DSP (DSPG) 8-K DSP Group, Inc. Reports Fourth Quarter 2011 Results

Exhibit 99.1

DSP Group, Inc. Reports Fourth Quarter 2011 Results

SAN JOSE, Calif., February 1, 2012—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 ended December 31, 2011.

Fourth Quarter Results:

Revenues for the fourth quarter of 2011 were $38,195,000, a decrease of 12% from revenues of $43,372,000 for the fourth quarter of 2010. Net loss for the fourth quarter of 2011 was $4,823,000, as compared to net loss of $8,792,000 for the fourth quarter of 2010. Loss per share for the fourth quarter of 2011 was $0.21, as compared to a loss per share of $0.38 for the fourth quarter of 2010.

Year End Results:

Revenues for the year ended December 31, 2011 were $193,861,000, a decrease of 14% over 2010 revenues of $225,482,000. Net loss for 2011 was $16,242,000, compared to a net loss of $7,425,000 for 2010. Loss per share for 2011 was $0.70, compared to a loss per share of $0.32 for 2010.

Non-GAAP Results:

Non-GAAP net loss and loss per share for the fourth quarter of 2011 were $4,264,000 and $0.19, respectively, as compared to non-GAAP net loss and loss per share of $4,017,000 and $0.17, respectively, for the fourth quarter of 2010. Non-GAAP net loss and loss per share for the fourth quarter of 2011 excluded the impact of amortization of acquired intangible assets of $1,381,000 associated with the acquisition of NXP’s CIPT business; equity-based compensation expenses of $1,156,000; other income from remeasurement of our initial investment in an affilated company of $1,343,000; and a tax benefit of $635,000 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 loss and loss per share for the fourth quarter of 2010 excluded the impact of amortization of acquired intangible assets of $2,495,000 associated with the acquisition of NXP’s CIPT business; equity-based compensation expenses of $2,211,000; and restructuring expenses of $69,000 associated with the reorganization of our operations.

Non-GAAP net loss and loss per share for the year ended December 31, 2011 were $4,200,000 and $0.18, respectively, as compared to non-GAAP net income and diluted EPS of $9,495,000 and $0.40, respectively, for the year ended December 31, 2010. Non-GAAP net loss and loss per share for the year ended December 31, 2011 excluded the impact of amortization of acquired intangible assets of $7,972,000 associated with the acquisition of NXP’s CIPT business; equity-based compensation expenses of $6,218,000; restructuring income of $170,000 associated with the reorganization of our operations; other income from remeasurement of our initial investment in an affilated company of $1,343,000; and a tax benefit of $635,000 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 year ended December 31, 2010 excluded the impact of amortization of acquired intangible assets of $9,975,000 associated with the acquisition of NXP’s CIPT business; equity-based compensation expenses of $9,553,000; restructuring expenses of $463,000 associated with the reorganization of our operations; 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; and income of $2,500,000 resulting from the reversal of a reserve that was determined to be no longer needed due to the expiration of applicable statute of limitations included in the cost of goods sold.

Ofer Elyakim, CEO of DSP Group, stated: “Our fourth quarter results were better than previously expected ending what has been a challanging year for DSP Group on a positive note. Looking forward, we are more optimistic about our 2012 outlook as channel inventory depletion cycle appears to be behind us.”

Mr. Elyakim continued: “Our revenue forecast for the full year is in the range of $200 to $220 million, representing an annual growth rate of approximately 8% at the mid point, fueled by significant growth from a promising pipeline of design wins from new market verticals such as home, business and mobile, as well as key design wins in cordless telephony.”

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 cautious optimistim about its 2012 outlook, completion of channel inventory depletion cycle, optimism for design wins and revenues to be generated from products for new market verticals in 2012 and annual 2012 revenue guidance. 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 our customers and their customers; continued uncertainty in consumer demand for traditional cordless telephony products in our major end markets, namely Europe and the US; the growth of new market verticals, namely home connectivity, IP telephony and mobile connectivity markets, that incorporate our XpandR, IP telephony and CAT-iq products; our ability to lower operating expenses; our ability to secure additional design wins; unexpected delays in commercial launch or mass production of new products incorporating our technologies; our ability to develop and produce new products at competitive costs and in a timely manner and for such products to achieve broad market acceptance; and general market demand for products that incorporate our technologies 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.

About DSP Group

DSP Group, Inc. (NASDAQ: DSPG) is a leading global provider of wireless chipset solutions for converged communications at home and office. Delivering semiconductor system solutions with software and reference designs, DSP Group enables OEMs/ODMs, consumer electronics (CE) manufacturers and service providers to cost-effectively develop new revenue-generating products with fast time to market. At the forefront of semiconductor innovation and operational excellence for over two decades,

DSP Group provides a broad portfolio of wireless chipsets integrating DECT/CAT-iq, DECT ULE, Wi-Fi, PSTN, BoneTone^™ intelligent voice enhancement and noise elimination, video and VoIP technologies. DSP Group enables converged voice, audio, video and data connectivity across diverse consumer and business products—from connected multimedia screens, mobile devices, and home automation and security to cordless phones, VoIP systems, and home gateways. Leveraging industry-leading experience and expertise, DSP Group partners with CE manufacturers and service providers to shape the future of converged communications at home and office. For more information, visit www.dspg.com.

Earnings conference call

DSP Group has scheduled a conference call for 8:30 AM ET today to discuss the financial results for the fourth 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 www.dspg.com or link to: http://www.media-server.com/m/p/ph87322t

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:

—US Dial-In # +1 347 366 9565 (passcode: 2614562#)

—International Dial-In # +44 207 111 1244 (passcode: 2614562#)

For more information, please contact Victor Halpert, Director of Business Development and Investor Relations. Tel: +1 917 602 2965, Email: victor.halpert@dspg.com

DSP GROUP, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

	Three Months Ended December 31,						Twelve Months Ended December 31,
	2011			2010			2011			2010
	(Unaudited)			(Unaudited)			(Unaudited)			(Audited)
Revenues	$	38,195		$	43,372		$	193,861		$	225,482
Cost of revenues		24,567			27,652			123,734			137,571
Gross profit		13,628			15,720			70,127			87,911
Operating expenses:
Research and development		12,275			14,491			53,244			55,588
Sales and marketing		4,140			4,196			16,497			17,199
General and administrative		2,968			3,499			12,920			14,362
Amortization of intangible assets		1,381			2,495			7,972			9,975
Restructuring expenses (income)		—			69			(170	)		463
Total operating expenses		20,764			24,750			90,463			97,587
Operating loss		(7,136	)		(9,030	)		(20,336	)		(9,676	)
Financial income, net		551			398			1,885			1,468
Other income		1,343			—			1,343			—
Loss before taxes on income		(5,242	)		(8,632	)		(17,108	)		(8,208	)
Taxes on income (income tax benefit)		(419	)		160			(866	)		(783	)
Net loss	$	(4,823	)	$	(8,792	)	$	(16,242	)	$	(7,425	)
Net loss per share:
Basic	$	(0.21	)	$	(0.38	)	$	(0.70	)	$	(0.32	)
Diluted	$	(0.21	)	$	(0.38	)	$	(0.70	)	$	(0.32	)
Weighted average number of shares of common stock used in the computation of net loss per share:
Basic		22,796			23,308			23,247			23,229
Diluted		22,796			23,308			23,247			23,229

DSP GROUP, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS (NON-GAAP)

(In thousands, except per share amounts)

Unaudited Reconciliation of GAAP to Non-GAAP Financial Measures

(In thousands, except per share amounts)

	Three Months Ended December 31,						Twelve Months Ended December 31,
	2011			2010			2011			2010
	Unaudited			Unaudited			Unaudited			Unaudited
GAAP net income (loss)	($	4,823	)	$	(8,792	)	($	16,242	)	$	(7,425	)
Equity-based compensation expense included in cost of product revenues and other		75			166			402			704
Equity-based compensation expense included in research and development		525			1,097			2,766			4,712
Equity-based compensation expense included in sales and marketing		193			355			987			1,493
Equity-based compensation expense included in general and administrative		363			593			2,063			2,644
Amortization of intangible assets		1,381			2,495			7,972			9,975
Reversal of income tax contingency reserve that was determined to be no longer needed due to the expiration of applicable statute of limitations included in tax		(635	)		—			(635	)		(571	)
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	)
Restructuring expenses (income)		—			69			(170	)		463
Other income from remeasurement of investment in affiliated company		(1,343	)		—			(1,343	)		—
Non-GAAP net income (loss)	$	(4,264	)	$	(4,017	)	$	(4,200	)	$	9,495
GAAP weighted-average number of common stock used in computation of basic and diluted loss per share (in thousands)		22,796			23,308			23,247			23,229
Weighted-average number of shares related to outstanding options and stock appreciation rights		—			—			—			394
Weighted-average number of common stock used in computation of non-GAAP diluted net income per share		22,796			23,308			23,247			23,623
GAAP Diluted net income (loss) per share	$	(0.21	)	$	(0.38	)	$	(0.70	)	$	(0.32	)
Equity-based compensation expense		0.05			0.09			0.27			0.41
Amortization of intangible assets		0.06			0.11			0.35			0.42
Reversal of income tax contingency reserve that was determined to be no longer needed due to the expiration of applicable statue of limitations included in tax		(0.03	)		—			(0.03	)		(0.02	)
Reversal of a reserve that was determined to be no longer needed due to the expiration of applicable statue of limitations included in costs of goods sold		—			—			—			(0.11	)
Restructuring expenses (income)		—			0.01			(0.01	)		0.02
Other income from remeasurement of investment in affiliated company		(0.06	)		—			(0.06	)		—
Non-GAAP diluted net income (loss) per share	$	(0.19	)	$	(0.17	)	$	(0.18	)	$	0.40

DSP GROUP, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands)

	December 31, 2011			December 31, 2010
	(Unaudited)			(Audited)
Assets
Current assets:
Cash and cash equivalents	$	18,109		$	33,912
Restricted deposits		128			121
Marketable securities and short term deposits		30,626			29,903
Trade receivables, net		25,643			25,170
Inventories		16,434			18,803
Other accounts receivable and prepaid expenses		5,343			6,302
Deferred income taxes		89			121
Total current assets		96,372			114,332
Property and equipment, net		5,803			7,786
Long term marketable securities and deposits		69,046			75,825
Severance pay fund		9,974			11,336
Intangible assets, net		14,395			10,434
Investment in other companies		—			2,200
Long term prepaid expenses and lease deposits		466			642
		93,881			100,437
Total assets	$	196,056		$	222,555
Liabilities and Stockholders’ Equity
Current liabilities:
Trade payables	$	17,989		$	19,206
Other current liabilities		18,373			23,053
Total current liabilities		36,362			42,259
Accrued severance pay		10,278			12,419
Accrued pensions		792			774
Total long term liabilities		11,070			13,193
Stockholders’ equity:
Common stock		23			23
Additional paid-in capital		341,352			335,132
Accumulated other comprehensive income (loss)		(1,756	)		355
Less – Cost of treasury stock		(122,236	)		(119,280	)
Accumulated deficit		(68,759	)		(49,127	)
Total stockholders’ equity		148,624			167,103
Total liabilities and stockholders’ equity	$	196,056		$	222,555