CEVA Inc. Reports Second Quarter 2006 Financial Results
SAN JOSE, Calif., July 20 /PRNewswire-FirstCall/ -- CEVA, Inc. (NASDAQ: CEVA)(LSE: CVA), the leading licensor of digital signal processor (DSP) cores, multimedia and storage platforms to the semiconductor industry, today announced financial results for the second quarter ended June 30, 2006.
Total revenue for the second quarter of 2006 was $8.4 million, a decrease of 12% compared to $9.5 million reported for the second quarter of 2005. Total revenue for the second quarter of 2006 increased 3% sequentially compared to $8.1 million reported for the first quarter of 2006. Second quarter of 2006 licensing revenue was $6.0 million, a decrease of 9% from the second quarter of 2005 and an increase of 13% from the first quarter of 2006.
Second quarter of 2006 royalty revenue was $1.4 million, a decrease of 11% compared to $1.6 million reported for the second quarter of 2005 and a decrease of 21% compared to $1.8 million reported for the first quarter of 2006. Revenue from services was $1.0 million for the second quarter of 2006, a decrease of 27% compared to $1.3 million for the second quarter of 2005 and a decrease of 2% compared to the first quarter of 2006.
Net loss for the second quarter of 2006 was $0.2 million, compared to net loss of $2.2 million for the second quarter of 2005 and net loss of $0.8 million for the first quarter of 2006. Net loss per share for the second quarter of 2006 was $0.01 per share compared to net loss of $0.12 per share for the second quarter of 2005 and net loss of $0.04 per share for the first quarter of 2006. The net loss for the second quarter of 2005 did not reflect the quarterly expense associated with equity based compensation which under Statement of Financial Accounting Standards No. 123R, "Share Based Payments" is required to be expensed for periods commencing after January 1, 2006.
In the second quarter of 2006, the Company recognized an equity-based compensation expense of $0.5 million pursuant to the adoption of SFAS 123R and a gain of $0.1 million reported in interest and other income related to the disposal of an investment. Non-GAAP net income and net income per share for the second quarter of fiscal 2006, excluding the equity-based compensation expense and the gain on investment, was $0.2 million and $0.01, respectively.
In the second quarter of 2006, nine license agreements were signed, bringing the total to sixteen new licensing agreements signed in the first six months of 2006. Of the nine license agreements, seven were for CEVA DSP cores and platforms, one for CEVA SATA technology and one for CEVA Bluetooth technology. In addition there was a renewal of a prepaid arrangement with an existing customer and a number of small PLL technology deals. Customer target applications for these licenses are cellular handsets, Mobile TV, consumer electronics, and networking products. Geographically, three license agreements were signed in the United States, five in Europe and one in the Asia Pacific region.
"The second quarter results illustrated continuous progress in our financial performance, both in revenue and profitability milestones set for 2006," said Gideon Wertheizer, Chief Executive Officer of CEVA. "We continue to reduce the company's operating expenses and for the first time in five quarters, we have presented a non-GAAP net income of $0.2 million. The recently announced divestment of our GPS technology and product line combined with the Company's cost control measures should further allow us to achieve additional profitability milestones."
Mr. Wertheizer added, "We signed nine license agreements in the second quarter, including one for our Mobile-Media2000 platform for deployment in a Mobile TV chip. This represents the fourth design win for our mobile multimedia platform in the lucrative personal multimedia player market and further reinforces our unique, all-in-software approach to developing multimedia platforms."
Yaniv Arieli, Chief Financial Officer of CEVA, commented, "As of June 30, 2006, our total cash and marketable securities position was $63.6 million. DSO for the second quarter hit a record low of 66 days. We believe that following the completion of the GPS divestment and realization of the related costs savings, management's goals of achieving positive operating income is obtainable in the near future."
CEVA Conference Call
On July 20, 2006, CEVA's management will conduct a conference call at 8:30 a.m. Eastern Time / 1:30 p.m. London time, to discuss the company's operating performance for the quarter. The conference call will be available via the following dial-in numbers:
-- US Participants: Dial 1-888-459-5609 (CEVA reference number # 7595119)
-- UK/Rest of World: Dial +44-800-032-3836 (CEVA reference number
# 7595119)The conference call also will be available live via the Internet by accessing the CEVA web site at https://www.ceva-ip.com/. 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: 7595119) for U.S. domestic callers and +44-800-169-3875 (passcode: 7595119) for international callers from two hours after the end of the call until 11:59 p.m. (Eastern Time) on July 27, 2006. The replay will also be available at CEVA's web site at https://www.ceva-ip.com/.
About CEVA, Inc.
Headquartered in San Jose, Calif., CEVA is the leading licensor of digital signal processor (DSP) cores, multimedia and storage platforms to the semiconductor industry. CEVA licenses a family of programmable DSP cores, associated SoC system platforms and a portfolio of application platforms, including multimedia, audio, Voice over Packet (VoP), Bluetooth, Serial Attached SCSI (SAS) and Serial ATA (SATA). In 2005, CEVA's IP was shipped in over 130 million devices. For more information visit https://www.ceva-ip.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 statements about achieving management goals relating to revenues and profitability, CEVA's cost costing measures and CEVA's ability to capitalize on the lucrative personal multimedia player market using its all-in-software approach. Additional forward-looking statements include Mr. Arieli's statements about the cost savings associated with the GPS divestment and achieving positive operating income in the near future. The risks, uncertainties and assumptions include: the ability of the CEVA-X line of products to continue to be a strong growth driver for the Company; intense competition within, and challenging period of growth experienced by, the industry in which the Company competes; failure of the market for the Company's technology to develop as expected, especially in the case of newly introduced or planned to be introduced technologies; the Company's ability to timely and successfully develop and introduce new technologies and penetrate new markets; the Company's reliance on revenue derived from a limited number of licensees; the Company's ability to capitalize on the lucrative personal multimedia player market; the Company's ability to realize cost savings from the GPS divestment; the Company's ability to continue its cost saving measures, and other risks relating to the Company's business, 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, 2005, and its quarterly reports filed after the Form 10-K. 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,
2006 2005 2006 2005
Unaudited Unaudited Unaudited Unaudited
Revenues:
Licensing and
royalties $7,455 $8,219 $14,615 $17,066
Other revenue 957 1,309 1,931 2,503
Total revenues 8,412 9,528 16,546 19,569
Cost of revenues 1,135 1,116 2,030 2,409
Gross profit 7,277 8,412 14,516 17,160
Operating expenses:
Research and
development, net 4,873 5,515 9,889 10,441
Sales and marketing 1,606 1,560 3,377 3,236
General and
administrative 1,474 1,611 2,958 3,082
Amortization of
intangible assets 141 218 331 441
Reorganization and
severance charge -- 1,657 -- 1,657
Impairment of assets -- 510 -- 510
Total operating
expenses 8,094 11,071 16,555 19,367
Operating income (loss) (817) (2,659) (2,039) (2,207)
Interest and other
income, net 630 443 1,171 778
Income (loss) before
taxes on income (187) (2,216) (868) (1,429)
Taxes on income 30 -- 150 160
Net income (loss) (217) (2,216) (1,018) (1,589)
Basic and diluted
net income (loss) per
share $(0.01) $(0.12) $(0.05) $(0.08)
Weighted-average number
of Common Stock used
in computation of
net income (loss)
per share
(in thousands):
Basic 19,142 18,742 19,104 18,713
Diluted 19,142 18,742 19,104 18,713
CEVA, INC. AND ITS SUBSIDIARIES
Non-GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
U.S. dollars in thousands, except per share data
Quarter ended Six Months ended
June 30, June 30,
2006 2005 2006 2005
Unaudited Unaudited Unaudited Unaudited
Revenues:
Licensing and
royalties $7,455 $8,219 $14,615 $17,066
Other revenue 957 1,309 1,931 2,503
Total revenues 8,412 9,528 16,546 19,569
Cost of revenues 1,126 1,116 2,006 2,409
Gross profit 7,286 8,412 14,540 17,160
Operating expenses:
Research and
development, net 4,739 5,515 9,536 10,441
Sales and marketing 1,528 1,560 3,197 3,236
General and
administrative 1,190 1,611 2,365 3,082
Amortization of
intangible assets 141 218 331 441
Total operating
expenses 7,598 8,904 15,429 17,200
Operating income (loss) (312) (492) (889) (40)
Interest and
other income, net 573 443 1,114 778
Income (loss) before
taxes on income 261 (49) 225 738
Taxes on income 30 -- 150 160
Net income (loss) 231 (49) 75 578
Non-GAAP basic and
diluted net income
(loss) per share $0.01 $(0.003) $0.004 $0.03
Weighted-average number
of Common Stock used in
computation of non-GAAP
net income (loss) per
share (in thousands):
Basic 19,142 18,742 19,104 18,713
Diluted 19,443 18,742 19,372 19,088The above non-GAAP condensed consolidated statements of operations have been adjusted to exclude the following items to U.S. GAAP reported net income (loss):
Quarter ended Six Months ended
June 30, June 30,
2006 2005 2006 2005
Unaudited Unaudited Unaudited Unaudited
Reported net
income (loss)
per U.S. GAAP (217) (2,216) (1,018) (1,589)
Adjustments
Equity based
compensation expense
included in cost
of revenue 9 -- 24 --
Equity based
compensation expense
included in research
and development
expenses 134 353
Equity based
compensation expense
included in sales
and marketing expenses 78 180
Equity based
compensation expense
included in general
and administrative
expenses 284 593
Interest and
other income, net (1) (57) -- (57) --
Reorganization and
severance charge (2) -- 1,657 -- 1,657
Impairment of assets (1) -- 510 -- 510
Non-GAAP net income
(loss) 231 (49) 75 578
(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.
(2) Results for the second quarter of 2005 included a reorganization and
severance charge of $1.7 million associated with the previously
announced plans to reduce the Company's operating expenses, primarily
those related to general and administrative functions, and a one-time
impairment charge of $0.5 million principally arising from our
decision to cease the CEVA Bluetooth technology line. This
$0.5 million was comprised of the remaining intangibles attributed to
the Bluetooth technology of $0.4 million and a $0.1 million charge
related to the impairment of other redundant assets.These adjustments reconcile the Company's reported results of operations to the non-GAAP results of operations. The Company believes that presentation of net loss and net loss per share excluding non-cash equity-based compensation, a gain related to the disposal of an investment, reorganization and severance charge and impairment of assets charge provides meaningful supplemental information to investors as it allows investors to better understand the underlying business trend of the Company and how the expenses associated with the adoption of SFAS 123R are reflected in the Company's statements of operations. The Company also believes that the non-GAAP presentation of excluding the equity-based compensation expense for its financial results for the first six months of 2006 in comparison to its financial results for the first six months of 2005 facilitates comparison of operating results across reporting periods since the Company's financial results for the first six months of 2005 would not have included equity-based compensation expense. The Company uses these non-GAAP measures when evaluating its financial results as well as for internal planning and budgeting purposes. These non-GAAP financial measures are used in addition to and in conjunction with results presented in accordance with GAAP, and are intended to provide additional insight into the Company's operations that, when viewed with its GAAP results and the accompanying reconciliations to corresponding GAAP financial measures, offer a more complete understanding of factors and trends affecting the Company's business. These non-GAAP measures should not be viewed as a substitute for the Company's reported GAAP results, and may be different than the non-GAAP measures used by other companies.
CEVA, INC. AND ITS SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
U.S. Dollars in Thousands
June 30, December 31,
2006 2005
Unaudited Audited
ASSETS
Current assets:
Cash and cash equivalents $30,113 $35,111
Marketable securities and bank deposits 33,480 26,509
Trade receivables, net 6,086 6,159
Deferred tax assets 543 600
Prepaid expenses 769 1,040
Other current assets 1,267 1,042
Total current assets 72,258 70,461
Long-term investments:
Severance pay fund 2,205 1,912
Deferred tax assets 382 292
Property and equipment, net 2,111 3,226
Investment 5,984 --
Goodwill 36,498 38,398
Other intangible assets, net 284 1,460
Total assets $119,722 $115,749
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Trade payables $630 $548
Accrued expenses and other payables 8,929 7,778
Taxes payable 363 442
Deferred revenues 377 453
Total current liabilities 10,299 9,221
Accrued severance pay 2,337 2,100
Accrued liabilities 1,967 2,195
Total liabilities 14,603 13,516
Stockholders' equity:
Common Stock: 19 19
Additional paid in-capital 142,722 138,818
Accumulated deficit (37,622) (36,604)
Total stockholders' equity 105,119 102,233
Total liabilities and stockholders' equity $119,722 $115,749SOURCE: CEVA Inc.
CONTACT: Yaniv Arieli, CFO of CEVA, Inc., +1-408-514-2941, or
[email protected]
Web site: https://www.ceva-ip.com/
