CEVA, Inc. Announces Second Quarter 2010 Financial Results

-Q2 revenue up 16% year-over-year; royalty revenue increased 30% year-over-year

SAN JOSE, Calif., July 28 — (PRNewswire) — CEVA, Inc. (Nasdaq: CEVA); (LSE: CVA), the leading licensor of silicon intellectual property (SIP) platform solutions and DSP cores for the mobile handsets, portable and consumer electronics markets, today announced its financial results for the second quarter ended June 30, 2010.

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Total revenue for the second quarter of 2010 was $10.6 million, an increase of 16% compared to $9.1 million reported for the second quarter of 2009. Second quarter of 2010 licensing revenue was $4.6 million, an increase of 7% compared to $4.3 million reported for the second quarter of 2009. Royalty revenue for the second quarter of 2010 was a record high $5.2 million, an increase of 30% over $4.0 million reported for the second quarter of 2009. Revenue from services for both the second quarter of 2010 and 2009 was $0.9 million.

Gideon Wertheizer, Chief Executive Officer of CEVA, stated: "We are extremely pleased with our achievements in the second quarter. Our worldwide market share in the handset cellular baseband space increased to a record 29%, and additional high-profile CEVA-powered product introductions by first-tier handset vendors will further increase our market share going forward.

Wertheizer added, "With substantial growth in data bandwidth requirements for mobile connectivity, we are experiencing strong demand from wireless industry leaders for our flagship CEVA-XC DSP to power their LTE user equipment and facilitate network upgrades. We are also encouraged by continued traction in the home entertainment markets as another first-tier manufacturer adopted our technology during the quarter."

U.S. GAAP net income for the second quarter of 2010 was $2.1 million, a decrease of 8% compared to $2.3 million reported for the same period in 2009. U.S. GAAP diluted earnings per share for the second quarter of 2010 was $0.10, a decrease of 17% compared to $0.12 reported for the second quarter of 2009. U.S. GAAP net income for the second quarter of 2009 included a pre-tax capital gain of $1.9 million related to our equity divestment of GloNav, Inc. to NXP Semiconductors.

Non-GAAP net income and diluted earnings per share for the second quarter of 2010 reached all time highs of $2.7 million and $0.12, respectively, representing an increase of 59% and 50%, respectively, over the $1.7 million and $0.08 reported for the second quarter of 2009. Non-GAAP net income and diluted earnings per share for the second quarter of 2010 and 2009, excluded an aggregate equity-based compensation expense of $0.5 million and $0.7 million, respectively, and a pre-tax capital gain of $1.9 million and the applicable tax expense of $0.5 million, related to our equity divestment of GloNav for the second quarter of 2009.

During the quarter, the Company concluded nine new licensing agreements. All nine agreements were for CEVA DSP cores, platforms and software. Target applications for customer deployment are 3G and 4G handsets, mobile broadband, cellular base stations, VoIP gateways, Digital TVs and Blu-ray players. Geographically, four of the agreements signed were in the U.S., four were in Asia and one was in Europe.

Yaniv Arieli, Chief Financial Officer of CEVA, stated: "We continue to show consistent progress in our financial performance.   Revenues for the quarter were at the high end of our guidance and set a new record for royalty revenues for the third successive quarter. In addition, we expanded our existing stock repurchase program with an additional two million shares of common stock available for repurchase, which represents approximately 10% of the Company's total outstanding shares. Finally, we continued to generate significant positive cash flow during the quarter. As of June 30, 2010, CEVA's cash balances, marketable securities and long term bank deposits were $108.6 million, after taking into consideration $1.2 million used for buyback activities."

CEVA Conference Call

On July 28, 2010, CEVA management will conduct a conference call at 8:30 a.m. Eastern Time / 1.30 p.m. London time, to discuss the operating performance for the quarter.

The conference call will be available via the following dial in numbers:

  • US Participants: Dial 1-877-493-9121 (Access Code: CEVA or 86099738)
  • UK/Rest of World: Dial +44-800-051-3806 (Access Code: CEVA or 86099738)

The conference call will also be available live via the Internet at the following link:   http://www.videonewswire.com/event.asp?id=70427. Please go to the web site at least fifteen minutes prior to the call to register, download and install any necessary audio software.

For those who cannot access the live broadcast, a replay will be available by dialing 1-800-642-1687 (passcode: 86099738) for US domestic callers and +44-800-917-2646 (passcode: 86099738) for international callers from two hours after the end of the call until 11:59 p.m. (Eastern Time) on August 8, 2010. The replay will also be available at CEVA's web site www.ceva-dsp.com.

About CEVA, Inc.

CEVA is the world's leading licensor of silicon intellectual property (SIP) DSP Cores and platform solutions for the mobile handset, portable and consumer electronics markets. CEVA's IP portfolio includes comprehensive technologies for cellular baseband (2G / 3G / 4G), multimedia, HD video and audio, voice over packet (VoP), Bluetooth, Serial Attached SCSI (SAS) and Serial ATA (SATA). In 2009, CEVA's IP was shipped in over 330 million devices, powering handsets from 7 out of the top 8 handset OEMs, including Nokia, Samsung, LG, Motorola, Sony Ericsson and ZTE. Today, more than one in every four handsets shipped worldwide is powered by a CEVA DSP core. For more information, visit www.ceva-dsp.com.

Forward-Looking Statements

This press release contains forward-looking statements that involve risks and uncertainties, as well as assumptions that if they materialize or prove incorrect, could cause the results of CEVA to differ materially from those expressed or implied by such forward-looking statements and assumptions. All statements other than statements of historical fact are statements that could be deemed forward-looking statements, including Mr. Wertheizer's statements about further increases in CEVA's market share in the baseband market, strong demands for CEVA-XC DSP and traction in the home entertainment markets.  The risks, uncertainties and assumptions include: the ability of the CEVA DSP cores and other technologies to continue to be strong growth drivers for the company; CEVA's success in penetrating new markets and maintaining its market position in existing markets; the effect of intense industry competition; the possibility that the markets for CEVA's technologies may not develop as expected or that products incorporating CEVA's technologies do not achieve market acceptance; CEVA's ability to timely and successfully develop and introduce new technologies; CEVA's ability to continue to improve its licensing and royalty revenue in future periods; and general market conditions and other risks relating to CEVA's business, including, but not limited to, those that are described from time to time in its SEC filings. CEVA assumes no obligation to update any forward-looking statements or information, which speak as of their respective dates.

CEVA, INC. AND ITS SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS – U.S. GAAP
U.S. dollars in thousands, except per share data


Quarter ended

Six months ended


June 30,

June 30,


2010

2009

2010

2009


Unaudited

Unaudited

Unaudited

Unaudited

Revenues:





Licensing

$  4,593

$  4,273

$  9,315

$  8,817

Royalties

5,154

3,950

10,134

7,709

Other revenues

862

887

1,761

2,097






Total revenues

10,609

9,110

21,210

18,623






Cost of revenues

863

1,152

1,577

2,362






Gross profit

9,746

7,958

19,633

16,261






Operating expenses:





Research and development, net

4,505

3,996

9,114

8,071

Sales and marketing

1,776

1,650

3,584

3,286

General and administrative

1,570

1,558

3,116

3,030






Total operating expenses

7,851

7,204

15,814

14,387






Operating income

1,895

754

3,819

1,874

Interest and other income, net

541

2,375

1,098

2,851






Income before taxes on income

2,436

3,129

4,917

4,725

Taxes on income

313

814

735

1,042






Net income

2,123

2,315

4,182

3,683






Basic net income per share

$0.10

$0.12

$0.20

$0.19

Diluted net income per share

$0.10

$0.12

$0.19

$0.19

Weighted-average number of Common
Stock used in computation of net income
per share (in thousands):





Basic

21,061

19,515

20,859

19,536

Diluted

22,069

20,014

21,991

19,884




Unaudited Reconciliation of GAAP to Non-GAAP Financial Measures
(U.S. Dollars in thousands, except per share amounts)


Quarter ended

Six months ended


June 30

June 30


2010

2009

2010

2009


Unaudited

Unaudited

Unaudited

Unaudited

GAAP net income

2,123

2,315

4,182

3,683

Equity-based compensation expense included in
cost of revenue

15

34

33

69

Equity-based compensation expense included in
research and development expenses

139

230

306

492

Equity-based compensation expense included in
sales and marketing expenses

96

142

208

304

Equity-based compensation expense included in
general and administrative expenses

290

311

577

660

Other income

-

(1,901)(1)

-

(1901)(1)

Taxes on income

-

543(1)

-

543(1)

Non-GAAP net income

2,663

1,674

5,306

3,850

GAAP weighted-average number of Common
Stock used in computation of diluted net
income per share (in thousands)

22,069

20,014

21,991

19,884

Weighted-average number of shares related to
outstanding options

57

-

75

-

Weighted-average number of Common Stock
used in computation of diluted net income per
share, excluding equity-based compensation
expense, and capital gains associated with the
divestment of CEVA's equity investment in
GloNav Inc, net (in thousands) and the
applicable tax expense

22,126

20,014

22,066

19,884
















GAAP diluted net income per share

$0.10

$0.12

$0.19

$0.19

Equity-based compensation expense

$0.02

$0.04

$0.05

$0.08

Other income

-

$(0.1)(1)

-

$(0.1)(1)

Taxes on income

-

$0.02(1)

-

$0.02(1)

Non-GAAP diluted net income per share

$0.12

$0.08

$0.24

$0.19






(1)  Results for the second quarter and six months ended June 30, 2009 included a capital gain of $1.9 million
reported in interest and other i ncome, net, and the applicable tax expense of $0.5 million reported in taxes on
income, both related to the divestment of CEVA's equity interest in GloNav Inc. to NXP Semiconductors.  




CEVA, INC. AND ITS SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
U.S. Dollars in Thousands


June 30,

December 31,


2010

2009


Unaudited

Audited

ASSETS



Current assets:



Cash and cash equivalents

$  22,228

$  12,104

Marketable securities and short term bank deposits

71,293

88,494

Trade receivables, net

5,546

5,995

Deferred tax assets

1,059

1,096

Prepaid expenses and other accounts  receivables

3,938

5,345

Total current assets

104,064

113,034




Long-term investments:

Long term bank deposits  

15,066

-

Severance pay fund

4,536

4,455

Deferred tax assets

564

309

Property and equipment, net

1,346

1,148

Goodwill

36,498

36,498

Total assets

$  162,074

$  155,444


   LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:



Trade payables

$  650

$  530

Deferred revenues

527

432

Accrued expenses and other payables

8,064

9,735

Deferred tax liabilities

1,062

1,168

Total current liabilities

10,303

11,865




Accrued severance pay

4,558

4,483




Total liabilities

14,861

16,348




Stockholders' equity:



Common Stock

21

20

Additional paid in-capital

164,001

158,325

Treasury Stock

(1,133)

-

Other comprehensive income (loss)

(336)

251

Accumulated deficit

(15,340)

(19,500)

Total stockholders' equity

147,213

139,096

Total liabilities and stockholders' equity

$  162,074

$  155,444





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