CEVA, Inc. Announces Fourth Quarter and Year End 2012 Financial Results
MOUNTAIN VIEW, Calif., Jan. 30, 2013 /PRNewswire via COMTEX/ --
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.
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
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
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 (*)
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 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
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
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.
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