Exhibit 99.1
DSP Group, Inc. Reports First Quarter 2008 Earnings
SAN JOSE, Calif., May 2, 2008—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 first quarter ended March 31, 2008.
First Quarter Results:
Revenues for the first quarter of 2008 were $72,729,000, an increase of 48% from revenues of $49,288,000 for the first quarter of 2007. Net loss for the first quarter was $7,608,000 compared to net income of $1,364,000 for the first quarter of 2007. Earnings per share (EPS) for the first quarter of 2008 were a loss of $0.25 compared to earnings of $0.05 for the first quarter of 2007.
Non-GAAP Results:
Non-GAAP net income and diluted EPS for the first quarter of 2008 were $1,441,000 and $0.05 per share on a diluted basis, respectively; a decrease of 73% from the non-GAAP net income of $5,333,000 and a decrease of 74% from non-GAAP diluted EPS of $0.19 per share for the first quarter of 2007. Non-GAAP net income and diluted EPS for the first quarter of 2008 excluded the impact of amortization of acquired intangible assets of $5,782 ,000, associated with the acquisition of the Cordless and VoIP Terminals business of NXP B.V.; equity-based compensation expenses of $3,961,000; and the aggregate tax benefits associated with such expenses of $694,000.
Eli Ayalon, Chairman and CEO of DSP Group, stated: “We expect our traditional cordless market to remain challenging throughout the year as a result of continuing pricing and volume pressures. We expect these pressures to lessen with the ramp-up of our new generation of multimedia products.”
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Ayalon also stated: “During the first quarter of 2008, we repurchased approximately 2,171,000 shares of our Common Stock at an average price of $11.91 per share, for an aggregate price of approximately $25.9 million.”
After giving effect to the most recent repurchases, approximately 2,000,000 shares of the Company’s Common Stock remain authorized for repurchase under the current repurchase program approved by the Company’s board of directors.
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 & 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, data and video communication and deployment in residential, SOHO, SME, enterprise and automotive applications. DSP Group 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 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 Mr. Ayalon’s statement that the traditional cordless market is to remain challenging throughout the year and that the continuing pricing and volume pressures will be lessened following a ramp-up of the new generation of multimedia products. 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 risk that the cost savings and other synergies from the acquisition of the CIPT business may not be fully realized or may take longer to realize than expected; DSP Group’s inability to develop and produce new products at competitive costs and in a timely manner; failure of new products, especially the new generation of multimedia products, to achieve broad market acceptance; and fluctuations in gross margins associated with the sale of existing products. 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 2007 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.
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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 2008 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 atwww.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: 33088619)
—International Dial-In # 1-617-801-6888 (passcode: 33088619)
For more information, please contact Ofer Elyakim, Vice President of Business Development, DSP Group Inc. at (408) 240-6839; or e-mail: ofere@dsp.co.il.
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DSP GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
| | | | | | | | |
| | | Three Months Ended
March 31, | |
| | | 2008 | | | 2007 | |
| | | Unaudited | | | Unaudited | |
Product revenues and other | | $ | 72,729 | | | $ | 49,288 | |
Cost of product revenues and other | | | 45,776 | | | | 30,001 | |
| | | | | | | | |
Gross profit | | | 26,953 | | | | 19,287 | |
Operating expenses: | | | | | | | | |
Research and development | | | 20,028 | | | | 12,757 | |
Sales and marketing | | | 6,021 | | | | 4,197 | |
General and administrative | | | 4,250 | | | | 3,596 | |
Amortization of intangible assets | | | 5,782 | | | | — | |
| | | | | | | | |
Total operating expenses | | | 36,081 | | | | 20,550 | |
| | | | | | | | |
Operating loss | | | (9,128 | ) | | | (1,263 | ) |
Other income : | | | | | | | | |
Interest and other income, net | | | 1,234 | | | | 3,652 | |
| | | | | | | | |
Income (loss) before provision for income taxes | | | (7,894 | ) | | | 2,389 | |
Provision for income taxes income tax benefit) | | | (286 | ) | | | 1,025 | |
| | | | | | | | |
Net income (loss) | | $ | (7,608 | ) | | $ | 1,364 | |
| | | | | | | | |
Net earnings (loss) per share: | | | | | | | | |
Basic | | $ | (0.25 | ) | | $ | 0.05 | |
Diluted | | $ | (0.25 | ) | | $ | 0.05 | |
Weighted average number of shares of Common stock used in the computation of: | | | | | | | | |
Basic | | | 30,574 | | | | 28,455 | |
Diluted | | | 30,757 | | | | 28,691 | |
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DSP GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME (NON-GAAP)
(In thousands, except per share amounts)
| | | | | | |
| | | Three Months Ended
March 31, |
| | | 2008 | | 2007 |
| | | Unaudited | | Unaudited |
Product revenues and other | | $ | 72,729 | | $ | 49,288 |
Cost of product revenues and other | | | 45,519 | | | 29,835 |
| | | | | | |
Gross profit | | | 27,210 | | | 19,453 |
Operating expenses: | | | | | | |
Research and development | | | 17,937 | | | 10,669 |
Sales and marketing | | | 5,514 | | | 3,757 |
General and administrative | | | 3,144 | | | 2,136 |
| | | | | | |
Total operating expenses | | | 26,595 | | | 16,562 |
| | | | | | |
Operating income | | | 615 | | | 2,891 |
Other income : | | | | | | |
Interest and other income, net | | | 1,234 | | | 3,652 |
Income before provision for income taxes | | | 1,849 | | | 6,543 |
Provision for income taxes | | | 408 | | | 1,210 |
| | | | | | |
Net income | | $ | 1,441 | | $ | 5,333 |
| | | | | | |
Net earnings per share: | | | | | | |
Basic | | $ | 0.05 | | $ | 0.19 |
Diluted | | $ | 0.05 | | $ | 0.19 |
Weighted average number of shares of Common stock used in the computation of: | | | | | | |
Basic | | | 30,574 | | | 28,455 |
Diluted | | | 30,757 | | | 28,691 |
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Unaudited Reconciliation of GAAP to Non-GAAP Financial Measures
(In thousands, except per share amounts)
| | | | | | | | |
| | | Three Months Ended
March 31, | |
| | | 2008 | | | 2007 | |
| | | (Unaudited) | | | (Unaudited) | |
GAAP net (loss) income | | $ | (7,608 | ) | | $ | 1,364 | |
| | | | | | | | |
Equity-based compensation expense Included in cost of product revenues | | | 257 | | | | 166 | |
Equity-based compensation expense Included in R&D | | | 2,091 | | | | 2,088 | |
Equity-based compensation expense Included in SG&A | | | 1,613 | | | | 1,900 | |
Amortization of intangible assets related to NXP transaction | | | 5,782 | | | | — | |
Tax benefit resulting from equity-based compensation and amortization of acquired intangible assets | | | (694 | ) | | | (185 | ) |
Non-GAAP net income | | $ | 1,441 | | | $ | 5,333 | |
| | | | | | | | |
Non-GAAP basic earnings per share | | $ | 0.05 | | | $ | 0.19 | |
Non-GAAP diluted earnings per share | | $ | 0.05 | | | $ | 0.19 | |
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DSP GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)
| | | | | | |
| | | March 31,
2008 | | December 31,
2007 |
| | | (Unaudited) | | (Audited) |
Assets | | | | | | |
Current assets: | | | | | | |
Cash and cash equivalents | | $ | 69,554 | | $ | 69,586 |
Restricted deposits | | | 3,428 | | | — |
Marketable securities and cash deposits | | | 30,832 | | | 63,682 |
Trade receivables, net | | | 44,668 | | | 51,636 |
Inventories | | | 17,652 | | | 16,361 |
Other accounts receivable | | | 10,868 | | | 8,173 |
Deferred income taxes | | | 5,529 | | | 4,011 |
| | | | | | |
Total current assets | | | 182,531 | | | 213,449 |
Property and equipment, net | | | 18,329 | | | 14,270 |
Long term marketable securities | | | 35,084 | | | 34,469 |
Severance pay fund | | | 7,379 | | | 6,883 |
Deferred income taxes | | | 4,997 | | | 5,109 |
Goodwill and other intangible assets | | | 233,233 | | | 237,969 |
Other assets | | | 1,892 | | | 694 |
| | | | | | |
Total assets | | $ | 483,445 | | $ | 512,843 |
| | | | | | |
Liabilities and Stockholders’ Equity | | | | | | |
Current liabilities: | | | | | | |
Accounts payable | | $ | 28,053 | | $ | 29,064 |
Other current liabilities | | | 45,565 | | | 48,125 |
| | | | | | |
Total current liabilities | | | 73,618 | | | 77,189 |
Accrued severance pay | | | 7,839 | | | 7,303 |
Accrued pensions | | | 2,003 | | | 1,758 |
Deferred tax liability | | | 803 | | | 372 |
Other long term liabilities | | | 1,556 | | | 1,364 |
| | | | | | |
Total long term liabilities | | | 12,201 | | | 10,797 |
Stockholders’ equity: | | | | | | |
Common stock | | | 29 | | | 31 |
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| | | | | | | | |
Additional paid-in capital | | | 304,505 | | | | 300,542 | |
Accumulated other comprehensive income | | | 2,446 | | | | 1,025 | |
Retained earnings | | | 178,666 | | | | 187,063 | |
Less – Cost of treasury stock | | | (88,020 | ) | | | (63,804 | ) |
| | | | | | | | |
Total stockholders’ equity | | | 397,626 | | | | 424,857 | |
| | | | | | | | |
Total liabilities and stockholders’ equity | | $ | 483,445 | | | $ | 512,843 | |
| | | | | | | | |
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