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DSP Group Reports Third Quarter 2000 Record Revenues and EPS of $29 Million and $0.29
DSP

DSP Group Reports Third Quarter 2000 Record Revenues
and EPS of  $29 Million and $0.29

SANTA CLARA, Calif. – October 24, 2000 -- DSP Group, Inc. (NASDAQ: DSPG) today announced Third Quarter, 2000 revenues increased 24% to $28,988,000 from $23,296,000 for the same period in 1999. Net income increased 46% to $8,428,000 compared to $5,770,000 and fully diluted earnings per share increased 32% to $0.29 compared to $0.22, for the third quarter of 1999. Both revenues and EPS reported are all time records, excluding non-recurring capital gains.

Eli Ayalon, Chairman and CEO of DSP Group stated, "we are very pleased to have achieved in the third quarter 2000 all time record revenues, in both our Licensing and Chip Sales activities. Our operating income continued to grow, despite our extended R&D and marketing efforts, including the new area of Voice Over broadband networks conducted by VoicePump."

Ayalon added, "we are proud to announce that Atmel Corporation, our Licensee for the Teak®DSPCore, signed a new license agreement for the PALM® DSPCore and joined a growing group of DSPG licensees that committed to use successive generations of our DSP Core Technology."

About DSP Group

DSP Group, Inc. is a global leader in the development and licensing of high-performance, cost-effective, digital signal processing cores used in a wide range of low-power, cost-driven applications, such as cellular, broadband communication, VoIP, multimedia, advanced telecommunication systems, disk drive controllers and many other types of embedded control applications. By combining its DSP core technologies with its proprietary, advanced speech-processing algorithms – DSP Group also offers a wide range of enabling, application specific ICs for full-featured integrated digital telephony, 900 MHz and 2.4 GHz wireless telephony and Voice Over broadband networks.

Additional information is available on the world wide web at www.dspg.com. This press release is also available through the company's News on Call fax service, which can be reached at (800) 758-5804, company code 112025.

For more information, please contact Yaniv Arieli at (408) 986-4423

# # # #

Statements contained in this release concerning the visibility and future growth of the Company business may constitute forward-looking statements. These statements involve certain risks and uncertainties such as acceptance of the company's new products by existing OEM customers, potential customers and the company's ability continue to add licensees and to develop and produce its new products at competitive costs.

These factors and other factors which may effect future operating results or our stock price are discussed under "FACTORS AFFECTING FUTURE OPERATING RESULTS' in our report on Form 10-Q for the quarter ended June 30, 2000, which has been filed with the Securities and Exchange Commission and is also available on our website (www.dspg.com) under Investor Relations.

 

DSP GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(In thousands, except per share amounts)
   

Three Months Ended

Nine Months Ended

   

September 30,

September 30,

   

2000

1999

2000

1999

Revenues:

         

Product sales

 

$ 21,925

$ 18,279

$ 60,469

$ 37,474

Licensing, royalties and other

 

7,063

5,017

17,619

12,986

   

¾ ¾ ¾

¾ ¾ ¾

¾ ¾ ¾

¾ ¾ ¾

Total revenues

 

28,988

23,296

78,088

50,460

           

Cost of revenues:

         

Product sales

 

12,623

10,646

34,825

21,545

Licensing, royalties and other

 

292

20

824

106

   

¾ ¾ ¾

¾ ¾ ¾

¾ ¾ ¾

¾ ¾ ¾

Total cost of revenues

 

12,915

10,666

35,649

21,651

   

¾ ¾ ¾

¾ ¾ ¾

¾ ¾ ¾

¾ ¾ ¾

Gross profit

 

16,073

12,630

42,439

28,809

           

Operating expenses:

         

Research and development

 

5,553

3,900

15,035

11,002

Sales and marketing

 

3,189

2,391

9,098

6,508

General and administrative

 

1,761

1,257

4,647

3,813

Unusual items

 

---

---

14,154

---

   

¾ ¾ ¾

¾ ¾ ¾

¾ ¾ ¾

¾ ¾ ¾

Total operating expenses

 

10,503

7,548

42,934

21,323

   

¾ ¾ ¾

¾ ¾ ¾

¾ ¾ ¾

¾ ¾ ¾

Operating income (loss)

 

5,570

5,082

(495)

7,486

Other income (expense):

         

Interest and other income

 

3,823

1,527

9,824

3,794

Interest expense and other

 

(51)

(65)

(131)

(162)

Equity in gain of unconsolidated subsidiaries

 

 

724

 

669

 

1,864

 

1,686

Minority interest in loss of subsidiary

 

205

---

253

---

Capital gains from realization of Investments

 

 

---

 

---

 

57,593

 

11,780

   

¾ ¾ ¾

¾ ¾ ¾

¾ ¾ ¾

¾ ¾ ¾

Income before provision for income taxes

 

10,271

7,213

68,908

24,584

Provision for income taxes

 

1,843

1,443

27,816

3,923

   

¾ ¾ ¾

¾ ¾ ¾

¾ ¾ ¾

¾ ¾ ¾

Net income

 

$ 8,428

$ 5,770

$ 41,092

$ 20,661

Net earnings per share:

         

Basic

 

$ 0.31

$ 0.24

$ 1.55

$ 0.90

Diluted

$ 0.29

$ 0.22

$ 1.42

$ 0.85

Shares used in per share computations:

         

Basic

 

26,932

24,080

26,576

22,922

Diluted

28,927

26,368

28,916

24,292


DSP GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)

   

September 30,

December 31,

   

2000

1999

Assets

     

Current Assets:

     

Cash, cash equivalents, marketable securities and cash deposits

 

 

$ 236,127

 

$ 161,371

Trade receivable, net

 

15,284

10,435

Inventories

 

2,718

3,283

Deferred income taxes

 

1,802

1,707

Other accounts receivable and

prepaid expenses

 

 

5,132

 

1,362

   

¾ ¾ ¾

¾ ¾ ¾

Total current assets

 

261,063

178,158

       

Property and equipment, net

 

5,244

6,948

Other investments, net of accumulated amortization

 

 

15,452

 

18,433

Other assets, net of accumulated

Amortization

 

 

3,986

 

1,250

Severance pay fund

 

1,719

1,390

   

¾ ¾ ¾

¾ ¾ ¾

Total Assets

 

$ 287,464

$ 206,179

Liabilities and Stockholders' Equity

 
   

Current liabilities:

     

Trade payable

 

$ 6,940

$ 6,079

Other current liabilities

 

15,707

8,332

   

¾ ¾ ¾

¾ ¾ ¾

Total current liabilities

22,647

14,411

Long term liabilities:

Accrued severance pay

1,967

1,431

Deferred income taxes

 

6,380

6,380

Minority interest

 

1,184

---

       

Stockholders' equity:

     

Common stock

 

27

12

Additional paid-in capital

 

149,285

119,163

Unrealized gain on marketable equity
Security

 

 

100

 

---

Retained earnings

 

105,874

64,782

   

¾ ¾ ¾

¾ ¾ ¾

Total stockholders' equity

 

255,286

183,957

   

¾ ¾ ¾

¾ ¾ ¾

Total liabilities and
Stockholders' equity

 

 

$ 287,464

 

$ 206,179