CEVA INC - 10-Q Quarterly Report

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended: March 31, 2004

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 ¨

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

Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of the latest practicable date: 18,376,773 shares of common stock, $0.001 par value, as of May 5, 2004.

TABLE OF CONTENTS


		Page

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)		4

Interim Condensed Consolidated Balance Sheets at March 31, 2004 and December 31, 2003		4

Interim Condensed Consolidated Statements of Operations for the three months ended March 31, 2004 and 2003.		5

Interim Statements of Changes in Stockholders’ Equity for the three months ended March 31, 2004 and 2003		6

Interim Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 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		25

PART II. OTHER INFORMATION

Item 6. Exhibits and Reports on Form 8-K		26

SIGNATURES		27

CERTIFICATIONS

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.

*****

PART I. FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS

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


	March 31, 2004			December 31, 2003¹
	Unaudited
ASSETS
Current assets:
Cash and cash equivalents	$	58,615		$	59,130
Trade receivables, net		10,698			10,226
Other accounts receivable and prepaid expenses		1,245			1,945

Total current assets		70,558			71,301
Long-term investments:
Severance pay fund		1,470			1,487

Property and equipment, net		4,595			4,792
Goodwill		38,398			38,398
Other intangible assets, net		3,232			3,455

Total assets	$	118,253		$	119,433

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Trade payables	$	2,124		$	3,030
Accrued expenses and other payables		11,137			12,876
Taxes payable		859			891
Deferred revenues		867			1,064

Total current liabilities		14,987			17,861

Accrued severance pay		1,538			1,510
Accrued liabilities		1,407			1,583

Total long-term liabilities		2,945			3,093


Stockholders’ equity:
Common Stock:
$0.001 par value: 100,000,000 shares authorized; 18,379,757 and 18,167,332 shares issued and outstanding at March 31, 2004 and December 31, 2003, respectively		18			18
Additional paid in-capital		135,882			134,449
Accumulated deficit		(35,579	)		(35,988	)

Total stockholders’ equity		100,321			98,479

Total liabilities and stockholders’ equity	$	118,253		$	119,433

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.

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

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


	Three months ended March 31,
	2004		2003
	Unaudited		Unaudited
Revenues:
Licensing and royalties	$	7,769	$	6,981
Other revenue		1,445		1,862

Total revenues		9,214		8,843
Cost of revenues		1,510		1,638

Gross profit		7,704		7,205
Operating expenses:
Research and development, net		4,009		4,049
Sales and marketing		1,673		1,373
General and administrative		1,459		1,478
Amortization of intangible assets		223		284
Reorganization, restructuring and severance charge		—		1,380

Total operating expenses		7,364		8,564

Operating income (loss)		340		(1,359	)
Other income (expense), net		189		41

Income (loss) before taxes on income		529		(1,318	)
Taxes on income		120		—

Net income (loss)		409		(1,318	)

Basic income (loss) per share	$	0.022	$	(0.073	)
Diluted income per share	$	0.021	$	(0.073	)
Weighted-average number of shares of Common Stock used in computation of net income (loss) per share (in thousands):
Basic		18,326		18,070
Diluted		19,257		18,070

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

INTERIM STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (Unaudited)

U.S. dollars in thousands (except share data)


	Common stock				Additional paid-in capital		Accumulated deficit			Total stockholders’ equity
Three months ended March 31, 2004	Shares	Amount			Additional paid-in capital		Accumulated deficit			Total stockholders’ equity
Balance as of January 1, 2004	18,167,332	$	18		$	134,449	$	(35,988	)	$	98,479
Net income	—		—			—		409			409
Issuance of Common Stock upon exercise of stock options	113,407		—	(*)		1,056		—			1,056
Issuance of Common Stock upon purchase of ESPP shares	99,018		—	(*)		377		—			377

Balance as of March 31, 2004	18,379,757	$	18		$	135,882	$	(35,579	)	$	100,321

(*)

Amount less than $1.


	Common stock				Additional paid-in capital		Accumulated deficit			Total stockholders’ equity
Three months ended March 31, 2003	Shares	Amount			Additional paid-in capital		Accumulated deficit			Total stockholders’ equity
Balance as of January 1, 2003	18,053,507	$	18		$	134,051	$	(23,997	)	$	110,072
Net loss	—		—			—		(1,318	)		(1,318	)
Issuance of Common Stock upon exercise of stock options	7,388		—	(*)		16		—			16
Issuance of Common Stock upon purchase of ESPP shares	18,224		—	(*)		65		—			65

Balance as of March 31, 2003	18,079,119	$	18		$	134,132	$	(25,315	)	$	108,835

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

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

U.S. dollars in thousands


	Three months ended March 31,
	2004			2003
	Unaudited			Unaudited
Cash flows from operating activities:
Net income (loss)		409			(1,318	)
Adjustments required to reconcile net income (loss) to net cash used in operating activities:
Depreciation		635			896
Amortization of intangible assets		223			284
(Profit) loss on disposal of property and equipment		(8	)		4
Currency translation differences		2			100
Changes in operating assets and liabilities:
Trade receivables		(478	)		(2,795	)
Other accounts receivable and prepaid expenses		698			253
Inventories		—			(128	)
Trade payables		(403	)		219
Deferred revenues		(197	)		(7	)
Accrued expenses and other payables		(1,762	)		(2,741	)
Taxes payable		(32	)		(60	)
Accrued severance pay, net		45			(69	)

Net cash used in operating activities		(868	)		(5,362	)


Cash flows from investing activities:
Purchase of property and equipment		(947	)		(86	)
Proceeds from sale of property and equipment		42			38
Purchase of technology		(30	)		—

Net cash used in investing activities		(935	)		(48	)


Cash flows from financing activities:
Proceeds from issuance of Common Stock upon exercise of stock options		1,056			16
Proceeds from issuance of Common Stock upon purchase of ESPP shares		377			65

Net cash provided by financing activities		1,433			81
Effect of exchange rate movements on cash		(145	)		38

Changes in cash and cash equivalents		(515	)		(5,291	)
Cash and cash equivalents at the beginning of the period		59,130

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