Achieves all time revenue record 62% increase YoY
SANTA CLARA, Calif., October 22, 2002 -- DSP Group, Inc. (NASDAQ: DSPG) today announced results for the third quarter of 2002, ending September 30, 2002.
Record high revenues for our semiconductor business for the third quarter of 2002 were $44,005,000, compared with revenues of $27,143,000 for the third quarter of 2001, an increase of 62%. Net income for the third quarter of 2002 was $8,772,000 and EPS was $0.32 (diluted), compared with net income of $6,854,000 and EPS $0.25 (diluted) for the third quarter of 2001. The discontinued operations, the DSP Core Licensing business, had revenues of $4,852,000 and net income of $981,000 for the third quarter of 2002.
Boaz Edan, COO of DSP Group said: "The successful launch of our 2.4 GHz line of products in the first half of 2002 is reflected in our substantial growth in revenues in the third quarter of 2002 compared with the third quarter of 2001. The 2.4 GHz line of products is driving our sales growth and significantly increasing our market share".
Eli Ayalon, Chairman & CEO of DSP Group stated: "In what may possibly be the most challenging downturn ever faced by the technology sector in general and semiconductor industry in particular, remarkably we have reached all time records in Revenues, Operating profit and Net Profit (excluding one time capital gains). The cash position of the company increased this quarter by $13,152,000.
Mr. Ayalon went on saying: "These results show that following the spin off of our DSP Core Licensing business, we will be left with a strong fabless semiconductor company, having an exceptional level of annual revenues per employee, expected to exceed $800,000 in 2002. Our employees and managers continue to show leadership in these tough times by achieving these excellent results.
In connection with the closing of the deal with Parthus Technologies plc, Moshe Zelnik, CFO of DSP Group stated: "The High Court of Ireland approved the scheme of arrangement that allows the combination of Parthus and Ceva into one Company. We are currently, together with Parthus, completing the process of registering the combination under the U.S. and U.K. Securities Laws, and expect that the transaction will close and trading of the common stock of ParthusCeva on NASDAQ and the London Stock Exchange will commence immediately following completion of the registration process.
About DSP Group, Inc.
DSP Group, Inc. is a semiconductor fabless company that is a leader in the wireless residential market. By combining its DSP Core technology with advanced RF, communication technology and speech-processing algorithms, DSP Group is a worldwide leader in developing and providing Total Telephony Solutionsâ„¢. These applications include digital 900MHz, 2.4GHz, DECT and Bluetooth for residential and automotive applications. DSP Group's advanced RF CMOS and communications technology provides the company with a clear path to a Phone-on-a-Chipâ„¢ solution. DSP Group also develops and markets embedded, integrated silicon/software solution for Voice-over-Digital-Subscriber Line (VoDSL), voice-over-Internet-Protocol (VoIP) applications, and other voice over packet applications for Integrated Access Device (IAD) and IP Phone.
This press release contains statements that qualify as "forward-looking statements" under the Private Securities Litigation Reform Act of 1995, including statements concerning the success of our 2.4GHz line of products and the completion of the spin-off of our DSP Core Licensing Business. These forward-looking statements are based on current expectations and the Company assumes no obligation to update this information. In addition, the events anticipated in these forward-looking statements, including the proposed combination with Parthus, may not actually arise. The Company's actual results could differ materially from those described in this press release if for any reason the spin-off of our DSP Cores licensing business does not occur. Other factors which may effect future operating results or our stock price are discussed under "RISK FACTORS" in our reports on form 10-K for the year ended December 31, 2001 and form 10-Q for the quarter and six months ended June 30, 2002, both of which have been filed with the Securities and Exchange Commission and are available on our Web site (www.dspg.com
Earnings conference call
DSP Group has scheduled a conference call for 8:30 a.m. EDT today to discuss third quarter results 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 website at www.dspg.com or through PRnewswire's web site at http://www.firstcallevents.com/service/ajwz365625949gf12.html. For more information, please contact Yaniv Arieli, Investor Relations, DSP Group at (408) 986-4423.
| Three Months Ended | Six Months Ended | |||
| September 30, | September 30, | |||
| 2002 | 2001 | 2002 | 2001 | |
| Product revenues and other | $ 44,005 | $ 27,143 | $ 97,029 | $ 64,687 |
| Cost of product revenues and other | 26,433 | 17,300 | 58,199 | 38,458 |
| __ __ __ | __ __ __ | __ __ __ | __ __ __ | |
| Gross profit | 17,572 | 9,843 | 38,830 | 26,229 |
| Operating expenses: | ||||
| Research and development | 5,245 | 5,273 | 15,124 | 15,259 |
| Sales and marketing | 3,501 | 2,411 | 7,978 | 6,844 |
| General and administrative | 1,608 | 1,391 | 3,524 | 3,627 |
| Aborted spin off expenses and other | --- | --- | 865 | --- |
| __ __ __ | __ __ __ | __ __ __ | __ __ __ | |
| Total operating expenses | 10,354 | 9,075 | 27,491 | 25,730 |
| __ __ __ | __ __ __ | __ __ __ | __ __ __ | |
| Operating income | 7,218 | 768 | 11,339 | 499 |
| Other income : | ||||
| Interest and other income, net | 2,416 | 3,022 | 7,566 | 9,637 |
| Equity in earnings of affiliates | -- | -- | -- | 105 |
| Minority interest in loss of subsidiary | -- | -- | -- | 173 |
| | __ | __ | __ | __ |
| Income after financial and other income Impairment of available-for-sale marketable securities | 9,634 -- __ __ __ | 3,790 -- __ __ __ | 18,905 (*) (9,815) __ __ __ | 10,414 -- __ __ __ |
| Income before provision for income taxes | 9,634 | 3,790 | 9,090 | 10,414 |
| Provision for income taxes | 1,843 | 96 | (**)44 | 1,825 |
| __ __ __ | __ __ __ | __ __ __ | __ __ __ | |
| Net income from continuing operations Net income from discontinued operations (***) | 7,791 | 3,694 | 9,046 | 8,589 |
| Net income | $ 8,772 _______ _______ | $ 6,854 _______ _______ | $ 11,538 _______ _______ | $ 17,873 _______ _______ |
| Net earnings per share for continuing operations: | ||||
| Basic | $0.29 | $ 0.14 | $0.34 | $ 0.32 |
| Diluted | $ 0.29 | $ 0.14 | $ 0.32 | $ 0.31 |
| Net earnings per share for discontinued operations: | ||||
| Basic | $0.03 | $ 0.12 | $0.09 | $ 0.35 |
| Diluted | $ 0.03 | $ 0.11 | $ 0.09 | $ 0.34 |
| Net earnings per share (combined): | ||||
| Basic | $0.32 | $ 0.26 | $0.43 | $ 0.67 |
| Diluted | $ 0.32 | $ 0.25 | $ 0.41 | $ 0.65 |
| Weighted average number of shares of Common Stock used in computing of: | ||||
| Basic | 27,104 | 26,732 | 27,030 | 26,576 |
| Diluted | 27,707 | 27,790 | 27,848 | 27,539 |
| (*) Related to impairment of AudioCodes Ltd. Stock (**) Including tax credit related to impairment of Audiocodes Ltd. (***) (***) Related to the DSP Licensing activities which are planned to be discontinued following the merger with Parthus |
| Three Months Ended | Six Months Ended | |||
| September 30, | September 30, | |||
| 2002 | 2001 | 2002 | 2001 | |
| Product revenues and other | $ 44,005 | $ 27,143 | $ 97,029 | $ 64,687 |
| Cost of product revenues and other | 26,433 | 17,300 | 58,199 | 38,459 |
| __ __ __ | __ __ __ | __ __ __ | __ __ __ | |
| Gross profit | 17,572 | 9,843 | 38,830 | 26,228 |
| Operating expenses: | ||||
| Research and development | 5,245 | 5,273 | 15,124 | 15,259 |
| Sales and marketing | 3,501 | 2,411 | 7,978 | 6,844 |
| General and administrative | 1,608 | 1,391 | 3,524 | 3,627 |
| __ __ __ | __ __ __ | __ __ __ | __ __ __ | |
| Total operating expenses | 10,354 | 9,075 | 26,626 | 25,730 |
| __ __ __ | __ __ __ | __ __ __ | __ __ __ | |
| Operating income | 7,218 | 768 | 12,204 | 499 |
| Other income : | ||||
| Interest and other income, net | 2,416 | 3,022 | 7,566 | 9,637 |
| Equity in earnings of affiliates
Minority interest in loss of subsidiary
| -- -- __ __ __ | -- -- __ __ __ | -- -- __ __ __ | 105 173 __ __ __ |
| Income after financial and other Provision for income taxes Net income from continuing | 9,634 1,843 7,791 | 3,790 96 3,694 | 19,770 3,800 15,970 | 10,414 1,825 8,589 |
| Net income from discontinued operations
| 981 __ __ __ $ 8,772 | 3,160 __ __ __ $ 6,854 | 2,491 __ __ __ $ 18,461 | 9,284 __ __ __ $ 17,873 |
| Net earnings per share for continuing operations:: | ||||
| Basic | $ 0.29 | $ 0.14 | $ 0.59 | $ 0.32 |
| Diluted | $ 0.29 | $ 0.14 | $ 0.57 | $ 0.31 |
| Net earnings per share for discontinued operations: | ||||
| Basic | $ 0.03 | $ 0.12 | $ 0.09 | $ 0.35 |
| Diluted | $ 0.03 | $ 0.11 | $ 0.09 | $ 0.34 |
| Net earnings per share (combined): | ||||
| Basic | $ 0.32 | $ 0.26 | $ 0.68 | $ 0.67 |
| Diluted | $ 0.32 | $ 0.25 | $ 0.66 | $ 0.65 |
| Weighted average number of | ||||
| Basic | 27,104 | 26,732 | 27,030 | 26,576 |
| Diluted | 27,707 | 27,790 | 27,848 | 27,539 |
| The above pro forma consolidated statements of income have been adjusted to exclude the following items to US GAAP reported net income: |
| Reported net income per US GAAP Adjustments: Aborted spin off expenses and other | $ 8,772
-- | $ 6,854
-- | $ 11,538
865 | $17,873
-- |
| Impairment of available-for-sale Tax benefit | -- -- | -- -- | 9,815 (3,757) | -- -- |
| __ __ __ | __ __ __ | __ __ __ | __ __ __ | |
| Pro forma net income | $ 8,772 | $ 6,854 | $ 18,461 | $17,873 |
| September 30, | December 31, | ||
| Assets | 2002 | 2001 | |
| Current Assets: | |||
| Cash and cash equivalents Cash designated to combination Marketable securities and short term bank deposits | $ 21,361 40,759 46,903 | $ 39,146
70,893 | |
| Trade receivable, net | 7,558 | 6,315 | |
| Inventories | 9,347 | 2,048 | |
| Deferred income taxes | 2,098 | 2,098 | |
| Other accounts receivable and prepaid Expenses | 1,149 | 1,547 | |
| Assets of discontinued operation | 15,322 | 12,197 | |
| Total current assets | 144,497 | 134,244 | |
| Property and equipment, net | 4,572 | 5,390 | |
| Long term marketable securities | 158,026 | 139,752 | |
| Other investments | 8,627 | 25,536 | |
| Other assets, net | 6,144 | 6,229 | |
| Severance pay fund | 1,302 | 1,228 | |
| __ __ __ | __ __ __ | ||
| Total Assets | $ 323,138 | $ 312,379 | |
| Liabilities and Stockholders' Equity | |||
| Current liabilities: | |||
| Trade payable | $ 7,225 | $ 5,123 | |
| Other current liabilities | 19,308 | 11,592 | |
| Liabilities of discontinued operation | 5,454 | 7,852 | |
| Total current liabilities | 31,987 | 24,567 | |
| Long term liabilities: | |||
| Accrued severance pay | 1,365 | 1,294 | |
| Deferred income taxes | 1,200 | 7,541 | |
| Total long term liabilities | 2,565 | 8,835 | |
| Stockholders' equity: | |||
| Common stock | 27 | 27 | |
| Additional paid-in capital | 155,969 | 155,969 | |
| Less cost of treasury stock | (2,744) | (8,623) | |
| Accumulated other comprehensive income (loss) | (2,057) | 2,652 | |
| Retained earnings | 137,391 | 128,952 | |
| Total stockholders' equity | 288,586 | 278,977 | |
| __ __ __ | __ __ __ | ||
| Total liabilities and stockholders' equity |
$ 323,138 |
$ 312,379 | |