Parthus Technologies Plc Announces Results For The Quarter Ended March 31, 2002

April 17, 2002

Results Statement | PDF
format ]

Dublin, Ireland - April 17, 2002 - Parthus Technologies plc
(LSE: PRH; Nasdaq: PRTH) today announced its financial results for the
quarter ended March 31, 2002.

Highlights for the first quarter ended March 31, 2002 (U.S. GAAP)

Licensing and royalty revenue grew 53% year-on-year to $8.9
million, up sequentially from $8.7 million

Total revenue increased year-on-year from $9.8 million to $10.7
million

Six new licensing agreements signed with four new customers

Samsung (NavStream3000 - the industry's leading location
technology) and Sharp Microelectronics (MachStream - acceleration IP)
announced as licensees

8% sequential reduction in operating cost base underpins return
to profitability target

Pro forma* basic and diluted net loss per share amounted to
$0.004 per ordinary share or $0.042 per ADS or $2.4 million, and loss from
operations decreased 26% sequentially

Basic and diluted net loss per share amounted to $0.006 per
ordinary share or $0.057 per ADS

Formed strategic alliance with UbiNetics Plc to add 3G W-CDMA
technologies to the Parthus portfolio.

* Pro forma results for the quarter ending March,31 2002
exclude amortization of intangibles & non-cash stock compensation
expense

Commenting today, Kevin Fielding, president of Parthus, said:

"We are pleased to have delivered another quarter of solid
performance, with 53% growth in year-on-year licensing, particularly when
set against the prevailing weakness in the semiconductor market. We
continued to complete agreements with the leading players in the industry,
as evidenced by the announcement that Samsung have licensed our NavStream
GPS location technology. In the quarter we also formed a strategic
partnership with UbiNetics, leaders in 3G technology, which delivers the
industry's leading 3G technology to Parthus' portfolio."

Commenting today, Elaine Coughlan, chief financial officer of
Parthus, said:
"With six new licensing agreements and four new
customers, we maintained strong year-on-year licensing and royalty growth
in the quarter. Our actions on cost reduction continued to produce results
with pro-forma operating losses declining by 26% sequentially. We believe
these metrics are strong indicators of our continued progress towards
planned return to profitability in 2002."

ParthusCeva Merger In April, we announced a proposed merger with
Ceva, the IP licensing subsidiary of DSP Group, Inc., which will create
what we believe to be the market leader in open-standard DSP based IP
solutions.

Commenting, Brian Long, chief executive officer of Parthus ,
said:
"The combination of Parthus and Ceva will position the
company to address two major converging trends in our industry. First, the
industry is moving towards open-standard RISC and DSP processor
architectures, away from traditional proprietary solutions. Secondly,
increased product complexity and shrinking market-windows have led to
growth in licensing the complete platform level-IP solution. ParthusCeva
will uniquely combine the leading supplier of open-standard DSP cores in
the industry, with the leading supplier of complete platform level-IP
solutions. We believe ParthusCeva will be well positioned to take full
advantage of these major industry shifts and become the leading supplier
of open-standard DSP solutions to the industry."

Income Statement Total revenue for the first quarter 2002 amounted to
$10.7 million, a 9% year-on-year increase, and up by 2% on fourth quarter
2001 revenue. Licensing and royalty revenue grew to $8.9 million, up 53%
from $5.9 million in the first quarter of 2001 and up 2% from $8.7 million
in the fourth quarter of 2001. Royalty revenue was $263,000, up 129%
compared with the fourth quarter 2001. Higher margin licensing and royalty
revenue represented 84% of total revenue, up from 60% a year ago and from
83% of total revenue in the fourth quarter 2001. IP creation revenue
amounted to $831,000 in the first quarter 2002 down 31% from the fourth
quarter 2001, reflecting the continued move away from IP creation to the
IP licensing model. Hard IP revenue volumes sequentially increased 58% to
$917,000 from $579,000 in the fourth quarter 2001, reflecting improved
volumes being shipped by the company's customers to end markets in the
first quarter 2002.

Gross margins grew to 76%, up 1% over the fourth quarter 2001 and a 12%
increase year-on-year. The gross margin improvement reflects the planned
shift in the mix of business and the continued growth of IP licensing
activity.

Operating expenses decreased by $816,000 or 7% sequentially, reflecting
the benefit of a full quarter of cost control measures taken in the fourth
quarter 2001. Research and development investment amounted to $7.2 million
in the first quarter 2002 a decrease of 6% sequentially from $7.7 million
in the fourth quarter 2001. Sales and marketing expenditure decreased by
16% sequentially from $2.7 million in the fourth quarter 2001 to $2.3
million in the first quarter 2002 due to seasonal effects of commission
payments in quarter four. General and administrative costs decreased by 9%
sequentially from $1.7 million in the fourth quarter 2001 to $1.6 million.

Overall, the pro forma loss from operations in first quarter 2002
decreased sequentially by $1.1 million or 26% to $3.2 million from $4.3
million in fourth quarter 2001. In the first quarter 2002, amortization of
goodwill and intangibles decreased to $340,000 from $3.8 million in the
fourth quarter 2001 due to the adoption of SFAS 142 "Goodwill and other
intangible assets". SFAS 142 changes the accounting for goodwill from an
amortization method to an impairment-only approach. Non-cash stock
compensation expense amounted to $525,000, the same as in the fourth
quarter 2001. In March 2002, the company transferred the assets and
facility associated with its GSM/GPRS team to UbiNetics resulting in a
loss on disposal of $213,000.

Interest and similar income was $680,000 in the first quarter 2002,
down from $1.3 million in the fourth quarter 2001.This reflects the impact
of lower cash balances and the lower interest rate environment in the
first quarter of 2002.

The pro forma net loss for the first quarter amounted to $2.4 million,
representing a loss of $0.004 per ordinary share or $0.042 per ADS. This
compares with a pro forma net loss in the fourth quarter 2001 of $3.0
million, representing a loss of $0.005 per ordinary share or $0.052 per
ADS. Pro forma results for the quarter ended March 31, 2002 exclude
amortization of intangibles and non-cash stock compensation expense. The
reported net loss for the first quarter 2002 was $3.3 million,
representing a loss of $0.006 per ordinary share or $0.057 per ADS. This
compares with a reported net loss for the fourth quarter 2001 of $8.1
million, or a loss of $0.014 per ordinary share or $0.14 per ADS.

Cash Flow Cash and cash equivalents amounted to $115.8 million
at March 31, 2002 compared with $121.5 million at December 31, 2001. The
cash outflow at the operating level amounted to $2.1 million in first
quarter 2002, an improvement of $1.2 million compared to an outflow of
$3.3 million in the fourth quarter 2001. During the quarter, Parthus
invested $4.5 million in UbiNetics in return for a minority shareholding
interest to underpin our 3G strategic alliance.

Licensing We completed six new licensing agreements in the
quarter - within our guidance range. Licensing revenue grew by 53%
year-on-year to $8.9 million in spite of the depressed market conditions
during the period. In total the company has executed 80 licensing
agreements to date.

We continued to see strong traction for our NavStream GPS location
technology driven by US e911 regulatory requirements. We announced that
Device Solution Network, the semiconductor division of Samsung
Electronics, has licensed the technology. In the quarter, we released
results of extensive trials of NavStream with network operators and
handset companies. These trials demonstrated NavStream's breakthrough
capability to determine a users location in most environments, exceeding
both the accuracy and time-to-fix requirements of the FCC e-911 mandate.
In the quarter, we also announced the first public deployment of our
MachStream acceleration technology with Sharp Microelectronics who are
deploying the technology in highly advanced PDA's and smartphones.

Corporate Development Mergers, acquisition and strategic
alliances are a key component of our strategy in achieving our goal of
being the leading provider of intellectual property for markets related to
consumer electronics and the mobile Internet. The start of 2002 has seen
us make two significant announcements in that regard.

ParthusCeva In April, we announced our proposed combination with
Ceva, the IP licensing subsidiary of DSP Group Inc., in a merger of
equals. The merger, which has been unanimously approved by the boards of
directors of both companies, creates a combined company which the parties
believe will have clear leadership in the market for Digital Signal
Processing (DSP) cores and platform-level IP - the core technologies for
all digital communication and multimedia devices. The new combined company
will be called ParthusCeva, Inc.

DSP technology is fundamental to our customers as they target their
products at high growth markets such as wireless communications, mobile
computing, automotive, consumer entertainment and computer networking. The
merger of Parthus and Ceva will create what we believe will be the leading
independent provider of DSP-based IP solutions with strong customer
penetration of many of the world's largest semiconductor companies and
OEMs. ParthusCeva will be in the unique position of being able to offer an
integrated IP solution - including communication, application and
multimedia IP built around the company's DSP core technology. This
integrated solution will favorably position ParthusCeva to exploit the
industry trend towards the licensing of open-standard IP architectures for
the digital economy. Key strengths of ParthusCeva are expected to include:

Market leadership in both DSP cores and platform-level IP
solutions that build around both DSP and leading RISC cores;

Strong positioning in large and fast-growing markets such as
wireless communications, mobile computing, automotive, consumer
entertainment and computer networking;

Compelling product offerings including IP solutions for key
applications such as Bluetooth, GPS, W-CDMA, VolP and MP3; · Strategically
well positioned to exploit the industry shift toward the licensing of
open-standard processor architectures;

Blue-chip semiconductor and OEM customers (including nine out of
the top-10 semiconductor companies) with demonstrated strong customer
retention and significant cross-selling opportunities;

Proven management team; and

Proven business model with scalable, high margin revenues

Under the terms of the combination, structured as a merger of equals:
·

DSP Group will contribute its IP licensing business, as well as
$40 million in net cash, to its wholly owned subsidiary, Ceva, Inc.

Ceva will then be spun off to the existing shareholders of DSP
Group, who will thereby become direct shareholders of Ceva

Parthus will distribute an aggregate of $60 million to its
existing shareholders

Parthus and Ceva will merge

Ceva will issue common stock to the existing shareholders of
Parthus, along with an aggregate of $100,000 in cash

Ceva will change its name to ParthusCeva

Immediately following these transactions, existing Parthus
shareholders will hold 49.9% of the combined entity and existing DSP Group
shareholders will hold the remaining approximately 50.1%

ParthusCeva's net cash position upon closing of the combination
is expected to be in excess of $80 million (reflecting $40 million net
cash to be contributed by Ceva and the cash to be contributed by Parthus
following its planned $60 million cash distribution to Parthus
shareholders).

ParthusCeva will be listed on both Nasdaq and the London Stock
Exchange

The boards of Parthus and DSPG expect the merger to be completed by the
end of Q3 2002, subject to, inter alia, receipt of a favorable private
letter ruling from the U.S. Internal Revenue Service regarding the
tax-free spin-off of the Ceva business by DSP Group, Parthus shareholder
approval of the merger and the repayment of capital, the Irish High Court
approval of a scheme of arrangement in accordance with Irish companies
legislation and other customary closing conditions.

UbiNetics 3G Alliance We believe that there is a major market
opportunity in the combination of GSM, GPRS and 3G technology in a
multi-mode solution. In the quarter we announced a broad ranging strategic
agreement with UbiNetics, an established expert and market leader in 3G
wireless device technology. Under a license agreement, UbiNetics will
integrate Parthus' GPRS/GSM technology into its 3G WCDMA silicon and
software technologies to create a fully integrated multi-mode 2.5G/3G
(W-CDMA/GPRS/GSM) solution. Parthus will market this multi-mode 2.5G/3G
solution as part of our portfolio of technologies, licensing the solution
through our global sales channel and semiconductor relationships. To
underpin the alliance, Parthus subscribed for a minority shareholding
interest in UbiNetics.

Technology In the quarter, we also released enhanced versions of
the Parthus InfoStream™ mobile computing platform optimized for Microsoft®
WinCE mobile technologies. These versions include Pocket PC 2002,
Microsoft® Smartphone Software Solution and Windows® CE .NET. The
capabilities of InfoStream were extended further with the announcement of
the porting of ART's speech and handwriting recognition engines to the
platform.

Outlook Semiconductor industry visibility remains poor and, as
anticipated, a sustained pick-up in the industry is not forecast by
industry analysts until the back-end of 2002. We nevertheless continue to
build a strong sales pipeline illustrating continued demand for our
technology. Recent technology alliances and additions to the product
portfolio have also helped this pipeline. We believe that the first
quarter metrics of continued licensing/royalty growth, improving gross
margins and declining operating expenses will keep us on track to achieve
a planned return to profitability in the second half of 2002.

###

This document may contain "forward looking statements".
Any "forward looking statements" in this document are subject to certain
risks and uncertainties that could cause actual results to differ
materially from those stated. Any statements that are not statements of
historical fact (including, without limitation, statements to the effect
that the company or its management "believes," "expects," "anticipates,"
"plans" and similar expressions) should be considered forward-looking
statements. Important factors that could cause actual results to differ
from those indicated by such forward-looking statements include
uncertainties relating to the ability of management to complete the
planned merger with Ceva, Inc. and to successfully integrate the
operations of the two companies, uncertainties relating to the acceptance
of semiconductor intellectual property offerings, expansion of our
business, quarterly variations in results, and other uncertainties that
are discussed in our 2000 Annual Report on Form 20-F which is on file with
the SEC since June 26, 2001.

For further information About
ParthusCeva, Inc.

Parthus Technologies Plc Consolidated Statement of Operations and
Consolidated Balance Sheets - US GAAP, are available here

A PDF copy of this press release is also available
here.