CEVA, Inc. Reports Third Quarter 2008 Financial Results

SAN JOSE, Calif., Oct. 29 /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 September 30, 2008.

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

Total revenue for the third quarter of 2008 was a record high $10.2 million, an increase of 17% compared to $8.7 million reported for the third quarter of 2007. Licensing revenue for the third quarter of 2008 was $6.0 million, an increase of 12% from $5.3 million reported for the third quarter of 2007. Royalty revenue for the third quarter of 2008 was $3.3 million, an increase of 51% from $2.2 million reported for the third quarter of 2007 and an 8% sequential increase from the second quarter of 2008. Revenue from services was $0.9 million, compared to $1.2 million reported for the third quarter of 2007.

Net income was $1.4 million for the third quarter of 2008, which represents an increase of 26% as compared to the $1.1 million for the same quarter of 2007. Diluted net income per share for the third quarter of 2008 increased 40% to $0.07 per share, compared to diluted net income of $0.05 per share for the third quarter of 2007.

During the third quarter of 2008, the Company concluded six new license agreements, of which five are for CEVA DSP cores, platforms and software. Target applications for customer deployment are 3.5G, LTE modems, femtocells and consumer electronics. Geographically, three of the six deals are in Europe, while two are with U.S.-based companies and one was concluded in the Asia Pacific region.

During the quarter, CEVA continued to execute on its strategy of licensing to global industry leaders, including two agreements for the Company's most advanced DSP cores. The first strategic agreement was signed with a major U.S. semiconductor company who licensed the CEVA-X1641 DSP core to develop an ASIC chip for a multinational OEM targeting the femtocell market. The second strategic agreement was signed with a major Asian OEM manufacturer who will use the CEVA-TeakLite-III DSP core to develop a chip for next-generation LTE applications. These two agreements illustrate the continued expansion of the wireless use model beyond cellular handsets to new applications in home gateways and mobile Internet markets.

Over the last few months, CEVA implemented its previously-announced 1 million share buy-back program, of which 500,000 shares were subject to a 10b5-1 plan that was established during the quarter. During the third quarter of 2008, CEVA repurchased approximately 200,000 shares at an average price of $8.2 per share, totaling approximately $1.6 million. As of today, CEVA repurchased approximately 675,000 shares at an average price of $7.87 per share, totaling approximately $5.3 million. It also fully utilized the shares available for repurchase under its 10b5-1 plan.

Gideon Wertheizer, Chief Executive Officer of CEVA, stated: "These solid third quarter results are a direct result of our focused strategy on growth opportunities in the mobile and consumer markets. Additionally, we are encouraged by our customers' progress in growing their businesses and expanding their markets shares with their customers, such as manufacturers of handsets, personal multimedia devices, portable game consoles and smartphones."

Yaniv Arieli, Chief Financial Officer of CEVA, stated: "During the third quarter, we executed record operating margins and operating income. We also generated positive cash flow of approximately $1.4 million, after taking into account $1.2 million of cash outflow associated with our buyback program. CEVA's cash balances and marketable securities as of September 30, 2008 were $87.9 million, and our DSO level was at 35 days."

"Given the current market environment, we remain vigilant in monitoring and controlling our expenses. Further, our strategy is supported by a strong balance sheet and business fundamentals that provide opportunities for continued stockholder value creation," concluded Arieli.

CEVA Conference Call

On October 29, 2008, CEVA management will conduct a conference call at 8:30 a.m. Eastern Time / 12:30 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=52145. 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: 68242364) for US domestic callers and +44-800-917-2646 (passcode: 68242364) for international callers from two hours after the end of the call until 11:59 p.m. (Eastern Time) on November 05, 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 the statement that we are encouraged by the growing adoption of our technologies beyond cellular handsets to home gateways and mobile Internet markets; Mr. Wertheizer's statement about our growth opportunities in the mobile and consumer markets and our prospects from the growing businesses and increasing market shares of our customers; and Mr. Arieli's statement that our strong balance sheet and business fundamentals provide opportunities for continued stockholder value creation. 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 reliance on revenue derived from a limited number of licensees; our ability to continue to improve our license and royalty revenue in future periods, general market conditions 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        Nine months ended
                                    September 30,         September 30,
                                   2008      2007        2008       2007
                                Unaudited  Unaudited  Unaudited  Unaudited
  Revenues:
    Licensing                     $5,974    $5,314     $17,088    $15,487
    Royalties                      3,296     2,178      10,067      6,053
    Other revenues                   936     1,237       3,201      3,430

  Total revenues                  10,206     8,729      30,356     24,970

  Cost of revenues                 1,105     1,001       3,543      2,926

  Gross profit                     9,101     7,728      26,813     22,044

  Operating expenses:
    Research and
     development, net              4,778     4,705      15,133     14,015
    Sales and marketing            1,822     1,471       5,401      4,645
    General and administrative     1,705     1,515       4,991      4,134
    Amortization of intangible
     assets                           12        41          53        124
    Reorganization expense             -         -       3,537          -

  Total operating expenses         8,317     7,732      29,115     22,918

  Operating income (loss)            784        (4)     (2,302)      (874)
  Interest and other income, net   1,003     1,170      13,226      2,620

  Income before taxes on income    1,787     1,166      10,924      1,746
  Taxes on income                    384        54       3,319        204

  Net income                       1,403     1,112       7,605      1,542

  Basic net income per share       $0.07     $0.06       $0.38      $0.08
  Diluted net income per share     $0.07     $0.05       $0.37      $0.08
    Weighted-average number of
     Common Stock used in
     computation of net income
     per share (in thousands):
    Basic                         20,157    19,647      20,131     19,516
    Diluted                       20,799    20,287      20,776     19,900



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

                                     Quarter ended       Nine months ended
                                      September 30,         September 30,
                                    2008        2007       2008      2007
                                  Unaudited  Unaudited  Unaudited  Unaudited

  GAAP net income                   1,403     1,112      7,605     1,542
  Equity-based compensation
   expense included in cost
   of revenue                          28        19         83        55
  Equity based compensation
   expense included in research
   and development expenses           273       234        805       646
  Equity based compensation
   expense included in sales
   and marketing expenses             143        76        380       250
  Equity based compensation
   expense included in general
   and administrative expenses        343       196        816       558
  Reorganization expense (1)            -         -      3,537         -
  Other income (2)(3)(4)             (358)     (425)   (11,247)     (425)
  Taxes on income (2)                 (19)        -      3,177         -
  Non-GAAP net income               1,813     1,212      5,156     2,626

  GAAP weighted-average number
   of Common Stock used in
   computation of diluted net
   income per share
   (in thousands)                  20,799    20,287     20,776    19,900

  Weighted-average number of
   shares related to
   outstanding options                169       152        169       162
  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
   of CEVA's equity investment in
   GloNav Inc, net; and disposal
   of an investment, net
   (in thousands)                  20,968    20,439     20,945    20,062


  GAAP diluted net income
   per share                        $0.07     $0.05      $0.37     $0.08
  Equity-based compensation
   expense                          $0.04     $0.03      $0.10     $0.07
  Reorganization expense                -         -      $0.17(1)      -
  Other income                      (0.02)(3) (0.02)(4)  (0.54)(2) (0.02)(4)
  Taxes on income                   $0.00         -      $0.15(2)      -
  Non-GAAP diluted net
   income per share                 $0.09     $0.06      $0.25     $0.13

  (1) Results for the nine months ended September 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 nine months ended September 30, 2008 included a
      capital gain of $11.22 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
      GloNav Inc. to NXP Semiconductors and a gain of $0.02 million reported
      in interest and other income, net, related to the disposal of an
      investment.
  (3) Results for the three months ended September 30, 2008 included a
      capital gain of $0.36 million reported in interest and other income,
      net, related to the divestment of CEVA's equity interest in GloNav
      Inc.
  (4) Results for the three months and nine months ended September 30, 2007
      included a gain of $0.4 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

                                                September 30,   December 31,
                                                    2008             2007
                                                  Unaudited        Audited
    ASSETS
  Current assets:
    Cash and cash equivalents                      $11,144        $40,697
    Marketable securities and bank deposits         76,713         35,678
    Trade receivables, net                           3,838          2,502
    Deferred tax assets                              1,300            861
    Prepaid expenses                                 1,375            904
    Investment                                           -          4,233
    Other current assets                             2,619          2,391
      Total current assets                          96,989         87,266
  Long-term investments:
    Severance pay fund                               3,943          3,091
  Deferred tax assets                                  616            455
  Property and equipment, net                        1,510          1,626
  Goodwill                                          36,498         36,498
  Other intangible assets, net                           -             53
      Total assets                                $139,556       $128,989

    LIABILITIES AND STOCKHOLDERS' EQUITY
  Current liabilities:
    Trade payables                                    $501           $455
    Accrued expenses and other payables              8,809          8,452
    Taxes payable                                      862            320
    Deferred revenues                                1,732            727
      Total current liabilities                     11,904          9,954

    Accrued severance pay                            4,153          3,141
    Accrued liabilities                                  -          1,506

      Total liabilities                             16,057         14,601

  Stockholders' equity:
  Common Stock:                                         20             20
  Additional paid in-capital                       152,874        149,772
  Treasury Stock                                      (910)             -
  Other comprehensive income (loss)                   (557)             7
  Accumulated deficit                              (27,928)       (35,411)
      Total stockholders' equity                   123,499        114,388
      Total liabilities and
       stockholders' equity                       $139,556       $128,989

Photo: NewsCom: http://www.newscom.com/cgi-bin/prnh/20051010/CEVALOGO
AP Archive: http://photoarchive.ap.org/
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/