SAN JOSE, Calif., Oct. 25, 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 third quarter ended September 30, 2010.
Third Quarter Results:
Revenues for the third quarter of 2010 were $65,154,000, a decrease of 1% from revenues of $65,532,000 for the third quarter of 2009. Net income for the third quarter of 2010 was $1,917,000, as compared to net income of $6,803,000 for the third quarter of 2009. Diluted earnings per share (EPS) for the third quarter of 2010 was $0.08 per share, as compared to a diluted EPS of $0.29 per share for the third quarter of 2009
Non-GAAP Results:
Non-GAAP net income and diluted EPS for the third quarter of 2010 were $6,501,000 and $0.27 per share, respectively, as compared to non-GAAP net income of $4,336,000 and diluted EPS of $0.18 per share for the third quarter of 2009. Non-GAAP net income and diluted EPS for the third quarter of 2010 excluded the impact of amortization of acquired intangible assets of $2,494,000 associated with the acquisition of NXP's CIPT business; equity-based compensation expenses of $2,267,000; restructuring expenses of $394,000 associated with the reorganization of our operations; and a tax benefit of $571,000 resulting from the reversal of an income tax contingency reserve that was determined to be no longer needed due to the expiration of applicable statute of limitations. 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 NXP's CIPT business; 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 an income tax contingency reserve that was determined to be no longer needed due to the expiration of applicable statute of limitations.
Ofer Elyakim, CEO of DSP Group, stated: "The third quarter was another strong quarter for DSP Group. We ended the quarter with non-GAAP operating profit of $5.7 million, or 9% of revenues, representing an increase of 50% from non-GAAP operating profit of $3.8 million, or 6% of revenues, in the third quarter of 2009, and our cash balance increased by $11 million to $132 million. In addition, we began shipments of our XpandR ICs for the anticipated Android cordless phone and other telephony products, such as Wi-Fi phones."
Mr. Elyakim also added: "Following a capacity shortage during the first nine months of this year, many customers were prompted to procure materials earlier in order to secure capacity. Now with capacity stabilizing, we are seeing a depletion of this safety stock inventory, which according to our checks, should be mostly exhausted during the fourth quarter. As a result of that inventory buildup, our customers' projections for the fourth quarter have decreased. The Company now expects revenues for the year to be in the range of $222 million to $226 million, representing an annual growth rate in the range of 5% to 7% in comparison to 2009."
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, 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 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 fourth quarter and fiscal 2010 financial guidance, the capacity shortage condition and the depletion of the safety stock inventory. 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 impact of reductions in lead times and inventory levels by DSP Group customers and their customers; the supply chain capacity conditions for the remainder of 2010; the sustainability of the market recovery; 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; 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 growing 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 AM ET today to discuss the financial results for the third 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://www.dspg.com/">www.dspg.com or link to: http://phx.corporate-ir.net/phoenix.zhtml?p=irol-eventDetails&c=101665&eventID=3413969.
If you cannot join the call, you may 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: 28323028) | |
| --- International Dial-In # | 1-617-801-6888 | (passcode: 28323028) | |
| DSP GROUP, INC. | ||||
| CONSOLIDATED STATEMENTS OF OPERATIONS | ||||
| (In thousands, except per share amounts) | ||||
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||
| 2010 | 2009 | 2010 | 2009 | |
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |
| Product revenues and other | $ 65,154 | $ 65,532 | $ 182,110 | $ 157,466 |
| Cost of product revenues and other | 39,806 | 40,807 | 109,919 | 100,251 |
| Gross profit | 25,348 | 24,725 | 72,191 | 57,215 |
| Operating expenses: | ||||
| Research and development | 14,066 | 15,221 | 41,098 | 42,590 |
| Sales and marketing | 4,332 | 4,666 | 13,003 | 13,466 |
| General and administrative | 3,487 | 3,655 | 10,864 | 11,395 |
| Amortization of intangible assets | 2,494 | 3,072 | 7,479 | 9,177 |
| Restructuring costs | 394 | -- | 394 | -- |
| Total operating expenses | 24,773 | 26,614 | 72,838 | 76,628 |
| Operating income (loss) | 575 | (1,889) | (647) | (19,413) |
| Other income: | ||||
| Interest and other income , net | 382 | 1,113 | 1,070 | 2,297 |
| Income (loss) before income tax benefit | ||||
| 957 | (776) | 423 | (17,116) | |
| Income tax benefit | 960 | 7,579 | 943 | 11,551 |
| Net income (loss) | $ 1,917 | $ 6,803 | $ 1,366 | $ (5,565) |
| Net earnings (loss) per share: | ||||
| Basic | $ 0.08 | $ 0.30 | 0.06 | (0.23) |
| Diluted | $ 0.08 | $ 0.29 | 0.06 | (0.23) |
| Weighted average number of shares of common stock used in the computation of: | ||||
| Basic | 23,352 | 22,901 | 23,202 | 23,906 |
| Diluted | 23,420 | 23,662 | 23,225 | 23,906 |
| DSP GROUP, INC. | ||||
| CONSOLIDATED STATEMENTS OF OPERATIONS (NON-GAAP) | ||||
| (In thousands, except per share amounts) | ||||
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||
| 2010 | 2009 | 2010 | 2009 | |
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |
| Product revenues and other | $ 65,154 | $ 65,532 | $ 182,110 | $ 157,466 |
| Cost of product revenues and other | 39,638 | 40,596 | 111,882 | 99,637 |
| Gross profit | 25,516 | 24,936 | 70,228 | 57,829 |
| Operating expenses: | ||||
| Research and development | 12,950 | 14,093 | 37,481 | 38,484 |
| Sales and marketing | 3,962 | 4,213 | 11,865 | 12,087 |
| General and administrative | 2,874 | 2,810 | 8,813 | 9,011 |
| Total operating expenses | 19,786 | 21,116 | 58,159 | 59,582 |
| Operating income (loss) | 5,730 | 3,820 | 12,069 | (1,753) |
| Other income: | ||||
| Interest and other income, net | 382 | 582 | 1,070 | 1,766 |
|
Income before provision for income taxes |
6,112 | 4,402 | 13,139 | 13 |
| Provision for income taxes (income tax benefit) | (389) | 66 | (373) | (417) |
| Net income | $ 6,501 | $ 4,336 | $ 13,512 | $ 430 |
| Net earnings per share: | ||||
| Basic | $ 0.28 | $ 0.19 | $ 0.58 | $ 0.02 |
| Diluted | $ 0.27 | $ 0.18 | $ 0.57 | $ 0.02 |
| Weighted average number of shares of common stock used in the computation of: | ||||
| Basic | 23,352 | 22,901 | 23,202 | 23,906 |
| Diluted | 23,650 | 23,662 | 23,728 | 24,215 |
| Unaudited Reconciliation of GAAP to Non-GAAP Financial Measures | ||||
| (In thousands, except per share amounts) | ||||
|
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||
| 2010 | 2009 | 2010 | 2009 | |
| Unaudited | Unaudited | Unaudited | Unaudited | |
| GAAP net income (loss) | $ 1,917 | $ 6,803 | $ 1,366 | $ (5,565) |
| Equity-based compensation expense | 168 | 211 | 538 | 614 |
| included in cost of product revenues | ||||
| Equity-based compensation expense | 1,116 | 1,128 | 3,617 | 4,106 |
| included in R&D | ||||
| Equity-based compensation expense | 983 | 1,298 | 3,189 | 3,763 |
| included in SG&A | ||||
| Amortization of intangible assets related to | 2,494 | 3,072 | 7,479 | 9,177 |
| NXP transaction | ||||
| Restructuring costs | 394 | -- | 394 | -- |
| Realized gain related to certain available-- | -- | (531) | -- | (531) |
| for-sale marketable securities | ||||
| Reversal of income tax contingency reserve | (571) | (7,645) | (571) | (7,645) |
| that was determined to be no longer | ||||
| needed due to the expiration of | ||||
| applicable statute of limitations included | ||||
| in tax | ||||
| Reversal of a reserve that was determined to | -- | -- | (2,500) | -- |
| be no longer needed due to the expiration | ||||
| of applicable statute of limitations | ||||
| included in costs of goods sold | ||||
| Tax benefit resulting from settlement | -- | -- | -- | (3,489) |
| agreement with tax authorities | ||||
| Non-GAAP net income | $ 6,501 | $ 4,336 | $ 13,512 | $ 430 |
| Non-GAAP diluted earnings per share | $ 0.27 | $ 0.18 | $ 0.57 | $ 0.02 |
| DSP GROUP, INC. | ||
| CONSOLIDATED BALANCE SHEETS | ||
| (In thousands) | ||
| September 30, | December 31, | |
| 2010 | 2009 | |
| (Unaudited) | (Audited) | |
| Assets | ||
| Current assets: | ||
| Cash and cash equivalents | $30,106 | $37,986 |
| Restricted deposits | 121 | 120 |
| Marketable securities and short term deposits | 31,064 | 19,567 |
| Trade receivables, net | 44,497 | 28,352 |
| Inventories | 17,315 | 12,427 |
| Other accounts receivable and prepaid expenses | 8,826 | 12,162 |
| Deferred income taxes | -- | 178 |
| Total current assets | 131,929 | 110,792 |
| Property and equipment, net | 8,411 | 10,090 |
|
Long term marketable securities and deposits |
70,623 |
65,392 |
| Severance pay fund | 10,432 | 9,521 |
| Deferred income taxes | 172 | 15 |
| Intangible assets, net | 12,940 | 20,473 |
| Investment in other companies | 2,200 | 2,200 |
| Long term prepaid expenses and lease deposits | 643 | 1,286 |
| 97,010 | 98,887 | |
| Total assets | $ 237,350 | $ 219,769 |
| Liabilities and Stockholders' Equity | ||
| Current liabilities: | ||
| Trade payables | $ 26,495 | $ 18,309 |
| Other current liabilities | 22,205 | 24,470 |
| Total current liabilities | 48,700 | 42,779 |
| Accrued severance pay | 11,584 | 10,572 |
| Accrued pensions | 964 | 929 |
| Total long term liabilities | 12,548 | 11,501 |
| Stockholders' equity: | ||
| Common stock | 23 | 23 |
| Additional paid-in capital | 332,922 | 325,579 |
| Accumulated other comprehensive income | 1,949 | 2,174 |
| Less – Cost of treasury stock | (118,528) | (123,350) |
| Accumulated deficit | (40,264) | (38,937) |
| Total stockholders' equity | 176,102 | 165,489 |
| Total liabilities and stockholders' equity | $ 237,350 | $ 219,769 |