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|DSP Group, Inc. Reports Third Quarter 2008 Earnings|
SAN JOSE, Calif., Oct. 30 /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, 2008.
Third Quarter Results:
Revenues for the third quarter of 2008 were $87,368,000, an increase of 41% from revenues of $61,866,000 for the third quarter of 2007. Net loss for the third quarter of 2008 was $3,030,000, as compared to net loss of $7,496,000 for the third quarter of 2007. Earnings per share (EPS) for the third quarter of 2008 were a loss of $0.11 per share, as compared with a loss of $0.25 per share for the third quarter of 2007.
Non-GAAP net income and diluted EPS for the third quarter of 2008 were $7,367,000 and $0.27 per share, respectively; a decrease of 3% from the non-GAAP net income of $7,615,000 and an increase of 4% from non-GAAP diluted EPS of $0.26 per share for the third quarter of 2007. Non-GAAP net income and diluted EPS for the third quarter of 2008 excluded the impact of amortization of acquired intangible assets of $5,702,000 associated with the acquisition of the Cordless and VoIP Terminals business of NXP B.V.; equity-based compensation expenses of $3,205,000; restructuring expenses of $1,870,000 associated with our cost cutting measures at various operating sites, unrealized loss related to certain available-for-sale marketable securities of $671,000 and the aggregate tax benefits associated with such expenses of $1,051,000. Non-GAAP net income and diluted EPS for the third quarter of 2007 excluded 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 aggregate tax benefits associated with such expenses of $1,593,000.
Eli Ayalon, Chairman and CEO of DSP Group, stated: "Despite a solid third quarter and in view of the current economic crisis and the uncertainty of consumer spending in 2009, we decided to implement further synergies aimed at improving efficiencies across our various operating sites and reduce our operating expenses in 2009." Mr. Ayalon also added, "During the third quarter of 2008, we secured two design wins for XpandR, our new generation of wireless multimedia system-on-a-chip (SoC) solution. Both Giant Wireless Technology Ltd, a leading wireless technology creation company, and another leading European-based OEM customer chose XpandR for its broad application capabilities and high level of integration."
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 Mr. Ayalon's statement about the company's implementation of further synergies to reduce its 2009 operating expenses. 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 fluctuations in sales of DSP Group's 5.8GHz and DECT 6.0 products; successful implementation of the restructuring plan to reduce 2009 operating expenses; slower than expected change in the nature of residential communications domain; unexpected delays in the introduction of new products or failure of such products to achieve broad market acceptance; DSP Group's inability develop and produce new products at competitive costs; decline or fluctuations in gross margins and the effect on revenues and profitability; and general market demand for products that incorporate DSP Group's technology in the market. These factors and other factors which may affect future operating results or DSP Group's stock price are discussed under "RISK FACTORS" in the Form 10-K for fiscal 2007 as well as other reports DSP Group has filed with the Securities and Exchange Commission and which are available on DSP Group's Web site (http://www.dspg.com) under Investor Relations.
Earnings conference call
DSP Group has scheduled a conference call for 8:30 a.m. EDT today to discuss the financial results for the third quarter of 2008 and invites you to listen to a live broadcast over the Internet. The broadcast can be accessed by all interested parties through the Investor Relations section (investor message board) of DSP Group's Web site at http://www.dspg.com or link to: http://ir.dspg.com./phoenix.zhtml?c=101665&p=irol-calendar.
If you cannot join the call, please listen to the replay, which will be available for approximately two weeks after the call on DSP Group's Web site or by calling the following numbers:
-- US Dial-In # 1-888-286-8010 (passcode: 59861318)
For more information, please contact Ofer Elyakim, DSP Group Inc. at +852-9017-5426; 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, 2008 2007 2008 2007 (Unaudited) (Unaudited) (Unaudited) (Unaudited) Product revenues and other $87,368 $61,866 $234,250 $163,590 Cost of product revenues and other 54,503 37,201 148,462 98,434 Gross profit 32,865 24,665 85,788 65,156 Operating expenses: Research and development 17,908 13,874 56,825 39,095 Sales and marketing 5,483 4,680 17,124 12,987 General and administrative 4,539 3,271 13,336 10,196 Amortization of intangible assets 5,702 3,057 17,200 3,057 In-process R&D - 10,120 - 10,120 Restructuring costs 1,870 - 1,870 - Total operating expenses 35,502 35,002 106,355 75,455 Operating loss (2,637) (10,337) (20,567) (10,299) Other income : Interest and other income/(loss), net (185) 2,569 1,948 9,148 Loss before provision for income taxes (2,822) (7,768) (18,619) (1,151) Provision for income taxes ( income tax benefit) 208 (272) (630) 2,016 Net Loss $(3,030) $(7,496) $(17,989) $(3,167) Net loss per share: Basic $(0.11) $(0.25) $(0.62) $(0.11) Diluted $(0.11) $(0.25) $(0.62) $(0.11) Weighted average number of shares of Common stock used in the computation of: Basic 27,728 29,436 28,885 28,716 Diluted 27,728 29,436 28,885 28,716 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, 2008 2007 2008 2007 (Unaudited) (Unaudited) (Unaudited) (Unaudited) Product revenues and other $87,368 $61,866 $234,250 $163,590 Cost of product revenues and other 54,295 36,411 147,750 97,312 Gross profit 33,073 25,455 86,500 66,278 Operating expenses: Research and development 16,267 12,424 51,201 33,628 Sales and marketing 5,127 4,351 15,832 11,771 General and administrative 3,539 2,313 10,215 6,613 Total operating expenses 24,933 19,088 77,248 52,012 Operating income 8,140 6,367 9,252 14,266 Other income: Interest and other income, net 486 2,569 2,619 10,144 Income before provision for income taxes 8,626 8,936 11,871 24,410 Provision for income taxes 1,259 1,321 2,042 4,291 Net income $7,367 $7,615 $9,829 $20,119 Net earnings per share: Basic $0.27 $0.26 $0.34 $0.70 Diluted $0.27 $0.26 $0.34 $0.70 Weighted average number of shares of Common stock used in the computation of: Basic 27,728 29,436 28,885 28,716 Diluted 27,740 29,549 28,957 28,903 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, 2008 2007 2008 2007 Unaudited Unaudited Unaudited Unaudited GAAP net loss $(3,030) $(7,496) $(17,989) $(3,167) Equity-based compensation expense included in cost of product revenues 208 143 712 475 Amortization of adjustment of Inventories to market values - 647 - 647 Equity-based compensation expense included in R&D 1,641 1,450 5,624 5,467 Equity-based compensation expense included in SG&A 1,356 1,287 4,413 4,799 Amortization of intangible assets related to NXP transaction 5,702 3,057 17,200 3,057 In-process R&D - 10,120 - 10,120 Restructuring costs 1,870 - 1,870 - Unrealized loss related to certain available-for-sale marketable securities 671 - 671 996 Tax benefit resulting from equity-based compensation, amortization of intangible assets, in-process R&D, restructuring costs and loss related to certain available-for-sale marketable securities (1,051) (1,593) (2,672) (2,275) Non-GAAP net income $7,367 $7,615 $9,829 $20,119 Non-GAAP diluted earnings per share $0.27 $0.26 $0.34 $0.70 DSP GROUP, INC. CONSOLIDATED BALANCE SHEETS (In thousands) September 30, December 31, 2008 2007 (Unaudited) (Audited) Assets Current assets: Cash and cash equivalents $64,089 $69,586 Restricted deposits 115 - Marketable securities and cash deposits 9,700 63,682 Trade receivables, net 44,233 51,636 Inventories 21,847 16,361 Other accounts receivable 15,682 8,173 Deferred income taxes 547 4,011 Total current assets 156,213 213,449 Property and equipment, net 16,451 14,270 Long term marketable securities 46,647 34,469 Severance pay fund 8,123 6,883 Deferred income taxes 8,842 5,109 Goodwill and other intangible assets 220,286 237,969 Other assets 1,704 694 Total assets $458,266 $512,843 Liabilities and Stockholders' Equity Current liabilities: Accounts payable $31,794 $29,064 Other current liabilities 40,319 48,125 Total current liabilities 72,113 77,189 Accrued severance pay 8,491 7,303 Accrued pensions 1,091 1,758 Deferred tax liability 1,613 372 Other long term liabilities 455 1,364 Total long term liabilities 11,650 10,797 Stockholders' equity: Common stock 28 31 Additional paid-in capital 311,296 300,542 Accumulated other comprehensive income (loss) (378) 1,025 Retained earnings 166,219 187,063 Less - Cost of treasury stock (102,662) (63,804) Total stockholders' equity 374,503 424,857 Total liabilities and stockholders' equity $458,266 $512,843
SOURCE DSP Group, Inc.