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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
 
__________________
 
FORM 10-Q

(Mark One)

x   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

     For the quarterly period ended: September 30, 2004

OR

o         TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

             For the transition period from              to             

Commission file number: 000-49842
__________________
 
CEVA, Inc.
(Exact Name of Registrant as Specified in Its Charter)

Delaware
77-0556376
(State or Other Jurisdiction of Incorporation or Organization)
 
(I.R.S. Employer Identification No.)
 
2033 Gateway Place, Suite 150, San Jose, California
95110-1002
(Address of Principal Executive Offices)
(Zip Code)

(408) 514-2900
(Registrant’s Telephone Number, Including Area Code)

__________________
 
Indicate by check mark whether the registrant: (1) has filed all reports to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x  No o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes x  No o

Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of the latest practicable date: 18,489,786 shares of common stock, $0.001 par value, as of November 3, 2004.


 
     
 



TABLE OF CONTENTS

 
Page
 
PART I.   FINANCIAL INFORMATION
 
 
 
Item  1.    Financial Statements (Unaudited)
 
4
 
                Interim Condensed Consolidated Balance Sheets at September 30, 2004 and December 31, 2003
 
4
 
                Interim Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2004 and 2003
 
5
 
                Interim Statements of Changes in Stockholders’ Equity for the nine months ended September 30, 2004 and 2003
 
6
 
                Interim Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2004 and 2003
 
7
 
                Notes to the Interim Condensed Consolidated Financial Statements
 
8
 
Item  2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations
 
12
 
Item  3.    Quantitative and Qualitative Disclosures About Market Risk
 
24
 
Item  4.    Controls and Procedures
 
24
 
PART II. OTHER INFORMATION
 
 
 
Item  1.    Legal Proceedings
 
25
 
Item  6.    Exhibits and Reports on Form 8-K
 
26
 
SIGNATURES
 
27
 


 
  2   
 

FORWARD-LOOKING STATEMENTS

This quarterly report includes forward-looking statements that are subject to a number of risks and uncertainties. All statements, other than statements of historical facts, included in this quarterly report regarding our strategy, future operations, financial position, estimated revenues, projected costs, prospects, plans, and objectives of management are forward-looking statements. The words “will”, “believe”, “anticipate”, “intend”, “estimate”, “expect”, “project”, and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements in this report contain these identifying words. We cannot guarantee future results, levels of activity, performance or achievements and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or strategic alliances. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including the risks described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Factors That Could Affect Our Operating Results” and elsewhere in this quarterly report. We do not assume any obligations to update any of the forward-looking statements we make.

*****



 
   3  


PART I. FINANCIAL INFORMATION

Item 1.    FINANCIAL STATEMENTS

 
INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS
U.S. dollars in thousands, except share and per share data

 
September 30,
2004
Unaudited
  
December 31,
20031
 
  
ASSETS
            
Current assets:
            
Cash and cash equivalents
$
27,035
  
$
59,130
  
Marketable securities
  
30,730
    
-
  
Trade receivables, net
  
11,583
    
10,226
  
Other assets and prepaid expenses
  
1,591
    
1,945
  
Total current assets
  
70,939
    
71,301
  
Long-term investments:
            
Severance pay fund
  
1,534
    
1,487
  
Property and equipment, net
  
4,690
    
4,792
  
Goodwill
  
38,398
    
38,398
  
Other intangible assets, net
  
2,786
    
3,455
  
Total assets
$
118,347
  
$
119,433
  
LIABILITIES AND STOCKHOLDERS’ EQUITY
            
Current liabilities:
            
Trade payables
$
1,881
  
$
3,030
  
Accrued expenses and other payables
  
9,604
    
12,876
  
Taxes payable
  
965
    
891
  
Deferred revenues
  
1,046
    
1,064
  
Total current liabilities
  
13,496
    
17,861
  
Accrued severance pay
  
1,609
    
1,510
  
Accrued liabilities
  
1,229
    
1,583
  
Total long-term liabilities
  
2,838
    
3,093
  
Stockholders’ equity:
            
Common Stock:
            
$0.001 par value: 100,000,000 shares authorized; 18,488,186 and 18,167,332 shares issued and outstanding at September 30, 2004 and December 31, 2003, respectively
  
18
    
18
  
Additional paid in-capital
  
136,520
    
134,449
  
Accumulated deficit
  
(34,525
)
  
(35,988
)
Total stockholders’ equity
  
102,013
    
98,479
  
Total liabilities and stockholders’ equity
$
118,347
  
$
119,433
  

 
1    The December 31, 2003 balance sheet information has been derived from the December 31, 2003 audited consolidated financial statements of the Company.

The accompanying notes are an integral part of the interim condensed consolidated financial statements.


 
  4   
 

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
U.S. dollars in thousands, except per share data
Nine months ended
September 30, 
Three months ended
September 30,
   
2004
Unaudited
  
2003
Unaudited
    
2004
Unaudited
    
2003
Unaudited
  
 
            
 
    
 
  
Revenues:
                        
Licensing and royalties
$
24,431
  
$
21,802
  
$
8,482
  
$
7,651
  
Other revenue
  
4,073
    
5,430
    
1,232
    
1,651
  
Total revenues
  
28,504
    
27,232
    
9,714
    
9,302
  
Cost of revenues
  
4,160
    
4,654
    
1,199
    
1,415
  
Gross profit
  
24,344
    
22,578
    
8,515
    
7,887
  
Operating expenses:
                        
Research and development, net
  
12,615
    
12,591
    
4,384
    
4,490
  
Sales and marketing
  
5,159
    
4,258
    
1,768
    
1,436
  
General and administrative
  
4,509
    
4,418
    
1,555
    
1,455
  
Amortization of intangible assets
  
669
    
856
    
223
    
288
  
Reorganization and severance charge
  
—
    
2,782
    
—
    
1,402
  
Total operating expenses
  
22,952
    
24,905
    
7,930
    
9,071
  
Operating income (loss)
  
1,392
    
(2,327
)
  
585
    
(1,184
)
Other income (expense), net
  
496
    
7
    
145
    
150
  
Income (loss) before taxes on income
  
1,888
    
(2,320
)
  
730
    
(1,034
)
Taxes on income
  
425
    
100
    
170
    
100
  
Net income (loss)
  
1,463
    
(2,420
)
  
560
    
(1,134
)
Basic income (loss) per share