CEVA Reports Increased Profits and Positive Cash Flow
Total revenue for the third quarter 2004 was $9.7 million, a slight increase from the $9.6 million reported in the second quarter 2004 and a 4% increase compared to $9.3 million in the third quarter 2003. Third quarter licensing revenue of $6.9 million was similar to the 2004 second quarter and increased 7% from $6.5 million in the third quarter 2003. Third quarter 2004 royalty revenue was $1.6 million, up 24% from $1.3 million reported in the second quarter 2004 and a 33% rise from the $1.2 million in the third quarter 2003.
Strong Unit Royalty Growth
Shipped units by licensees increased 30% to 30.5 million in the third quarter 2004 compared to 23 million shipped in the second quarter 2004 and a 110% increase from 14.5 million units shipped in the third quarter 2003.
Increasing Profitability
Third quarter gross margin was 88% compared with 85% in the 2004 second quarter and 85% in the third quarter 2003. Third quarter net income increased 13% to $560,000, or $0.03 per share compared with second quarter 2004 net income of $494,000, or $0.027 per share. The Company recorded a net loss of $1.1 million, or $0.063 net loss per share in the third quarter 2003.
Solid Balance Sheet
The Company generated $0.5 million of operating cash flow during the quarter. At September 30, 2004, cash equivalents and marketable securities were $57.8 million.
"CEVA's strong end-market growth drivers - wireless and consumer multimedia - resulted in a record 30 million units shipped in the third quarter with CEVA technology embedded as our licensees continue to thrive in the DSP industry," said Chet Silvestri, President and CEO of CEVA. "Although it is traditionally our weakest quarter, CEVA's revenue, gross margin and net income all recorded sequential improvements. Furthermore, our strong cash position gives us the flexibility to pursue internal and external growth initiatives to further extend our position as the leading licensor of DSP technology."
During the third quarter, CEVA completed six new licensing agreements including another licensee for CEVA-X and good adoption of CEVA's Serial-ATA solutions. In addition, a major Japanese wireless player was the first to license CEVA's Mobile Media solution following the launch of the technology in the quarter.
Additionally, further industry endorsement for CEVA technologies was underscored in the third quarter with the announcements that Atmel adopted CEVA for storage solutions, Zoran for DVD systems, Japan Radio Consortium for radio solutions, and Nemerix for location solutions.
"Notwithstanding the more moderate growth expectations for the semiconductor sector, our product portfolio of cores, solutions and services positions us well to continue our momentum of revenue and profit growth," continued Chet Silvestri.
CEVA Conference Call
On October 27, 2004, CEVA management will conduct a conference call at 10:30 a.m. EST/15.30 p.m. London time, to discuss the operating performance for the quarter. To participate in the conference call, US domestic callers can dial 877-951-7311 and international callers can dial +44-20-7019-0810, access code "CEVA."
The conference call will also be available live via the Internet by accessing the CEVA web site at http://www.ceva-dsp.com/. 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 866-851-5345 for US domestic callers and +44-20-7108-6343 for international callers from two hours after the end of the call until 6:00 p.m. (ET) on November 3, 2004. 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 the leading licensor of DSP cores and communications solutions to the semiconductor industry. CEVA markets a portfolio of DSP IPs in three integrated areas: CEVA DSPs, CEVA Xpert Open Framework Environment and CEVA Xpert Applications, all supported by Xpert Integration services. CEVA's technology has been embedded in over 70 million devices year-to-date 2004. CEVA was created through the merger of the DSP licensing division of DSP Group and Parthus Technologies. 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 ever 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. The forward looking statements in this press release include statements concerning CEVA pursuing internal and external growth initiatives, market growth, and continued momentum of revenue and profit growth, and extending its position as the number one licensor of DSP solutions for the semiconductor industry. The risks, uncertainties and assumptions referred to above include macroeconomic and geopolitical trends and events; intense competition within our industry; the industries in which we license our technology have experienced a challenging period of slow growth; that the market for the sale of our technology may not develop as expected; that we rely significantly on revenue derived from a limited number of licensees; the possible loss of key employees and/or senior management; the challenges of managing a geographically dispersed operation and other risks that are described from time to time in the Company's Securities and Exchange Commission reports, including but not limited to the Annual Report on Form 10- K for the fiscal year ended December 31, 2003, and reports filed after the Form 10-K. 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. dollars in thousands, except per share data
Quarter ended Nine months ended Quarter ended
September 30, September 30, June 30,
2004 2003 2004 2003 2004
Unaudited Unaudited Unaudited Unaudited Unaudited
Revenues:
Licensing and
royalties $8,482 $7,651 $24,431 $21,802 $8,180
Other revenue 1,232 1,651 4,073 5,430 1,396
Total revenues 9,714 9,302 28,504 27,232 9,576
Cost of revenues 1,199 1,415 4,160 4,654 1,451
Gross profit 8,515 7,887 24,344 22,578 8,125
Operating expenses:
Research and
development, net 4,384 4,490 12,615 12,591 4,222
Sales and
marketing 1,768 1,436 5,159 4,258 1,718
General and
administrative 1,555 1,455 4,509 4,418 1,495
Amortization of
intangible assets 223 288 669 856 223
Reorganization
and severance charge - 1,402 - 2,782 -
Total operating
expenses 7,930 9,071 22,952 24,905 7,658
Operating
income (loss) 585 (1,184) 1,392 (2,327) 467
Other income, net 145 150 496 7 162
Income (loss) before
taxes on income 730 (1,034) 1,888 (2,320) 629
Taxes on income 170 100 425 100 135
Net income (loss) 560 (1,134) 1,463 (2,420) 494
Basic income
(loss) per share $0.030 ($0.063) $0.080 $(0.134) $0.027
Diluted income
per share $0.030 ($0.063) $0.077 $(0.134) $0.026
Weighted average
number of Common
Stock used in
computation of
net income(loss)
per share:
Basic 18,453 18,108 18,387 18,085 18,380
Diluted 18,793 18,108 18,986 18,085 18,909
CEVA, INC. AND ITS SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands
September 30, December 31, June 30,
2004 2003(1) 2004
Unaudited Unaudited
ASSETS
Current assets:
Cash and cash equivalents $27,035 $59,130 $56,832
Marketable securities 30,730 - -
Trade receivables, net 11,583 10,226 10,707
Other assets and
prepaid expenses 1,591 1,945 1,757
Total current assets 70,939 71,301 69,296
Long-term investments:
Severance pay fund 1,534 1,487 1,458
Property and equipment, net 4,690 4,792 5,211
Goodwill 38,398 38,398 38,398
Other intangible assets, net 2,786 3,455 3,009
Total assets $118,347 $119,433 $117,372
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current liabilities:
Trade payables $1,881 $3,030 $2,018
Accrued expenses
and other payables 9,604 12,876 10,053
Taxes payable 965 891 737
Deferred revenues 1,046 1,064 775
Total current liabilities 13,496 17,861 13,583
Long-term liabilities:
Accrued severance pay 1,609 1,510 1,530
Accrued liabilities 1,229 1,583 1,293
2,838 3,093 2,823
Stockholders' equity:
Common Stock: 18 18 18
Additional paid in capital 136,520 134,449 136,033
Accumulated deficit (34,525) (35,988) (35,085)
Total stockholders' equity 102,013 98,479 100,966
Total liabilities
and stockholders' equity $118,347 $119,433 $117,372
(1) The December 31, 2003 balance sheet information has been derived from
the December 31, 2003 audited consolidated financial statements of
the Company.
CONTACT: Barry Nolan OF CEVA, Inc., +1-408-514-2900; or Michael Polyviou
or Kirin Smith, both of Financial Dynamics, +1-212-850-5600, for CEVA, Inc.
Web Site: http://www.ceva-dsp.com/