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DSP Group, Inc. Reports Second Quarter 2012 Earnings

SAN JOSE, Calif., July 30, 2012 (GLOBE NEWSWIRE) -- DSP Group®, Inc. (Nasdaq:DSPG), a leading global provider of wireless chipset solutions for converged communications, announced today its results for the second quarter ended June 30, 2012.

Second Quarter Results:

Revenues for the second quarter of 2012 were $44,191,000, a decrease of 24% from revenues of $58,517,000 for the second quarter of 2011. Net loss for the second quarter of 2012 was $2,224,000, as compared to net loss of $2,041,000 for the second quarter of 2011. Earnings per share (EPS) for the second quarter of 2012 were a loss of $0.10 per share, as compared to a loss of $0.09 per share for the second quarter of 2011.

Non-GAAP Results:

Non-GAAP net income and diluted EPS for the second quarter of 2012 were $520,000 and $0.02 per share, respectively, as compared to non-GAAP net income of $2,030,000 and non-GAAP diluted EPS of $0.08 per share for the second quarter of 2011. Non-GAAP net income and diluted EPS for the second quarter of 2012 excluded the impact of amortization of acquired intangible assets of $593,000 associated with the acquisition of NXP's CIPT business and BoneTone, equity-based compensation expenses of $1,458,000 and restructuring expenses of $693,000. Non-GAAP net income and diluted EPS for the second quarter of 2011 excluded the impact of amortization of acquired intangible assets of $2,198,000 associated with the acquisition of NXP's CIPT business and equity-based compensation expenses of $1,873,000.

Ofer Elyakim, CEO of DSP Group, stated: "Our second quarter results were better than previously expected, driven by higher gross margins and lower operating expenses. We ended the quarter with a negligible non-GAAP operating loss and generated approximately $2.2 million in cash flow from operations. Despite current market weakness, we remain on track to meet our objective of generating positive operating cash flows this year."

Mr. Elyakim also stated, "During the second quarter, we continued our stock repurchasing activities and repurchased approximately 563,000 shares for approximately $3.5 million an average price of $6.2 per share."

Presentation on Non-GAAP Net Income Calculation

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 June 30, 2012 to the same period in 2011 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.

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 DSP Group anticipating generating positive operating cash flows for 2012. In addition, the events described in these forward-looking statements may not actually arise as a result of various factors, including continued uncertainty in consumer demand for traditional cordless telephony products in DSP Group's major end markets; unexpected delays in the commercial launch or mass production of new products incorporating DSP Group's technology; the impact of reductions in lead times and inventory levels by DSP Group customers and their customers; DSP Group's ability to lower operating expenses; 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 design wins or 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 2011 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. Delivering semiconductor system solutions with software and reference designs, DSP Group enables OEMs/ODMs, consumer electronics (CE) manufacturers and service providers to cost-effectively develop new revenue-generating products with fast time to market. At the forefront of semiconductor innovation and operational excellence for over two decades, DSP Group provides a broad portfolio of wireless chipsets integrating DECT/CAT-iq, DECT ULE, Wi-Fi, PSTN, BoneTone™ intelligent voice enhancement and noise elimination, video and VoIP technologies. DSP Group enables converged voice, audio, video and data connectivity across diverse consumer and business products – from connected multimedia screens, mobile devices, and home automation & security to cordless phones, VoIP systems, and home gateways. Leveraging industry-leading experience and expertise, DSP Group partners with CE manufacturers and service providers to shape the future of converged communications at home, office and on the go.

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. ET today to discuss the financial results for the second quarter of 2012 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://www.media-server.com/m/p/s9ot4dy5

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:

--US Dial-In # +1-347-366-9565 (passcode: 2151854#)

--International Dial-In # +44-207-111-1244 (passcode: 2151854#)

 
DSP GROUP, INC.
 CONSOLIDATED STATEMENTS OF INCOME
 (In thousands, except per share amounts)
         
         
   Three Months Ended   Six Months Ended
   June 30,  June 30,
  2012 2011 2012 2011
  (Unaudited) (Unaudited) (Unaudited) (Unaudited)
         
Revenues  $44,191 $58,517 $87,695 $107,293
Cost of revenues 27,680 36,767 55,206 68,315
         
Gross profit 16,511 21,750 32,489 38,978
Operating expenses:        
Research and development 11,421 14,210 23,397 28,400
Sales and marketing 3,761 4,159 7,795 8,178
General and administrative 2,803 3,600 5,831 6,670
Amortization of intangible assets 593 2,198 1,186 4,394
Restructuring expenses (income) 693 -- 693 (590)
         
Total operating expenses 19,271 24,167 38,902 47,052
         
Operating loss  (2,760) (2,417) (6,413) (8,074)
         
Financial income, net 587 411 1,067 880
         
Loss before taxes on income  (2,173)  (2,006) (5,346) (7,194)
         
Taxes on income (income tax benefit)         
  51 35 140 (589)
Net loss  ($2,224) ($2,041) ($5,486) ($6,605)
         
Net loss per share:        
Basic and Diluted ($0.10) ($0.09) ($0.25) ($0.28)
         
Weighted average number of shares of common stock used in the computation of:        
Basic and Diluted 21,751 23,381 22,151 23,410
         
 
Unaudited Reconciliation of GAAP to Non-GAAP Financial Measures
 (In thousands, except per share amounts)
         
  Three Months Ended  Six Months Ended 
  June 30,  June 30,
  2012 2011 2012 2011
  Unaudited Unaudited Unaudited Unaudited
GAAP net loss  ($2,224) ($2,041) ($5,486) ($6,605)
Equity-based compensation expense included in cost of product revenues and other  95 102 205 234
Equity-based compensation expense included in research and development  686 724 1,457 1,606
Equity-based compensation expense included in sales and marketing  217 257 468 563
Equity-based compensation expense included in general and administrative  460 790 814 1,309
Amortization of intangible assets 593 2,198 1,186 4,394
Restructuring expenses (income) 693 -- 693 (590)
Non-GAAP net income (loss) $520 $2,030 ($663) $911
         
GAAP weighted-average number of common stock used in computation of basic and diluted loss per share (in thousands) 21,751 23,381 22,151 23,410
         
Weighted–average number of shares related to outstanding options and SARs 143 930 -- 465
         
Weighted-average number of common stock used in computation of non-GAAP diluted net income (loss) per share  21,894 24,311 22,151 23,875
         
GAAP diluted net loss per share  ($0.10) ($0.09) ($0.25) ($0.28)
Equity-based compensation expense 0.06 0.08 0.13 0.16
Amortization of intangible assets 0.03 0.09 0.06 0.18
Restructuring expenses (income) 0.03 -- 0.03 (0.02)
Non-GAAP diluted net income (loss) per share $0.02 $0.08 ($0.03) $0.04
 
DSP GROUP, INC.
CONSOLIDATED BALANCE SHEETS 
(In thousands)
     
  June 30, December 31,
  2012 2011
   (Unaudited) (Audited)
Assets     
Current assets:    
Cash and cash equivalents $22,046 $18,109
Restricted deposits 121 128
Marketable securities and short term deposits 18,832 30,626
Trade receivables, net 25,562 25,643
Inventories 16,842 16,434
Other accounts receivable and prepaid expenses 3,439 5,343
Deferred income taxes 135 89
Total current assets 86,977 96,372
     
Property and equipment, net 4,637 5,803
     
Long term marketable securities and deposits 70,793  69,046 
Severance pay fund 10,191 9,974
Intangible assets, net 13,205 14,395
Long term prepaid expenses and lease deposits 344 466
  94,533 93,881
     
Total assets $186,147 $196,056
     
Liabilities and Stockholders' Equity    
Current liabilities:    
Trade payables $17,359 $17,989
Other current liabilities  16,811 18,373
Total current liabilities 34,170 36,362
     
 Accrued severance pay 10,475 10,278
 Accrued pensions 811 792
 Total long term liabilities 11,286 11,070
     
Stockholders' equity:    
Common stock 22 23
Additional paid-in capital 344,297 341,352
Accumulated other comprehensive income  (646) (1,756)
Less – Cost of treasury stock (127,338) (122,236)
Accumulated deficit (75,644) (68,759)
Total stockholders' equity 140,691 148,624
Total liabilities and stockholders' equity $186,147 $196,056
CONTACT: Orly Garini-Dil
         +1-408-240-6822
         orly.garini@dspg.com

DSP Group

DSP Group, Inc.