SANTA CLARA, Calif., July 23 /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 second quarter ended June 30, 2007.
Second Quarter Results:
Revenues for the second quarter of 2007 were $52,436,000, a decrease of
14% from revenues of $60,737,000 for the second quarter of 2006. Net income
for the second quarter was $2,964,000, a decrease of 58% from net income of
$7,088,000 for the second quarter of 2006. Diluted earnings per share (EPS)
for the second quarter of 2007 were $0.10, a decrease of 57% from $0.23 for
the second quarter of 2006. Pro forma net income for the second quarter of
2007, which excludes equity-based compensation expenses of $3,707,000 and an
anticipated loss of $996,000 related to certain marketable securities, as well
as the tax benefit associated with such expenses and anticipated loss, was
$7,170,000 or $0.25 per share on a diluted basis.
Eli Ayalon, Chairman and CEO of DSP Group, stated: "As a result of
increased price sensitivity in the US market, we are seeing an increase of
sales of analog systems on account of digital systems. This trend may
continue until the introduction of our next wave of multimedia products in
2008 and as a result of these market conditions, we expect the US market to
remain challenging. On the other hand, despite this challenging environment,
sales of DECT (including DECT 6.0) are expected to ramp up according to plan,
and our R&D efforts to improve the cost effectiveness of our products enabled
us to return to a gross margin level of 41%."
Mr. Ayalon added: "During the quarter, we announced the acquisition of
NXP's Cordless and VoIP Terminal Business, and currently expect to close the
transaction in the third quarter. We are enthusiastic about the fit of the
NXP business with our line of business and believe it will put DSP Group
firmly in a leadership position in terms of scale and technology in the
growing VoIP and DECT markets."
Dror Levy, CFO of DSP Group, stated: "Our operating cash flow during the
quarter generated $7.5 million, demonstrating the continued strength of our
business. During the quarter we repurchased 421,000 shares of our common
stock for a total consideration of $7.7 million as part of our repurchase
program. Our cash and marketable securities at the end of the quarter were
$353.7 million."
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 statements made by Mr. Ayalon about the ramp up of sales of DECT
products and the timetable for and optimism about the acquisition of NXP's
Cordless and VoIP Terminal Business. 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 slower than expected change in the nature of the
residential communications domain, unexpected delays in the introduction of
new products, especially 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 second 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: 81662116)
-- International Dial-In # 1-617-801-6888 (passcode: 81662116)
For more information, please contact Ofer Elyakim, Vice President of
Business Development, DSP Group Inc. at (408) 986-4421; or e-mail:
ofere@dsp.co.il.
DSP GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
2007 2006 2007 2006
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Product revenues and other $ 52,436 $ 60,737 $ 101,723 $ 112,689
Cost of product revenues and
other 31,233 35,632 61,233 65,987
Gross profit 21,203 25,105 40,490 46,702
Operating expenses:
Research and development 12,465 12,409 25,221 23,310
Sales and marketing 4,110 4,070 8,307 7,876
General and administrative 3,328 2,895 6,925 5,695
Total operating expenses 19,903 19,374 40,453 36,881
Operating income 1,300 5,731 37 9,821
Other income :
Interest and other income, net 2,927 3,351 6,579 6,460
Income before provision for
income taxes 4,227 9,082 6,616 16,281
Provision for income taxes 1,263 1,994 2,288 3,555
Net income $ 2,964 $ 7,088 $ 4,328 $ 12,726
Net earnings per share:
Basic $ 0.10 $ 0.24 $ 0.15 $ 0.43
Diluted $ 0.10 $ 0.23 $ 0.15 $ 0.41
Weighted average number of
shares of Common stock used
in the computation of:
Basic 28,257 29,871 28,356 29,674
Diluted 28,469 30,632 28,580 30,708
Unaudited Reconciliation of GAAP to Pro Forma Non-GAAP Financial Measures
(In thousands, except per share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
2007 2006 2007 2006
Unaudited Unaudited Unaudited Unaudited
GAAP net income $ 2,964 $ 7,088 $ 4,328 $ 12,726
Equity-based compensation expense
included in cost of product revenues
and other 166 130 332 208
Equity-based compensation expense
included in R&D 1,929 1,703 4,017 2,925
Equity-based compensation expense
included in SG&A 1,612 1,525 3,512 2,718
Loss related to certain marketable
securities 996 -- 996 --
Tax benefit resulting from
equity-based compensation and from
loss related to certain marketable
securities (497) (121) (682) (208)
Pro Forma net income $ 7,170 $ 10,325 $ 12,503 $ 18,369
Pro Forma diluted earnings per share $ 0.25 $ 0.34 $ 0.44 $ 0.60
DSP GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)
June 30, December 31,
2007 2006
(Unaudited) (Audited)
Assets
Current assets:
Cash and cash equivalents $ 60,365 $ 37,344
Marketable securities and cash deposits 212,662 132,170
Trade receivables, net 30,560 21,489
Inventories 10,908 14,366
Other accounts receivable 5,127 4,049
Deferred income taxes 2,520 1,516
Total current assets 322,142 210,934
Property and equipment, net 12,831 12,644
Long term marketable securities 80,634 179,368
Severance pay fund 5,894 5,689
Deferred income taxes 2,977 1,987
Other assets 2,897 3,366
Total assets
$ 427,375 $ 413,988
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 18,828 $ 12,205
Other current liabilities 30,859 28,969
Total current liabilities 49,687 41,174
Accrued severance pay 6,198 6,065
Stockholders' equity:
Common stock 28 28
Additional paid-in capital 223,902 216,041
Accumulated other comprehensive income (loss) (1,533) 28
Retained earnings 196,637 195,198
Less - Cost of treasury stock (47,544) (44,546)
Total stockholders' equity 371,490 366,749
Total liabilities and stockholders' equity $ 427,375 $ 413,988
SOURCE DSP Group, Inc.
07/23/2007
CONTACT: Ofer Elyakim, Vice President of Business Development of DSP
Group Inc., +1-408-986-4421, ofere@dsp.co.il
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