. Diluted earnings per share (EPS) for the second quarter of 2008 were a loss of $0.26 as compared to earnings of $0.10 for the second quarter of 2007.
Non-GAAP net income and diluted EPS for the second quarter of 2008 were $1,019,000 and $0.04 per share, respectively; a decrease of 86% from the non-GAAP net income of $7,171,000 and a decrease of 84% from non-GAAP diluted EPS of $0.25 per share for the second quarter of 2007. Non-GAAP net income and diluted EPS for the second quarter of 2008 excluded the impact of amortization of acquired intangible assets of $5,716,000 associated with the acquisition of the Cordless and VoIP Terminals business of NXP B.V.; equity-based compensation expenses of $3,585,000; and the aggregate tax benefits associated with such expenses of $927,000. Non-GAAP net income and diluted EPS for the second quarter of 2007 excluded equity-based compensation expenses of $3,708,000, a loss related to certain marketable securities of $996,000 and aggregate tax benefits associated with such expenses of $497,000.
Eli Ayalon, Chairman and CEO of DSP Group, stated: "Having achieved our financial objectives for the second quarter 2008, the company continues to focus and invest significant resources on its R&D effort to deliver a new generation of products that we believe will ensure our future growth and profitability."
About DSP Group
DSP Group, Inc. is a fabless semiconductor company, offering advanced chip-set solutions for a variety of applications. DSP Group is a worldwide leader in the short-range wireless communication market, enabling home networking convergence for voice, video and data. By combining its in-house technologies of Digital Signal Processors (DSPs), portfolio of wireless communication protocols, including DECT, Bluetooth and Wi-Fi, most advanced Radio Frequency CMOS and SiGe, as well as VoIP ICs, DSP Group is a worldwide leader and a one-stop-shop for a wide range of applications. These applications include ISM band digital 900MHz, 2.4GHz and 5.8GHz telephony, European DECT (1.9GHz) telephony, Bluetooth systems for voice, video and data communication and deployment in residential, SOHO, SME, enterprise and automotive applications. DSP Group's ICs provide solutions for MP3 players, VoIP Phones, Gateways, and Integrated Access Devices and are widely used in Digital Voice Recorders. More information about DSP Group is available at 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 statements made by Mr. Ayalon about R&D investments in a new generation of products that DSP Group believes will ensure its future growth and profitability. 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 greater or lesser than anticipated decrease in sales of DSP Group's 5.8GHz products or growth in sales of DSP Group's DECT 6.0 products; slower than expected change in the nature of the 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; 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 fiscal 2007 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. EDT today to discuss the financial results for the second quarter of 2008 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: 63682958)
-- International Dial-In # 1-617-801-6888 (passcode: 63682958)
For more information, please contact Ofer Elyakim, DSP Group Inc. at +852-9017-5426; or e-mail: email@example.com.
(Logo: http://www.newscom.com/cgi-bin/prnh/20020715/SFM118LOGO) DSP GROUP, INC. CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share amounts) Three Months Ended Six Months Ended June 30, June 30, 2008 2007 2008 2007 (Unaudited) (Unaudited)(Unaudited) (Unaudited) Product revenues and other $74,152 $52,436 $146,881 $101,723 Cost of product revenues and other 48,183 31,233 93,959 61,233 Gross profit 25,969 21,203 52,922 40,490 Operating expenses: Research and development 18,890 12,465 38,916 25,221 Sales and marketing 5,621 4,110 11,642 8,307 General and administrative 4,547 3,328 8,798 6,925 Amortization of intangible assets 5,716 - 11,498 - Total operating expenses 34,774 19,903 70,854 40,453 Operating income/(loss) (8,805) 1,300 (17,932) 37 Other income : Interest and other income, net 898 2,927 2,132 6,579 Income/(loss) before provision for income taxes (7,907) 4,227 (15,800) 6,616 Provision for income taxes/ (income tax benefit) (552) 1,263 (838) 2,288 Net income/(loss) ($7,355) $2,964 ($14,962) $4,328 Net earnings (loss) per share: Basic ($0.26) $0.10 ($0.51) $0.15 Diluted ($0.26) $0.10 ($0.51) $0.15 Weighted average number of shares of Common stock used in the computation of: Basic 28,352 28,257 29,463 28,356 Diluted 28,352 28,469 29,463 28,580 DSP GROUP, INC. CONSOLIDATED STATEMENTS OF INCOME (NON-GAAP) (In thousands, except per share amounts) Three Months Ended Six Months Ended June 30, June 30, 2008 2007 2008 2007 (Unaudited) (Unaudited) (Unaudited) (Unaudited) Product revenues and other $74,152 $52,436 $146,881 $101,723 Cost of product revenues and other 47,936 31,066 93,455 60,900 Gross profit 26,216 21,370 53,426 40,823 Operating expenses: Research and development 16,998 10,536 34,933 21,205 Sales and marketing 5,192 3,663 10,706 7,420 General and administrative 3,530 2,163 6,676 4,299 Total operating expenses 25,720 16,362 52,315 32,924 Operating income 496 5,008 1,111 7,899 Other income : Interest and other income, net 898 3,923 2,132 7,575 Income before provision for income taxes 1,394 8,931 3,243 15,474 Provision for income taxes 375 1,760 784 2,970 Net income $1,019 $7,171 $2,459 $12,504 Net earnings per share: Basic $0.04 $0.25 $0.08 $0.44 Diluted $0.04 $0.25 $0.08 $0.44 Weighted average number of shares of Common stock used in the computation of: Basic 28,352 28,257 29,463 28,356 Diluted 28,373 28,469 29,565 28,580 Unaudited Reconciliation of GAAP to Pro Forma Non-GAAP Financial Measures (In thousands, except per share amounts) Three Months Ended Six Months Ended June 30, June 30, 2008 2007 2008 2007 Unaudited Unaudited Unaudited Unaudited GAAP net income (loss) ($7,355) $2,964 ($14,962) $4,328 Equity-based compensation expense included in cost of product revenues and other 247 167 504 333 Equity-based compensation expense included in R&D 1,892 1,929 3,983 4,016 Equity-based compensation expense included in SG&A 1,446 1,612 3,058 3,513 Amortization of intangible assets related to NXP transaction 5,716 - 11,498 - Loss related to certain marketable securities - 996 - 996 Tax benefit resulting from equity-based compensation, amortization of intangible assets and from loss related to certain marketable securities (927) (497) (1,622) (682) Pro Forma net income $1,019 $7,171 $2,459 $12,504 Pro Forma diluted earnings per share $0.04 $0.25 $0.08 $0.44 DSP GROUP, INC. CONSOLIDATED BALANCE SHEETS (In thousands) June 30, December 31, 2008 2007 (Unaudited) (Audited) Assets Current assets: Cash and cash equivalents $56,645 $69,586 Restricted deposits 115 - Marketable securities and cash deposits 16,239 63,682 Trade receivables, net 46,575 51,636 Inventories 19,514 16,361 Other accounts receivable 13,064 8,173 Deferred income taxes 2,014 4,011 Total current assets 154,166 213,449 Property and equipment, net 17,090 14,270 Long term marketable securities 48,929 34,469 Severance pay fund 8,031 6,883 Deferred income taxes 6,548 5,109 Goodwill and other intangible assets 227,354 237,969 Other assets 1,814 694 Total assets $463,932 $512,843 Liabilities and Stockholders' Equity Current liabilities: Accounts payable $33,356 $29,064 Other current liabilities 39,088 48,125 Total current liabilities 72,444 77,189 Accrued severance pay 8,249 7,303 Accrued pensions 1,917 1,758 Deferred tax liability 871 372 Other long term liabilities 455 1,364 Total long term liabilities 11,492 10,797 Stockholders' equity: Common stock 28 31 Additional paid-in capital 308,090 300,542 Accumulated other comprehensive income 1,327 1,025 Retained earnings 171,298 187,063 Less - Cost of treasury stock (100,747) (63,804) Total stockholders' equity 379,996 424,857 Total liabilities and stockholders' equity $463,932 $512,843
SOURCE DSP Group, Inc.
CONTACT: Ofer Elyakim of DSP Group Inc., +852-9017-5426,