CEVA Inc. (CEVA, Financial) filed Quarterly Report for the period ended 2009-03-31.
CEVA Inc is the leading licensor of DSP cores and integrated applications to the semiconductor industry. CEVA markets a portfolio of DSP IP in three integrated areas: CEVA DSPs; CEVA-Xpert Open Framework Environment; CEVA-Xpert Applications; supported by Xpert-Integration services. CEVA Inc. has a market cap of $154.6 million; its shares were traded at around $7.92 with a P/E ratio of 43.9 and P/S ratio of 3.9.
Our general and administrative expenses decreased to $1.5 million for the first quarter of 2009 from $1.6 million for the first quarter of 2008. The decrease for the first quarter of 2009 primarily reflects lower professional services costs, offset by higher non-cash equity-based compensation expenses. Included in general and administrative expenses for the first quarter of 2009 was a non-cash equity-based compensation expense of $349,000, compared to $188,000 for the first quarter of 2008. General and administrative expenses as a percentage of total revenues were 15% and 16% for the first quarter of 2009 and 2008, respectively.
As of March 31, 2009, we had approximately $15.5 million in cash and cash equivalents and $69.6 million in deposits and marketable securities, totaling $85.1 million, compared to $84.6 million at December 31, 2008. During the first quarter of 2009, we invested $31.1 million of cash in certificates of deposits, corporate bonds and securities, and U.S. government and agency securities with maturities up to 24 months. In addition, during the same period, certificates of deposits, corporate bonds and securities, and U.S. government and agency securities were sold or redeemed for cash amounting to $32.8 million. The purchase and sale or redemption of available-for-sale marketable securities are considered part of investing cash flow. In accordance with SFAS No. 115 Accounting for Certain Investments in Debt and Equity Securities, available-for-sale securities are stated at fair value, with unrealized gains and losses reported in accumulated other comprehensive income (loss), a separate component of stockholders equity, net of taxes. Realized gains and losses on sales of investments, as determined on a specific identification basis, are included in the condensed consolidated statements of operations. Determining whether the decline in fair value is other-than-temporary requires management judgment based on the specific facts and circumstances of each investment. For investments in debt instruments, these judgments primarily include: (i) the length of time and the extent to which the fair value has been less than cost, (ii) the financial condition and near-term prospects of the issuer, and (iii) our intent and ability to retain our investment in the issuer for a period of time sufficient to allow for any anticipated recovery in cost. Given the current market conditions, these judgments could prove to be wrong, and companies with relatively high credit ratings and solid financial conditions may not be able to fulfill their obligations. In addition, a decision by management to no longer hold an investment until maturity or recovery may result in the recognition of an other-than-temporary impairment.
Net cash provided by operating activities for the first quarter of 2009 was $1.0 million, compared to $6.6 million of net cash used in operating activities for the comparable period of 2008. Included in the net cash provided by operating activities for the first quarter of 2009 is $0.6 million expended in connection with the restructuring of our SATA activities. Included in the operating cash outflow for the first quarter of 2008 was $5.8 million expended in connection with the termination of the Harcourt lease.
Net cash provided by investing activities for the first quarter of 2009 and 2008 was $1.7 and $17.8 million, respectively. We had a cash outflow of $7.6 million and a cash inflow of $11.1 million in respect of investments in marketable securities for the first quarter of 2009, as compared to cash outflow of $5.4 million and a cash inflow of $8.2 million in respect of investments in marketable securities for the first quarter of 2008. Included in the cash outflow for the first quarter of 2009 was a net investment of $1.8 million in short term bank deposits. During the first quarter of 2008, we had a cash inflow of $15.1 million from the divestment of our equity investment in GloNav to NXP Semiconductors.
As a result of currency fluctuations and the remeasurement of non-U.S. dollar denominated expenditures to U.S. dollars for financial reporting purposes, we may experience fluctuations in our operating results on an annual and quarterly basis. To protect against the increase in value of forecasted foreign currency cash flow resulting from salaries paid in Israeli NIS and Euro during the year, we instituted during the second quarter of 2007, a foreign currency cash flow hedging program. We hedge portions of the anticipated payroll for our Israeli and Irish employees denominated in Israeli NIS and Euro for a period of one to twelve months with forward and put option contracts. During the first three months of 2009 and 2008, we recorded accumulated other comprehensive loss of $545,000 and $56,000, respectively, from our forward and put option contracts in respect to anticipated payroll for our Israeli and Irish employees. As of March 31, 2009, the amount of other comprehensive loss from our forward and put option contracts was $400,000, which will be recorded in the consolidated statements of operations in the following 12 months. We recognized a net loss of $239,000 and a net gain of $146,000 during the first quarter of 2009 and 2008, respectively, related to forward and put option contracts. We note that hedging transactions may not successfully mitigate losses caused by currency fluctuations. We expect to continue to experience the effect of exchange rate and currency fluctuations on an annual and quarterly basis.
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CEVA Inc is the leading licensor of DSP cores and integrated applications to the semiconductor industry. CEVA markets a portfolio of DSP IP in three integrated areas: CEVA DSPs; CEVA-Xpert Open Framework Environment; CEVA-Xpert Applications; supported by Xpert-Integration services. CEVA Inc. has a market cap of $154.6 million; its shares were traded at around $7.92 with a P/E ratio of 43.9 and P/S ratio of 3.9.
Highlight of Business Operations:
Our research and development expenses decreased to $4.1 million for the first quarter of 2009 from $5.1 million for the first quarter of 2008. The decrease for the first quarter of 2009 principally reflected lower salary and related costs mainly as a result of the termination in employment of a number of SATA-related technology engineers, as well as lower project-related expenses. Included in research and development expenses for the first quarter of 2009 was a non-cash equity-based compensation expense of $262,000, compared to $267,000 for the first quarter of 2008. Research and development expenses as a percentage of total revenues were 43% and 51% for the first quarter of 2009 and 2008, respectively.Our general and administrative expenses decreased to $1.5 million for the first quarter of 2009 from $1.6 million for the first quarter of 2008. The decrease for the first quarter of 2009 primarily reflects lower professional services costs, offset by higher non-cash equity-based compensation expenses. Included in general and administrative expenses for the first quarter of 2009 was a non-cash equity-based compensation expense of $349,000, compared to $188,000 for the first quarter of 2008. General and administrative expenses as a percentage of total revenues were 15% and 16% for the first quarter of 2009 and 2008, respectively.
As of March 31, 2009, we had approximately $15.5 million in cash and cash equivalents and $69.6 million in deposits and marketable securities, totaling $85.1 million, compared to $84.6 million at December 31, 2008. During the first quarter of 2009, we invested $31.1 million of cash in certificates of deposits, corporate bonds and securities, and U.S. government and agency securities with maturities up to 24 months. In addition, during the same period, certificates of deposits, corporate bonds and securities, and U.S. government and agency securities were sold or redeemed for cash amounting to $32.8 million. The purchase and sale or redemption of available-for-sale marketable securities are considered part of investing cash flow. In accordance with SFAS No. 115 Accounting for Certain Investments in Debt and Equity Securities, available-for-sale securities are stated at fair value, with unrealized gains and losses reported in accumulated other comprehensive income (loss), a separate component of stockholders equity, net of taxes. Realized gains and losses on sales of investments, as determined on a specific identification basis, are included in the condensed consolidated statements of operations. Determining whether the decline in fair value is other-than-temporary requires management judgment based on the specific facts and circumstances of each investment. For investments in debt instruments, these judgments primarily include: (i) the length of time and the extent to which the fair value has been less than cost, (ii) the financial condition and near-term prospects of the issuer, and (iii) our intent and ability to retain our investment in the issuer for a period of time sufficient to allow for any anticipated recovery in cost. Given the current market conditions, these judgments could prove to be wrong, and companies with relatively high credit ratings and solid financial conditions may not be able to fulfill their obligations. In addition, a decision by management to no longer hold an investment until maturity or recovery may result in the recognition of an other-than-temporary impairment.
Net cash provided by operating activities for the first quarter of 2009 was $1.0 million, compared to $6.6 million of net cash used in operating activities for the comparable period of 2008. Included in the net cash provided by operating activities for the first quarter of 2009 is $0.6 million expended in connection with the restructuring of our SATA activities. Included in the operating cash outflow for the first quarter of 2008 was $5.8 million expended in connection with the termination of the Harcourt lease.
Net cash provided by investing activities for the first quarter of 2009 and 2008 was $1.7 and $17.8 million, respectively. We had a cash outflow of $7.6 million and a cash inflow of $11.1 million in respect of investments in marketable securities for the first quarter of 2009, as compared to cash outflow of $5.4 million and a cash inflow of $8.2 million in respect of investments in marketable securities for the first quarter of 2008. Included in the cash outflow for the first quarter of 2009 was a net investment of $1.8 million in short term bank deposits. During the first quarter of 2008, we had a cash inflow of $15.1 million from the divestment of our equity investment in GloNav to NXP Semiconductors.
As a result of currency fluctuations and the remeasurement of non-U.S. dollar denominated expenditures to U.S. dollars for financial reporting purposes, we may experience fluctuations in our operating results on an annual and quarterly basis. To protect against the increase in value of forecasted foreign currency cash flow resulting from salaries paid in Israeli NIS and Euro during the year, we instituted during the second quarter of 2007, a foreign currency cash flow hedging program. We hedge portions of the anticipated payroll for our Israeli and Irish employees denominated in Israeli NIS and Euro for a period of one to twelve months with forward and put option contracts. During the first three months of 2009 and 2008, we recorded accumulated other comprehensive loss of $545,000 and $56,000, respectively, from our forward and put option contracts in respect to anticipated payroll for our Israeli and Irish employees. As of March 31, 2009, the amount of other comprehensive loss from our forward and put option contracts was $400,000, which will be recorded in the consolidated statements of operations in the following 12 months. We recognized a net loss of $239,000 and a net gain of $146,000 during the first quarter of 2009 and 2008, respectively, related to forward and put option contracts. We note that hedging transactions may not successfully mitigate losses caused by currency fluctuations. We expect to continue to experience the effect of exchange rate and currency fluctuations on an annual and quarterly basis.
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