CEVA, Inc. Announces Fourth Quarter and Year End 2007 Financial Results
Record Royalty Revenues and Cash Increase; Strong Technology Adoption by Major
OEMs
SAN JOSE, Calif., Jan. 31 -- CEVA, Inc. (Nasdaq: CEVA; LSE: CVA), a
leading licensor of silicon intellectual property (SIP) DSP cores and platform
solutions for the handset, consumer electronics and mobile PC markets, today
announced its financial results for the fourth quarter and year ended December
31, 2007.
(Logo: http://www.newscom.com/cgi-bin/prnh/20051010/CEVALOGO)
Fourth Quarter 2007
Total revenue for the fourth quarter of 2007 was $8.2 million, as compared
to $8.1 million reported in the fourth quarter of 2006, an increase of 2%.
Fourth quarter of 2007 royalty revenue was a record high of $3.0 million, an
increase of 84% as compared to $1.7 million reported in the fourth quarter of
2006 and a 40% sequential increase as compared to $2.2 million reported in the
third quarter of 2007. Fourth quarter of 2007 licensing revenue was $4
million, as compared to $5.3 million for the fourth quarter of 2006, a
decrease of 24%. Revenue from services was $1.2 million for the fourth quarter
of 2007, compared to $1.1 million for the fourth quarter of 2006.
Net loss for the fourth quarter of 2007 was $0.3 million, compared to net
income of $0.6 million reported in the fourth quarter of 2006. Diluted net
loss per share for the fourth quarter of 2007 was $0.01 cents, compared to
diluted net income of $0.03 per share for the fourth quarter of 2006.
The financial results for the fourth quarter of 2007 include equity-based
compensation expense of $0.6 million and tax expense of $0.1 million related
to disposal of an investment.
Full Year 2007 Review
Total revenue for 2007 was $33.2 million, representing a slight increase
of 2%, as compared to $32.5 million reported in 2006. Royalty revenue for 2007
was a record high of $9.1 million, representing an increase of 44% compared to
$6.3 million reported in 2006. Licensing revenue in 2007 was $19.5 million,
compared to $22.2 million reported in 2006, a decrease of 12%. A total of 36
new licensing agreements were signed in 2007, compared to 38 agreements in
2006. Shipped units by licensees increased 19% to a record 227 million in
2007, compared to 190 million units shipped in 2006. In the fourth quarter of
2007, 86 million units were shipped, as compared to 50 million units during
the same period in the prior year.
2007 net income was $1.3 million or $0.06 per share, compared to net loss
of $98,000 or $0.01 per share in 2006.
In 2007, the Company recorded equity-based compensation expense of $2.1
million, a gain of $0.4 million reported in interest and other income related
to the disposal of an investment and the related tax expense of $0.1 million.
During the quarter, the Company concluded nine new license agreements.
Seven were for CEVA DSP cores and platforms and two for CEVA SATA technology,
including a strategic $2.5 million agreement with a tier one semiconductor
company, the revenues of which will be recognized in future periods.
Target applications for the licenses concluded during the fourth quarter
are Smartphones, Portable Multimedia Players (PMP), Personal Navigation
Devices (PND), wireless network infrastructure equipment and Solid State
Drives (SSD). Geographically, three of the nine deals were signed in the U.S.,
two in Europe and four in the Asia Pacific region, including Japan.
Gideon Wertheizer, Chief Executive Officer of CEVA, stated: "In 2007, we
saw strong adoption of our technology by major suppliers in the handset
market, including Nokia, Sony Ericsson, Samsung, LG, ZTE, Sharp, Panasonic,
Reliance Communications and China Unicom. These results are indicative of our
strength and presence in the DSP market and specifically within its largest
segments, the handset, mobile and home consumer electronics segments. From a
technology standpoint, we introduced a new DSP core, the CEVA-TeakLite-III,
which was successfully licensed to market leaders in the handset and home
entertainment markets. We also expanded our market reach and customer base in
applications such as DTV, Blu-ray/HD-DVD, surveillance, network infrastructure
equipment and Solid State Drives (SSD)."
Wertheizer, continued: "The company continued on its path of growth in
the fourth quarter, as reflected in our record royalty revenue, key strategic
licensing agreements and strong sales pipeline. The deferral of our income
under the new $2.5 million agreement signed in the fourth quarter understates
our substantial progress. We will see the full economic benefit from these
deferred revenues over future quarters and our business fundamentals are on
track."
Yaniv Arieli, Chief Financial Officer of CEVA, stated: "Fourth quarter
2007 royalty revenue was a record high of $3.0 million. The Company's positive
cash flow reached record highs in the fourth quarter, and we increased our
cash and marketable securities by approximately $12.1 million in 2007 ($10.4
million of it in the fourth quarter). As of December 31, 2007, CEVA's cash
balances and marketable securities were $76.4 million and its quarterly DSO
levels at year end reached a record low of 28 days. We also surrendered and
terminated in 2007 and 2008 two long term property leases in Ireland, thereby
improving our future cash flow and significantly reducing our future lease
obligations. All these achievements enable us to put new targets and goals in
place for CEVA's continued growth, profitability improvement and financial
strength in 2008. We have a good start in 2008 by successfully divesting our
equity investment in GloNav, Inc. for a meaningful return of approximately $10
million (pre-tax) only eighteen months after the divestment of our GPS
business line to GloNav."
CEVA Conference Call
On January 31, 2007, CEVA management will conduct a conference call at
8:30 a.m. Eastern Time / 1:30p.m. London time, to discuss the operating
performance for the fourth quarter and year ended December 31, 2007.
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 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 1-800-642-1687 (passcode: 30294263) for US domestic callers and
+44-800-917-2646 (passcode: 30294263) for international callers from two hours
after the end of the call until 11:59 p.m. (Eastern Time) on February 7, 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) DSP cores and platform solutions for the handset,
consumer electronics and mobile PC markets. 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 227 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 optimism about our
achievements enabling us to put new targets and goals in place for CEVA's
continued growth, profitability improvement and financial strength in 2008;
the surrender and termination of two Irish leases improving our future cash
flow and significantly reducing our future lease obligations; our potential
royalty revenue growth based on our customers adopting our new technologies;
the indicative trends of our strength and presence in the DSP market and
specifically within its largest segments, the handset, mobile and home
consumer electronic segments; and the revenue recognition of the $2.5 million
agreement in future periods. 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; the effect of intense competition
within our industry; the effect of the challenging period of growth
experienced by the industries in which we license our technology; 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 royalty revenue in
future periods and other risks relating to our business and the pipeline of
companies interested in our technologies, including, but not limited to, those
that are described from time to time in the Company'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 Year ended
December 31, December 31,
2007 2006 2007 2006
Unaudited Unaudited Unaudited Audited
Revenues:
Licensing $4,012 $5,275 $19,499 $22,160
Royalties 3,042 1,656 9,095 6,324
Other revenues 1,187 1,135 4,617 4,021
Total revenues 8,241 8,066 33,211 32,505
Cost of revenues 925 1,013 3,851 4,035
Gross profit 7,316 7,053 29,360 28,470
Operating expenses:
Research and
development, net 5,121 4,610 19,136 18,769
Sales and marketing 1,608 1,477 6,253 6,268
General and
administrative 1,587 1,347 5,721 5,882
Amortization of
intangible assets 24 41 148 414
Total operating expenses 8,340 7,475 31,258 31,333
Operating loss (1,024) (422) (1,898) (2,863)
Interest and other
income, net 1,016 728 3,636 2,677
Income (loss) before (8) 306 1,738 (186)
taxes on income
Taxes on income 243 (273) 447 (88)
Net income (loss) $(251) $579 $1,291 $(98)
Basic net income (loss) $(0.01)
per share $(0.01) $0.03 $0.07
Diluted net income (loss)
per share $(0.01) $0.03 $0.06 $(0.01)
Weighted-average number of
Common Stock used in
computation of net income
(loss) per share (in
thousands):
Basic 19,873 19,315 19,606 19,191
Diluted 19,873 19,432 20,150 19,191
Unaudited Reconciliation of GAAP to Non-GAAP Financial Measures
(U.S. Dollars in thousands, except per share amounts)
Quarter ended Year ended
December 31, December 31,
2007 2006 2007 2006
Unaudited Unaudited Unaudited Unaudited
GAAP net income (loss) $(251) $579 $1,291 $(98)
Equity-based compensation
expense included in cost of
revenue 28 15 83 53
Equity-based compensation
expense included in
research and development
expenses 289 133 935 656
Equity-based compensation
expense included in sales
and marketing expenses 84 191 334 449
Equity-based compensation
expense included in general
and administrative expenses 221 205 779 1,047
Interest and other income,
net (1) 80 - (345) (57)
Non-GAAP net income $451 $1,123 $3,077 $2,050
GAAP weighted-average number
of Common Stock used in
computation of net income
(loss) per share (in
thousands) (diluted) 19,873 19,432 20,150 19,191
Weighted-average number of
shares related to
outstanding options 1,125 - 147 83
Non-GAAP weighted-average
number of Common Stock used
in computation of net
income per share (in
thousands) (diluted) 20,998 19,432 20,297 19,274
GAAP diluted net income
(loss) per share $(0.01) $0.03 $0.06 $(0.01)
Equity-based compensation
expense $0.03 $0.03 $0.11 $0.12
Interest and other income,
net (1) $(0.00) - $(0.02) $(0.00)
Non-GAAP diluted net income
per share $0.02 $0.06 $0.15 $0.11
(1) Results for the fiscal years of 2007 and 2006 included a gain, net of
taxes, of $0.3 million and $0.1 million, respectively, reported in
interest and other income related to the disposal of an investment.
Results for the three months ended December 31, 2007 included tax
provision expenses of $0.1 related to a gain from disposal of an
investment.
CEVA, INC. AND ITS SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
U.S. Dollars in Thousands
December 31, December 31,
2007 2006
Unaudited Audited
ASSETS
Current assets:
Cash and cash equivalents $40,697 $37,968
Marketable securities and short
term bank deposits 35,678 26,266
Trade receivables, net 2,502 8,421
Deferred tax assets 861 613
Prepaid expenses 904 564
Investment 4,233 --
Other current assets 2,391 1,890
Total current assets 87,266 75,722
Long-term investments:
Severance pay fund 3,091 2,338
Deferred tax assets 455 382
Property and equipment, net 1,626 1,706
Investment -- 4,233
Goodwill 36,498 36,498
Other intangible assets, net 53 201
Total assets $128,989 $121,080
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Trade payables $455 $718
Accrued expenses and other payables 8,802 9,462
Taxes payable 320 135
Deferred revenues 727 406
Total current liabilities 10,304 10,721
Accrued severance pay 3,141 2,519
Accrued liabilities 1,156 1,697
Total liabilities 14,601 14,937
Stockholders' equity:
Common Stock 20 19
Additional paid in-capital 149,772 142,826
Other comprehensive income 7 -
Accumulated deficit (35,411) (36,702)
Total stockholders' equity 114,388 106,143
Total liabilities and
stockholders' equity $128,989 $121,080
SOURCE CEVA, Inc.
-0- 01/31/2008
/CONTACT: Yaniv Arieli, CFO, +1-408-514-2941, yaniv.arieli@ceva-dsp.com,
or Richard Kingston, Director of Marketing & Investor Relations, +1-408-514-
2976, richard.kingston@ceva-dsp.com, both of CEVA, Inc./
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(CEVA)