CEVA, Inc. Reports Second Quarter 2007 Financial Results

SAN JOSE, Calif., July 24 /PRNewswire-FirstCall/ -- CEVA, Inc. (NASDAQ: CEVA)(LSE: CVA), a leading licensor of silicon intellectual property (SIP) platform solutions and DSP cores for mobile, consumer electronics and storage applications, today announced its financial results for the quarter ended June 30, 2007.

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

Total revenue for the second quarter of 2007 was $8.5 million, a slight increase of 1% compared to $8.4 million reported for the second quarter of 2006 and a sequential increase of 10% from $7.7 million for the first quarter of 2007. Second quarter of 2007 licensing revenue was $5.5 million, a decrease of 8% from $6.0 million reported for the second quarter of 2006 and a sequential increase of 19% from $4.6 million for the first quarter of 2007. Royalty revenue for the second quarter of 2007 was $1.9 million, an increase of 33% over $1.4 million for the second quarter of 2006 and slightly lower by 2.0% from the traditionally strong first quarter of 2007 in which royalty revenue was $2.0 million. Revenue from services for the first and second quarters of 2007 was $1.1 million, an increase of 11% compared to $1.0 million reported for the second quarter of 2006.

Net income for the second quarter of 2007 was $0.4 million, compared to a net loss of $0.2 million for the second quarter of 2006. Net income per share for the second quarter of 2007 was $0.02 per share, compared to net loss of $0.01 per share for the second quarter of 2006.

In the second quarter of 2007 and 2006, the Company recognized an equity-based compensation charge of $0.5 million pursuant to the adoption of SFAS 123R. Pro forma non-GAAP net income and net income per share for the second quarter of 2007, excluding the equity-based compensation expense, increased 308% and 400% to $0.9 million and $0.05, respectively, compared to the second quarter of 2006. Pro forma non-GAAP net income and net income per share for the second quarter of 2006, excluding the equity-based compensation expense and a gain of $0.1 million reported in interest and other income related to the disposal of an investment, was $0.2 million and $0.01, respectively.

During the second quarter of 2007, the Company concluded eight new license agreements. Six agreements were for CEVA DSP cores and platforms, one agreement was for CEVA SATA technology and one agreement was for CEVA Bluetooth 2.0+EDR technology. Target applications for customer deployment are Digital TV, DVD and HD-DVD, ultra low cost phones, 3G phones, smart phones and portable multimedia players. Geographically, three of the eight deals concluded were in the U.S., one was in Europe and four were in the Asia Pacific region.

During the quarter, CEVA concluded another major strategic licensing agreement for its newest DSP core, the CEVA-TeakLite-III. The new customer is one of the largest, branded, consumer electronics vendors in Japan that has adopted the CEVA-TeakLite-III for its next generation of integrated Digital TVs. This represents another major design win for CEVA in the home entertainment segment and continues the Company's expansion beyond the mobile market into a larger market composed of Digital TVs, HD-DVD / Blu-ray DVDs, IPTV and set-top boxes.

Gideon Wertheizer, Chief Executive Officer of CEVA, stated: "The second quarter of 2007 was a strong quarter for the main aspects of our business, including total revenue reached, the backlog and pipeline build up and the increase in royalty revenue which was 33% higher compared to the equivalent quarter last year. We are also particularly pleased with the continued success of our newest generation CEVA-TeakLite-III DSP core in penetrating the home entertainment market, as well as the strategic decision made by one of the largest European semiconductor companies to broadly use our technology over its internally developed DSP solution."

Yaniv Arieli, Chief Financial Officer of CEVA, stated: "Our revenue for the second quarter of 2007 was closer to the higher end of our guidance through a combination of strong royalties reported by our customers and good licensing performance. This revenue performance along with continued focus on our growth engines enabled us to report significant sequential profits growth. Non-GAAP pro forma net income and fully diluted EPS for the second quarter of 2007 compared to the first quarter of 2007 grew 100% and 96%, respectively. We also generated positive cash flow of approximately $0.5 million and as of June 30, 2007, CEVA's cash balances and marketable securities were $64.9 million."

CEVA Conference Call

On July 24, 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 (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=40804. 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: 8982532) for US domestic callers and +44-800-169-3875 (passcode: 8982532) for international callers from two hours after the end of the call until 11:59 p.m. (Eastern Time) on July 31, 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 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, 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 Mr. Wertheizer's statements about the backlog and pipeline build up in the second quarter of 2007. The risks, uncertainties and assumptions include: the ability of the CEVA- TeakLite-III DSP core and VoIP solution 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; 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 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 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           Six Months ended
                                June 30,                 June 30,
                           2007         2006       2007          2006
                       Unaudited    Unaudited   Unaudited     Unaudited
  Revenues:
    Licensing and
     royalties            $7,452       $7,455      $14,048      $14,615
    Other revenues         1,063          957        2,193        1,931

  Total revenues           8,515        8,412       16,241       16,546

  Cost of revenues           918        1,135        1,925        2,030

  Gross profit             7,597        7,277       14,316       14,516

  Operating expenses:
    Research and
     development, net      4,610        4,873        9,310        9,889
    Sales and marketing    1,619        1,606        3,174        3,377
    General and
     administrative        1,373        1,474        2,619        2,958
    Amortization of
     intangible assets        41          141           83          331

  Total operating
    expenses               7,643        8,094       15,186       16,555

  Operating loss             (46)        (817)        (870)      (2,039)
  Interest and other
    income, net              626          630        1,450        1,171

  Income (loss) before
    taxes on income          580         (187)         580         (868)
  Taxes on income            150           30          150          150

  Net income (loss)          430         (217)         430       (1,018)

  Basic and diluted
    net income (loss)
    per share              $0.02       $(0.01)       $0.02       $(0.05)

  Weighted-average
    number of Common
    Stock used in
    computation of net
    income (loss) per
    share (in thousands):
  Basic                   19,473       19,142       19,450       19,104
  Diluted                 19,776       19,142       19,702       19,104



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

                            Quarter ended          Six Months ended
                               June 30                 June 30
                          2007         2006        2007        2006
                       Unaudited     Unaudited   Unaudited   Unaudited
  GAAP net income
   (loss)                   430        (217)          430      (1,018)
  Equity-based
    compensation
    expense included
    in cost of revenue       18           9            36          24
  Equity based
    compensation expense
    included in research
    and development
    expenses                216         134           412         353
  Equity based
    compensation expense
    included in sales and
    marketing expenses       92          78           174         180
  Equity based
    compensation expense
    included in general
    and administrative
    expenses                186         284           362         593
  Interest and other
    income, net (1)           0         (57)            0         (57)
  Pro forma non-GAAP
    net income              942         231         1,414          75
  Pro forma non-GAAP
    basic and diluted
    net income per share  $0.05       $0.01         $0.07       $0.00
  Weighted-average number
    of common stock used
    in computation of pro
    forma non-GAAP Net
    income per share
    (in thousands):
  Basic                  19,473      19,142        19,450      19,104
  Diluted                19,941      19,443        19,862      19,372

  (1) Results for the second quarter of 2006 included a gain of $0.1 million
      reported in interest and other income 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,
                                                     2007          2006
                                                   Unaudited     Audited
     ASSETS
  Current assets:
   Cash and cash equivalents                         $43,026       $37,968
   Marketable securities and bank deposits            21,880        26,266
   Trade receivables, net                              9,949         8,421
   Deferred tax assets                                   642           613
   Prepaid expenses                                      765           564
   Other current assets                                1,858         1,890
           Total current assets                       78,120        75,722
  Long-term investments:
   Severance pay fund                                  2,291         2,338
  Deferred tax assets                                    703           382
  Property and equipment, net                          1,887         1,706
  Investment                                           4,233         4,233
  Goodwill                                            36,498        36,498
  Other intangible assets, net                           118           201
           Total assets                             $123,850      $121,080


     LIABILITIES AND STOCKHOLDERS' EQUITY
  Current liabilities:
   Trade payables                                       $884          $718
   Accrued expenses and other payables                10,013         9,462
   Taxes payable                                         119           135
   Deferred revenues                                     626           406
           Total current liabilities                  11,642        10,721

   Accrued severance pay                               2,468         2,519
   Accrued liabilities                                  1370         1,697
           Total liabilities                          15,480        14,937

  Stockholders' equity:
  Common Stock:                                           19            19
  Additional paid in-capital                         144,652       142,826
  Other comprehensive loss                               (29)           --
  Accumulated deficit                                (36,272)      (36,702)
           Total stockholders' equity                108,370       106,143
           Total liabilities and stockholders'      $123,850      $121,080

Photo: NewsCom: http://www.newscom.com/cgi-bin/prnh/20051010/CEVALOGO
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PRN Photo Desk, photodesk@prnewswire.com

SOURCE: CEVA, Inc.

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

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