CEVA, Inc. Announces Fourth Quarter and Year End 2008 Financial Results
SAN JOSE, Calif., Feb. 3 /PRNewswire-FirstCall/ -- CEVA, Inc. , a leading licensor of silicon intellectual property (SIP) platform solutions and DSP cores for the handset, consumer electronics and portable device markets, today announced its financial results for the fourth quarter and year ended December 31, 2008.
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Fourth Quarter 2008
Total revenue for the fourth quarter of 2008 was $10.0 million, an increase of 21% compared to $8.2 million reported for the fourth quarter of 2007. Licensing revenue for the fourth quarter of 2008 was $4.6 million, an increase of 15% from $4.0 million reported for the fourth quarter of 2007. Royalty revenue for the fourth quarter of 2008 was a record high $4.3 million, an increase of 41% from $3.0 million reported for the fourth quarter of 2007 and a 30% sequential increase from the third quarter of 2008. Revenue from services and support for the fourth quarter of 2008 was $1.1 million, compared to $1.2 million for the fourth quarter of 2007.
US GAAP net income was $1.0 million for the fourth quarter of 2008, compared to a net loss of $0.3 million for the same quarter of 2007. US GAAP diluted net income per share for the fourth quarter of 2008 increased to $0.05 per share, compared to diluted loss per share of $0.01 for the fourth quarter of 2007.
The financial results for the fourth quarter of 2008 include equity-based compensation expense of $0.8 million; a pre-tax capital gain of $0.9 million associated with our equity divestment of GloNav Inc to NXP Semiconductors and a one-time reorganization expense of $0.6 million related to the recent cost reduction measures taken to reduce the on-going expenses associated with the Company's SATA activities.
Non-GAAP net income and diluted net income per share for the fourth quarter of 2008, excluding the items described above, were $1.6 million and $0.08 per share, respectively, an increase of 246% and 300%, respectively, compared to the fourth quarter of 2007.
During the fourth quarter, CEVA continued to implement its previously-announced one million share buy-back program. As of February 2, 2009, the Company repurchased approximately 753,000 shares at an average price of $7.70 per share for a total amount of approximately $5.8 million and has an additional 247,000 shares available for repurchase under the existing plan.
During the fourth quarter of 2008, the Company concluded six new license agreements, all of which are for CEVA DSP cores, platforms and software. Target applications for customer deployment are 2G and 3G handsets, smartphones and mobile multimedia products. Geographically, four of the six deals concluded were in Europe, one in the U.S. and one in the Asia Pacific region. Of the license deals concluded, two are with strategic customers. One of the strategic agreements is with a large merchant chip supplier in the handset market who signed a comprehensive agreement for the use of CEVA DSP cores in low-end and mid-range handset products. The second strategic agreement is with a leading Asia-based semiconductor company in the consumer market who is expanding into the handset market targeting the 3G segment.
Gideon Wertheizer, Chief Executive Officer of CEVA, said, "I am very proud of CEVA's progress during 2008. It was an outstanding year for the Company from both a strategic and a business perspective. Not only have we gained considerable market traction in the handset, portable and consumer electronics markets, but as a result of the industry-wide migration to CEVA DSP cores, our technologies are now in mass production at Nokia, Samsung, LG Electronics, Sony Ericsson, Sony Electronics and many others. I believe that our market position and strong business fundamentals will allow us to keep growing, even in the midst of uncertain economic times."
Full Year 2008 Review
Total revenue for 2008 was $40.4 million, representing an increase of 22% compared to $33.2 million reported for 2007. Royalty revenue for 2008 was a record high of $14.3 million, representing an increase of 58% compared to $9.1 million reported for 2007. Licensing revenue for 2008 was $21.7 million, an increase of 11% compared to $19.5 million a year ago. A total of 30 new licensing agreements were signed in 2008, compared to 36 agreements in 2007. Shipped units by licensees increased 36% to a record 307 million in 2008, compared to 227 million units shipped in 2007.
US GAAP net income and diluted net income per share for 2008 was $8.6 million and $0.42, an increase of 563% and 600%, respectively, compared to $1.3 million and $0.06 per share reported for 2007.
In 2008, the Company recorded equity-based compensation expenses of $2.9 million, a pre-tax capital gain of $12.1 million associated with its equity divestment of GloNav to NXP Semiconductors; an expense of $3.5 million associated with the exit of the Dublin long-term lease in the first quarter of 2008, and a restructuring expense of $0.6 million associated with SATA activities in the fourth quarter of 2008.
Non-GAAP net income and diluted net income per share for 2008, excluding the items described above, were $6.7 million and $0.32 per share, respectively, an increase of 118% and 113%, respectively, compared to 2007.
Yaniv Arieli, Chief Financial Officer of CEVA, stated, "The fourth quarter of 2008 delivered another significant milestone for CEVA with record high royalty revenue of $4.3 million. This continued royalty progress is clearly reflected in the Company's record full year 2008 financials with total revenue up 22% year-over-year to $40.4 million, combined with significant profitability and net income per share improvements. The Company also managed to generate positive cash flow of $8.3 million during 2008, strengthening our balance sheet considerably. As of December 31, 2008, CEVA's cash balances and marketable securities were $84.6 million. "In the context of the current economic downturn, we recently made adjustments to our 2009 expense levels to ensure the sustainability of our financial progress by reducing overall expenses by approximately $1.0 million," concluded Arieli.
CEVA Conference Call
On February 3, 2009, 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 fourth quarter and year ended December 31, 2008.
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 also will be available live via the Internet at the following link: http://www.videonewswire.com/event.asp?id=54398. 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: 79622372) for US domestic callers and +44-800-917-2646 (passcode: 79622372) for international callers from two hours after the end of the call until 11:59 p.m. (Eastern Time) on February 10, 2009. The replay will also be available at CEVA's web site https://www.ceva-ip.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 handsets, consumer electronics and portable devices. 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 2008, CEVA's IP was shipped in over 300 million devices. For more information, visit https://www.ceva-ip.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 about our market position and strong business fundamentals allowing us to keep growing, even in the midst of uncertain economic times; and Mr. Arieli's statement reducing overall 2009 expenses to ensure the sustainability of our financial progress. The risks, uncertainties and assumptions include: the ability of the CEVA DSP cores and other technologies to continue to be strong growth drivers for us; the continuation of our market position; the ability of the reduction in overall 2009 expenses to produce the intended benefits; 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, general market conditions 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,
2008 2007 2008 2007
Unaudited Unaudited Unaudited Audited
Revenues:
Licensing $4,613 $4,012 $21,701 $19,499
Royalties 4,282 3,042 14,349 9,095
Other revenues 1,114 1,187 4,315 4,617
Total revenues 10,009 8,241 40,365 33,211
Cost of revenues 1,125 925 4,668 3,851
Gross profit 8,884 7,316 35,697 29,360
Operating expenses:
Research and
development, net 5,039 5,121 20,172 19,136
Sales and marketing 1,687 1,608 7,088 6,253
General and
administrative 1,646 1,587 6,637 5,721
Amortization of
intangible assets - 24 53 148
Reorganization
expense 584 - 4,121 -
Total operating
expenses 8,956 8,340 38,071 31,258
Operating loss (72) (1,024) (2,374) (1,898)
Interest and other
income, net 1,514 1,016 14,740 3,636
Income (loss)
before taxes
on income 1,442 (8) 12,366 1,738
Taxes on income 482 243 3,801 447
Net income (loss) $960 $(251) $8,565 $1,291
Basic net income
(loss) per share $0.05 $(0.01) $0.43 $0.07
Diluted net income
(loss) per share $0.05 $(0.01) $0.42 $0.06
Weighted-average
number of Common
Stock used in
computation of
net income (loss)
per share
(in thousands):
Basic 19,647 19,873 20,009 19,606
Diluted 19,977 19,873 20,575 20,150
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,
2008 2007 2008 2007
Unaudited Unaudited Unaudited Unaudited
GAAP net income (loss) 960 (251) 8,565 1,291
Equity-based
compensation expense
included in cost
of revenue 29 28 112 83
Equity based
compensation expense
included in research
and development
expenses 283 289 1,088 935
Equity based
compensation expense
included in sales
and marketing expenses 151 84 531 334
Equity based
compensation expense
included in general
and administrative
expenses 375 221 1,191 779
Reorganization expense 584(1) - 4,121(1) -
Other income (760)(2) (3) (12,007)(3) (428)(5)
Taxes on income (61)(2) 83(4) 3,116(3) 83
Non-GAAP net income 1,561 451 6,717 3,077
GAAP weighted-average
number of Common
Stock used in
computation of
diluted net income
(loss) per share
(in thousands) 19,977 19,873 20,575 20,150
Weighted-average
number of shares
related to outstanding
options 5 1,125 128 147
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
CEVA's equity divestment
of GloNav Inc, net;
and disposal of an
investment
(in thousands) 19,982 20,998 20,703 20,297
GAAP diluted net
income (loss)
per share $0.05 $(0.01) $0.41 $0.06
Equity-based
compensation expense $0.04 $0.03 $0.14 $0.11
Reorganization
expense $0.03(1) - $0.20 -
Other income (0.04)(2) (0.00) (0.58)(3) (0.02)(5)
Taxes on income $0.00(2) $0.00(4) $0.15 (3) $0.00
Non GAAP diluted
net income per
share $0.08 $0.02 $0.32 $0.15
(1) Results for the three months ended December 31, 2008 included a
reorganization expense of $0.6 million related to cost cutting
measures associated with SATA activities. Results for the year ended
December 31, 2008 included a reorganization expense of $3.5 million
related to the termination of the long-term Harcourt lease in
Dublin, Ireland and $0.6 million related to SATA activities.
(2) Results for the three months ended December 31, 2008 included a
capital gain of $0.9 million reported in interest and other income,
net, and the applicable tax expense of $0.06 million reported in taxes
on income, related to the equity divestment of GloNov Inc to NXP
Semiconductors and a loss of $0.14 million reported in interest and
other income, net, related to disposal of fixed assets.
(3) Results for the year ended December 31, 2008 included a capital gain
of $12.12 million reported in interest and other income, net, and the
applicable tax expense of $3.1 million reported in taxes on income,
related to the equity divestment of GloNov and a gain of $0.03 million
reported in interest and other income, net, related to the disposal of
an investment and a loss of $0.14 million reported in interest and
other income, net, related to disposal of fixed assets.
(4) Results for the three months ended December 31, 2007 included tax
provision expense of $0.08 related to a gain from disposal of an
investment.
(5) Results for the year ended December 31, 2007 included a gain of $0.43
million, reported in interest and other income and the applicable tax
expense of $0.08 million reported in taxes on income, related to the
disposal of an investment.
CEVA, INC. AND ITS SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
U.S. Dollars in Thousands
December 31, December 31,
2008 2007
Unaudited Audited
ASSETS
Current assets:
Cash and cash equivalents $13,328 $40,697
Marketable securities and bank deposits 71,301 35,678
Trade receivables, net 5,390 2,502
Deferred tax assets 1,085 861
Prepaid expenses 1,673 904
Investment - 4,233
Other current assets 3,248 2,391
Total current assets 96,025 87,266
Long-term investments:
Severance pay fund 3,441 3,091
Deferred tax assets 351 455
Property and equipment, net 1,271 1,626
Goodwill 36,498 36,498
Other intangible assets, net - 53
Total assets $137,586 $128,989
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Trade payables $615 $455
Accrued expenses and other payables 10,446 8,452
Taxes payable 44 320
Deferred revenues 1,034 727
Total current liabilities 12,139 9,954
Accrued severance pay 3,788 3,141
Accrued liabilities - 1,506
Total liabilities 15,927 14,601
Stockholders' equity:
Common Stock: 20 20
Additional paid in-capital 153,712 149,772
Treasury Stock (5,077) -
Other comprehensive income (loss) (24) 7
Accumulated deficit (26,972) (35,411)
Total stockholders' equity 121,659 114,388
Total liabilities and stockholders'
equity $137,586 $128,989
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SOURCE: CEVA, Inc.
Web site: https://www.ceva-ip.com/
