SAN JOSE, Calif., Jan. 27, 2010 (GLOBE NEWSWIRE) -- DSP Group, Inc. (Nasdaq:DSPG), a leading global provider of wireless chipset solutions for converged communications at home announced today its results for the fourth quarter and year ended December 31, 2009.
Fourth Quarter Results:
Revenues for the fourth quarter of 2009 were $54,720,000, a decrease of 24% from revenues of $71,551,000 for the fourth quarter of 2008. Net loss for the fourth quarter of 2009 was $2,871,000, as compared to net loss of $194,405,000 for the fourth quarter of 2008. Loss per share for the fourth quarter of 2009 was $0.13, as compared to a loss per share of $7.23 for the fourth quarter of 2008.
Year End Results:
Revenues for the year ended December 31, 2009 were $212,186,000, a decrease of 31% over 2008 revenues of $305,800,000. Net loss for 2009 was $8,436,000, compared to a net loss of $212,394,000 for 2008. Loss per share for 2009 was $0.36, compared to a loss per share of $7.48 for 2008.
Non-GAAP Results:
Non-GAAP net income and diluted EPS for the fourth quarter of 2009 were $2,827,000 and $0.12, respectively; a decrease of 29% from the non-GAAP net income of $3,987,000 and a decrease of 20% from the non-GAAP diluted earnings per share (EPS) of $0.15 for the fourth quarter of 2008. Non-GAAP net income and diluted EPS for the fourth quarter of 2009 excluded the impact of amortization of acquired intangible assets of $3,081,000 associated with the acquisition of the Cordless and VoIP Terminals business of NXP B.V. and equity-based compensation expenses of $2,617,000. Non-GAAP net income and diluted EPS for the fourth quarter of 2008 excluded the impact of amortization of acquired intangible assets of $5,654,000, associated with the acquisition; equity-based compensation expenses of $3,188,000; impairment of goodwill and other intangible assets of $181,534,000; unrealized losses related to certain available-for-sale marketable securities of $2,290,000 and the net tax effect of all items cited above along with valuation allowance of deferred tax assets of $5,726,000.
Non-GAAP net income and diluted EPS for the year ended December 31, 2009 were $3,258,000 and $0.14, respectively, representing a decrease of 76% from the non-GAAP net income of $13,816,000 and a decrease of 71% from the non-GAAP diluted EPS of $0.49 for the year ended December 31, 2008. Non-GAAP net income and diluted EPS for the year ended December 31, 2009 excluded the impact of amortization of acquired intangible assets of $12,258,000 associated with the acquisition; equity-based compensation expenses of $11,100,000; gains from realization of previously impaired available-for-sale securities of $531,000; a tax benefit of $3,488,000 resulting from a settlement agreement with the tax authorities and a tax benefit of $7,645,000 resulting from the reversal of certain income tax contingency reserves that were determined to be no longer needed due to the expiration of applicable limitation statutes.
Non-GAAP net income and diluted EPS for the year ended December 31, 2008 excluded the impact of amortization of acquired intangible assets of $22,853,000 associated with the acquisition; equity-based compensation expenses of $13,938,000; impairment of goodwill and other intangible assets of $181,534,000; unrealized losses related to certain available-for-sale marketable securities of $2,961,000; restructuring expenses of $1,870,000 associated with our cost cutting measures at various operating sites and the net tax effect of all items cited above along with valuation allowance of deferred tax assets of $3,054,000.
Ofer Elyakim, CEO of DSP Group, stated: "Our fourth quarter financial results were solid, and our cash flow from operations reached approximately $13 million during the quarter. We ended the year with $123 million in cash and equivalents, taking into consideration $20 million expended in the repurchase of our common stock from NXP and a tough market environment, our ability to generate $26 million in cash from operations in 2009 is a major achievement.
"Moreover, the Consumer Electronics Show in January was a successful event for DSP Group. For the first time, several industry participants showed fully functional devices based on our XpandR product that supports DECT and Wi-Fi connectivity.
"As we look to 2010, we expect conditions in our major end markets, including Europe and the U.S., to improve. We project revenue growth of 10% for 2010 over 2009, reflecting a sharp recovery during the first quarter, as compared to the first quarter of 2009, and revenue generation from our new product categories throughout the year."
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 fourth quarter and year ended December 31, 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.
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 objective to resume revenue growth in 2010, a sharp recovery during the first quarter and revenue generation from new product categories. 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 2008 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. EST today to discuss the financial results for the fourth 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-calendar.
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: 89096148)
--International Dial-In # 1-617-801-6888 (passcode: 89096148)
DSP GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
| Three Months Ended | Twelve Months Ended | ||||
| December 31, | December 31, | ||||
| 2009 | 2008 | 2009 | 2008 | ||
| (Unaudited) | (Unaudited) | (Unaudited) | (Audited) | ||
| Product revenues and other | $ 54,720 | $ 71,551 | $ 212,186 | $ 305,800 | |
| Cost of product revenues and other | 33,339 | 43,350 | 133,590 | 191,811 | |
| Gross profit | 21,381 | 28,201 | 78,596 | 113,989 | |
| Operating expenses: | |||||
| Research and development | 13,557 | 17,032 | 56,148 | 73,856 | |
| Sales and marketing | 4,423 | 5,587 | 17,889 | 22,712 | |
| General and administrative | 3,833 | 4,535 | 15,228 | 17,871 | |
| Amortization of intangible assets | 3,081 | 5,654 | 12,258 | 22,853 | |
| Impairment of goodwill and other intangible assets | -- | 181,534 | -- | 181,534 | |
| Restructuring costs | -- | -- | -- | 1,870 | |
| Total operating expenses | 24,894 | 214,342 | 101,523 | 320,696 | |
| Operating loss | (3,513) | (186,141) | (22,927) | (206,707) | |
| Other income: | |||||
| Interest and other income (loss), net | 559 | (1,787) | 2,857 | 160 | |
|
Loss before provision for income taxes |
(2,954) |
(187,928) |
(20,070) |
(206,547) |
|
| Provision for income taxes (income tax benefit) | (83) | 6,477 | (11,634) | 5,847 | |
| Net loss | $ (2,871) | $ (194,405) | $ (8,436) | $ (212,394) | |
|
Net loss per share: |
|||||
| Basic | $ (0.13) | $ (7.23) | $ (0.36) | $ (7.48) | |
| Diluted | $ (0.13) | $ (7.23) | $ (0.36) | $ (7.48) | |
|
Weighted average number of shares of common stock used in the computation of: |
|||||
| Basic | 22,901 | 26,892 | 23,655 | 28,387 | |
| Diluted | 22,901 | 26,892 | 23,655 | 28,387 | |
| DSP GROUP, INC. | ||||
| CONSOLIDATED STATEMENTS OF INCOME (NON-GAAP) | ||||
| (In thousands, except per share amounts) | ||||
| Three Months Ended | Twelve Months Ended | |||
| December 31, | December 31, | |||
| 2009 | 2008 | 2009 | 2008 | |
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |
| Product revenues and other | $54,720 | $71,551 | $212,186 | $305,800 |
| Cost of product revenues and other | 33,175 | 43,143 | 132,812 | 190,892 |
| Gross profit | 21,545 | 28,408 | 79,374 | 114,908 |
| Operating expenses: | ||||
| Research and development | 12,410 | 15,409 | 50,895 | 66,608 |
| Sales and marketing | 4,029 | 5,183 | 16,116 | 21,017 |
| General and administrative | 2,921 | 3,581 | 11,932 | 13,795 |
| Total operating expenses | 19,360 | 24,173 | 78,943 | 101,420 |
| Operating income | 2,185 | 4,235 | 431 | 13,488 |
| Other income: | ||||
| Interest and other income, net | 559 | 503 | 2,326 | 3,121 |
| Income before provision for | 2,744 | 4,738 | 2,757 | 16,609 |
| income taxes | ||||
| Provision for income taxes (income tax benefit) | (83) | 751 | (501) | 2,793 |
| Net income | $2,827 | $3,987 | $3,258 | $13,816 |
| Net earnings per share: | ||||
| Basic | $0.12 | $0.15 | $0.14 | $0.49 |
| Diluted | $0.12 | $0.15 | $0.14 | $0.49 |
|
Weighted average number of shares of common stock used in the computation of: |
||||
| Basic | 22,901 | 26,892 | 23,655 | 28,387 |
| Diluted | 23,058 | 26,897 | 23,926 | 28,442 |
|
Unaudited Reconciliation of GAAP to Non-GAAP Financial Measures (In thousands, except per share amounts) |
|||||
| Three Months Ended | Twelve Months Ended | ||||
| December 31, | December 31, | ||||
| 2009 | 2008 | 2009 | 2008 | ||
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | ||
| GAAP net loss | $ (2,871) | $ (194,405) | $ (8,436) | $ (212,394) | |
| Equity-based compensation expense included in cost of product revenues | 164 | 207 | 778 | 919 | |
| Equity-based compensation expense included in R&D | 1,147 | 1,623 | 5,253 | 7,248 | |
| Equity-based compensation expense included in SG&A | 1,306 | 1,358 | 5,069 | 5,771 | |
| Amortization of intangible assets related to NXP transaction | 3,081 | 5,654 | 12,258 | 22,853 | |
| Impairment of goodwill and other intangible assets | -- | 181,534 | -- | 181,534 | |
| Restructuring costs | -- | -- | -- | 1,870 | |
| Unrealized loss (realized gain) related to certain available-for-sale marketable securities | -- | 2,290 | (531) | 2,961 | |
| Reversal of income tax contingency reserve | -- | -- | (7,645) | -- | |
| Tax benefit resulting from settlement agreement with tax authorities | -- | -- | (3,488) | -- | |
| Tax benefit resulting from the above mentioned items | -- | 5,726 | -- | 3,054 | |
| Non-GAAP net income | $ 2,827 | $ 3,987 | $ 3,258 | $ 13,816 | |
| Non-GAAP diluted earnings per share | $ 0.12 | $ 0.15 | $ 0. 14 | $ 0.49 | |
| DSP GROUP, INC. | ||
| CONSOLIDATED BALANCE SHEETS | ||
| (In thousands) | ||
| December 31, | December 31, | |
| 2009 | 2008 | |
| (Unaudited) | (Audited) | |
| Assets | ||
| Current assets: | ||
| Cash and cash equivalents | $37,986 | $68,886 |
| Restricted deposits | 120 | 115 |
| Marketable securities and cash deposits | 19,567 | 12,449 |
| Trade receivables, net | 28,352 | 39,603 |
| Inventories | 12,427 | 14,098 |
| Other accounts receivable | 12,162 | 17,367 |
| Deferred income taxes | 178 | 306 |
| Total current assets | 110,792 | 152,824 |
| Property and equipment, net | 10,090 | 14,822 |
| 65,392 | 40,051 | |
| Long term marketable securities and cash deposits | ||
| Severance pay fund | 9,521 | 7,286 |
| Deferred income taxes | 15 | 212 |
| Intangible assets, net | 20,473 | 32,728 |
| Investment in affiliated companies | 2,200 | -- |
| Long term prepaid expenses and lease deposits | 1,286 | 1,331 |
| 98,887 | 81,608 | |
| Total assets | $219,769 | $249,254 |
| Liabilities and Stockholders' Equity | ||
| Current liabilities: | ||
| Trade payables | $18,309 | $20,136 |
| Other current liabilities | 24,470 | 40,329 |
| Total current liabilities | 42,779 | 60,465 |
| Accrued severance pay | 10,572 | 8,008 |
| Accrued pensions | 929 | 1,675 |
| Deferred tax liabilities | -- | 24 |
| Other long term liabilities | -- | 455 |
| Total long term liabilities | 11,501 | 10,162 |
| Stockholders' equity: | ||
| Common stock | 23 | 27 |
| Additional paid-in capital | 325,588 | 314,484 |
| Accumulated other comprehensive income | 2,174 | 51 |
| Less – Cost of treasury stock | (123,359) | (107,749) |
| Accumulated deficit | (38,937) | (28,186) |
| Total stockholders' equity | 165,489 | 178,627 |
| Total liabilities and stockholders' equity | $219,769 | $249,254 |