SAN JOSE, Calif., July 29, 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 second quarter ended June 30, 2010.

Second Quarter Results:

Revenues for the second quarter of 2010 were $60,846,000, an increase of 17% from revenues of $52,020,000 for the second quarter of 2009. Net loss for the second quarter of 2010 was $367,000, as compared to net loss of $1,677,000 for the second quarter of 2009. Loss per share for the second quarter of 2010 was $0.02 per share, as compared to a loss of $0.07 per share for the second quarter of 2009.

Non-GAAP Results:

Non-GAAP net income and diluted EPS for the second quarter of 2010 were $4,354,000 and $0.18 per share, respectively, as compared to non-GAAP net income of $718,000 and diluted EPS of $0.03 per share for the second quarter of 2009. Non-GAAP net income and diluted EPS for the second quarter of 2010 excluded the impact of amortization of acquired intangible assets of $2,488,000 associated with the acquisition of NXP's CIPT business and equity-based compensation expenses of $2,233,000. Non-GAAP net income and diluted EPS for the second quarter of 2009 excluded the impact of amortization of acquired intangible assets of $3,058,000 associated with the acquisition of NXP's CIPT business; equity-based compensation expenses of $2,825,000; and a tax benefit of $3,488,000 resulting from a partial reversal of tax reserves.

Ofer Elyakim, CEO of DSP Group, stated, "Our results for the second quarter reflects solid execution and a continued improvement in our business; sales of our DECT products grew sequentially and year over year for both the U.S. and European end markets. We ended the quarter with non-GAAP operating income of approximately $4 million and a strong balance sheet of $121 million in cash and equivalents. Moreover, having focused our R&D resources over the last several quarters on developing our next generation products, we are excited to announce that during the third quarter of 2010 several new innovative products based on our XpandR platform are expected to be launched worldwide."

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 June 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 XpandR-based products launching in the third quarter. 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 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; 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 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 second 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 www.dspg.com or link to: http://phx.corporate-ir.net/phoenix.zhtml?p=irol-eventDetails&c=101665&eventID=3209816

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:30127868)

-- International Dial-In # 1-617-801-6888 (passcode: 30127868)
DSP GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
     
   Three Months Ended  Six Months Ended
   June 30,  June 30,
  2010 2009 2010 2009
  (Unaudited) (Unaudited) (Unaudited) (Unaudited)
         
Product revenues and other $ 60,846 $ 52,020 $ 116,956 $ 91,934
Cost of product revenues and other 37,592 32,940 70,113  59,444
         
Gross profit  23,254  19,080  46,843  32,490
Operating expenses:        
Research and development  13,541  13,632  27,032  27,368
Sales and marketing 4,226 4,284  8,671  8,801
General and administrative 3,615 3,926 7,377 7,740
Amortization of intangible assets 2,488 3,058 4,985 6,105
         
Total operating expenses 23,870 24,900 48,065 50,014
         
Operating loss  (616)  (5,820)  (1,222)  (17,524)
Other income :        
 Interest and other income, net  263  582 688  1,184
Loss before provision for   income taxes    (353)    (5,238)    (534)    (16,340)
Income tax expenses (benefit)    14    (3,561)   17    (3,972)
         
Net Loss  ($367)  ($1,677)  ($551)  ($12,368)
  Net loss per share:        
 Basic  ($ 0.02)  ($ 0.07)  ($ 0.02)  ($ 0.51)
 Diluted  ($ 0.02)  ($ 0.07)  ($ 0.02)  ($ 0.51)
         
Weighted average number of shares of common stock  used in the computation of:        
 Basic 23,149 22,734 23,128  24,408
 Diluted  23,149  22,734  23,128  24,408

  
DSP GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (NON-GAAP)
 (In thousands, except per share amounts)
     
   Three Months Ended  Six Months Ended
   June 30,  June 30,
  2010 2009 2010 2009
  (Unaudited) (Unaudited) (Unaudited) (Unaudited)
         
Product revenues and other $ 60,846 $ 52,020 $ 116,956 $ 91,934
Cost of product revenues and other  37,425  32,745 72,244 59,041
         
Gross profit  23,421  19,275 44,712  32,893
Operating expenses:        
Research and development  12,422  12,229  24,530  24,391
Sales and marketing 3,901 3,816  7,903  7,875
General and administrative 2,993 3,167 5,939 6,201
         
Total operating expenses 19,316 19,212 38,372 38,467
         
Operating income (loss)  4,105  63 6,340  (5,574)
Other income :        
 Interest and other income, net 263  582 688 1,184
Income (loss) before provision for   income taxes    4,368    645   7,028    (4,390)
Provision for income taxes (income tax benefit) 14  (73) 17   (484)
         
Net income (loss)  $ 4,354  $ 718  $ 7,011  $ (3,906)
  Net earnings (loss) per share:        
 Basic  $ 0.19  $ 0.03  $ 0.30  $ (0.16)
 Diluted  $ 0.18  $ 0.03  $ 0.29  $ (0.16)
         
Weighted average number of shares of common stock  used in the computation of:        
 Basic  23,149  22,734  23,128  24,408
 Diluted  23,837  22,901  23,768  24,408
 
Unaudited Reconciliation of GAAP to Non-GAAP Financial Measures
 (In thousands, except per share amounts)
     
  Three Months Ended  Six Months Ended 
  June 30,  June 30,
  2010 2009 2010 2009
  Unaudited Unaudited Unaudited Unaudited
GAAP net loss  ($367)  ($1,677)  ($551)   ($12,368)
Equity-based compensation expense included in cost of product revenues and other 167 195 369 403
Equity-based compensation expense included in R&D 1,119 1,403 2,502 2,977
Equity-based compensation expense included in SG&A 947 1,227 2,206 2,465
Amortization of intangible assets related to NXP transaction 2,488 3,058 4,985 6,105
Reversal of a reserve that was determined to be no longer needed due to the expiration of applicable limitation statutes included in costs of goods sold   --  --  (2,500)  --
Tax benefit resulting from a partial reversal of tax reserves -- (3,488) -- (3,488)
Non-GAAP net income (loss)  $ 4,354  $ 718  $ 7,011  $ (3,906)
Non-GAAP diluted earnings (loss) per share  $ 0.18  $ 0.03  $ 0.29  $ (0.16)

 
DSP GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)
     
  June 30, December 31,
    2010  2009 
   (Unaudited) (Audited)
Assets     
Current assets:    
Cash and cash equivalents Restricted deposits $31,409 120 $37,986 120
Marketable securities and short term deposits 34,977 19,567
Trade receivables, net 43,848 28,352
Inventories 15,473 12,427
Other accounts receivable and prepaid expenses 9,396 12,162
Deferred income taxes   --    178 
Total current assets 135,223 110,792
     
Property and equipment, net 9,303 10,090
  Long term marketable securities and deposits  54,678  65,392
Severance pay fund 9,535 9,521
Deferred income taxes 148 15
Intangible assets, net 15,370 20,473
Investment in other companies 2,200 2,200
Long term prepaid expenses and lease deposits   633    1,286 
  82,564 98,887
Total assets $ 227,090 $ 219,769
   
Liabilities and Stockholders' Equity  
Current liabilities:    
Trade payables $ 26,019 $ 18,309
Other current liabilities 20,543  24,470
Total current liabilities 46,562 42,779
 Accrued severance pay 10,681 10,572
 Accrued pensions  847  929
 Total long term liabilities 11,528 11,501
  Stockholders' equity:    
 Common stock 23 23
 Additional paid-in capital 330,656 325,579
 Accumulated other comprehensive (loss) income (38)  2,174
 Less – Cost of treasury stock  (120,644)  (123,350)
Accumulated deficit  (40,997)  (38,937)
Total stockholders' equity  169,000  165,489
Total liabilities and stockholders' equity $ 227,090 $ 219,769
CONTACT:  DSP Group, Inc.          Orly Garini-Dil          +1-408-240-6839          orly.garini@dspg.com

DSP Group

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