- Investor Relations
|View printer-friendly version|
|DSP Group, Inc. Reports Third Quarter 2007 Earnings|
SAN JOSE, Calif., Oct. 31 /PRNewswire-FirstCall/ -- DSP Group, Inc. (Nasdaq: DSPG), a worldwide leader in developing and providing chip-set solutions for residential wireless connectivity, announced today its results for the third quarter ended September 30, 2007.
Third Quarter Results:
Revenues for the third quarter of 2007 were $61,866,000, a decrease of 3% from revenues of $63,875,000 for the third quarter of 2006. Net loss for the third quarter was $7,496,000 as compared to net income of $8,052,000 for the third quarter of 2006. Earnings per share (EPS) for the third quarter of 2007 were a loss of $0.25 per share, as compared to earnings of $0.28 per share for the third quarter of 2006.
Non-GAAP net income and diluted EPS for the third quarter of 2007, excluding the impact of an in-process R&D expense of $10,120,000 and the amortization of acquired intangibles and other acquisition-related assets of $3,704,000, both associated with the acquisition of the Cordless and VoIP Terminals business of NXP B.V.; equity-based compensation expenses of $2,880,000; and the tax benefits associated with such expenses, were $7,615,000 and $0.26 per share on a diluted basis, representing a decrease of 30% from the non-GAAP net income of $10,903,000 and non-GAAP diluted EPS of $0.37 per share for the third quarter of 2006.
Eli Ayalon, Chairman and CEO of DSP Group, stated: "During the third quarter, we completed the acquisition of the Cordless and VoIP Terminals business of NXP and operated as one company for the last three weeks of the quarter. As anticipated, the acquired business had a positive impact on our non-GAAP net income and EPS (excluding the in-process R&D expense and the amortization of acquired intangibles and other acquisition-related assets) for the third quarter of 2007. We believe the acquisition will have a greater positive financial impact in the fourth quarter of 2007 and 2008. In the fourth quarter of 2007, we believe our revenues will double as compared to the fourth quarter of 2006, and we will significantly improve our operating margins."
Mr. Ayalon added: "During the earnings conference call, we will elaborate on the market conditions for traditional cordless telephony, which remains challenging, our activities related to the introduction of our next generation of products, the outlook for the fourth quarter of 2007 and 2008, and the contributions expected from the acquired business going forward."
The Company believes that the non-GAAP presentation of net income and diluted EPS presented in this press release is useful to investors in comparing results for the quarter ended September 30, 2007 to the same period during 2006, because results for the third quarter of 2006 did not include the amortization of acquired intangibles and other acquisition-related assets and the in-process R&D expense. Further, the Company believes it is useful to investors to understand how the expenses associated with equity-based compensations expenses are reflected on its statements of income.
About DSP Group
DSP Group, Inc. is a fabless semiconductor company, offering advanced chip-set solutions for a variety of applications. DSP Group is a worldwide leader in the short-range wireless communication market, enabling home networking convergence for voice, video and data. By combining its in-house technologies of Digital Signal Processors (DSPs), portfolio of wireless communication protocols, including DECT, Bluetooth and Wi-Fi, most advanced Radio Frequency CMOS and SiGe, as well as VoIP ICs, DSP Group is a worldwide leader and a one-stop-shop for a wide range of applications. These applications include ISM band digital 900MHz, 2.4GHz and 5.8GHz telephony, European DECT (1.9GHz) telephony, Bluetooth systems for voice, video and data communication and deployment in residential, SOHO, SME, enterprise and automotive applications. DSP Group's ICs provide solutions for MP3 players, VoIP Phones, Gateways, and Integrated Access Devices and are widely used in Digital Voice Recorders. More information about DSP Group is available at http://www.dspg.com.
Forward Looking Statements
This press release may contain statements that qualify as "forward-looking statements" under the Private Securities Litigation Reform Act of 1995, including the statements made by Mr. Ayalon about DSP Group's belief that (i) the acquisition of the Cordless and VoIP Terminals business of NXP will have a greater positive financial impact in the fourth quarter of 2007 and 2008; (ii) its revenues will double as compared to the fourth quarter of 2006, (iii) the acquisition will significantly improve its operating margins, and (iv) the acquisition will contribute to its business going forward. 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 the risk that the acquired business will not be integrated successfully; the risk that the revenue potentials, cost savings and any other synergies from the acquisition may not be fully realized or may take longer to realize than expected; disruption relating to the acquisition that makes it more difficult for DSP Group to maintain relationships with customers, employees or suppliers and other risks and uncertainties associated with the acquisition; slower than expected change in the nature of the residential communications domain, including the VoIP and DECT markets, unexpected delays in the introduction of new products, especially VoIP and DECT products; failure to achieve broad market acceptance of existing and new products by existing and potential OEM customers; DSP Group's inability to add new customers and develop and produce new products at competitive costs and in a timely manner; decline or fluctuations in gross margins and the effect on revenues and profitability; and general market demand for products that incorporate DSP Group's technology in the market. These factors and other factors which may affect future operating results or DSP Group's stock price are discussed under "RISK FACTORS" in the Form 10-K for fiscal 2006 as well as other reports DSP Group has filed with the Securities and Exchange Commission and which are available on DSP Group's Web site (http://www.dspg.com) under Investor Relations.
Earnings conference call
DSP Group has scheduled a conference call for 8:30 a.m. EDT today to discuss the financial results for the third quarter of 2007 and invites you to listen to a live broadcast over the Internet. The broadcast can be accessed by all interested parties through the Investor Relations section (investor message board) of DSP Group's Web site at http://www.dspg.com or link to: http://ir.dspg.com./phoenix.zhtml?c=101665&p=irol-calendar.
If you cannot join the call, please listen to the replay, which will be available for approximately two weeks after the call on DSP Group's Web site or by calling the following numbers:
-- US Dial-In # 1-888-286-8010 (passcode: 83156797)
-- International Dial-In # 1-617-801-6888 (passcode: 83156797)
For more information, please contact Ofer Elyakim, Vice President of Business Development, DSP Group Inc. at (408) 240-6839; or e-mail: firstname.lastname@example.org. DSP GROUP, INC. CONSOLIDATED STATEMENTS OF INCOME (In thousands, except per share amounts) Three Months Ended Nine Months Ended September 30, September 30, 2007 2006 2007 2006 (Unaudited)(Unaudited) (Unaudited) (Unaudited) Product revenues and other $61,866 $63,875 $163,590 $176,565 Cost of product revenues and other 37,201 37,689 98,434 103,676 Gross profit 24,665 26,186 65,156 72,889 Operating expenses: Research and development 13,874 12,242 39,095 35,553 Sales and marketing 4,680 4,357 12,987 12,233 General and administrative 3,271 2,771 10,196 8,466 In-process R&D 10,120 - 10,120 - Amortization of intangible assets 3,057 - 3,057 - Total operating expenses 35,002 19,370 75,455 56,252 Operating income (loss) (10,337) 6,816 (10,299) 16,637 Other income : Interest and other income, net 2,569 3,372 9,148 9,832 Income (loss) before provision for income taxes (7,768) 10,188 (1,151) 26,469 Provision for income taxes (benefit) (272) 2,136 2,016 5,691 Net income (loss) $(7,496) $ 8,052 $ (3,167) $ 20,778 Net earnings (loss) per share: Basic $ (0.25) $ 0.28 $ (0.11) $ 0.70 Diluted $ (0.25) $ 0.27 $ (0.11) $ 0.68 Weighted average number of shares of Common stock used in the computation of: Basic 29,436 29,279 28,716 29,543 Diluted 29,549 29,748 28,903 30,388 DSP GROUP, INC. CONSOLIDATED STATEMENTS OF INCOME (NON-GAAP) (In thousands, except per share amounts) Three Months Ended Nine Months Ended September 30, September 30, 2007 2006 2007 2006 (Unaudited)(Unaudited) (Unaudited)(Unaudited) Product revenues and other $61,866 $63,875 $163,590 $176,565 Cost of product revenues and other 36,411 37,563 97,312 103,342 Gross profit 25,455 26,312 66,278 73,223 Operating expenses: Research and development 12,424 10,589 33,628 30,975 Sales and marketing 4,351 4,013 11,771 11,267 General and administrative 2,313 1,917 6,613 5,516 Total operating expenses 19,088 16,519 52,012 47,758 Operating income 6,367 9,793 14,266 25,465 Other income : Interest and other income, net 2,569 3,372 10,144 9,832 Income before provision for income taxes 8,936 13,165 24,410 35,297 Provision for income taxes 1,321 2,262 4,291 6,025 Net income $ 7,615 $10,903 $ 20,119 $ 29,272 Net earnings per share: Basic $ 0.26 $ 0.37 $ 0.70 $ 0.99 Diluted $ 0.26 $ 0.37 $ 0.70 $ 0.96 Weighted average number of shares of Common stock used in the computation of: Basic 29,436 29,279 28,716 29,543 Diluted 29,549 29,748 28,903 30,388 Unaudited Reconciliation of GAAP to Non-GAAP Financial Measures (In thousands, except per share amounts) Three Months Ended Nine Months Ended September 30, September 30, 2007 2006 2007 2006 Unaudited Unaudited Unaudited Unaudited GAAP net (loss) income $(7,496) $ 8,052 $(3,167) $20,778 Equity-based compensation expense 143 126 475 334 Included in cost of product revenues Amortization of adjustment of inventories to market values 647 - 647 - Included in cost of product revenues Equity-based compensation expense 1,450 1,653 5,467 4,578 Included in R&D Equity-based compensation expense 1,287 1,198 4,799 3,916 Included in SG&A Loss related to certain marketable securities - - 996 - In-process R&D 10,120 - 10,120 - Amortization of intangible assets related to NXP transaction 3,057 - 3,057 - Tax benefit resulting from equity-based compensation, loss related to certain marketable securities, in-process R&D and amortization of intangibles and other acquisition-related assets (1,593) (126) (2,275) (334) Non-GAAP net income $ 7,615 $10,903 $20,119 $29,272 Non-GAAP basic earnings per share $ 0.26 $ 0.37 $ 0.70 $ 0.99 Non-GAAP diluted earnings per share $ 0.26 $ 0.37 $ 0.70 $ 0.96 DSP GROUP, INC. CONSOLIDATED BALANCE SHEETS (In thousands) September 30, December 31, 2007 2006 (Unaudited) (Audited) Assets Current assets: Cash and cash equivalents $ 38,192 $ 37,344 Marketable securities and cash deposits 69,830 132,170 Trade receivables, net 42,833 21,489 Inventories 16,352 14,366 Other accounts receivable 22,564 4,049 Deferred income taxes 2,638 1,516 Total current assets 192,409 210,934 Property and equipment, net 14,926 12,644 Long term marketable securities 50,996 179,368 Severance pay fund 6,311 5,689 Deferred income taxes 4,916 1,987 Goodwill and other intangible assets 246,429 2,694 Other assets 699 672 Total assets $516,686 $413,988 Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 20,329 $ 12,205 Other current liabilities 46,517 28,969 Total current liabilities 66,846 41,174 Accrued severance pay 6,650 6,065 Accrued pensions 1,663 - Stockholders' equity: Common stock 32 28 Additional paid-in capital 298,173 216,041 Accumulated other comprehensive income (loss) 569 28 Retained earnings 188,707 195,198 Less - Cost of treasury stock (45,954) (44,546) Total stockholders' equity 441,527 366,749 Total liabilities and stockholders' equity $516,686 $413,988
SOURCE DSP Group, Inc.