CEVA, Inc. Reports Second Quarter 2008 Financial Results

58% YoY increase in royalty revenue and 61% YoY increase in net income, Strategic licensing agreements with leading Asian customers

SAN JOSE, Calif., July 23 /PRNewswire-FirstCall/ -- CEVA, Inc. ((NASDAQ: CEVA); ), a leading licensor of silicon intellectual property (SIP) platform solutions and DSP cores for mobile handset, consumer electronics and storage applications, today announced its financial results for the quarter ended June 30, 2008.

(Logo: http://www.newscom.com/cgi-bin/prnh/20051010/CEVALOGO)

Total revenue for the second quarter of 2008 was $10.1 million, an increase of 18% compared to $8.5 million reported for the second quarter of 2007. Licensing revenue for the second quarter of 2008 was $6.0 million, an increase of 9% from $5.5 million reported for the second quarter of 2007. Royalty revenue for the second quarter of 2008 was $3.0 million, an increase of 58% from $1.9 million reported for the second quarter of 2007. Revenue from services for the second quarter of 2008 was $1.0 million, compared to $1.1 million reported for the second quarter of 2007.

Net income for the second quarter of 2008 was $0.7 million, compared to $0.4 million for the second quarter of 2007. Diluted net income per share for the second quarter of 2008 was $0.03 per share, compared to diluted net income of $0.02 per share for the second quarter of 2007.

During the second quarter of 2008, the Company concluded eight new license agreements. Seven agreements were for CEVA DSP cores, platforms and software, and one agreement was for CEVA Bluetooth technology. Target applications for customer deployment are LTE modems, 3G data cards, HSDPA handsets, satellite phones, two way radios, wireless connectivity, consumer electronics and gaming consoles. Geographically, seven of the eight deals concluded were in the Asia Pacific region and one was in Europe.

During the quarter, CEVA concluded two strategic licensing agreements with tier 1 OEMs for its DSP cores and platforms. A major, branded Asian OEM signed a comprehensive agreement for the latest CEVA-X DSP cores and platforms for the development of 3G data cards and 4G LTE applications. The second strategic agreement was signed with a major, branded Japanese OEM who extended its use of CEVA's DSPs to a range of consumer and portable electronics products. These two agreements are illustrative of CEVA's strategy of partnering with the world's leading semiconductors and OEMs to power a new range of end market products while maintaining the Company's traditionally strong presence in the cellular handset market.

Gideon Wertheizer, Chief Executive Officer of CEVA, stated: "During the second quarter of 2008, CEVA continued to expand its licensing activities and customer base in the handset market with strategic agreements in LTE and 3G data cards. We continue to see the introduction and adoption of new handsets enabled by our technologies which we believe will further contribute to our growth. We also are encouraged by the growing adoption of our technologies beyond cellular to wireless and consumer electronics applications."

Yaniv Arieli, Chief Financial Officer of CEVA, stated: "During the first half of 2008, CEVA achieved strong financial performance as compared to prior years. CEVA achieved an increase of 24% in revenue for the first six months of 2008 as compared to the same period in 2007, as well as a significant increase of 1400% in fully diluted EPS when comparing the same periods. The results for the first half of 2008 include a capital gain of $7.7 million, net of taxes, associated with CEVA's divestment of its equity interest in GloNov Inc. and a restructuring expense of $3.5 million associated with the termination of the Harcourt lease. We believe our strong pipeline of licensing deals and royalty revenue derived from the introduction of new CEVA-powered devices are indicative of our continued growth. During the second quarter of 2008, we generated positive cash flow of approximately $1.0 million, after taking into account $1.7 million of tax payments paid during the second quarter of 2008 associated with the capital gain from our equity divestment of GloNav Inc to NXP Semiconductors. As of June 30, 2008, CEVA's cash balances and marketable securities were $86.5 million and quarterly DSO levels were at 53 days."

CEVA Conference Call

On July 23, 2008 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)
    -- UK/Rest of World: Dial +44-800-032-3836 (Access Code: CEVA)

The conference call will also be available live via the Internet at the following link: http://www.videonewswire.com/event.asp?id=49604. 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: 54500819) for US domestic callers and +44-800-917-2646 (passcode: 54500819) for international callers from two hours after the end of the call until 11:59 p.m. (Eastern Time) on July 30, 2008. The replay will also be available at CEVA's web site http://www.ceva-dsp.com.

About CEVA, Inc.

Headquartered in San Jose, Calif., CEVA is a leading licensor of silicon intellectual property (SIP) platform solutions and DSP cores for mobile, consumer electronics and storage applications. CEVA's IP portfolio includes comprehensive solutions for multimedia, audio, voice over packet (VoP), Bluetooth and Serial ATA (SATA), and a wide range of programmable DSP cores and subsystems with different price/performance metrics serving multiple markets. In 2007, CEVA's IP was shipped in over 225 million devices. For more information, visit http://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 statement that the introduction and adoption of new handsets enabled by CEVA's technologies will contribute to CEVA's growth and that the company is encouraged by the growing adoption of its technologies beyond cellular to wireless and consumer electronics applications and, as well as Mr. Arieli's statement that the company believes its strong pipeline of licensing deals and royalty revenue derived from the introduction of new CEVA-powered devices are indicative of its continued growth. The risks, uncertainties and assumptions include: the ability of CEVA's DSP cores and other technologies to continue to be strong growth drivers for the Company, including adapting to changes in the cellular handset market and expanding into wireless and consumer electronics markets; the effect of intense competition within our industry; the possibility that the market for our technology may not develop as expected; the possibility that our customers' products incorporating our technologies do not succeed as expected; our ability to timely and successfully develop and introduce new technologies; our reliance on revenue derived from a limited number of licensees; our ability to continue to improve our license and royalty revenue in future periods and other risks relating to our business, including, but not limited to, those that are described from time to time in CEVA's Securities and Exchange Commission 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,
                                                                        2008                2007                2008              2007
                                                                    Unaudited      Unaudited      Unaudited    Unaudited
        Revenues:
            Licensing                                      $6,026            $5,534            $11,114        $10,173
            Royalties                                        3,038              1,918                6,771            3,875
            Other  revenues                              1,019              1,063                2,265            2,193

        Total  revenues                                10,083              8,515              20,150          16,241

        Cost  of  revenues                              1,268                  918                2,438            1,925

        Gross  profit                                      8,815              7,597              17,712          14,316

        Operating  expenses:
            Research  and
              development,  net                        5,235              4,610              10,355            9,310
            Sales  and  marketing                    1,806              1,619                3,579            3,174
            General  and
              administrative                            1,696              1,373                3,286            2,619
            Amortization  of
              intangible  assets                            20                    41                      41                  83
            Reorganization  expense                      -                      -                3,537                    -

        Total  operating  expenses              8,757              7,643              20,798          15,186

        Operating  income  (loss)                      58                (46)            (3,086)            (870)
        Interest  and  other
          income,  net                                          546                  626              12,223            1,450

        Income  before  taxes  on
          income                                                    604                  580                9,137                580
        Taxes  on  income                                  (87)                  150                2,935                150

        Net  income                                              691                  430                6,202                430

        Basic  net  income  per                      $0.03              $0.02                $0.31            $0.02
          share
        Diluted  net  income  per
          share                                                  $0.03              $0.02                $0.30            $0.02
            Weighted-average
              number  of  Common
              Stock  used  in
              computation  of  net
              income    per  share
              (in  thousands):
            Basic                                              20,140            19,473              20,118          19,450
            Diluted                                          20,804            19,776              20,764          19,702



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

                                                                          Quarter  ended                    Six  months  ended
                                                                                June  30,                                June  30,
                                                                          2008                2007                2008              2007
                                                                    Unaudited      Unaudited      Unaudited    Unaudited

        GAAP  net  income                                    691                  430                6,202                430
        Equity-based  compensation
          expense  included  in  cost
          of  revenue                                              27                    18                      55                  36
        Equity  based  compensation
          expense  included  in
          research  and  development
          expenses                                                265                  216                    532                412
        Equity  based  compensation
          expense  included  in  sales
          and  marketing  expenses                    142                    92                    237                174
        Equity  based  compensation
          expense  included  in  general
          and  administrative  expenses          285                  186                    473                362
        Reorganization  expense(1)                    -                      -                3,537                    -
        Other  income(2)                                    (24)                    -            (10,889)                  -
        Taxes  on  income(2)                                91                      -                3,196                    -
        Total  reconciliation                      1,477                  942                3,343            1,414

        GAAP  weighted-average  number
          of  Common  Stock  used  in
          computation  of  diluted  net
          income  per  share
          (in  thousands)                              20,804            19,776              20,764          19,702

        Weighted-average  number  of
          shares  related  to
          outstanding  options
                                                                          169                  165                    169                160

        Weighted-average  number  of
          Common  Stock  used  in
          computation  of  diluted  net
          income  per  share,  excluding
          equity-based  compensation
          expense;  reorganization
          expense,  net;  capital  gains
          associated  with  the
          divestment  CEVA's  equity
          investment  in  GloNav  Inc,
          net;  and  disposal  of  an
          investment  (in  thousands)
                                                                    20,973            19,941              20,933          19,862

        GAAP  diluted  net  income
          per  share                                          $0.03              $0.02                $0.30            $0.02
        Equity-based  compensation
          expense                                              $0.04              $0.03                $0.06            $0.05
        Reorganization  expense(1)                    -                      -                $0.17                    -
        Other  income(2)                                $0.00                      -              $(0.52)                  -
        Taxes  on  income(2)                          $0.00                      -                $0.15                    -
        Total  reconciliation                      $0.07              $0.05                $0.16            $0.07


        (1)  Results  for  the  six  months  ended  June  30,  2008  included  a
                reorganization  expense  of  $3.5  million  related  to  the  termination  of
                the  long-term  Harcourt  lease  property  in  Ireland.

        (2)  Results  for  the  six  months  ended  June  30,  2008  included  a  capital  gain
                of  $10.87  million  reported  in  interest  and  other  income,  net,  and  the
                applicable  tax  expense  of  $3.2  million  reported  in  taxes  on  income,
                related  to  the  divestment  of  CEVA's  equity  interest  in  GloNov  Inc.  to
                NXP  Semiconductors.  Results  for  the  second  quarter  and  six  months
                ended  June  30,  2008  included  a  gain  of  $0.02  million  reported  in
                interest  and  other  income,  net,  related  to  the  disposal  of  an
                investment.



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

                                                                                                            June  30,        December  31,
                                                                                                              2008                      2007
                                                                                                          Unaudited            Audited
        ASSETS
        Current  assets:
            Cash  and  cash  equivalents                                            $43,093                $40,697
            Marketable  securities  and  bank  deposits                  43,382                  35,678
            Trade  receivables,  net                                                      5,884                    2,502
            Deferred  tax  assets                                                            1,336                        861
            Prepaid  expenses                                                                  1,616                        904
            Investment                                                                                      -                    4,233
            Other  current  assets                                                          1,939                    2,391
                    Total  current  assets                                                97,250                  87,266
        Long-term  investments:
            Severance  pay  fund                                                              3,859                    3,091
        Deferred  tax  assets                                                                    807                        455
        Property  and  equipment,  net                                                1,630                    1,626
        Goodwill                                                                                    36,498                  36,498
        Other  intangible  assets,  net                                                    12                          53
                            Total  assets                                                    $140,056              $128,989



            LIABILITIES  AND  STOCKHOLDERS'  EQUITY

        Current  liabilities:
        Trade  payables                                                                            $713                      $455
        Accrued  expenses  and  other  payables                                8,827                    8,452
        Taxes  payable                                                                            1,815                        320
        Deferred  revenues                                                                    2,110                        727
                Total  current  liabilities                                          13,465                    9,954

        Accrued  severance  pay                                                            4,063                    3,141
        Accrued  liabilities                                                                        -                    1,506

                Total  liabilities                                                          17,528                  14,601

        Stockholders'  equity:
        Common  Stock:                                                                                  20                          20
        Additional  paid  in-capital                                              151,846                149,772
        Other  comprehensive  income  (loss)                                      (129)                          7
        Accumulated  deficit                                                            (29,209)              (35,411)
                Total  stockholders'  equity                                      122,528                114,388
                Total  liabilities  and  stockholders'
                          equity                                                                  $140,056              $128,989
 

Web site: http://www.ceva-dsp.com/




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