CEVA, Inc. Reports First Quarter 2007 Financial Results

SAN JOSE, Calif., May 1 /PRNewswire-FirstCall/ -- CEVA, Inc. (NASDAQ: CEVA)(LSE: CVA), a leading licensor of innovative intellectual property (IP) platform solutions and DSP cores for wireless, consumer and multimedia applications, today announced its financial results for the quarter ended March 31, 2007.

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

Total revenue for the first quarter of 2007 was $7.7 million, a decrease of 5% compared to $8.1 million reported for the first quarter of 2006. First quarter of 2007 licensing revenue was $4.6 million, a decrease of 13% from the first quarter of 2006. Royalty revenue for the first quarter of 2007 was $2.0 million, an increase of 8% over the first quarter of 2006 and 18% sequentially higher than the fourth quarter of 2006. Revenue from services for the first quarter of 2007 was $1.1 million, an increase of 16% compared to the first quarter of 2006.

Net income for the first quarter of 2007 was $0.0 million, compared to a net loss of $0.8 million for the first quarter of 2006. Net income per share for the first quarter of 2007 was $0.00 per share, compared to net loss of $0.04 per share for the first quarter of 2006.

In the first quarter of 2007, the Company recognized an equity-based compensation charge of $0.5 million pursuant to the adoption of SFAS 123R, compared to a charge of $0.6 million in the first quarter of 2006. Pro forma non-GAAP net income and net income per share for the first quarter of 2007, excluding the equity-based compensation expense, was $0.5 million and $0.02, respectively. Pro forma non-GAAP net loss and net loss per share for the first quarter of 2006, excluding the equity-based compensation expense, was $0.2 million and $0.01, respectively.

During the first quarter of 2007, the Company signed nine new license agreements. Six agreements were for CEVA DSP cores and platforms and three agreements were for CEVA SATA technology. Target applications for customer deployment are next generation 3G cellular phones, smart phones, personal video recorder, Voice over IP and networking equipment. Geographically, four of the nine deals signed were in the U.S., two were in Europe and three were in the Asia Pacific region.

During the quarter, CEVA also concluded a strategic licensing agreement for its newest DSP Core, the CEVA-TeakLite-III, with a first tier Asian fabless company. This is the second major design win for the CEVA-TeakLite-III core. This design win expands CEVA's DSP core reach beyond the mobile market into the large home entertainment audio market composing of DVDs, set-top boxes, game consoles, digital TVs, IP TVs and the emerging HD DVD and Blu-ray applications.

Also earlier during the first quarter of 2007, Infineon Technologies and Nokia announced that Nokia would begin to use Infineon's ULC2 reference platform (incorporating the CEVA-TeakLite DSP) in their low cost handsets targeted for the emerging economies of India and China.

Gideon Wertheizer, Chief Executive Officer of CEVA, stated: "The first quarter of 2007 marked a number of important achievements in licensing revenue for the Company -- we entered into the home entertainment audio market and continued our expansion in the VoIP space. We also are pleased to report two quarters of double digit sequential growth in our royalty revenue since the third quarter of 2006 as a result of the successful deployment of consumer electronics and cellular products incorporating CEVA's technologies."

Yaniv Arieli, Chief Financial Officer of CEVA, stated: "Our revenue for the first quarter of 2007 was at the low range of our guidance due to the delay in execution of a license agreement that we now anticipate will be executed in the second quarter. During the first quarter of 2007, we generated positive cash flow and as of March 31, 2007, CEVA's cash balances and marketable securities were $64.4 million. We are encouraged by a strong pipeline of companies with interest in licensing our newer technologies targeting traditional markets as well as new market segments and applications."

CEVA Conference Call

On May 1, 2007 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 (CEVA reference number # 8685671)

-- UK/Rest of World: Dial +44-800-032-3836 (CEVA reference number # 8685671)

The conference call will also be available live via the Internet at the following link: http://www.videonewswire.com/event.asp?id=39165. 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 1-877-519-4471 (passcode: 8685671) for US domestic callers and +44- 800-169-3875 (passcode: 8685671) for international callers from two hours after the end of the call until 11:59 p.m. (Eastern Time) on May 8, 2007. 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 innovative intellectual property (IP) platform solutions and DSP cores for wireless, consumer and multimedia applications. CEVA's IP portfolio includes comprehensive platform solutions for multimedia, audio, voice over packet (VoP), Bluetooth, Serial Attached SCSI (SAS) and Serial ATA (SATA), and a wide range of programmable DSP cores and subsystems with different price/performance metrics serving multiple markets. In 2006, CEVA's IP was shipped in over 190 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 CEVA's results 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 statements about the anticipated execution of a license agreement originally planned for the first quarter of 2007 and the pipeline of companies with interest in CEVA's technologies. The risks, uncertainties and assumptions include: the ability of the CEVA TeakLite-III DSP Core and VoIP solution to continue to be a strong growth driver for the Company; intense competition within our industry; the industries in which we license our technology have experienced a challenging period of growth; the market for our technology may not develop as expected, especially in the case of newly introduced or planned to be introduced technologies; 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 improve our royalty revenue in 2007 and other risks relating to our business and the strong 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, including but not limited to its Annual Report on Form 10-K for the fiscal year ended December 31, 2006. 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
                                                          March 31,
                                                     2007           2006
                                                  Unaudited      Unaudited
  Revenues:
    Licensing and royalties                         $6,596         $7,160
    Other revenue                                    1,130            974

  Total revenues                                     7,726          8,134

  Cost of revenue                                    1,007            895

  Gross profit                                       6,719          7,239

  Operating expenses:
    Research and development, net                    4,700          5,016
    Sales and marketing                              1,555          1,771
    General and administrative                       1,246          1,484
    Amortization of intangible assets                   42            190

  Total operating expenses                           7,543          8,461

  Operating loss                                      (824)        (1,222)
  Interest and other income, net                       824            541

  Income (loss) before taxes on income                   -           (681)
  Taxes on income                                        -            120

  Net income (loss)                                      -           (801)

  Basic and diluted net income (loss) per share      $0.00         $(0.04)

  Weighted-average number of common stock used
   in computation of net income (loss) per share
   (in thousands):
  Basic and Diluted                                 19,420         19,061


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

                                                        Quarter ended
                                                           March 31,
                                                      2007          2006
                                                   Unaudited      Unaudited

  GAAP net income (loss)                                $-          $(801)
  Equity-based compensation expense included in
   cost of revenue                                      18             15
  Equity-based compensation expense included in
   research and development                            196            219

  Equity-based compensation expense included in
   sales and marketing                                  82            102
  Equity-based compensation expense included in
   general and administration                          176            309
  Pro forma non-GAAP net income (loss)                 472           (156)
  Pro forma non-GAAP basic and diluted net
   income (loss) per share                           $0.02         $(0.01)

  Weighted-average number of common stock used in
   computation of pro forma non-GAAP net
   income (loss) per share (in thousands):
  Basic and Diluted                                 19,628         19,061


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

                                                  March 31,     December 31,
                                                    2007            2006
                                                 Unaudited        Audited
    ASSETS
  Current assets:
    Cash and cash equivalents                      $37,177        $37,968
    Marketable securities and bank deposits         27,251         26,266
    Trade receivables, net                           8,663          8,421
    Deferred tax assets                                537            613
    Prepaid expenses                                   727            564
    Other current assets                             2,116          1,890
      Total current assets                          76,471         75,722
  Long-term investments:
    Severance pay fund                               2,220          2,338
  Deferred tax assets                                  624            382
  Property and equipment, net                        1,941          1,706
  Investment in other company, net                   4,233          4,233
  Goodwill                                          36,498         36,498
  Other intangible assets, net                         159            201
      Total assets                                $122,146       $121,080

    LIABILITIES AND STOCKHOLDERS' EQUITY
  Current liabilities:
    Trade payables                                    $838           $718
    Accrued expenses and other payables              9,575          9,462
    Taxes payable                                      140            135
    Deferred revenues                                  385            406
      Total current liabilities                     10,938         10,721

  Accrued severance pay                              2,402          2,519
  Accrued liabilities                                1,536          1,697

      Total liabilities                             14,876         14,937

  Stockholders' equity:
  Common stock:                                         19             19
  Additional paid in-capital                       143,956        142,826
  Other comprehensive loss                              (3)             -
  Accumulated deficit                              (36,702)       (36,702)
      Total stockholders' equity                   107,270        106,143
      Total liabilities and stockholders'
       equity                                     $122,146       $121,080

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SOURCE: CEVA, Inc.

CONTACT: Yaniv Arieli, CFO, +1-408-514-2941, or
yaniv.arieli@ceva-dsp.com, or Richard Kingston, +1-408-514-2976, or
richard.kingston@ceva-dsp.com, both of CEVA, Inc.

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