View Filing Data

Print Document View Excel Document

Document And Entity Information - USD ($) $ in Thousands	12 Months Ended
Document And Entity Information - USD ($) $ in Thousands	Dec. 31, 2019	Mar. 04, 2020	Jun. 30, 2019
Document Information [Line Items]
Entity Registrant Name	DSP GROUP INC /DE/
Entity Central Index Key	0000915778
Trading Symbol	dspg
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Entity Emerging Growth Company	false
Entity Small Business	false
Entity Interactive Data Current	Yes
Entity Common Stock, Shares Outstanding (in shares)		23,428,494
Entity Public Float			$ 265,430
Entity Shell Company	false
Document Type	10-K
Document Period End Date	Dec. 31, 2019
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	FY
Amendment Flag	false
Title of 12(b) Security	Common Stock, $.001 per share

Consolidated Balance Sheets - USD ($)	Dec. 31, 2019	Dec. 31, 2018
CURRENT ASSETS:
Cash and cash equivalent	$ 28,737,000	$ 12,146,000
Restricted deposits	518,000	493,000
Marketable securities and short-term deposits (Note 3)	39,141,000	35,713,000
Trade receivables	15,382,000	13,475,000
Other accounts receivable and prepaid expenses (Note 5)	3,551,000	3,670,000
Inventories (Note 6)	7,464,000	9,819,000
Total current assets	94,793,000	75,316,000
PROPERTY AND EQUIPMENT, NET (Note 7)	6,805,000	2,748,000
NON-CURRENT ASSETS:
Long-term marketable securities and long-term deposits (Note 3)	62,884,000	75,538,000
Long-term prepaid expenses and lease deposits	707,000	1,229,000
Deferred income taxes (Note 15)	6,377,000	3,580,000
Severance pay fund	15,800,000	14,158,000
Operating leases: right-of-use assets (Note 4)	11,655,000
Intangible assets, net (Note 8)	661,000	1,078,000
Goodwill	6,243,000	6,243,000
Total non-current assets	104,327,000	101,826,000
Total assets	205,925,000	179,890,000
CURRENT LIABILITIES:
Trade payables	8,511,000	9,579,000
Operating lease liability (Note 4)	2,569,000
Accrued compensation and benefits	8,781,000	8,255,000
Income tax accruals and payables	3,061,000	1,404,000
Accrued expenses and other accounts payable (Note 10)	2,317,000	3,461,000
Total current liabilities	25,239,000	22,699,000
NON-CURRENT LIABILITIES:
Deferred income taxes, net (Note 15)	119,000	151,000
Accrued severance pay	16,074,000	14,348,000
Operating lease liability (Note 4)	10,436,000
Accrued pensions (Note 11)	963,000	827,000
Total non-current liabilities	27,592,000	15,326,000
COMMITMENTS AND CONTINGENCIES (Note 14)
STOCKHOLDERS’ EQUITY (Note 13):
Common stock, $0.001 par value - Authorized: 50,000,000 shares at December 31, 2019 and 2018; Issued and outstanding: 23,110,631 and 22,265,971 shares at December 31, 2019 and 2018, respectively	23,000	22,000
Additional paid-in capital	386,534,000	378,855,000
Treasury stock at cost	(113,862,000)	(122,325,000)
Accumulated other comprehensive loss	(889,000)	(2,324,000)
Accumulated deficit	(118,712,000)	(112,363,000)
Total stockholders’ equity	153,094,000	141,865,000
Total liabilities and stockholders’ equity	$ 205,925,000	$ 179,890,000

Consolidated Balance Sheets (Parentheticals) - $ / shares	Dec. 31, 2019	Dec. 31, 2018
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, authorized (in shares)	50,000,000	50,000,000
Common stock, issued (in shares)	23,110,631	22,265,971
Common stock, outstanding (in shares)	23,110,631	22,265,971

Consolidated Statements of Operations - USD ($)
shares in Thousands, $ in Thousands

12 Months Ended

Dec. 31, 2019

Dec. 31, 2018

Dec. 31, 2017

Revenues

$ 117,613

$ 117,438

$ 124,753

Costs of revenues (1)

^[1]

58,066

59,991

67,058

Gross profit

59,547

57,447

57,695

Operating expenses:

Research and development

^[2]

35,552

36,109

36,655

Sales and marketing

^[3]

17,665

15,323

14,315

General and administrative

^[4]

10,317

9,955

9,789

Amortization of intangible assets

417

1,700

Total operating expenses

63,951

63,087

62,459

Operating loss

(4,404)

(5,640)

(4,764)

Financial income, net (Note 12)

1,654

1,815

1,669

Loss before income tax benefit

(2,750)

(3,825)

(3,095)

Income tax benefit (Note 15)

1,560

1,868

Net loss

$ (1,190)

$ (1,957)

$ (3,003)

Net loss per share:

Basic and diluted (in dollars per share)

$ (0.05)

$ (0.09)

$ (0.14)

Weighted average number of shares used in per share computations of:

Basic and diluted net loss per share (in shares)

22,827

22,512

22,229

[1]	Includes equity-based compensation expense in the amount of $448, $428 and $352 for the years ended December 31, 2019, 2018 and 2017, respectively.
[2]	Includes equity-based compensation expense in the amount of $2,842, $2,873 and $2,349 for the years ended December 31, 2019, 2018 and 2017, respectively.
[3]	Includes equity-based compensation expense in the amount of $1,758, $1,248 and $1,115 for the years ended December 31, 2019, 2018 and 2017, respectively.
[4]	Includes equity-based compensation expense in the amount of $2,583, $2,255 and $2,045 for the years ended December 31, 2019, 2018 and 2017, respectively.

Consolidated Statements of Operations (Parentheticals) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Equity-based compensation expense included in cost of revenues	$ 448	$ 428	$ 352
Equity-based compensation expenses included in research and development, net	2,842	2,873	2,349
Equity-based compensation expense included in sales and marketing	1,758	1,248	1,115
Equity-based compensation expense included in general and administrative	$ 2,583	$ 2,255	$ 2,045

Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Net loss	$ (1,190)	$ (1,957)	$ (3,003)
Available-for-sale securities:
Changes in unrealized income (loss)	1,494	(465)	(158)
Reclassification adjustments for losses included in net income (loss)	73	41	50
Net change	1,567	(424)	(108)
Cash flow hedges:
Changes in unrealized gains (losses)	108	(19)	163
Reclassification adjustments for (gains) losses included in net income (loss)	(105)	16	(172)
Net change	3	(3)	(9)
Change in unrealized components of defined benefit plans:
Gains (losses) arising during the period	(141)	29	24
Amortization of actuarial loss and prior service benefit	16	19	22
Net change	(125)	48	46
Foreign currency translation adjustments, net	(10)	(71)	49
Other comprehensive income (loss)	1,435	(450)	(22)
Comprehensive income (loss)	$ 245	$ (2,407)	$ (3,025)

Statements of Changes in Stockholders' Equity - USD ($)

Common Stock Outstanding [Member]

Additional Paid-in Capital [Member]

Treasury Stock [Member]

AOCI Attributable to Parent [Member]

Retained Earnings Including Treasury Stock [Member]

Total

Balance (in shares) at Dec. 31, 2016

21,932,000

Balance at Dec. 31, 2016

$ 22,000

$ 366,121,000

$ (122,632,000)

$ (1,852,000)

$ (96,112,000)

$ 145,547,000

Issuance of treasury stock upon purchase of common stock under employee stock purchase plan (in shares)

227,000

Issuance of treasury stock upon purchase of common stock under employee stock purchase plan

^[1]

2,225,000

(330,000)

1,895,000

Issuance of treasury stock upon exercise of stock options, stock appreciation rights and restricted stock units by employees and directors (in shares)

663,000

Issuance of treasury stock upon exercise of stock options, stock appreciation rights and restricted stock units by employees and directors

^[1]

59,000

6,500,000

(5,397,000)

$ 1,162,000

Purchase of treasury stock (in shares)

(389,000)

Purchase of treasury stock

^[1]

(4,490,000)

$ (4,490,000)

Equity-based compensation expenses

5,861,000

Net loss

(3,003,000)

Change in accumulated other comprehensive income (loss)

(22,000)

Balance (in shares) at Dec. 31, 2017

22,433,000

Balance at Dec. 31, 2017

$ 22,000

372,041,000

(118,397,000)

(1,874,000)

(104,842,000)

146,950,000

Issuance of treasury stock upon purchase of common stock under employee stock purchase plan (in shares)

230,000

Issuance of treasury stock upon purchase of common stock under employee stock purchase plan

^[1]

2,275,000

(271,000)

2,004,000

Issuance of treasury stock upon exercise of stock options, stock appreciation rights and restricted stock units by employees and directors (in shares)

618,000

Issuance of treasury stock upon exercise of stock options, stock appreciation rights and restricted stock units by employees and directors

$ 1,000

10,000

6,114,000

(5,387,000)

$ 738,000

Purchase of treasury stock (in shares)

(1,015,000)

Purchase of treasury stock

$ (1,000)

(12,317,000)

$ (12,318,000)

Equity-based compensation expenses

6,804,000

Net loss

(1,957,000)

Change in accumulated other comprehensive income (loss)

(450,000)

Adoption of accounting standard

94,000

Balance (in shares) at Dec. 31, 2018

22,266,000

Balance at Dec. 31, 2018

$ 22,000

378,855,000

(122,325,000)

(2,324,000)

(112,363,000)

141,865,000

Issuance of treasury stock upon purchase of common stock under employee stock purchase plan (in shares)

206,000

Issuance of treasury stock upon purchase of common stock under employee stock purchase plan

^[1]

2,066,000

(87,000)

1,979,000

Issuance of treasury stock upon exercise of stock options, stock appreciation rights and restricted stock units by employees and directors (in shares)

639,000

Issuance of treasury stock upon exercise of stock options, stock appreciation rights and restricted stock units by employees and directors

$ 1,000

48,000

6,397,000

(5,072,000)

$ 1,374,000

Purchase of treasury stock (in shares)

Equity-based compensation expenses

7,631,000

$ 7,631,000

Net loss

(1,190,000)

Change in accumulated other comprehensive income (loss)

1,435,000

Balance (in shares) at Dec. 31, 2019

23,111,000

Balance at Dec. 31, 2019

$ 23,000

$ 386,534,000

$ (113,862,000)

$ (889,000)

$ (118,712,000)

$ 153,094,000

[1]	Represents an amount lower than $1.

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Cash flows from operating activities:
Net loss	$ (1,190)	$ (1,957)	$ (3,003)
Adjustments required to reconcile net loss to net cash provided by operating activities:
Depreciation	1,517	1,593	1,781
Equity-based compensation expenses related to employees’ stock options, SARs and RSUs	7,631	6,804	5,861
Capital loss from sale and disposal of property and equipment	9		19
Realized losses from sale of marketable securities, net	73	41	50
Amortization of intangible assets	417	1,700	1,700
Operating lease right-of-use asset amortization expenses	1,347
Change in operating lease liability	(562)
Accrued interest and amortization of premium on marketable securities and short-term deposits	337	601	372
Change in operating assets and liabilities:
Deferred income tax assets and liabilities, net	(2,833)	(2,814)	(459)
Trade receivables, net	(1,916)	(107)	5,728
Other accounts receivable and prepaid expenses	817	(76)	(1,142)
Inventories	2,345	(431)	363
Long-term prepaid expenses and lease deposits	(28)	(159)	(212)
Trade payables	(1,197)	927	(3,893)
Accrued compensation and benefits	2,515	1,598	1,878
Income tax accruals	1,653	180	39
Accrued expenses and other accounts payable	(573)	767	(704)
Accrued severance pay, net	84	(8)	117
Accrued pensions	26	32	18
Net cash provided by operating activities	10,472	8,691	8,513
Cash flows from investing activities:
Purchase of marketable securities	(57,558)	(27,564)	(38,924)
Purchase of short-term deposits	(15,942)	(8,668)	(10,884)
Proceeds from maturity of marketable securities	44,396	20,501	21,499
Proceeds from sales of marketable securities	25,064	5,113	19,226
Proceeds from redemption of short-term deposits	14,420	5,668	8,309
Purchases of property and equipment	(5,638)	(1,181)	(838)
Proceeds from sale of fixed assets	51
Other investing activities	(518)	(104)
Net cash provided by (used in) investing activities	4,275	(6,235)	(1,612)
Cash flows from financing activities:
Issuance of common stock and treasury stock upon exercise of stock options	1,351	738	1,509
Purchase of treasury stock		(12,343)	(4,465)
Net cash provided by (used in) financing activities	1,351	(11,605)	(2,956)
Increase (decrease) in cash and cash equivalents and restricted cash	16,098	(9,149)	3,945
Cash and cash equivalents and restricted cash at the beginning of the year	12,639	21,848	17,822
Cash (erosion) due to exchange rate differences		(60)	81
Cash and cash equivalents and restricted cash at the end of the year	28,737	12,639	21,848
Supplemental disclosures of cash flows information:
Cash and cash equivalent	28,737	12,146	21,324
Restricted cash		493	524
Total cash and cash equivalents and restricted cash	28,737	12,639	21,848
Supplemental disclosures of cash flows activities:
Cash paid for income taxes	(495)	(902)	(219)
Cash received for income taxes	702
Net lease liabilities arising from obtaining right-of-use asset	$ 1,114

Note 1 - General

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block]

NOTE

- GENERAL

DSP Group, Inc., a Delaware corporation, and its subsidiaries (collectively, the “Company”), are a fabless semiconductor company offering advanced chipset solutions for a variety of voice, audio, video and data applications. The Company is a worldwide leader in the short-range wireless communication market, enabling home and business networking convergence for voice, audio, video and data.

The Company sells its products through distributors and directly to OEMs and original design manufacturers (ODMs) that incorporate the Company’s products into consumer and enterprise products. The Company expects that a limited number of customers, varying in identity from period-to-period, will account for a substantial portion of its revenues in any period. The loss of, or reduced demand for products from, any of the Company’s major customers could have a material adverse effect on the Company’s business, financial condition and results of operations.

The following table represents the Company’s sales, as a percentage of the Company’s total revenues, for the years ended

December 31, 2019,

2018

and

2017:

	Year ended December 31,
Major Customers/ Distributors	201 9			201 8			201 7
VTech Holdings Ltd.		21	%		24	%		27	%

Nexty Electronics Ltd. (“Nexty Electronics”) ¹ ²		*			11	%		12	%
Ascend Technology Inc. (“Ascend Technology”) ¹ ³		27	%		26	%		23	%

*Less than

10%.

¹ Distributor

² Nexty Electronics sells the Company’s products to a limited number of customers. One customer, Panasonic Communications Co., Ltd. (“Panasonic”) has continually accounted for a majority of the sales of Nexty Electronics. Sales to Panasonic through Nexty Electronics generated approximately

7%,

and

10%

of the Company’s total revenues for

2019,

2018

and

2017,

respectively.

³ Ascend Technology sells our products to a limited number of customers.

one

of those customers – Cisco Systems, Inc. (“Cisco”) – accounted for

10%,

and

of our total revenues for the years ended

December 31, 2019,

2018

and

2017,

respectively.

All of the Company’s integrated circuit products are manufactured and tested by independent foundries and test houses. While these foundries and test houses have been able to adequately meet the demands of the Company’s business, the Company is and will continue to be dependent upon these foundries and test houses to achieve acceptable manufacturing yields, quality levels and costs, and to allocate to the Company a sufficient portion of foundry and test capacity to meet the Company’s needs in a timely manner. Revenues could be materially and adversely affected should any of these foundries and test houses fail to meet the Company’s request for product manufacturing due to a shortage of production capacity, process difficulties, low yield rates or financial instability. Additionally, certain of the raw materials, components, and subassemblies included in the products manufactured by the Company’s original equipment manufacturer (OEM) customers, which incorporate the Company’s products, are obtained from a limited group of suppliers. Disruptions, shortages, or termination of certain of these sources of supply could occur and could negatively affect the Company’s financial condition and results of operations.

Note 2 - Significant Accounting Policies

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Significant Accounting Policies [Text Block]

NOTE

SIGNIFICANT ACCOUNTING POLICIES

The consolidated financial statements are prepared according to United States generally accepted accounting principles (“U.S. GAAP”).

Use of estimates:

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates, judgments and assumptions. The Company’s management believes that the estimates, judgments and assumptions used are reasonable based upon information available at the time that these estimates, judgments and assumptions are made. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements, and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Financial statements in U.S. dollars:

Most of the Company’s revenues are generated in U.S. dollars. In addition, a substantial portion of the Company’s costs are incurred in U.S. dollars. The Company’s management believes that the U.S. dollar is the currency of the primary economic environment in which the Company operates. Thus, the functional and reporting currency of the Company is the U.S. dollar.

Monetary accounts maintained in currencies other than the U.S. dollar are remeasured into dollars in accordance with ASC

No.

830

30,

“Translation of Financial Statements.” All transaction gains and losses resulting from the remeasurement of monetary balance sheet items are reflected in the consolidated statements of operations as financial income or expenses as appropriate.

The financial statements of the Company’s subsidiary – DSP Group Technologies GmbH whose functional currency is in Euro, has been translated into dollars. All amounts on the balance sheets have been translated into the dollar using the exchange rates in effect on the relevant balance sheet dates. All amounts in the consolidated statements of operations have been translated into the dollar using the average exchange rate for the relevant periods. The resulting translation adjustments are reported as a component of accumulated other comprehensive income (loss) in changes in stockholders’ equity.

Accumulated other comprehensive loss related to foreign currency translation adjustments, net amounted to

$335

and

$327

as of

December 31, 2019

and

2018,

respectively.

Principles of consolidation:

The consolidated financial statements include the accounts of the Company. Intercompany transactions and balances have been eliminated in consolidation.

Cash equivalents:

Cash equivalents are short-term highly liquid investments, which are readily convertible to cash with original maturity of

three

months or less from the date of acquisition.

Restricted deposits:

Restricted deposits, which are deposits with original maturities of more than

three

months and less than

one

year, are presented at cost, inclusive of accrued interest. Restricted deposits include deposits which are used as security for lease agreements.

Short-term deposits:

Bank deposits with original maturities of more than

three

months and less than

one

year are presented at cost, including accrued interest.

Marketable securities:

The Company accounts for investments in debt securities in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”)

No.

320

10,

“Investments in Debt and Equity Securities.” Management determines the appropriate classification of the Company’s investments in debt securities at the time of purchase and reevaluates such determinations at each balance sheet date.

The Company classified all of its investments in marketable securities as available-for-sale.

Available-for-sale securities are carried at fair value, with the unrealized gains and losses, reported in accumulated other comprehensive income (loss) using the specific identification method. The amortized cost of marketable securities is adjusted for amortization of premiums and accretion of discounts to maturity. Such amortization is included in financial income, net. Interest and dividends on securities are included in financial income, net. The Company classifies its marketable debt securities as either short-term or long-term based on each instrument’s underlying contractual maturity date and the entity’s expectations of sales and redemptions in the following year.

The marketable securities are periodically reviewed for impairment. If management concludes that any of these investments are impaired, management determines whether such impairment is other-than-temporary. Factors considered in making such a determination include the duration and severity of the impairment, the reason for the decline in value and the potential recovery period, and the Company’s intent to sell, or whether it is more likely than

not

that the Company will be required to sell the investment before recovery of cost basis. For debt securities, only the decline attributable to deteriorating credit of an-other-than-temporary impairment is recorded in the consolidated statement of operations, unless the Company intends, or more likely than

not

it will be forced, to sell the security. During the years ended

December 31, 2019,

2018

and

2017,

the Company did

not

record an-other-than-temporary impairment loss (see Note

Fair value of financial instruments:

Cash and cash equivalents, restricted deposits, short-term deposits, trade receivables, trade payables and accrued liabilities approximate fair value due to short-term maturities of these instruments. Marketable securities and derivative instruments are carried at fair value. See Note

for more information.

The Company accounts for certain assets and liabilities at fair value under ASC

820,

“Fair Value Measurements and Disclosures.” Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability.

The hierarchy below lists

three

levels of fair value based on the extent to which inputs used in measuring fair value are observable in the market. The Company categorizes each of its fair value measurements in

one

of these

three

levels based on the lowest level input that is significant to the fair value measurement in its entirety.

Level

Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level

Include other inputs that are directly or indirectly observable in the marketplace.

Level

Unobservable inputs which are supported by little or

market activity.

The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

Inventories:

Inventories are stated at the lower of cost and net realizable value. Inventory reserves are provided to cover risks arising from slow-moving items or technological obsolescence.

The Company and its subsidiaries periodically evaluate the quantities on hand relative to historical, current and projected sales volume. Based on this evaluation, an impairment charge is recorded when required to write-down inventory to its market value.

Cost is determined as follows:

Work in progress and finished products- on the basis of raw materials and manufacturing costs on an average basis.

The Company regularly evaluates the ability to realize the value of inventory based on a combination of factors, including the following: historical usage rates and forecasted sales according to outstanding backlogs. Purchasing requirements and alternative usage are explored within these processes to mitigate inventory exposure. When recorded, the reserves are intended to reduce the carrying value of inventory to its net realizable value. Inventory of

$7,464,

$9,819

and

$9,422

as of

December

31,

2019,

2018

and

2017,

respectively, is stated net of inventory reserves of

$382,

$508

and

$468

in each year, respectively. If actual demand for the Company’s products deteriorates, or market conditions are less favorable than those projected, additional inventory reserves

may

be required.

Property and equipment, net:

Property and equipment are stated at cost, net of accumulated depreciation. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets, at the following annual rates:

	%			Mainly %

Computers and equipment	20	–	33		33
Office furniture and equipment	7	–	15		15
Leasehold improvements	see below

Leasehold improvements are depreciated on a straight-line basis over the shorter of the lease term (including the extension option held by the Company and intended to be exercised) and the expected life of the improvement.

Long-lived assets of the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset

may

not

be recoverable. The recoverability of assets to be held and used is measured by a comparison of the carrying amount of such assets to the future undiscounted cash flows expected to be generated by the assets. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets.

During the years ended

December

31,

2019,

2018

and

2017,

impairment losses were identified.

The Company accounts for costs of computer software developed or obtained for internal use in accordance with FASB ASC

No.

350

40,

“The Internal Use Software.” FASB ASC

350

requires the capitalization of certain costs incurred in connection with developing or obtaining internal use software. During

2019,

2018

and

2017,

the Company did

not

capitalize internal use software.

Goodwill and other intangible assets:

The goodwill and certain other purchased intangible assets have been recorded as a result of the BoneTone acquisition and the acquisition of a private company in Asia. Goodwill represents the excess of the purchase price in a business combination over the fair value of net tangible and intangible assets acquired. Goodwill is

not

amortized, but rather is subject to an annual impairment test.

ASC

350

prescribes a

two

-phase process for impairment testing of goodwill. The

first

phase screens for impairment, while the

second

phase (if necessary) measures impairment. Goodwill impairment is deemed to exist if the net book value of a reporting unit exceeds its estimated fair value. In such a case, the

second

phase is then performed, and the Company measures impairment by comparing the carrying amount of the reporting unit’s goodwill to the implied fair value of that goodwill. An impairment loss is recognized in an amount equal to the excess. ASC

350

allows an entity to

first

assess qualitative factors to determine whether it is necessary to perform the

two

-step quantitative goodwill impairment test. An entity is

not

required to calculate the fair value of a reporting unit unless the entity determines, based on a qualitative assessment, that it is more likely than

not

that its fair value is less than its carrying amount.

Alternatively, ASC

350

permits an entity to bypass the qualitative assessment for any reporting unit and proceed directly to performing the

first

step of the goodwill impairment test.

The Company performs an annual impairment test on

December 31

of each fiscal year, or more frequently if impairment indicators are present.

The Company’s reporting units are consistent with the reportable segments identified in Note

17.

Fair value is determined using discounted cash flows, market multiples and market capitalization. Significant estimates used in the methodologies include estimates of future cash-flows, future short-term and long-term growth rates, weighted average cost of capital and market multiples for the reporting unit.

For the fiscal year ended

December 31, 2019,

2018

and

2017,

the Company performed a quantitative assessment on its goodwill and

impairment losses were identified.

Intangible assets that are

not

considered to have an indefinite useful life are amortized using the straight-line basis over their estimated useful lives, which range from

years. The carrying amount of these assets is reviewed whenever events or changes in circumstances indicate that the carrying value of an asset

may

not

be recoverable. Recoverability of these assets is measured by comparison of the carrying amount of the asset to the future undiscounted cash flows the asset is expected to generate.

If such asset is considered to be impaired, the impairment to be recognized is measured as the difference between the carrying amount of the assets and the fair value of the impaired asset.

During the fiscal year ended

December 31, 2019,

2018

and

2017,

impairment losses were identified.

Severance pay:

DSP Group Ltd., the Company’s Israeli subsidiary (“DSP Israel”), has a liability for severance pay pursuant to Israeli law, based on the most recent monthly salary of its employees multiplied by the number of years of employment as of the balance sheet date for such employees. DSP Israel’s liability is fully provided for by monthly accrual and deposits with severance pay funds and insurance policies.

The deposited funds include profits accumulated up to the balance sheet date. The deposited funds

may

be withdrawn only upon the fulfillment of the obligation pursuant to Israel’s Severance Pay Law or labor agreements.

The Company’s Korean subsidiary has a statutory liability for severance pay pursuant to Korean law based on the most recent monthly salary of its employees multiplied by the number of years of employment of such employees as of the balance sheet date for such employees. The Korean subsidiary’s liability is fully accrued.

Severance expenses for the years ended

December 31, 2019,

2018

and

2017,

were

$1,685,

$1,679

and

$1,666,

respectively.

Revenue recognition:

The Company generates its revenues from sales of products. The Company sells its products through a direct sales force and through a network of distributors.

The Company adopted ASC

606,

Revenue from Contracts with Customers (ASC

606

), effective on

January 1, 2018,

using the modified retrospective method. As a result of this adoption, the Company revised its accounting policy for revenue recognition as detailed below. Under the modified retrospective method, the Company recognized the cumulative effect of initially applying the new revenue standard as an adjustment to the opening balance of retained earnings. Results for reporting periods beginning after

January 1, 2018

are presented under Topic

606,

while prior period amounts are

not

adjusted and continue to be reported in accordance with the Company’s historic accounting under Revenue Recognition (“Topic

605”

The Company recognizes revenue under the core principle that transfer of control to the Company’s customers should be depicted in an amount reflecting the consideration the Company expects to receive in revenue. In order to achieve that core principle, the Company applies the following

five

-step approach: (

) identify the contract with a customer, (

) identify the performance obligations in the contract, (

) determine the transaction price, (

) allocate the transaction price to the performance obligations in the contract, and (

) recognize revenue when a performance obligation is satisfied.

(

) Identify the contract with a customer

A contract is an agreement between

two

or more parties that creates enforceable rights and obligations. In evaluating the contract, the Company analyzes the customer’s intent and ability to pay the amount of promised consideration (credit risk) and considers the probability of collecting substantially all of the consideration.

(

) Identify the performance obligations in the contract

At a contract’s inception, the Company assesses the goods or services promised in a contract with a customer and identifies the performance obligations.

The Company’s contracts with customers for the sale of products generally include

one

performance obligation.

(

) Determine the transaction price

The transaction price is the amount of consideration to which the Company is entitled in exchange for transferring goods to a customer. Generally, the Company does

not

provide any variable consideration, including price protection, stock rotation, and/or right of return.

(

) Allocate the transaction price to the performance obligations in the contract

The Company allocates the transaction price to

one

performance obligation.

(

) Recognize revenue when a performance obligation is satisfied

Revenue is recognized at a point in time when or as performance obligation is satisfied by transferring control of a promised good to a customer. Generally, control of an asset is transferred to the customer on delivery of the products.

Under ASC

606,

certain product sales through the Company’s distributors where revenue was previously deferred until the distributors resold the Company’s products to the end customers are now recognized when products are delivered to the distributor and control of the promised goods are transferred, in an amount that reflects the consideration that the company expects to receive in exchange for those goods or services.

For information of disaggregated revenue per segment, please refer to Note

17.

Warranty:

The Company warrants its products against errors, defects and bugs for generally

one

year. The Company estimates the costs that

may

be incurred under its warranty and records a liability in the amount of such costs. The Company periodically assesses the adequacy of its recorded warranty liabilities and adjusts the amounts as necessary. Warranty costs and liability were immaterial for the years ended

December 31, 2019,

2018

and

2017.

Research and development costs, net:

Research and development costs, net of grants received, are charged to the consolidated statement of operations as incurred.

Government grants:

Government grants received by the Company’s Israeli subsidiary are credited to the consolidated statements of income during the period in which the expenditure to which they relate is charged. Royalty and non royalty bearing grants from the Israeli Innovation Authority ("IIA") (formerly known as Office of the Chief Scientist) for funding certain approved research and development projects are recognized at the time when the Company’s Israeli subsidiary is entitled to such grants, on the basis of the related costs incurred, and are included as a deduction from research and development expenses, net.

The Company recorded grants in the amount of

$1,635,

$1,678

and

$1,528

for the year ended

December 31, 2019

and

2018

and

2017,

respectively. The vast majority of those grants are bearing royalties.

The Company’s Israeli subsidiary is obligated to pay royalties amounting to

of the sales of certain products the development of which received grants from the IIA in previous years. The obligation to pay these royalties is contingent on actual sales of such products. Grants received from the IIA

may

become repayable if certain criteria under the grants are

not

met. The Israeli Research and Development Law provides that know-how developed under an approved research and development program

may

not

be transferred to

third

parties without the approval of the IIA. Such approval is

not

required for the sale or export of any products resulting from such research or development. The IIA, under special circumstances,

may

approve the transfer of IIA-funded know-how outside Israel, in the following cases: (a) the grant recipient pays to the IIA a portion of the sale price paid in consideration for such IIA-funded know-how or in consideration for the sale of the grant recipient itself, as the case

may

be, which portion will

not

exceed

six

times the amount of the grants received plus interest (or

three

times the amount of the grant received plus interest, in the event that the recipient of the know-how has committed to retain the research and development activities of the grant recipient in Israel after the transfer); (b) the grant recipient receives know-how from a

third

party in exchange for its IIA-funded know-how; (c) such transfer of IIA-funded know-how arises in connection with certain types of cooperation in research and development activities; or (d) if such transfer of know-how arises in connection with a liquidation by reason of insolvency or receivership of the grant recipient.

Equity-based compensation:

December 31, 2019,

the Company had

two

equity incentive plans from which the Company

may

grant future equity awards and

one

expired equity incentive plans from which

future equity awards

may

be granted but had outstanding equity awards granted prior to expiration. The Company also had

one

employee stock purchase plan. See full description in Note

13.

The Company accounts for equity-based compensation in accordance with ASC

No.

718,

“Stock Compensation” (“ASC

No.

718”

). ASC

No.

718

requires companies to estimate the fair value of equity-based awards on the date of grant using an option-pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as an expense over the requisite service periods in the Company’s consolidated statements of operations.

The Company recognizes compensation expenses for the value of its awards granted based on the accelerated attribution method, rather than a straight-line method over the requisite service period of each of the awards, net of estimated forfeitures. FASB ASC

No.

718

requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Estimated forfeitures are based on actual historical pre-vesting forfeitures.

The Company selected the lattice option pricing model as the most appropriate fair value method for its equity-based awards and values options and stock appreciation rights (“SARs”) based on the market value of the underlying shares on the date of grant. The option-pricing model requires a number of assumptions, of which the most significant are the expected stock price volatility and the expected term of the equity-based award. Expected volatility is calculated based upon actual historical stock price movements. The expected term of the equity-based award granted is based upon historical experience and represents the period of time that the award granted is expected to be outstanding. The risk-free interest rate is based on the yield from U.S. treasury bonds with an equivalent term. The Company has historically

not

paid dividends and has

foreseeable plans to pay dividends.

With respect to the Company’s employee stock purchase plan, the Company selected the Monte Carlo pricing model as the most appropriate fair value method.

A majority of the Company’s equity awards until

2012

were in the form of SARs. Starting in

2013,

a majority of the Company’s equity awards were in the form of restricted stock unit (“RSU”) grants.

The fair value of each restricted stock unit (“RSU”) is based on the market value of the underlying share on the date of grant.

Basic and diluted income (loss) per share:

Basic net income (loss) per share is computed based on the weighted average number of shares of common stock outstanding during the year. Diluted net income (loss) per share further includes the dilutive effect of stock options, SARs and RSUs outstanding during the year, all in accordance with ASC

No.

260,

“Earnings Per Share.”

The total weighted average number of shares related to the outstanding stock options, SARs and RSUs excluded from the calculation of diluted net income per share due to their anti-dilutive effect was

1,419,612,

1,317,197

and

1,378,282

for the years ended

December 31, 2019,

2018

and

2017,

respectively.

Income taxes:

The Company accounts for income taxes in accordance with ASC

No.

740,

“Income Taxes.” This topic prescribes the use of the liability method, whereby deferred tax asset and liability account balances are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates that will be in effect when the differences are expected to reverse. The Company provides a valuation allowance, if necessary, to reduce deferred tax assets to their estimated realizable value.

Deferred tax liabilities and assets are classified as non-current based on the adopting of Accounting Standards Update (“ASU”)

2015

17,

“Balance Sheet Classification of Deferred Taxes.”

The Company accounts for uncertain tax positions in accordance with ASC

740,

which contains a

two

-step approach to recognizing and measuring uncertain tax positions. The

first

step is to evaluate the tax position taken or expected to be taken in a tax return by determining whether the weight of available evidence indicates that it is more likely than

not

that, on an evaluation of the technical merits, the tax position will be sustained on audit, including resolution of any related appeals or litigation processes. The

second

step is to measure the tax benefit as the largest amount that is more than

50%

likely to be realized upon ultimate settlement. The Company reevaluates its income tax positions periodically to consider factors such as changes in facts or circumstances, changes in or interpretations of tax law, effectively settled issues under audit, and new audit activity. Such a change in recognition or measurement would result in recognition of a tax benefit or an additional charge to the tax provision.

The Company includes interest related to tax issues as part of income tax expense in its consolidated financial statements. The Company records any applicable penalties related to tax issues within the income tax provision.

Concentrations of credit risk:

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents, restricted deposits, short-term deposits, trade receivables and marketable securities.

The majority of cash and cash equivalents and short-term deposits of the Company are invested in dollar deposits with major U.S., European and Israeli banks. Deposits in U.S. banks

may

be in excess of insured limits and are

not

insured in other jurisdictions. Generally, cash and cash equivalents and these deposits

may

be withdrawn upon demand and therefore bear low risk.

The Company’s marketable securities consist of investment-grade corporate bonds and U.S. government-sponsored enterprise (“GSE”) securities. As of

December

31,

2019,

the amortized cost of the Company’s marketable securities was

$87,024,

and their stated market value was

$86,958,

representing an unrealized net loss of

$66.

A significant portion of the products of the Company is sold to original equipment manufacturers of consumer electronics products. The customers of the Company are located primarily in Japan, Hong Kong, Taiwan, China, Korea, Europe and the United States. The Company performs ongoing credit evaluations of their customers. A specific allowance for doubtful accounts is determined, based on management’s estimates and historical experience. Under certain circumstances, the Company

may

require a letter of credit. The Company covers most of its trade receivables through credit insurance. As of

December 31, 2019

and

2018,

allowance for doubtful accounts was provided.

The Company has

off-balance-sheet concentration of credit risk, except for certain derivative instruments as mentioned below.

Derivative instruments:

The Company accounts for derivatives and hedging based on ASC

No.815,

“Derivatives and Hedging”. ASC

No.

815

requires companies to recognize all of their derivative instruments as either assets or liabilities on the balance sheet at fair value.

For derivative instruments that are designated and qualify as a cash flows hedge (i.e., hedging the exposure to variability in expected future cash flows that is attributable to a particular risk), the effective portion of the gain or loss on the derivative instrument is reported as a component of other comprehensive income and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. Any gain or loss on a derivative instrument in excess of the cumulative change in the present value of future cash flows of the hedged item is recognized in current earnings during the period of change.

To protect against the increase in value of forecasted foreign currency cash flows resulting from salary and rent payments in New Israeli Shekel (“NIS”) during the year, the Company instituted a foreign currency cash flow hedging program. The Company hedges portions of the anticipated payroll and rent of its Israeli facilities denominated in NIS for a period of

one

months with put and call options and forward contracts. These forward contracts and put and call options are designated as cash flow hedges and are all effective as hedges of these expenses.

The effect of derivative instruments in cash flow hedging transactions on income and other comprehensive income (“OCI”) for the years ended

December

31,

2019,

2018

and

2017

is summarized below:

	Gains (losses) on derivatives recognized in OCI
	Year ended December 31,
	201 9		2018			2017

Foreign exchange forward contracts and put and call options	$	108	$	(19	)	$	163

		Gains (losses) on derivatives reclassified from OCI to income
		Year ended December 31,
	Location	201 9		2018			2017

Foreign exchange forward contracts and put and call options	Operating expenses	$	105	$	(16	)	$	172

As of

December 31, 2019,

the Company had

outstanding option or forward contracts.

As of

December 31, 2018,

the Company had outstanding option contracts in the amount of

$3,600.

As of

December 31, 2017,

the Company had

outstanding option or forward contracts.

Comprehensive income:

The Company accounts for comprehensive income in accordance with ASC

No.

220,

“Comprehensive Income.” Comprehensive income generally represents all changes in stockholders’ equity during the period except those resulting from investments by, or distributions to, stockholders. The Company determined that its items of other comprehensive income relate to gains and losses on hedging derivative instruments, unrealized gains and losses on available-for-sale securities, unrealized gains and losses from pension and unrealized gain and losses from foreign currency translation adjustments.

The following table summarizes the changes in accumulated balances of other comprehensive income (loss) for

2019:

	Unrealized gains (losses) on available- for-sale marketable securities			Unrealized gains (losses) on Cash Flow Hedges			Unrealized gains (losses) on components of defined benefit plans			Unrealized gains (losses) on foreign currency translation			Total
January 1, 2019	$	(1,633	)	$	(3	)	$	(361	)	$	(327	)	$	(2,324	)
Other comprehensive income (loss) before reclassifications		1,494			108			(141	)		(10	)		1,451
Losses (gains) reclassified from accumulated other comprehensive income (loss)		73			(105	)		16			-			(16	)
Net current period other comprehensive income (loss)		1,567			3			(125	)		(10	)		1,435

December 31, 2019	$	(66	)	$	-		$	(486	)	$	(337	)	$	(889	)

The following table provides details about reclassifications out of accumulated other comprehensive income (loss) for

2019:

Details about Accumulated Other Comprehensive Income Components	Losses (gains) reclassified from accumulated other comprehensive income			Affected Line Item in the Statement of Income (Loss)

Losses on available-for-sale marketable securities	$	73		Financial income, net
		-		Provision for income taxes
		73		Total, net of income taxes

Gains on cash flow hedges
		(83	)	Research and development

		(8	)	Sales and marketing
		(14	)	General and administrative
		(105	)	Total, before income taxes
		-		Provision for income taxes
		(105	)	Total, net of income taxes

Losses on components of defined benefit plans		11		Research and development
		5		Sales and marketing
		16		Total, before income taxes
		-		Provision for income taxes
		16		Total, net of income taxes

Total reclassifications for the period		(16	)	Total, net of income taxes

Treasury stock at cost

The Company repurchases its common stock from time to time on the open market or in other transactions and holds such shares as treasury stock. The Company presents the cost to repurchase treasury stock as a reduction of stockholders’ equity.

From time to time, the Company reissues treasury stock under its employee stock purchase plan and equity incentive plans, upon purchases or exercises of equity awards under the plans. When treasury stock is reissued, the Company accounts for the re-issuance in accordance with ASC

No.

505

30,

“Treasury Stock” and charges the excess of the purchase cost over the re-issuance price (loss) to retained earnings. The purchase cost is calculated based on the specific identification method. In case the purchase cost is lower than the re-issuance price, the Company credits the difference to additional paid-in capital.

Operating leases:

Effective as of

January

2019,

the Company adopted Topic

842

(“Topic

842”

), which requires the recognition of lease assets and lease liabilities by lessees for leases classified as operating leases. The Company determines if an arrangement is a lease at inception. The Company’s assessment is based on: (

) whether the contract includes an identified asset, (

) whether the Company obtains substantially all of the economic benefits from the use of the asset throughout the period of use, and (

) whether the Company has the right to direct how and for what purpose the identified asset is used throughout the period of use.

Leases are classified as either finance leases or operating leases. A lease is classified as a finance lease if any

one

of the following criteria are met: the lease transfers ownership of the asset by the end of the lease term, the lease contains an option to purchase the asset that is reasonably certain to be exercised, the lease term is for a major part of the remaining useful life of the asset, the present value of the lease payments equals or exceeds substantially all of the fair value of the asset, or the underlying asset is of such a specialized nature that it is expected to have

alternative use to the lessor at the end of lease term. A lease is classified as an operating lease if it does

not

meet any of those criteria. Since all of the Company’s lease contracts do

not

meet any of the criteria above, the Company concluded that all of its lease contracts should be classified as operation leases. ROU assets and liabilities are recognized on the commencement date based on the present value of remaining lease payments over the lease term. For this purpose, the Company considers only payments that are fixed and determinable at the time of commencement.

Some leases include

one

or more options for renewal. The exercise of the lease renewal options is typically at the Company's sole discretion; therefore, a majority of renewals to extend the lease terms are included in the Company’s right-of-use assets and liabilities as they are reasonably certain of exercise. New lease modifications result in remeasurement of the right of use assets and lease liability.

Some of the leases contain variable lease payments, including payments based on the Consumer Price Index (CPI). Variable lease payments based on a CPI are initially measured using the index in effect at lease adoption. Additional payments based on changes in CPI are recorded as a period expense when incurred.

As most of the Company's leases do

not

provide an implicit rate, the Company used a

third

party valuation firm to determine the incremental borrowing rate in determining the present value of lease payments. The ROU asset also includes any lease payments made prior to commencement and is recorded net of any lease incentives received. All ROU assets are reviewed for impairment. The lease terms

may

include options to extend or terminate the lease when it is reasonably certain that the Company will exercise such options.

Recently issued and adopted accounting pronouncements:

January 1, 2019,

the Company adopted Topic

842

using the modified retrospective transition approach by applying the new standard to all leases existing on the date of initial application. Results and disclosure requirements for reporting periods beginning after

January 1, 2019

are presented under Topic

842,

while prior period amounts have

not

been adjusted and continue to be reported in accordance with the Company’s historical accounting under Topic

840.

The Company elected the package of practical expedients permitted under the transition guidance, which allowed the Company to carryforward (i) the historical lease classification, (ii) the Company’s assessment regarding whether a contract was or contains a lease, and (iii)

not

to reassess initial direct costs for any leases that existed prior to

January 1, 2019.

The Company also elected to keep leases with an initial term of

months or less off the balance sheet and recognized the associated lease payments in the consolidated statements of income on a straight-line basis over the lease term. As a result of the adoption of Topic

842,

January 1, 2019,

the Company recorded both operating lease right-of-use assets of

$12,500

and operating lease liabilities of

$12,500.

The adoption did

not

impact the Company’s beginning retained earnings, or its prior year condensed consolidated statements of income and statements of cash flows.

Recently issued accounting pronouncements

not

yet effective:

August 2018,

the FASB issued ASU

2018

15,

Intangibles—Goodwill and Other—Internal-Use Software (Subtopic

350

): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. The amendments in this ASU align the requirements for capitalizing implementation costs incurred in a hosting arrangement with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The implementation costs incurred in a hosting arrangement that is a service contract should be presented as a prepaid asset on the balance sheet and expensed over the term of the hosting arrangement to the same line item in the statement of income as the costs related to the hosting fees. The guidance in this ASU is effective for fiscal years beginning after

December 15, 2019,

including interim periods within those fiscal years, and early adoption is permitted, including adoption in any interim period. The amendments should be applied either retrospectively or prospectively to all implementation costs incurred after adoption. The Company is currently evaluating the impact that the standard will have on our consolidated financial statements and do

not

expect the adoption of this ASU to have a material effect on our consolidated financial statements.

August 2018,

the FASB issued ASU

2018

14—Compensation—Retirement

Benefits—Defined Benefit Plans—General (Topic

715

): Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans which improves disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans. This standard is effective for fiscal years ending after

December 15, 2020,

for public business entities. Early adoption is permitted for all entities. Entities are to apply the amendments in this Update on a retrospective basis for all periods presented. The Company is currently evaluating the impact that the standard will have on the Company’s consolidated financial statements and related disclosures.

June 2016,

the FASB issued ASU

2016

13,

“Financial Instruments – Credit Losses on Financial Instruments” (“ASU

2016

13”

), which requires that expected credit losses relating to financial assets measured on an amortized cost basis and available-for-sale debt securities be recorded through an allowance for credit losses. ASU

2016

limits the amount of credit losses to be recognized for available-for-sale debt securities to the amount by which carrying value exceeds fair value and also requires the reversal of previously recognized credit losses if fair value increases. The new standard will be effective for interim and annual periods beginning after

January 1, 2020,

and early adoption is permitted. The Company does

not

expect this standard to have a material effect on its consolidated financial statements.

Note 3 - Marketable Securities and Time Deposits

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure [Text Block]

NOTE

MARKETABLE SECURITIES AND TIME DEPOSITS

The following is a summary of marketable securities and time deposits at

December 31, 2019

and

2018

(see also Note

	Amortized cost				Unrealized gains (losses), net						Fair value
	201 9		2018		201 9			2018			201 9		2018

Short-term deposit	$	15,067	$	8,349	$	-		$	-		$	15,067	$	8,349
Long-term deposit		-		5,130		-			-			-		5,130
U.S. GSE securities		4,468		21,550		(6	)		(253	)		4,462		21,297
Corporate obligations		82,556		77,857		(60	)		(1,382	)		82,496		76,475

	$	102,091	$	112,885	$	(66	)	$	(1,635	)	$	102,025	$	111,251

The amortized costs of marketable debt securities at

December

31,

2019,

by contractual maturities or anticipated dates of sale, are shown below

	Amortized		Unrealized gains (losses)					Fair
	cost		Gains		Losses			value

Due in one year or less	$	24,033	$	55	$	(14	)	$	24,074
Due after one year to five years		62,991		124		(231	)		62,884

	$	87,024	$	179	$	(245	)	$	86,958

The amortized cost of marketable debt securities at

December

31,

2018,

by contractual maturities or anticipated dates of sale, are shown below

	Amortized		Unrealized gains (losses)					Fair
	cost		Gains		Losses			value

Due in one year or less	$	27,442	$	-	$	(78	)	$	27,364
Due after one year to six years		71,965		1		(1,558	)		70,408

	$	99,406	$	1	$	(1,636	)	$	97,772

The actual maturity dates

may

differ from the contractual maturities because debtors

may

have the right to call or prepay obligations without penalties.

The total fair value of marketable securities with outstanding unrealized losses as of

December 31, 2019

amounted to

$56,855,

while the unrealized losses for these marketable securities amounted to

$245.

Of the

$245

unrealized losses outstanding as of

December 31, 2019,

a portion of which in the amount of

$115

was related to marketable securities that were in a loss position for more than

months and the remaining portion of

$130

was related to marketable securities that were in a loss position for less than

months.

The total fair value of marketable securities with outstanding unrealized losses as of

December 31, 2018

amounted to

$94,550,

while the unrealized losses for these marketable securities amounted to

$1,636.

Of the

$1,636

unrealized losses outstanding as of

December 31, 2018,

a portion of which in the amount of

$1,498

was related to marketable securities that were in a loss position for more than

months and the remaining portion of

$138

was related to marketable securities that were in a loss position for less than

months.

Management believes that as of

December 31, 2019,

the unrealized losses in the Company’s investments in all types of marketable securities were temporary and

impairment loss was realized in the Company’s consolidated statements of operations.

The unrealized losses related to the Company’s marketable securities were primarily due to changes in interest rates. Because the Company does

not

intend to sell the investments and it is

not

more likely than

not

that the Company will be required to sell the investments before recovery of their amortized cost bases, which

may

be maturity, the Company does

not

consider those investments to be other-than-temporarily impaired at

December 31, 2019.

Proceeds from maturity of available-for-sale marketable securities during

2019,

2018

and

2017

were

$44,396,

$20,501

and

$21,499,

respectively. Proceeds from sales of available-for-sale marketable securities during

2019,

2018

and

2017

were

$25,064,

$5,113

and

$19,226,

respectively. Realized gains from the sale of available-for sale marketable securities for

2019,

2018

and

2017

were

$4,

$26

and

$7,

respectively. Realized losses from the sale of available-for sale marketable securities for

2019,

2018

and

2017

were

$77,

$67

and

$57,

respectively. The Company determines realized gains or losses on the sale of available-for-sale marketable securities based on a specific identification method.

Note 4 - Operating Leases

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Lessee, Operating Leases [Text Block]

NOTE

OPERATING LEASES

The Company has entered into various non-cancelable operating lease agreements of its offices and car leases. The Company’s headquarters is located in San Jose, California pursuant to a lease that terminates in

December 2021.

The Company and its subsidiaries lease certain equipment and facilities under non-cancelable operating leases. The Company has significant leased facilities in Herzliya, Israel. The lease agreement for the facilities of its Israeli subsidiary is effective until

April 2029.

The Company’s subsidiaries in Germany, China (Shanghai and Shenzhen), Japan, South Korea and India have lease agreements for their facilities that terminate in

2020,

with the agreement in India having an option to be extended until

2030.

The Company’s subsidiary in Hong-Kong has a lease agreement for its facilities that terminate in

2022.

The Company has operating lease agreements for its motor vehicles which terminate in

2020

through

2022.

Many leases include

one

or more options to renew. The Company assumes renewals in the determination of the lease term if the renewals are deemed to be reasonably assured at lease commencement date. The Company's lease agreements do

not

contain any material residual value guarantees or material restrictive covenants.

Total operating lease costs during

2019

were

$2,997,

out of which an amount of

$2,432

represented the total cash paid for amounts included in the measurement of operating lease liabilities during the year ended

December 31, 2019.

During

2019,

total new lease liability amounted to

$1,114.

Other information about lease amounts recognized in the Company’s consolidated financial statements is summarized as follows:

	December 3 1 , 2019
Weighted-average remaining lease term – operating leases (in years)		8.14
Weighted-average discount rate – operating leases		5.08	%

As of

December 31, 2019,

the Company’s lease liabilities were as follows:

	Operating Leases

2020	$	2,620
2021		2,139
2022		1,848
2023		1,446
2024 and thereafter		8,179

Total undiscounted lease payments		16,232
Less: imputed interest		(3,227	)

Present value of lease liabilities		13,005
Less: current portion of lease liabilities		(2,569	)

Total long-term lease liabilities	$	10,436

Facilities rental expenses amounted to

$2,354,

$2,328

and

$2,308

for the years ended

December

31,

2019,

2018

and

2017,

respectively.

Note 5 - Other Accounts Receivable and Prepaid Expenses

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Other Accounts Receivable and Prepaid Expenses Disclosure [Text Block]

NOTE

OTHER ACCOUNTS RECEIVABLE AND PREPAID EXPENSES

	December 31,
	201 9		2018
Prepaid expenses	$	1,219	$	1,836
Tax and governmental receivables		1,840		1,468
Deposits		237		235
Others		255		131

	$	3,551	$	3,670

Note 6 - Inventories

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Inventory Disclosure [Text Block]

NOTE

INVENTORIES

Inventories are composed of the following:

	December 31,
	201 9		2018

Work-in-progress	$	4,512	$	4,993
Finished products		2,952		4,826

	$	7,464	$	9,819

During

2019,

the Company recorded

$27

of income due to the utilization of inventory that was previously written off.

Inventory write-downs amounted to

$89

and

$51

for the years ended

December 31, 2018

and

2017,

respectively.

Note 7 - Property and Equipment

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Property, Plant and Equipment Disclosure [Text Block]

NOTE

PROPERTY AND EQUIPMENT

Composition of assets, grouped by major classifications, is as follows:

	December 31,
	201 9		2018
Cost:
Computers and equipment	$	20,435	$	22,139
Office furniture and equipment		1,380		1,471
Leasehold improvements		4,953		5,221

		26,768		28,831
Less - accumulated depreciation		19,963		26,083

Depreciated cost	$	6,805	$	2,748

During

2019,

the Company disposed or sold equipment and leasehold improvements, which ceased to be used, in the amount of

$7,676.

Capital loss in an amount of

was recorded due to this disposal of equipment in the consolidated statement of operations.

During

2018,

the Company disposed leasehold improvements, which ceased to be used, in the amount of

$109.

capital loss was recorded due to this disposal of equipment in the consolidated statement of operations.

Depreciation expenses amounted to

$1,517,

$1,593

and

$1,781

for the years ended

December 31, 2019,

2018

and

2017,

respectively.

Note 8 - Intangible Assets

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Intangible Assets Disclosure [Text Block]

NOTE

INTANGIBLE ASSETS

The following table shows the Company’s intangible assets for the periods presented:

	Useful life		December 31,
	(years)		201 9		2018

Cost:


Distribution agreement		5		2,086		2,086
Non-competition agreement		3		519		519

				2,605		2,605
Accumulated amortization:


Distribution agreement				1,425		1,008
Non-competition agreement				519		519

				1,944		1,527


Amortized cost			$	661	$	1,078

Amortization expenses amounted to

$417,

$1,700

and

$1,700

for the years ended

December 31, 2019,

2018

and

2017,

respectively. Those expenses were included in amortization of intangible assets in the Company’s consolidated financial statements.

Estimated amortization expenses for the years ending:

Year ending December 31,

2020	$	417
2021		244

	$	661

Note 9 - Fair Value Measurements

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Fair Value Measurement and Measurement Inputs, Recurring and Nonrecurring [Text Block]

NOTE

:- FAIR VALUE MEASUREMENTS

In accordance with ASC

820,

the Company measures its cash equivalents, marketable securities and foreign currency derivative contracts at fair value. Cash equivalents, marketable securities and foreign currency derivative contracts are classified within Level

or Level

value hierarchies. This is because cash equivalents, and marketable securities are valued using quoted market prices or alternative pricing sources and models utilizing market observable inputs. Foreign currency derivative contracts are classified within Level

value hierarchy as the valuation inputs are based on quoted prices and market observable data of similar instruments.

The following table provides information by value level for financial assets and liabilities that are measured at fair value on a recurring basis as of

December

31,

2019

(see also Note

	Balance as of		Fair value measurements
Description	December 31, 201 9		Level 1		Level 2		Level 3

Assets

Cash equivalents
Money market mutual funds	$	11,635	$	11,635	$	-	$	-

Short-term marketable securities and time deposits
U.S. GSE securities	$	752	$	-	$	752	$	-
Corporate debt securities	$	23,322	$	-	$	23,322	$	-

Long-term marketable securities
U.S. GSE securities	$	3,710	$	-	$	3,710	$	-
Corporate debt securities	$	59,174	$	-	$	59,174	$	-

The following table provides information by value level for financial assets and liabilities that are measured at fair value on a recurring basis as of

December

31,

2018

(see also Note

	Balance as of		Fair value measurements
Description	December 31, 201 8		Level 1		Level 2		Level 3

Assets

Cash equivalents
Money market mutual funds	$	773	$	773	$	-	$	-

Short-term marketable securities and time deposits
U.S. GSE securities	$	1,785	$	-	$	1,785	$	-
Corporate debt securities	$	25,579	$	-	$	25,579	$	-

Long-term marketable securities
U.S. GSE securities	$	19,512	$	-	$	19,512	$	-
Corporate debt securities	$	50,896	$	-	$	50,896	$	-

Derivative liabilities	$	3	$	-	$	3	$	-

In addition to the assets and liabilities described above, the Company’s financial instruments also include cash and cash equivalents, restricted deposits, short term deposits, trade receivables, other accounts receivable, trade payables, accrued expenses and other payables. The fair value of these financial instruments was

not

materially different from their carrying value at

December 31, 2019

and

2018

due to the short-term maturity of these instruments.

Note 10 - Accrued Expenses and Other Accounts Payable

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Accounts Payable and Accrued Liabilities Disclosure [Text Block]

NOTE

10:

ACCRUED EXPENSES AND OTHER ACCOUNTS PAYABLE

	December 31,
	201 9		201 8


Accrued expenses	$	769	$	1,658
Royalties and commission		1,057		1,089
Accrued legal, and accounting expenses		424		370
Governmental payables		67		341
Others		-		3

	$	2,317	$	3,461

Note 11 - Accrued Pension Liabilities

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Pension and Other Postretirement Benefits Disclosure [Text Block]

NOTE

11:

ACCRUED PENSION LIABILITIES

As of

December 31, 2019

and

2018,

the defined benefits plans that are accounted for in the Company’s consolidated financial statements are the pension plans in Germany and India. Consistent with the requirements of local law, the Company deposits funds for certain plans with insurance companies,

third

-party trustees, or into government-managed accounts, and/or accrues for the unfunded portion of the obligation.

The Company’s pension obligation in Germany relating to the unvested pension claims (i.e. future obligation that will result from future service period) of the employees were outsourced in

November 2010

to an external insurance company (“Nuremberger Versicherung”). From and after the outsourcing date, the Company is required to pay premiums to the external insurance company and in return the pension benefits earned by the German employees are covered by the Company’s arrangement with the external insurance company. The Company legally is released from its obligations to the German employees once the premiums are paid, and it is

longer subject to any of the risks and rewards associated with the benefit obligations covered and the plan assets transferred to the external insurance company. Since the outsourcing arrangement meets the requirements of a nonparticipating annuity contract, the Company treats the costs of the outsourcing arrangement as the costs of the benefits being earned in accordance with ASC Paragraph

715

of ASC

715

“Compensation—Retirement Benefits.”

The following tables provide a reconciliation of the changes in the pension plans’ benefit obligation and the fair value of assets for the years ended

December 31, 2019

and

2018,

and the statement of funded status as of

December 31, 2019

and

2018:

	December 31,
	201 9			2018

Accumulated benefit obligation	$	951		$	815

Change in benefit obligation

Benefit obligation at beginning of year	$	827		$	883
Service cost		5			5
Interest cost		15			15
Benefits paid from the plan		(8	)		(8	)
Actuarial (gain) loss		145			(27	)
Exchange rates and others		(21	)		(41	)

Benefit obligation at end of year	$	963		$	827

The assumptions used in the measurement of the Company’s pension expense and benefit obligations as of

December 31, 2019,

2018

and

2017

are as follows:

	Year ended December 31,
	201 9			2018			2017
Weighted-average assumptions
Discount rate		1.1	%		1.9	%		1.8	%
Rate of compensation increase		2.5	%		2.5	%		2.5	%

The amounts reported for net periodic pension costs and the respective benefit obligation amounts are dependent upon the actuarial assumptions used. The Company reviews historical trends, future expectations, current market conditions, and external data to determine the assumptions. The discount rate is determined considering the yield of government bonds. The rate of compensation increase is determined by the Company, based on its long-term plans for such increases.

The following table provides the components of net periodic benefit cost for the years ended

December 31, 2019,

2018

and

2017:

	December 31,
	201 9		2018		2017
Components of net periodic benefit cost

Service cost	$	5	$	5	$	4
Interest cost		15		15		14
Actuarial loss		4
Amortization of net loss		16		19		22

Net periodic benefit cost	$	40	$	39	$	40

	December 31,
	201 9			2018

Net amounts recognized in the consolidated balance sheets as of December 31, 2019 and 2018 consist of:
Current liabilities	$	-		$	-
Noncurrent liabilities		963			827

Net amounts recognized in the consolidated balance sheets	$	963		$	827

Net amounts recognized in accumulated other comprehensive income as of December 31, 2019 and 2018 consist of:
Net actuarial loss	$	(486	)	$	(361	)

Net amounts recognized in accumulated other comprehensive loss	$	(486	)	$	(361	)

The estimated amount that will be amortized from accumulated other comprehensive income (loss) into net periodic benefit cost in

2020

is as follows:

	20 20

Net actuarial loss and other	$	23

Benefit payments are expected to be paid as follows:

Year ending December 31,

2020	$	9
2021		10
2022		30
2023		26
2024		10
2025-2029		78

	$	163

The Company had

pension plan assets at

December 31, 2019.

Regarding the policy for amortizing actuarial gains or losses for pension and post-employment plans, the Company has chosen the “corridor” option. This option consists of recognizing in the consolidated statements of operations, the part of unrecognized actuarial gains or losses exceeding

10%

of the greater of the projected benefit obligation or the market value of the plan assets. If amortization is required, the minimum amortization amount is that excess divided by the average remaining service period of the active employees expected to receive benefits under the plan.

Actuarial losses were recognized in other comprehensive income (loss) in the amount of

$141

for the year ended

December 31, 2019.

Actuarial gains were recognized in other comprehensive income (loss) in the amount of

$29

for the year ended

December 31, 2018.

Actuarial gains were recognized in other comprehensive income (loss) in the amount of

$24

for the year ended

December 31, 2017.

Note 12 - Financial Income, Net

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Other Nonoperating Income and Expense [Text Block]

NOTE

12:

FINANCIAL INCOME, NET

The components of financial income, net were as follows:

	Year ended December 31,
	201 9		2018		2017

Foreign exchange gains	$	121	$	16	$	156
Interest income from marketable securities and deposits, net of amortization of premium on marketable securities		2,506		2,108		1,719
Other		-		2		-
Realized gains on marketable securities		4		27		7

Financial income		2,631		2,153		1,882

Realized losses on marketable securities		77		68		57
Foreign exchange losses (*)		825		195