CEVA, Inc. Reports Second Quarter 2008 Financial Results

SAN JOSE, Calif., July 23 /PRNewswire-FirstCall/ -- CEVA, Inc. ((NASDAQ: CEVA); (LSE: CVA)), a leading licensor of silicon intellectual property (SIP) platform solutions and DSP cores for mobile handset, consumer electronics and storage applications, today announced its financial results for the quarter ended June 30, 2008.

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

Total revenue for the second quarter of 2008 was $10.1 million, an increase of 18% compared to $8.5 million reported for the second quarter of 2007. Licensing revenue for the second quarter of 2008 was $6.0 million, an increase of 9% from $5.5 million reported for the second quarter of 2007. Royalty revenue for the second quarter of 2008 was $3.0 million, an increase of 58% from $1.9 million reported for the second quarter of 2007. Revenue from services for the second quarter of 2008 was $1.0 million, compared to $1.1 million reported for the second quarter of 2007.

Net income for the second quarter of 2008 was $0.7 million, compared to $0.4 million for the second quarter of 2007. Diluted net income per share for the second quarter of 2008 was $0.03 per share, compared to diluted net income of $0.02 per share for the second quarter of 2007.

During the second quarter of 2008, the Company concluded eight new license agreements. Seven agreements were for CEVA DSP cores, platforms and software, and one agreement was for CEVA Bluetooth technology. Target applications for customer deployment are LTE modems, 3G data cards, HSDPA handsets, satellite phones, two way radios, wireless connectivity, consumer electronics and gaming consoles. Geographically, seven of the eight deals concluded were in the Asia Pacific region and one was in Europe.

During the quarter, CEVA concluded two strategic licensing agreements with tier 1 OEMs for its DSP cores and platforms. A major, branded Asian OEM signed a comprehensive agreement for the latest CEVA-X DSP cores and platforms for the development of 3G data cards and 4G LTE applications. The second strategic agreement was signed with a major, branded Japanese OEM who extended its use of CEVA's DSPs to a range of consumer and portable electronics products. These two agreements are illustrative of CEVA's strategy of partnering with the world's leading semiconductors and OEMs to power a new range of end market products while maintaining the Company's traditionally strong presence in the cellular handset market.

Gideon Wertheizer, Chief Executive Officer of CEVA, stated: "During the second quarter of 2008, CEVA continued to expand its licensing activities and customer base in the handset market with strategic agreements in LTE and 3G data cards. We continue to see the introduction and adoption of new handsets enabled by our technologies which we believe will further contribute to our growth. We also are encouraged by the growing adoption of our technologies beyond cellular to wireless and consumer electronics applications."

Yaniv Arieli, Chief Financial Officer of CEVA, stated: "During the first half of 2008, CEVA achieved strong financial performance as compared to prior years. CEVA achieved an increase of 24% in revenue for the first six months of 2008 as compared to the same period in 2007, as well as a significant increase of 1400% in fully diluted EPS when comparing the same periods. The results for the first half of 2008 include a capital gain of $7.7 million, net of taxes, associated with CEVA's divestment of its equity interest in GloNov Inc. and a restructuring expense of $3.5 million associated with the termination of the Harcourt lease. We believe our strong pipeline of licensing deals and royalty revenue derived from the introduction of new CEVA-powered devices are indicative of our continued growth. During the second quarter of 2008, we generated positive cash flow of approximately $1.0 million, after taking into account $1.7 million of tax payments paid during the second quarter of 2008 associated with the capital gain from our equity divestment of GloNav Inc to NXP Semiconductors. As of June 30, 2008, CEVA's cash balances and marketable securities were $86.5 million and quarterly DSO levels were at 53 days."

CEVA Conference Call

On July 23, 2008 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=49604. 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: 54500819) for US domestic callers and +44-800-917-2646 (passcode: 54500819) for international callers from two hours after the end of the call until 11:59 p.m. (Eastern Time) on July 30, 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) 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 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 225 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 Mr. Wertheizer's statement that the introduction and adoption of new handsets enabled by CEVA's technologies will contribute to CEVA's growth and that the company is encouraged by the growing adoption of its technologies beyond cellular to wireless and consumer electronics applications and, as well as Mr. Arieli's statement that the company believes its strong pipeline of licensing deals and royalty revenue derived from the introduction of new CEVA-powered devices are indicative of its continued growth. The risks, uncertainties and assumptions include: the ability of CEVA's DSP cores and other technologies to continue to be strong growth drivers for the Company, including adapting to changes in the cellular handset market and expanding into wireless and consumer electronics markets; the effect of intense competition within our industry; 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 license and royalty revenue in future periods and other risks relating to our business, including, but not limited to, those that are described from time to time in CEVA'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          Six months ended
                                      June 30,                June 30,
                                  2008        2007        2008       2007
                                Unaudited   Unaudited   Unaudited  Unaudited
  Revenues:
    Licensing                   $6,026      $5,534      $11,114    $10,173
    Royalties                    3,038       1,918        6,771      3,875
    Other revenues               1,019       1,063        2,265      2,193

  Total revenues                10,083       8,515       20,150     16,241

  Cost of revenues               1,268         918        2,438      1,925

  Gross profit                   8,815       7,597       17,712     14,316

  Operating expenses:
    Research and
     development, net            5,235       4,610       10,355      9,310
    Sales and marketing          1,806       1,619        3,579      3,174
    General and
     administrative              1,696       1,373        3,286      2,619
    Amortization of
     intangible assets              20          41           41         83
    Reorganization expense           -           -        3,537          -

  Total operating expenses       8,757       7,643       20,798     15,186

  Operating income (loss)           58        (46)      (3,086)      (870)
  Interest and other
   income, net                     546         626       12,223      1,450

  Income before taxes on
   income                          604         580        9,137        580
  Taxes on income                 (87)         150        2,935        150

  Net income                       691         430        6,202        430

  Basic net income per           $0.03       $0.02        $0.31      $0.02
   share
  Diluted net income per
   share                         $0.03       $0.02        $0.30      $0.02
    Weighted-average
     number of Common
     Stock used in
     computation of net
     income  per share
     (in thousands):
    Basic                       20,140      19,473       20,118     19,450
    Diluted                     20,804      19,776       20,764     19,702



              Unaudited Reconciliation of Financial Measures
          (U.S. Dollars in thousands, except per share amounts)

                                   Quarter ended          Six months ended
                                      June 30,                June 30,
                                   2008        2007        2008       2007
                                Unaudited   Unaudited   Unaudited  Unaudited

  GAAP net income                  691         430        6,202        430
  Equity-based compensation
   expense included in cost
   of revenue                       27          18           55         36
  Equity based compensation
   expense included in
   research and development
   expenses                        265         216          532        412
  Equity based compensation
   expense included in sales
   and marketing expenses          142          92          237        174
  Equity based compensation
   expense included in general
   and administrative expenses     285         186          473        362
  Reorganization expense(1)          -           -        3,537          -
  Other income(2)                  (24)          -      (10,889)         -
  Taxes on income(2)                91           -        3,196          -
  Total reconciliation           1,477         942        3,343      1,414

  GAAP weighted-average number
   of Common Stock used in
   computation of diluted net
   income per share
   (in thousands)               20,804      19,776       20,764     19,702

  Weighted-average number of
   shares related to
   outstanding options
                                   169         165          169        160

  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 the
   divestment CEVA's equity
   investment in GloNav Inc,
   net; and disposal of an
   investment (in thousands)
                                20,973      19,941       20,933     19,862

  GAAP diluted net income
   per share                     $0.03       $0.02        $0.30      $0.02
  Equity-based compensation
   expense                       $0.04       $0.03        $0.06      $0.05
  Reorganization expense(1)          -           -        $0.17          -
  Other income(2)                $0.00           -       $(0.52)         -
  Taxes on income(2)             $0.00           -        $0.15          -
  Total reconciliation           $0.07       $0.05        $0.16      $0.07


  (1) Results for the six months ended June 30, 2008 included a
      reorganization expense of $3.5 million related to the termination of
      the long-term Harcourt lease property in Ireland.

  (2) Results for the six months ended June 30, 2008 included a capital gain
      of $10.87 million reported in interest and other income, net, and the
      applicable tax expense of $3.2 million reported in taxes on income,
      related to the divestment of CEVA's equity interest in GloNov Inc. to
      NXP Semiconductors. Results for the second quarter and six months
      ended June 30, 2008 included a gain of $0.02 million reported in
      interest and other income, net, 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,
                                                     2008           2007
                                                   Unaudited      Audited
  ASSETS
  Current assets:
    Cash and cash equivalents                      $43,093        $40,697
    Marketable securities and bank deposits         43,382         35,678
    Trade receivables, net                           5,884          2,502
    Deferred tax assets                              1,336            861
    Prepaid expenses                                 1,616            904
    Investment                                           -          4,233
    Other current assets                             1,939          2,391
        Total current assets                        97,250         87,266
  Long-term investments:
    Severance pay fund                               3,859          3,091
  Deferred tax assets                                  807            455
  Property and equipment, net                        1,630          1,626
  Goodwill                                          36,498         36,498
  Other intangible assets, net                          12             53
            Total assets                          $140,056       $128,989



    LIABILITIES AND STOCKHOLDERS' EQUITY

  Current liabilities:
  Trade payables                                      $713           $455
  Accrued expenses and other payables                8,827          8,452
  Taxes payable                                      1,815            320
  Deferred revenues                                  2,110            727
      Total current liabilities                     13,465          9,954

  Accrued severance pay                              4,063          3,141
  Accrued liabilities                                    -          1,506

      Total liabilities                             17,528         14,601

  Stockholders' equity:
  Common Stock:                                         20             20
  Additional paid in-capital                       151,846        149,772
  Other comprehensive income (loss)                   (129)             7
  Accumulated deficit                              (29,209)       (35,411)
      Total stockholders' equity                   122,528        114,388
      Total liabilities and stockholders'
           equity                                 $140,056       $128,989

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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/