Exhibit 99.1
DSP Group, Inc. Reports First Quarter 2011 Earnings
SAN JOSE, Calif., April 28, 2011—DSP Group, Inc. (NASDAQ: DSPG), a leading global provider of wireless chipset solutions for converged communications at home, announced today its results for the first quarter ended March 31, 2011.
First Quarter Results:
Revenues for the first quarter of 2011 were $48,776,000, a decrease of 13% from revenues of $56,109,000 for the first quarter of 2010. Net loss for the first quarter of 2011 was $4,564,000, as compared to a net loss of $184,000 for the first quarter of 2010. Loss per share for the first quarter of 2011 was $0.19, as compared to a loss per share of $0.01 for the first quarter of 2010.
Non-GAAP Results:
Non-GAAP net loss and diluted loss per share for the first quarter of 2011 were $1,119,000 and $0.05, respectively, as compared to non-GAAP net income of $2,657,000 and non-GAAP diluted earnings per share of $0.11 for the first quarter of 2010. Non-GAAP net loss and diluted loss per share for the first quarter of 2011 excluded the impact of amortization of acquired intangible assets in the amount of $2,196,000, associated with the acquisition of the Cordless and VoIP Terminals business of NXP B.V., equity-based compensation expenses of $1,839,000 and restructuring income of $590,000 associated with the reorganization of our European operations.
Non-GAAP net income and diluted EPS for the first quarter of 2010 excluded the impact of amortization of acquired intangible assets in the amount of $2,498,000, associated with the acquisition of the Cordless and VoIP Terminals business of NXP B.V., equity-based compensation expenses of $2,843,000 and income from the reversal of a reserve that was determined to be no longer needed due to the expiration of applicable statute of limitations in the amount of $2,500,000, recorded in the cost of goods sold.
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Ofer Elyakim, CEO of DSP Group, stated “Our business results for the first quarter were consistent with our financial projections. Furthermore, we believe that the inventory correction that impacted our results in both the fourth quarter of 2010 and first quarter of 2011 is finally behind us. We anticipate solid demand going forward and expect our second quarter revenues to grow by approximately 20% compared to the first quarter of 2011.” Mr. Elyakim also stated, “We are happy to announce that two leading telecommunication operators in Western Europe chose to integrate our DECT CAT-iq products in their new line of residential gateways with commercial shipments of such products having taken place already in the first quarter.”
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 March 31, 2011 to the same period in 2010 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 conclusion of the inventory correction, as well as the Company’s expectation that second quarter revenues will grow by approximately 20% as compared to the first quarter of 2011. 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; the impact of reductions in lead times and inventory levels by DSP Group customers and their 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; 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 2010 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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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.
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 2011 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.media-server.com/m/em/mu5zva28/r/1
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 # 1-888-286-8010 (passcode:86982344)
—International Dial-In # 1-617-801-6888 (passcode:86982344)
For more information, please contact Victor Halpert, Investor Relations Consultant; Tel: 1 917 602 2965
Email: victor.halpert@dspg.com
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DSP GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
| Three Months Ended March 31, | ||||||||
| 2011 | 2010 | |||||||
| Unaudited | Unaudited | |||||||
Revenues | $ | 48,776 | $ | 56,109 | ||||
Cost of revenues | 31,548 | 32,521 | ||||||
Gross profit |
|
17,228 |
|
|
23,588 |
| ||
Operating expenses: | ||||||||
Research and development | 14,190 | 13,491 | ||||||
Sales and marketing | 4,019 | 4,444 | ||||||
General and administrative | 3,070 | 3,762 | ||||||
Amortization of intangible assets | 2,196 | 2,498 | ||||||
Restructuring expenses (income) | (590 | ) | — | |||||
Total operating expenses | 22,885 | 24,195 | ||||||
Operating loss |
|
(5,657 |
) |
|
(607 |
) | ||
Other income: | ||||||||
Financial income, net | 469 | 425 | ||||||
Loss before taxes on income |
|
(5,188 |
) |
|
(182 |
) | ||
Taxes on income (income tax benefit) | (624 | ) | 2 | |||||
Net loss | $ | (4,564 | ) | $ | (184 | ) | ||
Net loss per share: | ||||||||
Basic | $ | (0.19 | ) | $ | (0.01 | ) | ||
Diluted | $ | (0.19 | ) | $ | (0.01 | ) | ||
Weighted average number of shares of common stock used in the computation of: | ||||||||
Basic | 23,439 | 23,107 | ||||||
Diluted | 23,439 | 23,107 | ||||||
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DSP GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME (NON-GAAP)
(In thousands, except per share amounts)
| Three Months Ended March 31, | ||||||||
| 2011 | 2010 | |||||||
| Unaudited | Unaudited | |||||||
Revenues | $ | 48,776 | $ | 56,109 | ||||
Cost of revenues | 31,416 | 34,819 | ||||||
Gross profit | 17,360 | 21,290 | ||||||
Operating expenses: | ||||||||
Research and development | 13,308 | 12,108 | ||||||
Sales and marketing | 3,713 | 4,002 | ||||||
General and administrative | 2,551 | 2,946 | ||||||
Total operating expenses | 19,572 | 19,056 | ||||||
Operating income (loss) | (2,212 | ) | 2,234 | |||||
Other income: | ||||||||
Financial income, net | 469 | 425 | ||||||
Income (loss) before taxes on income |
|
(1,743 |
) |
|
2,659 |
| ||
Taxes on income (income tax benefit) | (624 | ) | 2 | |||||
Net income (loss) | $ | (1,119 | ) | $ | 2,657 | |||
Net earnings (loss) per share: | ||||||||
Basic | $ | (0.05 | ) | $ | 0.11 | |||
Diluted | $ | (0.05 | ) | $ | 0.11 | |||
Weighted average number of shares of common stock used in the computation of: | ||||||||
Basic | 23,439 | 23,107 | ||||||
Diluted | 23,439 | 23,698 | ||||||
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Unaudited Reconciliation of GAAP to Non-GAAP Financial Measures
(In thousands, except per share amounts)
| Three Months Ended March 31, | ||||||||
| 2011 | 2010 | |||||||
| (Unaudited) | (Unaudited) | |||||||
GAAP net loss | $ | (4,564 | ) | $ | (184 | ) | ||
Equity-based compensation expense | ||||||||
Included in cost of product revenues | 132 | 202 | ||||||
Equity-based compensation expense | ||||||||
Included in R&D | 882 | 1,383 | ||||||
Equity-based compensation expense | ||||||||
Included in SG&A | 825 | 1,258 | ||||||
Amortization of intangible assets related to NXP transaction | 2,196 | 2,498 | ||||||
Restructuring expenses (income) | (590 | ) | — | |||||
Reversal of a reserve that was determined to be no longer needed due to the expiration of applicable statute of limitations included in costs of goods sold | — | (2,500 | ) | |||||
Non-GAAP net income (loss) | $ | (1,119 | ) | $ | 2,657 | |||
Non-GAAP basic earnings (loss) per share | $ | (0.05 | ) | $ | 0.11 | |||
Non-GAAP diluted earnings (loss) per share | $ | (0.05 | ) | $ | 0.11 | |||
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DSP GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)
| March 31, 2011 | December 31, 2010 | |||||||
| (Unaudited) | (Audited) | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 36,835 | $ | 33,912 | ||||
Restricted deposits | 121 | 121 | ||||||
Marketable securities and short term deposits | 25,034 | 29,903 | ||||||
Trade receivables, net | 29,877 | 25,170 | ||||||
Inventories | 15,887 | 18,803 | ||||||
Other accounts receivable and prepaid expenses | 6,450 | 6,302 | ||||||
Deferred income taxes | 143 | 121 | ||||||
Total current assets | 114,347 | 114,332 | ||||||
Property and equipment, net | 7,391 | 7,786 | ||||||
Long term marketable securities and deposits | 75,236 | 75,825 | ||||||
Severance pay fund | 11,862 | 11,336 | ||||||
Intangible assets, net | 8,261 | 10,434 | ||||||
Investment in other companies | 2,200 | 2,200 | ||||||
Long term prepaid expenses and lease deposits | 630 | 642 | ||||||
| 98,189 | 100,437 | |||||||
Total assets | $ | 219,927 | $ | 222,555 | ||||
Liabilities and Stockholders’ Equity | ||||||||
Current liabilities: | ||||||||
Trade payables | $ | 19,683 | $ | 19,206 | ||||
Other current liabilities | 21,967 | 23,053 | ||||||
Total current liabilities | 41,650 | 42,259 | ||||||
Accrued severance pay | 12,998 | 12,419 | ||||||
Accrued pensions | 837 | 774 | ||||||
Total long term liabilities | 13,835 | 13,193 | ||||||
Stockholders’ equity: | ||||||||
Common stock | 23 | 23 | ||||||
Additional paid-in capital | 336,971 | 335,132 | ||||||
Accumulated other comprehensive income | 257 | 355 | ||||||
Less – Cost of treasury stock | (117,493 | ) | (119,280 | ) | ||||
Accumulated deficit | (55,316 | ) | (49,127 | ) | ||||
Total stockholders’ equity | 164,442 | 167,103 | ||||||
Total liabilities and stockholders’ equity | $ | 219,927 | $ | 222,555 | ||||
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