Summary of DSP GROUP INC /DE/

Results of Operations and Financial Condition, Financial Statements and Exhibi

ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION

On October 27, 2009, DSP Group, Inc. (the "Company") announced its financial results for the quarter ended September 30, 2009. A copy of the press release, dated October 27, 2009, is attached and filed herewith as Exhibit 99.1. This information, including Exhibit 99.1 attached hereto, shall not be deemed "filed" for purposes of Section 18 of the Securities Act of 1934, nor shall it 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 ended September 30, 2009 in accordance with generally accepted accounting principles in the United States ("GAAP"), the press release also included non-GAAP net income, and basic and diluted earnings per share (EPS) figures for the quarter ended September 30, 2009 and 2008 that excluded (a) for the quarter ended September 30, 2009, the impact of amortization of acquired intangible assets of $3,072,000 associated with the acquisition of the Cordless and VoIP Terminals business of NXP B.V. (the "Acquisition"); equity-based compensation expenses of $2,637,000; gains from realization of previously impaired available-for-sale securities of $531,000; and a tax benefit of $7,645,000 resulting from the reversal of income tax contingency reserve that was determined to be no longer needed due to the expiration of applicable limitation statutes, and (b) for the quarter ended September 30, 2008,. the impact of amortization of acquired intangible assets of $5,702,000 associated with the Acquisition; equity-based compensation expenses of $3,205,000; restructuring expenses of $1,870,000 associated with the Company's cost cutting measures at various operating sites; an unrealized loss related to certain available-for-sale marketable securities of $671,000; and the aggregate tax benefits associated with such expenses of $1,051,000.

The Company believes that the non-GAAP presentation in the press release is useful to investors in analyzing the results for the quarter ended September 30, 2009 because the exclusion of such expense may provide a more meaningful analysis of the Company's core operating results as certain expenses were not recorded in both comparative periods. Further, the Company believes it is useful for investors to understand how the expenses associated with the application of SFAS 123(R) 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.