DSPG DSP Group Inc

ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION

 

On February 4, 2021, DSP Group, Inc. (the “Company”) announced its financial results for the quarter and year ended December 31, 2020.  A copy of the press release, dated February 4, 2021, is attached and filed herewith as Exhibit 99.1.  On the same day, the Company held a conference call to discuss its financial results for the quarter and year ended December 31, 2020.  A copy of the script of the conference call is attached hereto as Exhibit 99.2. This information, including Exhibits 99.1 and 99.2 attached hereto, shall not be deemed “filed” for purposes of Section 18 of the Securities Act of 1934, nor shall they be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference to such filing.

 

In addition to the disclosure of financial results for the quarter and year ended December 31, 2020 in accordance with generally accepted accounting principles in the United States (“GAAP”), the press release also included non-GAAP net income and diluted earnings per share, for the quarters and years ended December 31, 2020 and 2019 that excluded (a) for the quarter ended December 31, 2020, the impact of amortization of acquired intangible assets in the amount of $0.4 million associated with previous acquisitions, equity-based compensation expenses of $3.2 million, non-cash expenses from exchange rate differences resulting from lease accounting standard (ASC 842) in the amount of $0.7 million, amortization of employees retention expenses related to the acquisition of SoundChip S.A. (“SoundChip”) in the amount of $0.25 million and income resulting from changes in deferred taxes in the amount of $0.3 million related to intangible assets acquired in previous acquisitions and equity-based compensation expenses; (b) for the quarter ended December 31, 2019, the impact of amortization of acquired intangible assets in the amount of $0.1 million associated with previous acquisitions, equity-based compensation expenses of $1.8 million, non-cash exchange rate differences resulting from ASC 842 in the amount of $0.1 million and changes in deferred taxes in the amount of $0.3 million related to intangible assets acquired in previous acquisitions and equity-based compensation expenses; (c) for the year ended December 31, 2020, the impact of amortization of acquired intangible assets of $1.1 million associated with current and previous acquisitions; equity-based compensation expenses of $9.7 million, non-cash exchange rate differences resulting from ASC 842 in the amount of $0.6 million, transaction expenses related to the acquisition of SoundChip in the amount of $0.25 million, amortization of employees retention expenses related to the acquisition of SoundChip in the amount of $0.5 million and changes in deferred taxes related to intangible assets acquired in current and previous acquisitions and equity-based compensation expenses in the amount of $0.5 million; and (d) for the year ended December 31, 2019, the impact of amortization of acquired intangible assets of $0.4 million associated with previous acquisitions; equity-based compensation expenses of $7.6 million, non-cash exchange rate differences resulting from ASC 842 in the amount of $0.8 million, and changes in deferred taxes related to intangible assets acquired in previous acquisitions and equity-based compensation expenses in the amount of $0.6 million.

 

The Company believes that the non-GAAP presentation in the press release is useful to investors in analyzing the results for the quarter and year ended December 31, 2020 and 2019 because the exclusion of such expense may provide a more meaningful analysis of the Company’s core operating results. Further, the Company believes it is useful for investors to understand how the expenses associated with the application of FASB ASC No. 718 are reflected on its statements of income. The non-GAAP financial measures are used in addition to and in conjunction with results presented in accordance with GAAP, and are intended to provide additional insight into the Company’s operations that, when viewed with its GAAP results and the accompanying reconciliations to corresponding GAAP financial measures, offer a more complete understanding of factors and trends affecting the Company’s business. The non-GAAP presentation should not be viewed as a substitute for the Company’s reported GAAP results.