Press Release

Printer Friendly Version View printer-friendly version
<< Back
DSP Group, Inc. Reports First Quarter 2010 Earnings

SAN JOSE, Calif., Apr 28, 2010 (GlobeNewswire via COMTEX) --DSP Group, Inc. (Nasdaq:DSPG), a leading global provider of wireless chipset solutions for converged communications at home, announced today its results for the first quarter ended March 31, 2010.

First Quarter Results:

Revenues for the first quarter of 2010 were $56,109,000, an increase of 41% from revenues of $39,914,000 for the first quarter of 2009. Net loss for the first quarter of 2010 was $184,000, as compared to a net loss of $10,691,000 for the first quarter of 2009. Loss per share for the first quarter of 2010 was $0.01, as compared to a loss per share of $0.41 for the first quarter of 2009.

Non-GAAP Results:

Non-GAAP net income and diluted earnings per share (EPS) for the first quarter of 2010 were $2,657,000 and $0.11, respectively, as compared to non-GAAP net loss of $4,623,000 and non-GAAP loss per share of $0.18 for the first quarter of 2009. Non-GAAP net income and diluted EPS for the first quarter of 2010 excluded the impact of amortization of acquired intangible assets in the amount of $2,498,000, associated with the acquisition of the Cordless and VoIP Terminals business of NXP B.V., equity-based compensation expenses of $2,843,000 and income from the reversal of a reserve that was determined to be no longer needed due to the expiration of applicable limitation statutes in the amount of $2,500,000, recorded in the cost of goods sold.

Non-GAAP net loss and loss per share for the first quarter of 2009 excluded the impact of amortization of acquired intangible assets of $3,047,000, associated with the acquisition of the Cordless and VoIP Terminals business of NXP B.V. and equity-based compensation expenses of $3,021,000.

Ofer Elyakim, CEO of DSP Group, stated, "We continue to improve our financial performance, and feel optimistic about our business outlook. Our first quarter financial results exceeded the higher end of our guidance range as better than expected revenues and lower non-GAAP operating expenses contributed to higher non-GAAP operating income. On the product side, we passed another milestone event by commencing commercial shipments of our XpandR multimedia platform, and anticipate the launch of additional XpandR-based products this year by leading consumer electronic brands."

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 March 31, 2010 to the same period in 2009 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 compensation expenses are reflected on its statements of income.

Forward Looking Statements

This press release contains statements that qualify as "forward-looking statements" under the Private Securities Litigation Reform Act of 1995, including Mr. Elyakim's statements about the company's optimism on its business outlook and its expectation that additional XpandR based products by leading consumer electronics brands will be launched in the market this year. 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 as a result of various factors, including the timing and ability of the market to recover and the corresponding recovery of DSP Group's customers; unexpected delays in the introduction of new products; especially the new generation of multimedia products; fluctuations in gross margins associated with the sale of existing products; the impact of reductions in lead times and inventory levels by DSP Group customers and their customers; slower than expected change in the nature of residential communications domain; DSP Group's inability to develop and produce new products at competitive costs and in a timely manner or failure of such products to achieve broad market acceptance; 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 2009 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 (www.dspg.com) under Investor Relations.

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 first quarter of 2010 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://phx.corporate-ir.net/phoenix.zhtml?p=irol-eventDetails&c=101665&eventID=2790115

If you cannot join the call, please listen to the replay, which will be available for 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: 36696030)

--International Dial-In # 1-617-801-6888 (passcode: 36696030)

                     DSP GROUP, INC.
            CONSOLIDATED STATEMENTS OF INCOME
         (In thousands, except per share amounts)

                                   Three Months Ended
                                        March 31,

                                    2010       2009
                                 ---------  -----------
                                 Unaudited  Unaudited

  Product revenues and other      $ 56,109     $ 39,914
  Cost of product revenues and
   other                            32,521       26,504
                                 ---------  -----------

  Gross profit                      23,588       13,410
  Operating expenses:
    Research and development        13,491       13,738
    Sales and marketing              4,444        4,516
    General and administrative       3,762        3,814
    Amortization of intangible
     assets                          2,498        3,047


                                 ---------  -----------

    Total operating expenses        24,195       25,115
                                 ---------  -----------

  Operating loss                     (607)     (11,705)
  Other income :
    Interest and other income,
     net                               425          603
                                 ---------  -----------

  Loss before provision for
   income taxes                      (182)     (11,102)
  Provision for income taxes
   (income tax benefit)                  2        (411)


                                 ---------  -----------

  Net loss                         $ (184)   $ (10,691)
                                 =========  ===========

  Net loss per share:
    Basic                         $ (0.01)     $ (0.41)
    Diluted                       $ (0.01)     $ (0.41)

  Weighted average number of
   shares of
  common stock used in the
   computation of:
    Basic                           23,107       26,083
    Diluted                         23,107       26,083



                      DSP GROUP, INC.
       CONSOLIDATED STATEMENTS OF INCOME (NON-GAAP)
         (In thousands, except per share amounts)

                                    Three Months Ended
                                        March 31,

                                     2010         2009
                                 ------------  ----------
                                  Unaudited     Unaudited

  Product revenues and other         $ 56,109    $ 39,914
  Cost of product revenues and
   other                               34,819      26,296
                                 ------------  ----------

  Gross profit                         21,290      13,618
  Operating expenses:
    Research and development           12,108      12,163
    Sales and marketing                 4,002       4,058
    General and administrative          2,946       3,034


                                 ------------  ----------

    Total operating expenses           19,056      19,255
                                 ------------  ----------

  Operating income (loss)               2,234     (5,637)
  Other income:
    Interest and other income,
     net                                  425         603
                                 ------------  ----------

  Income (loss) before
   provision for
  income taxes                          2,659     (5,034)
  Provision for income taxes
   (income tax benefit)                     2       (411)


                                 ------------  ----------

  Net income (loss)                   $ 2,657   $ (4,623)
                                 ============  ==========

  Net earnings (loss) per
   share:
    Basic                              $ 0.11    $ (0.18)
    Diluted                            $ 0.11    $ (0.18)

  Weighted average number of
   shares of
  common stock used in the
   computation of:
    Basic                              23,107      26,083
    Diluted                            23,698      26,083



    Unaudited Reconciliation of GAAP to Non-GAAP Financial Measures
               (In thousands, except per share amounts)

                                                Three Months Ended
                                                    March 31,

                                                2010         2009
                                             -----------  -----------
                                             (Unaudited)  (Unaudited)

  GAAP net loss                                  $ (184)   $ (10,691)
                                             -----------  -----------
  Equity-based compensation expense                  202          208
    Included in cost of product revenues
  Equity-based compensation expense                1,383        1,575
    Included in R&D
  Equity-based compensation expense                1,258        1,238
    Included in SG&A
  Amortization of intangible assets related        2,498        3,047
    to NXP transaction
  Reversal of a reserve that was determined
   to                                            (2,500)            0
    be no longer needed due to the
    expiration of applicable limitation
    statutes included in costs of goods
     sold

  Non-GAAP net income (loss)                     $ 2,657    $ (4,623)
                                             -----------  -----------

  Non-GAAP basic earnings (loss) per share        $ 0.11     $ (0.18)
  Non-GAAP diluted earnings (loss) per
   share                                          $ 0.11     $ (0.18)



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


                                             December
                                March 31,      31,
                                  2010         2009
                               -----------  ----------

                               (Unaudited)   (Audited)
                               -----------  ----------
  Assets
  Current assets:
    Cash and cash equivalents     $ 38,367    $ 37,986
    Restricted deposits                120         120
    Marketable securities and
     short term deposits            23,540      19,567
    Trade receivables, net          33,855      28,352
    Inventories                     11,855      12,427
    Other accounts receivable
     and prepaid expenses           12,688      12,162

    Deferred income taxes              138         178
                               -----------  ----------
  Total current assets             120,563     110,792

  Property and equipment, net        9,678      10,090

  Long term marketable
   securities and deposits          57,274      65,392
  Severance pay fund                 9,882       9,521
  Deferred income taxes                  8          15
  Intangible assets, net            17,922      20,473

  Investment in other
   companies                         2,200       2,200
  Long term prepaid expenses
   and lease deposits                1,302       1,286
                               -----------  ----------

                                    88,588      98,887
                               -----------  ----------

  Total assets                   $ 218,829   $ 219,769
                               ===========  ==========

  Liabilities and
   Stockholders' Equity
  Current liabilities:
  Trade payables                  $ 18,903    $ 18,309

  Other current liabilities         18,915      24,470
                               -----------  ----------
  Total current liabilities         37,818      42,779
  Accrued severance pay             10,950      10,572

  Accrued pensions                     911         929
                               -----------  ----------
  Total long term liabilities       11,861      11,501

  Stockholders' equity:
  Common stock                          23          23
  Additional paid-in capital       328,423     325,579
  Accumulated other
   comprehensive income              2,084       2,174
  Less -- Cost of treasury
   stock                         (120,871)   (123,350)

  Accumulated deficit             (40,509)    (38,937)
                               -----------  ----------

  Total stockholders' equity       169,150     165,489
                               -----------  ----------

  Total liabilities and
   stockholders' equity          $ 218,829   $ 219,769
                               ===========  ==========

This news release was distributed by GlobeNewswire, www.globenewswire.com

SOURCE: DSP Group, Inc.

CONTACT:  DSP Group, Inc.
Irit Jakoby, Director of Investor Relations
1 224 515 6236
irit.jakoby@dspg.com