CEVA, Inc. Announces Fourth Quarter and Year End 2012 Financial Results - Company reports 16% sequential royalty revenue growth

- Record quarterly and annual shipments of CEVA technology - 303 million units and 1.08 billion units, respectively

MOUNTAIN VIEW, Calif., Jan. 30, 2013 /PRNewswire/ -- CEVA, Inc. (NASDAQ: CEVA), the leading licensor of silicon intellectual property (SIP) platform solutions and DSP cores for the mobile, portable and consumer electronics markets, today announced its financial results for the fourth quarter and year ended December 31, 2012.

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Fourth Quarter 2012
Total revenue for the fourth quarter of 2012 was $13.0 million, a decrease of 19% compared to $16.0 million reported for the fourth quarter of 2011. Fourth quarter 2012 licensing revenue was $3.6 million, a 25% decrease when compared to $4.7 million reported for the fourth quarter of 2011. Royalty revenue for the fourth quarter of 2012 was $8.2 million, a decrease of 19% compared to $10.2 million reported for the fourth quarter of 2011. Other revenue for the fourth quarter of 2012 was $1.2 million, an increase of 12% when compared to $1.1 million reported for the fourth quarter of 2011, due to the licensing of development tools to a large customer in conjunction with a fourth quarter licensing agreement.

U.S. GAAP net income for the fourth quarter of 2012 was $2.8 million, a decrease of 43% over $4.9 million reported for the same period in 2011. U.S. GAAP diluted earnings per share for the fourth quarter of 2012 were $0.12, a decrease of 40% compared to $0.20 for the fourth quarter of 2011.

Non-GAAP net income and diluted earnings per share for the fourth quarter of 2012 were $4.3 million and $0.19, respectively, representing a decrease of 33% and 27%, respectively, over the $6.4 million and $0.26 reported for the fourth quarter of 2011. Non-GAAP net income and diluted earnings per share for the fourth quarter of 2012 excluded an aggregate equity-based compensation expense, net of taxes, of $1.2 million, and $0.3 million related to transaction costs associated with the MIPS transaction, net of taxes. Non-GAAP net income and diluted earnings per share for the fourth quarter of 2011 excluded an aggregate equity-based compensation expense, net of taxes, of $1.5 million.

Gideon Wertheizer, Chief Executive Officer of CEVA, stated, "Fourth quarter shipments of products powered by our technology reached an overall record high of 303 million units, reflecting growth across every handset market segment. Our customers continue to gain traction in the low cost 3G smartphone space and the lucrative LTE smartphone market. Also, shipment volumes of CEVA-powered 2G handsets showed sequential growth, coupled with an improved mix of 2G smartphones as compared to feature phones."

Mr. Wertheizer continued, "Overall, 2012 was a challenging year for both CEVA and the semiconductor industry, significantly more so than was originally anticipated. Our licensing revenue was weaker than initially expected, resulting from uncertainty in the macro environment and a prolonged decision-making process by licensees for next-generation products. Despite this, we managed to license our best-of-breed technologies to major strategic customers throughout the year. Importantly, these customers are fueling adoption of our products and laying the foundation that we expect will generate future royalty revenue growth. We maintained our DSP market share leadership in the handset market, and finished the year with record volume shipments of CEVA-powered devices of approximately 1.1 billion units. Looking forward, we are ideally positioned to leverage the ongoing market trends in handsets, specifically the transition to 3G and LTE smartphones in emerging and developed economies, and capitalize on our significant customer presence across the handset industry."

During the fourth quarter of 2012, the Company concluded eight new license agreements. Five of the agreements were for CEVA DSP cores, platforms, and software and three agreements were for CEVA SATA/SAS technology. Target applications for customer deployment consisted of baseband processors, G.Fast wired modems, mobile audio and solid state drives. Geographically, two of the license agreements were in the US, one in Europe, and five in Asia, including Japan.

Full Year 2012 Review
Total revenue for 2012 was $53.7 million, a decrease of 11% compared to $60.2 million reported for 2011. Royalty revenue for 2012 was $32 million, representing a decrease of 12% compared to $36.4 million reported for 2011. Licensing revenue for 2012 was $18.2 million, a decrease of 10% compared to $20.2 million reported for 2011. Other revenue for the 2012 was $3.5 million, a decrease of 3% as compared to $3.6 million reported for 2011.

U.S. GAAP net income and diluted earnings per share for 2012 were $13.7 million and $0.59, respectively, a decrease of 26% and 23%, respectively, compared to $18.6 million and $0.77 reported for 2011.

Non-GAAP net income and diluted earnings per share for 2012 were $18.4 million and $0.79, respectively, representing a decrease of 22% and 19%, respectively, over the $23.5 million and $0.97 reported for 2011. Non-GAAP net income and diluted earnings per share for 2012 excluded an aggregate equity-based compensation expense, net of taxes, of $4.4 million and $0.3 million related to transaction costs associated with the MIPS transaction, net of taxes. Non-GAAP net income and diluted earnings per share for 2011 excluded an aggregate equity-based compensation expense, net of taxes, of $5.0 million.

Yaniv Arieli, Chief Financial Officer of CEVA, stated, "Our fourth quarter results produced sequential revenue and EPS growth, reflecting improved shipments and royalty revenue for our products in the third quarter. On an annual basis, 2012 proved to be a transition year for CEVA, with our customers increasing their penetration of the 3G and LTE markets, which partially offset the ramp down of CEVA-powered legacy products at two OEMs and price erosion in the 2G segment. We continued to actively exercise our share repurchase program throughout the year, buying back approximately 1.5 million shares of our common stock at an average price of $18.33 per share for a total consideration of approximately $27.2 million, illustrating our conviction in CEVA's long-term growth prospects. As of December 31, 2012, CEVA's cash and cash equivalent balances, marketable securities and long term bank deposits were approximately $158 million."

CEVA Conference Call
On January 30, 2013, 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 fourth quarter and year ended December 31, 2012.

The conference call will be available via the following dial in numbers:

  • U.S. Participants: Dial 1-800-860-2442 (Access Code: CEVA)
  • International Participants: Dial +1-412-858-4600 (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=91523.  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 +1-877-344-7529 or +1-412-317-0088 (access code: 10023357) from one hour after the end of the call until 9:00 a.m. (Eastern Time) on February 07, 2013. The replay will also be available at CEVA's web site www.ceva-dsp.com.

About CEVA, Inc.
CEVA is the world's leading licensor of silicon intellectual property (SIP) DSP cores and platform solutions for the mobile, portable and consumer electronics markets. CEVA's IP portfolio includes comprehensive technologies for cellular baseband (2G / 3G / 4G), multimedia (vision, imaging and HD audio), voice processing, Bluetooth, Serial Attached SCSI (SAS) and Serial ATA (SATA). In 2012, CEVA's IP was shipped in more than 1 billion devices, powering smartphones from many of the world's leading OEMs, including HTC, Huawei, LG, Nokia, Motorola, Samsung, Sony, TCL and ZTE. Today, more than 40% of handsets shipped worldwide are powered by a CEVA DSP core. For more information, visit www.ceva-dsp.com. Follow CEVA on twitter at www.twitter.com/cevadsp.

Forward Looking Statement
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.  Forward-looking statements include Mr. Wertheizer's statements about CEVA's royalty revenue growth prospects, the adoption of CEVA products and CEVA's ideal position to leverage the ongoing market trends in handsets, and Mr. Arieli's statements about CEVA's long term growth prospects and CEVA's stock buyback activities reflecting such prospects. The risks, uncertainties and assumptions include: the ability of the CEVA DSP cores and other technologies to continue to be strong growth drivers for us; our success in penetrating new markets and maintaining our market position in existing markets; the ability of products incorporating our technologies to achieve market acceptance, the effect of intense industry competition and consolidation, global chip market trends, the possibility that markets for our technologies may not develop as expected or that products incorporating our technologies do not achieve market acceptance; our ability to timely and successfully develop and introduce new technologies; and general market conditions and other risks relating to our business, including, but not limited to, those that are described from time to time in our SEC 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 INCOME – U.S. GAAP

U.S. dollars in thousands, except per share data



Quarter ended

Year ended


December 31,

December 31,


2012

2011

2012

2011


Unaudited

Unaudited

Unaudited

Audited

Revenues:





Licensing

$   3,555

$   4,711

$   18,248

$   20,239

Royalties

8,203

10,159

31,950

36,403

Other revenues

1,209

1,082

3,479

3,597






Total revenues

12,967

15,952

53,677

60,239






Cost of revenues

1,025

924

3,952

3,559






Gross profit

11,942

15,028

49,725

56,680






Operating expenses:





Research and development, net

4,695

5,730

20,243

21,543

Sales and marketing

2,603

2,287

9,231

8,937

General and administrative

2,226

2,096

7,884

7,639











Total operating expenses

9,524

10,113

37,358

38,119






Operating income

2,418

4,915

12,367

18,561

Financial income, net

727

873

3,380

2,909






Income before taxes on income

3,145

5,788

15,747

21,470

Taxes on income

390

935

2,062

2,908






Net income

$2,755

$4,853

$13,685

$18,562











Basic earnings per share

$0.12

$0.21

$0.60

$0.80






Diluted earnings per share

$0.12

$0.20

$0.59

$0.77

Weighted-average number of Common Stock used in computation of earnings per share (in thousands):





Basic

22,300

23,491

22,798

23,173

Diluted

22,737

24,293

23,357

24,153






 


Unaudited Reconciliation of GAAP to Non-GAAP Financial Measures

(U.S. Dollars in thousands, except per share amounts)



Quarter ended

Year ended


December 31,

December 31,


2012

2011

2012

2011


Unaudited

Unaudited

Unaudited

Unaudited

GAAP net income

2,755

4,853

13,685

18,562

Equity-based compensation expense included in cost of revenue

64

68

241

239

Equity-based compensation expense included in research and development expenses

483

562

1,810

1,934

Equity-based compensation expense included in sales and marketing expenses

313

347

1,036

1,094

Equity-based compensation expense included in general and administrative expenses

535

641

1,996

1,891

MIPS transaction costs

415(1)

-

415(1)

-

Taxes on income (benefit)

(277)

(106)

(827)

(204)

Non-GAAP net income

4,288

6,365

18,356

23,516






GAAP weighted-average number of Common Stock used in computation of diluted earnings per share (in thousands)

22,737

24,293

23,357

24,153

Weighted-average number of shares related to outstanding options

2

9

4

16

Weighted-average number of Common Stock used in computation of diluted earnings per share, excluding equity-based compensation expense and tax  and transaction costs (in thousands)

22,739

24,302

23,361

24,169






GAAP diluted earnings per share

$0.12

$0.20

$0.59

$0.77

Equity-based compensation expense

$0.06

$0.07

$0.22

$0.21

Taxes on income (benefit)

($0.01)

($0.01)

($0.04)

($0.01)

MIPS transaction costs

$0.02


$0.02


Non-GAAP diluted earnings per share

$0.19

$0.26

$0.79

$0.97



(1)

Results for the three months and for the year ended December 31, 2012 included transaction costs associated with the MIPS transaction of $0.4.

 


CEVA, INC. AND ITS SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS


(U.S. Dollars in thousands)


December 31,

December 31,


2012

2011 (*)


Unaudited

Unaudited

ASSETS



Current assets:



Cash and cash equivalents

$        18,422

$        14,954

Marketable securities and short term bank deposits

116,572

124,458

Trade receivables, net

6,232

5,116

Deferred tax assets

2,065

2,248

Prepaid expenses and other accounts receivables

2,361

2,320

Total current assets

145,652

149,096

Long-term investments:



Long term bank deposits

23,050

25,106

Severance pay fund

6,130

5,473

Deferred tax assets

1,178

832

Property and equipment, net

1,392

1,235

Goodwill

36,498

36,498

Investment in other companies

2,433

900

Total assets

$        216,333

$        219,140



LIABILITIES AND STOCKHOLDERS' EQUITY


Current liabilities:



Trade payables

$           1,176

$           580

Deferred revenues

865

1,074

Accrued expenses and other payables

10,240

10,124

Taxes payable

1,626

545

Deferred tax liabilities

200

290

Total current liabilities

14,107

12,613




Accrued severance pay

6,158

5,607




Total liabilities

20,265

18,220




Stockholders' equity:



Common Stock:

22

24

Additional paid in-capital

198,495

191,945

Treasury Stock

(25,694)

-

Accumulated other comprehensive income (loss)

360

(901)

Retained earnings

22,885

9,852

Total stockholders' equity

196,068

200,920

Total liabilities and stockholders' equity

$    216,333

$    219,140



(*)

Derived from audited financial statements

 

SOURCE CEVA, Inc.



RELATED LINKS
http://www.ceva-dsp.com

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