SANTA CLARA, Calif., Oct 19, 2004 (PRNewswire-FirstCall via COMTEX) -- DSP Group, Inc. today announced its results for the quarter ended September 30, 2004.
Revenues for the third quarter of 2004 were $46,232,000, a slight decrease of 2% from revenues of $47,178,000 for the third quarter of 2003. Net income for the third quarter of 2004 was $20,380,000, as compared to $9,640,000 for the third quarter of 2003. Diluted earnings per share (EPS) for the third quarter of 2004 were $0.69, as compared to $0.32 for the third quarter of 2003.
Results for the third quarter of 2004 included a capital gain of $15,460,000 under "Other income" in the Company's statements of income, resulting from the sale of 1,650,000 shares of AudioCodes Ltd. stock. Following the aforementioned sale, DSP Group no longer owns any AudioCodes stock. The related taxes on the capital gain were $4,865,000.
Pro-forma net income for the third quarter of 2004, excluding the effects of the capital gain and related taxes associated with the sale of AudioCodes stock, was $9,785,000, a 1% increase compared to $9,640,000 in the third quarter of 2003. Pro-forma diluted earnings per share (EPS) were $0.33 in the third quarter of 2004, a 3% increase over $0.32 in the third quarter of 2003.
The Company believes that this pro forma presentation of net income and diluted EPS is useful to investors in comparing results for the quarter ended September 30, 2004 to the same period during 2003, because it excludes items that management does not consider meaningful for purposes of analyzing the Company's operating results and making budget-planning decisions.
Eli Ayalon, Chairman and CEO of DSP Group, stated: "The second half of 2004 can be characterized as a challenging environment for the consumer electronics industry. The industry is encountering demand and inventory issues across different product lines which impact our business. In spite of this, we managed to provide solid results for the third quarter of 2004, and we reached record high operating margins of 21% of revenues, and pro forma net income of 21.2% of revenues."
Mr. Ayalon added: "In the last few weeks we reached a significant and strategic milestone for the company by introducing our first DECT standard -- 1.9GHz chip sets for the European market -- and by delivering our first shipment of initial quantities to a key customer. We believe that the European market represents meaningful growth opportunities for DSP Group in the years to come. In addition, in the line with the Company's strategy to provide a complete short range residential wireless offering, we anticipate closing today the acquisition of WiFi technology assets developed by Bermai, Inc for approximately $6 Million in cash and expect to add 30 - 40 additional employees in connection with the acquisition. We will provide further details on this acquisition in our conference call scheduled today."
The Company also announced that in light of the Company's strong cash position and its focus on shareholder value, its Board of Directors has authorized management to repurchase an additional 2.5 million shares of the Company's common stock in open-market and privately negotiated transactions. In the third quarter of 2004 the Company repurchased 1,488,000 shares of its common stock at an average price of $ 20.10 per share, representing an aggregate repurchase of approximately $29.9 million worth of company shares. As of September 30, 2004, approximately 1.3 million shares remained available for repurchase from previous Board authorizations. Accordingly, the total number of shares currently authorized for repurchase following the recent Board authorization is approximately 3.8 million shares.
About DSP Group
DSP Group, Inc. is a fabless semiconductor company, offering advanced Integrated Circuit (IC) solutions. DSP Group is a world leader in the short-range wireless communication market, enabling home networking convergence for voice, video & data. By combining its in-house technologies of Digital Signal Processors, portfolio of wireless communication protocols, including DECT and Bluetooth, most advanced Radio Frequency CMOS and SiGe, as well as VoIP ICs, DSP Group is a world 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; and Bluetooth systems for voice, data and video communication, which are employed in residential, SOHO, SME, enterprise and automotive applications. DSP Group's ICs provide solutions for MP3 players, VoIP phones, gateways, and Integrated Access Devices (IADs) and are widely used in Digital Voice Recorders (DVRs). More information about DSP Group is available at http://www.dspg.com/.
Earnings conference call
DSP Group has scheduled a conference call for 8:30 a.m. EDT today to discuss the financial results for the third quarter of 2004 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 # 888-286-8010 (passcode: 21339699)
-- International Dial-In # +1-617-801-6888 (passcode: 21339699)
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 the European market representing meaningful growth opportunities for DSP Group in the years to come. 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 of DSP Group's new products to achieve broad market acceptance, especially in the European markets; DSP Group's inability to develop and produce new products at competitive costs and in a timely manner; declines or fluctuations in gross margins as a result of entry into new markets; and general market demand for products that incorporate DSP Group's technology. These and other factors which may affect future operating results and DSP Group's stock price are discussed under "RISK FACTORS" in the Form 10-K for the year ended December 31, 2003, 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 (http://www.dspg.com/) under Investor Relations.
CONTACT: Yaniv Arieli, President of U.S. Operations, Investor Relations, of DSP Group Inc., +1-408-986-4423, or email@example.com.
DSP GROUP, INC. CONSOLIDATED STATEMENTS OF INCOME - US GAAP (In thousands, except per share amounts) Three Months Ended Nine Months Ended September 30, September 30, 2004 2003 2004 2003 Product revenues and other $46,232 $47,178 $128,956 $114,739 Cost of product revenues and other 23,401 25,643 66,177 63,626 Gross profit 22,831 21,535 62,779 51,113 Operating expenses: Research and development 8,463 6,704 23,327 17,402 Sales and marketing 2,929 3,429 9,014 8,616 General and administrative 1,718 1,899 5,258 5,006 Impairment of goodwill -- -- 4,304 -- In-process research and development write-off -- -- -- 2,727 Total operating expenses 13,110 12,032 41,903 33,751 Operating income 9,721 9,503 20,876 17,362 Other income: Interest and other income, net 2,069 2,112 6,353 5,945 Capital gains 15,460 -- 44,448 241 Income before provision for income taxes 27,250 11,615 71,677 23,548 Provision for income taxes 6,870 1,975 21,812 4,154 Net income $ 20,380 $9,640 $49,865 $19,394 Net earnings per share: Basic $0.72 $0.34 $1.73 $0.70 Diluted $0.69 $0.32 $1.64 $0.66 Weighted average number of shares of Common Stock used in the computation of: Basic 28,411 28,168 28,779 27,677 Diluted 29,358 30,142 30,337 29,343 DSP GROUP, INC. CONSOLIDATED PRO FORMA STATEMENTS OF INCOME (In thousands, except per share amounts) Three Months Ended Nine Months Ended September 30, September 30, 2004 2003 2004 2003 Product revenues and other $46,232 $47,178 $128,956 $114,739 Cost of product revenues and other 23,401 25,643 66,177 63,626 Gross profit 22,831 21,535 62,779 51,113 Operating expenses: Research and development 8,463 6,704 23,327 17,402 Sales and marketing 2,929 3,429 9,014 8,616 General and administrative 1,718 1,899 5,258 5,006 Total operating expenses 13,110 12,032 37,599 31,024 Operating income 9,721 9,503 25,180 20,089 Other income: Interest and other income, net 2,069 2,112 6,353 5,945 Income before provision for income taxes 11,790 11,615 31,533 26,034 Provision for income taxes 2,005 1,975 5,362 4,426 Net income $9,785 $9,640 $26,171 $21,608 Net earnings per share: Basic $0.34 $0.34 $0.91 $0.78 Diluted $0.33 $0.32 $0.86 $0.74 Weighted average number of shares of Common Stock used in the computation of: Basic 28,411 28,168 28,779 27,677 Diluted 29,358 30,142 30,337 29,343 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 $20,380 $9,640 $49,865 $19,394 Adjustments: Impairment of goodwill -- -- 4,304 -- In-process research & development write-off -- -- -- 2,727 Capital gains (15,460) -- (44,448) (241) Tax expenses (benefit) 4,865 -- 16,450 (272) Pro forma net income $9,785 $9,640 $26,171 $21,608 DSP GROUP, INC. CONSOLIDATED BALANCE SHEETS (In thousands) September 30, December 31, 2004 2003 Assets (Unaudited) (Audited) Current assets: Cash and cash equivalents $91,272 $36,812 Marketable securities and cash deposits 52,252 42,490 Trade receivables, net 16,151 15,844 Inventories 8,549 8,466 Other accounts receivable 1,440 1,462 Deferred income taxes 1,326 1,326 Total current assets 170,990 106,400 Property and equipment, net 6,556 7,108 Long term marketable securities 193,540 197,071 Investment in equity securities of traded companies -- 47,138 Severance pay fund 3,019 2,360 Long term pre-paid expenses and lease deposits 583 513 Goodwill 1,500 5,804 Deferred income taxes 641 -- Other intangible assets 1,616 2,076 Total assets $378,445 $368,470 Liabilities and Stockholders' Equity Current liabilities: Trade payable $13,937 $11,221 Other current liabilities 46,501 34,292 Total current liabilities 60,438 45,513 Long term liabilities: Accrued severance pay 3,353 2,555 Long term liability -- 1,429 Deferred income taxes -- 14,592 Total long term liabilities 3,353 18,576 Stockholders' equity: Common Stock 28 29 Additional paid-in capital 186,906 174,700 Accumulated other comprehensive income 70 23,045 Retained earnings 156,968 107,799 Less - Cost of treasury stock (29,318) (1,192) Total stockholders' equity 314,654 304,381 Total liabilities and stockholders' equity $378,445 $368,470
SOURCE DSP Group, Inc.
Yaniv Arieli, President of US Operations, Investor Relations for DSP Group Inc., +1-408-986-4423, firstname.lastname@example.org