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DSP Group, Inc. Reports Third Quarter 2009 Earnings

SAN JOSE, Calif., Oct. 27, 2009 (GLOBE NEWSWIRE) -- DSP Group, Inc.(TM) (Nasdaq:DSPG), a leading global provider of wireless chipset solutions for converged communications at home announced today its results for the third quarter ended September 30, 2009.

Third Quarter Results:

Revenues for the third quarter of 2009 were $65,532,000, a decrease of 25% from revenues of $87,368,000 for the third quarter of 2008. Net income for the third quarter of 2009 was $6,803,000, as compared to net loss of $3,030,000 for the third quarter of 2008. Diluted earnings per share (EPS) for the third quarter of 2009 were $0.29, as compared to a loss of $0.11 per share for the third quarter of 2008.

Non-GAAP Results:

Non-GAAP net income and diluted EPS for the third quarter of 2009 were $4,336,000 and $0.18 per share, respectively; a decrease of 41% from the non-GAAP net income of $7,367,000 and a decrease of 33% from the non-GAAP diluted EPS of $0.27 per share for the third quarter of 2008. Non-GAAP net income and diluted EPS for the third quarter of 2009 excluded the impact of amortization of acquired intangible assets of $3,072,000 associated with the acquisition of the Cordless and VoIP Terminals business of NXP B.V.; equity-based compensation expenses of $2,637,000; gains from realization of previously impaired available-for-sale securities of $531,000; and a tax benefit of $7,645,000 resulting from the reversal of income tax contingency reserve that was determined to be no longer needed due to the expiration of applicable limitation statutes. 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; an 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.

Ofer Elyakim, CEO of DSP Group, stated: "Our financial results for the third quarter were at the higher end of our forecast and reflect solid execution in what remains a challenging environment in which our customers' visibility remains limited."

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, 2009 to the same period in 2008 because the exclusion of the above noted expenses may provide a more meaningful analysis of the Company's core operating results. 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. (Nasdaq:DSPG) is a leading global provider of wireless chipset solutions for converged communications at home. Delivering system solutions that combine semiconductors and software with reference designs, DSP Group enables consumer electronics (CE) manufacturers to cost-effectively develop new revenue-generating applications with fast time to market. At the forefront of semiconductor innovation and operational excellence for over two decades, and with a dominant share of the wireless home telephony market, DSP Group provides a broad portfolio of wireless chipsets integrating DECT, Wi-Fi, PSTN and VoIP technologies with state-of-the-art application processors. Enabling converged voice, audio, video and data connectivity across diverse consumer products - from cordless and VoIP phones to home gateways and connected multimedia screens - DSP Group proactively partners with CE manufacturers to shape the future of converged communications at home. For more information, visit www.dspg.com.

The DSP Group, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=6171

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 2009 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 www.dspg.com or link to: http://ir.dspg.com./phoenix.zhtml?c=101665&p=irol-eventDetails&EventId=2432395.

If you cannot join the call, please listen to the replay, which will be available for approximately one week after the call on DSP Group's Web site or by calling the following numbers:

  • U.S. Dial-In # 1-888-286-8010 (passcode: 31071002)


  • International Dial-In # 1-617-801-6888 (passcode: 31071002)


  • 
                                 DSP GROUP, INC.
                        CONSOLIDATED STATEMENTS OF INCOME
                     (In thousands, except per share amounts)
    
    
                                 Three Months Ended    Nine Months Ended
                                    September 30,         September 30,
                                  2009        2008       2009       2008
                                ---------  ---------  ---------  ---------
                               (Unaudited)(Unaudited)(Unaudited)(Unaudited)
    
     Product revenues and other $  65,532  $  87,368  $ 157,466  $ 234,250
     Cost of product revenues
      and other                    40,807     54,503    100,251    148,462
                                ---------  ---------  ---------  ---------
     Gross profit                  24,725     32,865     57,215     85,788
     Operating expenses:
      Research and development     15,221     17,908     42,590     56,825
      Sales and marketing           4,666      5,483     13,466     17,124
      General and administrative    3,655      4,539     11,395     13,336
      Amortization of intangible
       assets                       3,072      5,702      9,177     17,200
      Restructuring costs              --      1,870         --      1,870
                                ---------  ---------  ---------  ---------
      Total operating expenses     26,614     35,502     76,628    106,355
                                ---------  ---------  ---------  ---------
     Operating loss                (1,889)    (2,637)   (19,413)   (20,567)
     Other income:
      Interest and other income
      (loss), net                   1,113       (185)     2,297      1,948
                                ---------  ---------  ---------  ---------
      Loss before provision for
       income taxes                  (776)    (2,822)   (17,116)   (18,619)
     Provision for income taxes
      (income tax benefit)         (7,579)       208    (11,551)      (630)
                                ---------  ---------  ---------  ---------
     Net income (loss)          $   6,803  $  (3,030) $  (5,565) $ (17,989)
                                =========  =========  =========  =========
    
     Net earnings (loss)
      per share:
       Basic                    $    0.30  $   (0.11)     (0.23)     (0.62)
       Diluted                  $    0.29  $   (0.11)     (0.23)     (0.62)
    
     Weighted average number of
      shares of common stock
      used in the computation
      of:
       Basic                       22,901     27,728     23,906     28,885
       Diluted                     23,662     27,728     23,906     28,885
    
    
                                 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,
                                  2009        2008       2009      2008
                                ---------  ---------  ---------  ---------
                               (Unaudited)(Unaudited)(Unaudited)(Unaudited)
    
     Product revenues and other $  65,532  $  87,368  $ 157,466  $ 234,250
     Cost of product revenues
      and other                    40,596     54,295     99,637    147,750
                                ---------  ---------  ---------  ---------
     Gross profit                  24,936     33,073     57,829     86,500
     Operating expenses:
      Research and development     14,093     16,267     38,484     51,201
      Sales and marketing           4,213      5,127     12,087     15,832
      General and administrative    2,810      3,539      9,011     10,215
                                ---------  ---------  ---------  ---------
      Total operating expenses     21,116     24,933     59,582     77,248
                                ---------  ---------  ---------  ---------
     Operating income (loss)        3,820      8,140     (1,753)     9,252
     Other income:
      Interest and other
       income, net                    582        486      1,766      2,619
                                ---------  ---------  ---------  ---------
     Income before provision for
       income taxes                 4,402      8,626         13     11,871
     Provision for income taxes
      (income tax benefit)             66      1,259       (417)     2,042
                                ---------  ---------  ---------  ---------
     Net income                 $   4,336  $   7,367  $     430  $   9,829
                                =========  =========  =========  =========
    
     Net earnings per share:
      Basic                     $    0.19  $    0.27  $    0.02  $    0.34
      Diluted                   $    0.18  $    0.27  $    0.02  $    0.34
    
     Weighted average number of
      shares of common stock
      used in the
      computation of:
      Basic                        22,901     27,728     23,906     28,885
      Diluted                      23,662     27,740     24,215     28,957
    
    
    
     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,
                                  2009        2008       2009      2008
                                ---------  ---------  ---------  ---------
                               (Unaudited)(Unaudited)(Unaudited)(Unaudited)
    
     GAAP net income (loss)     $   6,803  $  (3,030) $  (5,565) $ (17,989)
                                =========  =========  =========  =========
     Equity-based compensation
      expense included in cost
      of product revenues             211        208        614        712
     Equity-based compensation
      expense included in R&D       1,128      1,641      4,105      5,624
     Equity-based compensation
      expense included in SG&A      1,298      1,356      3,763      4,413
     Amortization of intangible
      assets related to NXP
      transaction                   3,072      5,702      9,177     17,200
     Restructuring costs               --      1,870         --      1,870
     Unrealized loss(realized
      gain) related to certain
      available-for-sale
      marketable securities          (531)       671       (531)       671
     Reversal of income tax
      contingency reserve          (7,645)        --     (7,645)        --
     Tax benefit resulting from
      settlement agreement
      with tax authorities             --         --     (3,488)        --
     Tax benefit resulting from
      the above mentioned
      items                            --     (1,051)        --     (2,672)
     Non-GAAP net income        $   4,336  $   7,367  $     430  $   9,829
                                =========  =========  =========  =========
     Non-GAAP diluted earnings
      per share                 $    0.18  $    0.27  $    0.02  $    0.34
    
    
                                DSP GROUP, INC.
                          CONSOLIDATED BALANCE SHEETS
                                (In thousands)
    
                                               September 30,   December 31,
                                                  2009            2008
                                              -------------  -------------
                                               (Unaudited)     (Audited)
                                              -------------  -------------
     Assets
     Current assets:
      Cash and cash equivalents               $      37,976  $      68,886
      Restricted deposits                               115            115
      Marketable securities and cash deposits        17,308         12,449
      Trade receivables, net                         35,920         39,603
      Inventories                                    13,000         14,098
      Other accounts receivable                      14,484         17,367
      Deferred income taxes                             243            306
                                              -------------  -------------
     Total current assets                           119,046        152,824
    
     Property and equipment, net                     10,883         14,822
    
     Long term marketable securities and
      cash deposits                                  58,436         40,051
     Severance pay fund                               8,743          7,286
     Deferred income taxes                               16            212
     Other intangible assets                         23,568         32,728
    
     Other assets                                     1,475          1,331
                                              -------------  -------------
    
     Total assets                             $     222,167  $     249,254
                                              =============  =============
    
     Liabilities and Stockholders' Equity
     Current liabilities:
      Accounts payable                        $      21,941  $      20,136
      Other current liabilities                      22,630         40,329
                                              -------------  -------------
     Total current liabilities                       44,571         60,465
    
      Accrued severance pay                          10,188          8,008
      Accrued pensions                                1,744          1,675
      Deferred tax liability                             --             24
      Other long term liabilities                        --            455
                                              -------------  -------------
     Total long term liabilities                     11,932         10,162
     Stockholders' equity:
    
      Common stock                                       23             27
      Additional paid-in capital                    322,971        314,484
      Accumulated other comprehensive income
                                                      2,094             51
      Less - Cost of treasury stock                (123,359)      (107,749)
     Retained loss                                  (36,065)       (28,186)
                                              -------------  -------------
     Total stockholders' equity                     165,664        178,627
                                              -------------  -------------
    
     Total liabilities and
      stockholders' equity                    $     222,167  $     249,254
                                              =============  =============
    

    CONTACT: DSP Group, Inc.
    Orly Garini
    1-408-240-6839
    orly.garini@dspg.com