##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-K
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2007
 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.
  Delaware
    
    77-0556376(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)2033 Gateway Place, Suite 150, San Jose, California
    
    95110-1002(Address of principal executive offices)
    
    (Zip Code)
 (408) 514-2900   None
  Title of each class
    
    Name of each exchange on which registeredCommon Stock, $0.001 par value per share
    
    NASDAQ GLOBAL MARKET
   o þ
  o þ
  þ o
 o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
  o þ
   Class
    
    Outstanding at March 10, 2008Common Stock, $0.001 par value per share
    
    20,126,940 shares
 DOCUMENTS INCORPORATED BY REFERENCE




---



##### 



TABLE OF CONTENTS
 PagePART IItem 1.
    
    Business
    
    
    3Item 1A.
    
    Risk Factors
    
    
    13Item 1B.
    
    Unresolved Staff Comments
    
    
    19Item 2.
    
    Properties
    
    
    19Item 3.
    
    Legal Proceedings
    
    
    20Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    20Executive Officers of the Registrant
    
    
    21PART IIItem 5.
    
    Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
    
    
    22Item 6.
    
    Selected Financial Data
    
    
    24Item 7.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    27Item 7A.
    
    Quantitative and Qualitative Disclosure About Market Risk
    
    
    42Item 8.
    
    Financial Statements and Supplementary Data
    
    
    43Item 9.
    
    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
    
    
    43Item 9A.
    
    Disclosure Controls and Procedures
    
    
    43Item 9B.
    
    Other Information
    
    
    44PART IIIItem 10.
    
    Directors, Executive Officers and Corporate Governance
    
    
    45Item 11.
    
    Executive Compensation
    
    
    45Item 12.
    
    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
    
    
    45Item 13.
    
    Certain Relationships and Related Transactions, and Director Independence
    
    
    45Item 14.
    
    Principal Accountant Fees and Services
    
    
    45PART IVItem 15.
    
    Exhibits, Financial Statement Schedules
    
    
    46Financial Statements
    
    
    F-1SignaturesExhibit 10.6Exhibit 10.7Exhibit 10.9Exhibit 10.10Exhibit 21.1Exhibit 23.1Exhibit 31.1Exhibit 31.2Exhibit 32
   1




---



##### Table of Contents



FORWARD-LOOKING STATEMENTS AND INDUSTRY DATA
  
    
    Our belief that there is increasingly an industry shift away from the traditional approach of licensing standalone DSPs
and towards licensing highly integrated application platforms incorporating all the necessary hardware and software for
their target applications and that the growth in demand for these platforms will drive demand for our technology and
that we are well positioned to take full advantage of this industry shift;
    
    Forward Concepts forecasts total DSP semiconductor shipments to grow 12% in the next four years to a level of
$14.6 billion;
    
    Our belief that the penetration of ultra low cost (ULC) handsets in rural sites, specifically China and India,
represents future growth potential for our business;
    
    Our belief that the introduction of additional technologies, such as advanced DSP cores for the fourth generation
handset and high definition audio and video, will contribute to our growth in future periods;
    
    Our belief that our future solutions will provide the desired flexibility needed for the always-connected Internet trend;
    
    Our belief that our IP model is the best vehicle for a pervasive adoption of our technology;
    
    Our belief that CEVA-X, CEVA-Teak and CEVA-TeakLite families of products will continue to generate a significant portion
of our revenues for 2008;
    
    Our belief that our royalty revenues will grow in the next few years due to recent announcements by our customers
indicating that our DSP cores are incorporated in the design phases of four of the five largest original equipment
manufacturers (OEMs) in the handset market;
    
    Our belief that the devaluation of the U.S. dollar as compared to the NIS and Euro will result in an increase in overall
expense increase in 2008; and
    
    Our anticipation that our current cash on hand, short term deposits and marketable securities, along with cash from
operations, will provide sufficient capital to fund our operations for at least the next 12 months.
     2




---



##### Table of Contents



PART I
 
 ITEM 1. BUSINESS
 Company Overview
       Industry Background
 Digital Signal Processor (DSP) Cores
   Semiconductor Intellectual Property (SIP)
   3




---



##### Table of Contents



CEVA Business
   IP Business Model
   Strategy
  
    
    continue to develop and enhance our range of DSP cores and associated subsystems  We
seek to enhance our existing family of DSP cores and DSP-based subsystems with
additional features, performance and capabilities.
    
    continue to develop and enhance our range of complete and highly integrated platform
solutions  We intend to continue developing our integrated IP solutions which combine
application-specific software and dedicated logic  such as video, audio and VoIP -
built around our DSP cores, and delivered to our licensing partners as a complete and
verified system solution.
  4




---



##### Table of Contents




    
    capitalize on our relationships and leadership  We seek to expand our worldwide
community of semiconductor and system OEM licensees who are developing CEVA-based
solutions.
    
    capitalize on our IP licensing and royalty business model  We seek to maximize the
advantages of our IP model which we believe is the best vehicle for a pervasive adoption
of our technology. Furthermore, by not having to focus on manufacturing or selling
silicon products, we are free to focus most of our resources on research and development
of new licensable technologies and applications.
 Products
   
 CEVA DSP Cores
   
    
    CEVA-X-a scalable VLIW-SIMD DSP architecture delivering high levels of performance at
low power consumption. CEVA-X is uniquely designed as a multipurpose architecture,
allowing multiple derivative cores with the optimal performance/price/power point
requirements targeted at multiple markets, such as 3G and 4G phones, smart phones, personal
media players and infrastructure equipments. CEVA-X combines extendibility  the
architecture can be extended with user-defined instruction sets  with scalability,
supporting between 2 to 16 Multiply Accumulate (MAC) units, as well as additional
computational resources and memory bandwidth. CEVA-X enables licensees to efficiently
develop software using high-level languages, such as C and C++, which reduces the cost of
development.
  5




---



##### Table of Contents



CEVA-X1620, the first implementation of the CEVA-X architecture family, is a 16 bit data
width, dual MAC DSP with four 40-bit arithmetic units. The CEVA-X1620 can run up to 8
instructions simultaneously and up to 20 SIMD operations at any given cycle. Demonstration
CEVA-X1620 silicon runs at 400MHz (TSMC 0.13μ).CEVA-X1622 is the second implementation of the CEVA-X architecture. It offers the same basic
features as the CEVA-X 1620 but offers an enhanced memory architecture, including
configurable memory size (64KB or 128KB), and configurable memory bank organizations in 2 or
4 blocks. It also offers advanced emulation capabilities.CEVA-X1641 is the third implementation of the CEVA-X architecture. It is the first Quad-MAC
DSP CEVA-X core and is designed specifically to run highly computational intensive tasks that
require substantial data throughput and high memory bandwidth, such as 3G, WiMAX, LTE and
advanced multimedia standards.CEVA-X DSP cores are complemented by development platforms and Software Development Kits
(SDK). All components of CEVA-X tools are developed in-house by CEVA to deliver optimal
performance.
    
    CEVA-Teak - a 16-bit fixed point general purpose DSP core. Its dual MAC architecture
features high performance and bandwidth for complex signal processing implementations. Its
capability to run up to 4 instructions simultaneously while using only a single 16-bit
instruction word make it ideal for portable multimedia and wireless communication markets.
CEVA-Teak markets include 2.5G/2.75G handsets, portable multimedia devices, portable audio
players, digital still cameras and VoIP phones.
    
    CEVA-TeakLite - a single MAC 16-bit fixed point DSP core. CEVA-TeakLite is positioned to
meet high volume, but very cost sensitive, markets, such as 2G/2.5G and ultra low cost
(ULC) wireless handsets, portable audio players, hard disk drives, optical drives, hearing
aids, VoIP phones and home entertainment and communication devices. CEVA-TeakLite is fully
compatible with the legacy CEVA-Oak DSP at assembly and binary levels which reduces our
customers software development costs.
    
    CEVA-TeakLite-II - a single MAC 16-bit fixed point DSP core. The core extends the
architecture of CEVA-TeakLite and CEVA-Oak. CEVA-TeakLite-II achieves a performance
increase compared to its predecessor core, and delivers a higher level of integration in a
small silicon die size. CEVA-TeakLite-II is positioned to meet high volume, but very cost
sensitive, markets such as 2G/2.5G wireless handsets, portable media players, hard disk
drives, optical drives and digital cordless phones. CEVA-TeakLite-II is fully compatible
with both CEVA-TeakLite and CEVA-Oak DSPs at assembly and binary levels, which reduces our
customers software development costs.
    
    CEVA-TeakLite-III - a native 32-bit data precision backward compatible architecture and
DSP core, featuring a 32-bit MAC unit, supports advanced audio standards such as Dolby
Digital Plus and DTS-HD, as well as a 10-stage pipeline, enabling the core to reach
operating speeds exceeding 500MHz in a 65nm process. The core extends the architecture of
CEVA-TeakLite and CEVA-Oak DSP cores. The CEVA-TeakLite-III offers a unique balance of
power and performance, and its instruction set makes it ideal for a range of high volume,
cost sensitive audio applications, including high definition audio used in Digital TVs,
set-top boxes and next generation smart phones. CEVA-TeakLite-III is code compatible with
all of its predecessor cores, CEVA-TeakLite and CEVA-TeakLite-II.
  CEVA DSP-based Subsystems
   6




---



##### Table of Contents




    
    CEVA-XS1100- a low power, highly-integrated DSP-based subsystem, designed to ease the
development and integration process and further reduce development costs and time-to-market
for CEVA-X1620 DSP-based wireless baseband designs. The CEVA-XS1100 exploits multiple
innovative power-saving techniques, such as system modules active only when needed,
level-two memory architecture and caching, adjustable DSP system speed, decentralized
interconnect topology and selective hardware/software wake-up events. The CEVA-XS1100
includes a complete set of DSP peripherals and interfaces, such as an Interrupt Controller,
Power Management Unit, Timers and General Purpose I/Os, and provides easy means of
connectivity to other systems present on chip. CEVA-XS1100 markets include wireless
modems.
    
    CEVA-XS1102- a low power, highly-integrated DSP-based subsystem, designed to ease the
development and integration process and further reduce development costs and time-to-market
for CEVA-X1622 DSP-based wireless baseband designs. The CEVA-XS1102 exploits multiple
innovative power-saving techniques, such as system modules active only when needed,
level-two memory architecture and caching, adjustable DSP system speed, decentralized
interconnect topology and selective hardware/software wake-up events. The CEVA-XS1102
includes a complete set of DSP peripherals and interfaces, such as an Interrupt Controller,
Power Management Unit, Timers and General Purpose I/Os, and provides easy means of
connectivity to other systems present on chip. CEVA-XS1102 markets include wireless
modems.
    
    CEVA-XS1141- a low power, highly-integrated DSP-based subsystem, designed to ease the
development and integration process and further reduce development costs and time-to-market
for CEVA-X DSP-based designs. The CEVA-XS1141 subsystem leverages the CEVA-XS1100 and
interfaces directly with the CEVA-X1641 core. CEVA-XS1141 markets include 4G/WiMAX
wireless modems and wireless network infrastructure.
    
    CEVA-XS1200- a low power, highly-integrated DSP-based subsystem, designed to ease the
development and integration process and further reduce development costs and time-to-market
for CEVA-X DSP-based designs. The CEVA-XS1200 subsystem is based on the CEVA-XS1100
subsystem and is enhanced with a programmable 3D Direct Memory Access (DMA) co-processor
and glue-less TDM ports. This provides designers with the ability to target high
performance applications, such as multimedia, communications, VoIP and storage.
CEVA-XS1200 markets include 3G wireless applications, portable multimedia players, home
entertainment and high fidelity audio systems, and VoIP multi-channel applications.
    
    Xpert-TeakLite-II- a complete, low power, low cost, programmable DSP-based subsystem,
designed for the embedded application markets. It includes configurable cached program
memory, direct program, data memories, high performance DMA controller, BTDMP, host
processor interface unit (PIU), standard AMBA bridges (AHB & APB) and optional Ethernet
MAC. Xpert-TeakLite-II markets include 2G/2.5G wireless applications, portable multimedia
players, and consumer/professional audio, VoIP, VoCable, VoDSL and Voice over optical
networks applications.
    
    Xpert-Teak- a complete DSP-based subsystem for low power, low-cost SoC designs targeted
at applications, such as wireless baseband and portable multimedia markets. Xpert-Teak
includes multiple hardware peripherals and incorporates on-chip data and program memories,
high performance DMA controller, BTDMP, high-throughput HPI and other peripherals.
Xpert-Teak markets include 2/2.5G wireless applications, and image and video processing,
consumer/professional audio, VoIP, VoCables and VoDSL applications.
 CEVA Application-Specific Platforms
  
    
    CEVA-Audio - a high performance, low power audio platform for consumer devices.
CEVA-Audio is a fully synthesizable soft IP, operating at up to 200MHz, and built around
the CEVA-TeakLite-II. With overall die size of less than two square mm, and 0.1 mW/MHz
for stereo MP3 decoder (using TSMC 0.13u G process), it supports all of the industry
standard audio and speech codecs, including MP3, WMA, AAC, HE-AAC, Ogg Vorbis, BSAC,
NB-AMR and WB-AMR.
 CEVA-Audio Markets: portable audio players, cellular handsets and home entertainment
systems.
  7




---



##### Table of Contents




    
    CEVA MM2000 - a flexible, integrated software based platform, combining audio, video,
voice and imaging functions at extremely low power consumption and at a small die size.
Programmable for a wide range of multimedia standards, resolutions and frame rates, the
CEVA Mobile-Media solution allows licensees to re-target a single silicon platform for any
multimedia processing requirements, thus negating the need for costly, time-consuming
silicon re-spins.CEVA MM2000 solution is a complete hardware plus software platform. The hardware portion
includes the high performance CEVA-X1620 DSP core, the CEVA-XS1200 subsystem platform. The
software element is a collection of industry standard video and audio codes, such as H.264
decoder and encoder, MPEG4 decoder and encoder, RealVideo, VC-1, MP3 and AMR. The video
codes of MM2000 make use of CEVA-patented FST technology that allows high resolution video
(DVD quality) to be processed fully in software using a low-cost and low power DSP.MM2000 Markets: high end feature phones, smartphones and portable multimedia devices.
    
    CEVA-VoP - is a complete platform enabling a wide range of cost-sensitive VoIP products
targeting residential and enterprise telecom markets. Based on CEVAs Xpert-TeakLite-II,
the CEVA-VoP platform is a complete hardware and software solution that can be deployed as
a subsystem in an integrated networking and VoP SoC. The platform integrates the widely
adopted, programmable CEVA-TeakLite-II DSP core, with added hardware peripherals capable
of handling multiple, simultaneous, packet-voice channels on a single core. The solution
includes all required DSP software, such as speech compression and decompression, echo
cancellation, telephony functions and signaling/networking. The software is open,
allowing design licensees to add proprietary algorithms and broaden the use of the design
for other markets or applications.CEVA-VoP Markets: VoIP residential gateways and phones.
    
    CEVA Bluetooth - a flexible, silicon-proven Bluetooth platform containing all the
required deliverables for OEM, semiconductor, ASIC, and fabless customers to rapidly
design Bluetooth® technology into their ASICs and ASSPs. CEVA offers Bluetooth 1.2,
Bluetooth 2.0+EDR and Bluetooth 2.1+EDR standards. The platform is designed to accelerate
Bluetooth deployment and reduce time-to-certification and time-to-revenue. The complete
solution includes Bluetooth baseband RTL, Bluetooth protocol stack and full Bluetooth
profile support.CEVA Bluetooth Markets: Wireless handsets, smartphones / PDAs, cordless phones, wireless PBX
and Bluetooth headsets.
    
    CEVA SATA - a complete, low power Serial ATA licensable solution combining a SATA
1.5Gbps PHY or SATA 3.0Gbps PHY with a Link/Transport/Command Protocol stack, and is fully
compliant to the Serial ATA specification. The SATA PHY is supplied in the form of a
GDSII hard macro with simulation models and physical views. The SATA Protocol (PHY
Control, Link, Transport and Command/DMA layers) is delivered in the form of an RTL
package, and supported by a comprehensive test bench environment plus physical design
scripts for realization on the target semiconductor processes.CEVA-SATA Markets: Solid State Drives (SSD), set-top boxes, PVR and HD DVD/Blu-ray.
  Principal Markets
  
    
    Wireless HandsetsCEVA is the worlds leading licensor of DSP technology to the handset industry. Over the
years, hundreds of millions of widely used cellphones have deployed CEVAs technology.
Recent announcements by CEVAs customers indicate that CEVAs DSP cores are incorporated in
the design phases of four of the five largest OEMs in the handset market. With complete
solutions spanning modem and application processing platforms and Bluetooth technologies,
CEVAs IP portfolio greatly accelerates time-to-market, functionality and performance of next
generation handsets.
  8




---



##### Table of Contents




    
    Portable Multimedia PlayersCEVAs portable multimedia solutions integrate a DSP core, DSP-based subsystem and
comprehensive software codecs that support all industry audio, video and imaging standards in
a silicon proven platform. Designed for ultra low power, minimal memory requirements and
high level of resolution, our solutions offer the portable multimedia player market a
complete software programmable multimedia platform.
    
    Portable AudioCEVA offers a complete, highly-integrated, low power, low-cost audio platform for consumer
devices, including handsets, portable audio players and home entertainment systems. The CEVA
audio platform combines several CEVA-developed technologies, including CEVA-TeakLite-II and
CEVA-Teaklite-III, the new and enhanced version of the widely-adopted CEVA-TeakLite DSP core,
a cache memory subsystem, audio peripherals, a comprehensive set of audio codecs and complete
tool chain support.
    
    StorageCEVAs technologies are incorporated annually in tens of millions of disk drives, DVD players
and recorders. CEVAs technologies are chosen for a combination of high performance with
small die size and low power consumption. CEVAs storage offerings include DSP cores for
magnetic and optical drive controllers, as well as high speed serial communications,
including SATA, which was recently selected by key customers for Solid State Drive (SSD)
applications.
    
    Telecom / NetworkingCEVA provides networking and telecommunication semiconductor vendors with a broad range of
solutions targeting IP-phones and residential gateways, including PON (Passive Optical
network). Complete VoIP, Giga Ethernet and Serdes silicon-verified solutions from CEVA are
designed to reduce the cost and time-to-market for telecom and networking products.
 Customers
  International Sales and Operations
    9




---



##### Table of Contents



Sales and Marketing
    Technical Support
  
    
    assistance with implementation, responding to customer-specific inquiries, training
and, when and if they become available, distributing updates and upgrades of our
products;
    
    application support, consisting of providing general hardware and software design
examples, ready-to-use software modules and guidelines to our licensees to assist them
in using our technology; and
    
    design services, consisting of creating customer-specific implementations of our DSP
cores and application platforms.
  Research and Development
    Competition
   10




---



##### Table of Contents




    
    IP vendors that offer programmable DSP cores;
    
    IP vendors of general purpose processors with DSP extensions;
    
    internal design groups of large chip companies that develop proprietary DSP solutions
for their own application-specific chips; and
    
    semiconductor companies that offer off-the-shelf programmable DSP chips.
      
    
    in the multimedia market  ARC, Chips & Media, Hantro (being acquired by On2),
Imagination Technologies and Tensilica;
    
    in the serial storage technology area  ARM, Gennum, Silicon Image and Synopsys;
    
    in VoIP applications  ARM and MIPS Technologies; and
    
    in audio applications  ARC, ARM and Tensilica.
 Proprietary Rights
   11




---



##### Table of Contents



Employees
  NumberTotal employees
    
    
    192FunctionResearch and development
    
    
    136Sales and marketing
    
    
    19Technical support
    
    
    12Administration
    
    
    25LocationIsrael
    
    
    126Ireland
    
    
    34United Kingdom
    
    
    8United States
    
    
    9Elsewhere
    
    
    15
  12




---



##### Table of Contents



Corporate History
  Available Information
 www.sec.gov
  
 ITEM 1A. RISK FACTORS
 We caution you that the following important factors, among others, could cause our actual
future results to differ materially from those expressed in forward-looking statements made by or
on behalf of us in filings with the Securities and Exchange Commission, press releases,
communications with investors and oral statements. Any or all of our forward-looking statements in
this annual report, and in any other public statements we make, may turn out to be wrong. They can
be affected by inaccurate assumptions we might make or by known or unknown risks and uncertainties.
Many factors mentioned in the discussion below will be important in determining future results.
We undertake no obligation to publicly update any forward-looking statements, whether as a result
of new information, future events or otherwise. You are advised, however, to consult any further
disclosures we make in our reports filed with the Securities and Exchange Commission.
 The markets in which we operate are highly competitive, and as a result we could experience a loss
of sales, lower prices and lower revenue.
  
    
    microprocessor IP providers, such as ARC, ARM, MIPS Technologies and Tensilica, are
offering DSP extensions to their IP;
    
    SATA IP market is highly standardized with several vendors offering similar products,
leading to pricing pressures for both licensing and royalty revenue;
    
    our video solution is software-based and competes with hardware implementation offered
by companies such as Hantro (being acquired by On2) and other software solutions offered by
Chips & Media (acquired by MIPS Technologies), Hantro, Imagination Technologies and
Tensilica;
    
    ARC is offering a licensing model based on royalty payments specifically for Chinese
customers that waive initial licensee fees; and
    
    lower license fees and overall erosion of average selling prices of our IP.
  13




---



##### Table of Contents



Our quarterly operating results fluctuate from quarter to quarter due to a variety of factors,
including our lengthy sales cycle, and may not be a meaningful indicator of future performance.
  
    
    the timing of the introduction of new or enhanced technologies by us and our
competitors, as well as the market acceptance of such technologies;
    
    the timing and volume of orders and production by our customers, as well as
fluctuations in royalty revenues resulting from fluctuations in unit shipments by our
licensees and shifts by our customers from prepaid royalty arrangements to per unit
royalty arrangements;
    
    the mix of revenues among licensing revenues, per unit and prepaid royalties and
service revenues;
    
    our lengthy sales cycle and specifically in the third quarter of any fiscal year
during which summer vacations slow down decision-making processes of our customers in
executing contracts;
    
    the gain or loss of significant licensees, partly due to our dependence on a limited
number of customers generating a significant amount of quarterly revenues;
    
    any delay in execution of any anticipated licensing arrangement during a particular
quarter;
    
    delays in the commercialization of end products that incorporate our technology;
    
    currency fluctuations of the Euro and NIS versus the U.S. dollar;
    
    increased operating expenses and gross margin fluctuations associated with the
introduction of new or enhanced technologies;
    
    changes in our pricing policies and those of our competitors; and
    
    restructuring, asset impairment and related charges, as well as other accounting
changes or adjustments.
 We rely significantly on revenue derived from a limited number of customers.
  We depend on market acceptance of third-party semiconductor intellectual property.
   14




---



##### Table of Contents



Because our IP solutions are components of end products, if semiconductor companies and electronic
equipment manufacturers do not incorporate our solutions into their end products or if the end
products of our customers do not achieve market acceptance, we may not be able to generate adequate
sales of our products.
   We depend on a limited number of key personnel who would be difficult to replace.
  The sales cycle for our IP solutions is lengthy, which makes forecasting of our customer orders and
revenues difficult.
  We may dispose of or discontinue existing product lines and technology developments, which may
adversely impact our future results.
   15




---



##### Table of Contents



Because our IP solutions are complex, the detection of errors in our products may be delayed, and
if we deliver products with defects, our credibility will be harmed, the sales and market
acceptance of our products may decrease and product liability claims may be made against us.
  Our operating results may fluctuate significantly due to the cyclicality of the semiconductor
industry or global economy slowdown, which could adversely affect the market price of our stock.
  Our success will depend on our ability to successfully manage our geographically dispersed
operations.
  Our operations in Israel may be adversely affected by instability in the Middle East region.
    16




---



##### Table of Contents



Our research and development expenses may increase if the grants we currently receive from the
Israeli and Irish governments are reduced or withheld.
  We are exposed to fluctuations in currency exchange rates.
  Because we have significant international operations, we may be subject to political, economic and
other conditions relating to our international operations that could increase our operating
expenses and disrupt our revenues and business.
  
    
    unexpected changes in regulatory requirements;
    
    fluctuations in the exchange rate for the U.S. dollar;
    
    imposition of tariffs and other barriers and restrictions;
    
    burdens of complying with a variety of foreign laws;
    
    political and economic instability; and
    
    changes in diplomatic and trade relationships.
 If we are unable to meet the changing needs of our end-users or to address evolving market demands,
our business may be harmed.
   17




---



##### Table of Contents



We may seek to expand our business through acquisitions that could result in diversion of resources
and extra expenses.
   
    
    issuance of equity securities that would dilute our current stockholders
percentages of ownership;
    
    large one-time write-offs;
    
    incurrence of debt and contingent liabilities;
    
    difficulties in the assimilation and integration of operations, personnel,
technologies, products and information systems of the acquired companies;
    
    diversion of managements attention from other business concerns;
    
    contractual disputes;
    
    risks of entering geographic and business markets in which we have no or only
limited prior experience; and
    
    potential loss of key employees of acquired organizations.
 We may not be able to adequately protect our intellectual property.
   Our business will suffer if we are sued for infringement of the intellectual property rights of
third parties or if we cannot obtain licenses to these rights on commercially acceptable terms.
   18




---



##### Table of Contents



Our business depends on our customers and their suppliers obtaining required complementary
components.
  The future growth of our business depends in part on our ability to license to system OEMs and
small-to-medium-sized semiconductor companies directly and to expand our sales geographically.
  The Israeli tax benefits that we currently receive and the government programs in which we
participate require us to meet certain conditions and may be terminated or reduced in the future,
which could increase our tax expenses.
  Our corporate tax rate may increase, which could adversely impact our cash flow, financial
condition and results of operations.
  
 ITEM 1B. UNRESOLVED STAFF COMMENTS
  
 ITEM 2. PROPERTIES
   19




---



##### Table of Contents



AreaLocation
    
    Term
    
    
    Expiration
    
    
    (Sq. Feet)
    
    
    Principal ActivitiesSan Jose, CA, U.S.
    
    3 years
    
    
    
    2010
    
    
    
    5,250
    
    
    Headquarters; sales and marketing; administrationHerzeliya, Israel
    
    4 years
    
    
    
    2010
    
    
    
    26,100
    
    
    Research and development; administrationDublin, Ireland
    
    25 years
    
    
    
    2021
    
    
    
    20,900
    
    
    Research and development; administrationDublin, Ireland
    
    2 years
    
    
    
    2008
    
    
    
    2,270
    
    
    Research and development; administrationCork, Ireland
    
    25 years
    
    
    
    2025
    
    
    
    10,000
    
    
    Research and developmentLimerick, Ireland
    
    10 years
    
    
    
    2010
    
    
    
    4,000
    
    
    Research and developmentBelfast, Northern Ireland
    
    15 years
    
    
    
    2019
    
    
    
    2,600
    
    
    Research and development
    
 ITEM 3. LEGAL PROCEEDINGS
    
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
   20




---



##### Table of Contents



EXECUTIVE OFFICERS OF THE REGISTRANT
  Gideon Wertheizer
 Yaniv Arieli
 Issachar Ohana
  21




---



##### Table of Contents



PART II
 
 ITEM 5.
    
    MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
  Price Range ofCommon StockHigh
    
    
    Low2007First Quarter
    
    $
    8.11
    
    
    $
    6.49Second Quarter
    
    $
    8.58
    
    
    $
    7.11Third Quarter
    
    $
    9.41
    
    
    $
    7.81Fourth Quarter
    
    $
    13.22
    
    
    $
    8.632006First Quarter
    
    $
    6.88
    
    
    $
    5.80Second Quarter
    
    $
    7.90
    
    
    $
    5.62Third Quarter
    
    $
    6.15
    
    
    $
    5.05Fourth Quarter
    
    $
    6.89
    
    
    $
    5.30
   2008 Annual Meeting of Stockholders
  Stock Performance Graph
 Notwithstanding anything to the contrary set forth in any of the Companys previous or future
filings under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as
amended, that might incorporate this proxy statement or future filings made by the Company under
those statutes, the below Stock Performance Graph shall not be deemed filed with the United States
Securities and Exchange Commission and shall not be deemed incorporated by reference into any of
those prior filings or into any future filings made by the Company under those statutes.
  22




---



##### Table of Contents



COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
 
 *
    
    $100 invested on 12/31/02 in stock or index-including reinvestment of dividends. Fiscal year ending December 31. 12/31/02
    
    
    
    12/31/03
    
    
    
    12/31/04
    
    
    
    12/31/05
    
    
    
    12/31/06
    
    
    
    12/31/07CEVA, Inc
    
    
    
    100.00
    
    
    
    
    176.14
    
    
    
    
    154.09
    
    
    
    
    105.92
    
    
    
    
    109.48
    
    
    
    
    206.60NASDAQ Composite
    
    
    
    100.00
    
    
    
    
    149.75
    
    
    
    
    164.64
    
    
    
    
    168.60
    
    
    
    
    187.83
    
    
    
    
    205.22Specialized Semiconductor
    
    
    
    100.00
    
    
    
    
    174.11
    
    
    
    
    145.93
    
    
    
    
    153.22
    
    
    
    
    168.69
    
    
    
    
    224.30
     23




---



##### Table of Contents



ITEM 6. SELECTED FINANCIAL DATA
  Year Ended December 31,2003
    
    
    2004
    
    
    2005
    
    
    2006
    
    
    2007(in thousands)Consolidated Statements of Operations Data:Revenues:Licensing
    
    $
    25,737
    
    
    $
    26,237
    
    
    $
    23,935
    
    
    $
    22,160
    
    
    $
    19,499Royalties
    
    
    4,058
    
    
    
    6,034
    
    
    
    6,820
    
    
    
    6,324
    
    
    
    9,095Other revenue
    
    
    7,041
    
    
    
    5,402
    
    
    
    4,881
    
    
    
    4,021
    
    
    
    4,617Total revenues
    
    
    36,836
    
    
    
    37,673
    
    
    
    35,636
    
    
    
    32,505
    
    
    
    33,211Cost of revenues
    
    
    6,061
    
    
    
    5,178
    
    
    
    4,217
    
    
    
    4,035
    
    
    
    3,851Gross profit
    
    
    30,775
    
    
    
    32,495
    
    
    
    31,419
    
    
    
    28,470
    
    
    
    29,360Operating expenses:Research and development, net
    
    
    17,382
    
    
    
    17,276
    
    
    
    20,153
    
    
    
    18,769
    
    
    
    19,136Sales and marketing
    
    
    6,058
    
    
    
    6,965
    
    
    
    6,577
    
    
    
    6,268
    
    
    
    6,253General and administrative
    
    
    6,109
    
    
    
    5,863
    
    
    
    5,742
    
    
    
    5,882
    
    
    
    5,721Amortization of intangible assets
    
    
    1,127
    
    
    
    892
    
    
    
    823
    
    
    
    414
    
    
    
    148Reorganization, restructuring and
severance charge
    
    
    8,620
    
    
    
    
    
    
    
    3,207
    
    
    
    
    
    
    
    Impairment of assets
    
    
    3,233
    
    
    
    
    
    
    
    510
    
    
    
    
    
    
    
    Total operating expenses
    
    
    42,529
    
    
    
    30,996
    
    
    
    37,012
    
    
    
    31,333
    
    
    
    31,258Operating income (loss)
    
    
    (11,754
    )
    
    
    1,499
    
    
    
    (5,593
    )
    
    
    (2,863
    )
    
    
    (1,898
    )Financial income, net
    
    
    63
    
    
    
    796
    
    
    
    1,820
    
    
    
    2,620
    
    
    
    3,211Other income
    
    
    
    
    
    
    
    
    
    
    1,507
    
    
    
    57
    
    
    
    425Income (loss) before taxes on income
    
    
    (11,691
    )
    
    
    2,295
    
    
    
    (2,266
    )
    
    
    (186
    )
    
    
    1,738Income tax expense (income)
    
    
    300
    
    
    
    645
    
    
    
    
    
    
    
    (88
    )
    
    
    447Net income (loss)
    
    $
    (11,991
    )
    
    $
    1,650
    
    
    $
    (2,266
    )
    
    $
    (98
    )
    
    $
    1,291Basic net income (loss) per share
    
    $
    (0.66
    )
    
    $
    0.09
    
    
    $
    (0.12
    )
    
    $
    (0.01
    )
    
    $
    0.07Diluted net income (loss) per share
    
    $
    (0.66
    )
    
    $
    0.09
    
    
    $
    (0.12
    )
    
    $
    (0.01
    )
    
    $
    0.06
  24




---



##### Table of Contents



December 31,2003
    
    
    2004
    
    
    2005
    
    
    2006
    
    
    2007(in thousands)Consolidated Balance Sheet DataWorking capital
    
    $
    53,440
    
    
    $
    57,960
    
    
    $
    61,240
    
    
    $
    65,001
    
    
    $
    77,312Total assets
    
    
    119,433
    
    
    
    119,163
    
    
    
    115,749
    
    
    
    121,080
    
    
    
    128,989Total long term liabilities
    
    
    3,093
    
    
    
    2,626
    
    
    
    4,295
    
    
    
    4,216
    
    
    
    4,647Total stockholders equity
    
    $
    98,479
    
    
    $
    102,549
    
    
    $
    102,233
    
    
    $
    106,143
    
    
    $
    114,388
 QUARTERLY FINANCIAL INFORMATION
 Three months endedMarch 31,
    
    
    June 30,
    
    
    September 30,
    
    
    December 31,
    
    
    March 31,
    
    
    June 30,
    
    
    September 30,
    
    
    December 31,2006
   

    
    2007Revenues:Licensing
    
    $
    5,340
    
    
    $
    6,017
    
    
    $
    5,528
    
    
    $
    5,275
    
    
    $
    4,639
    
    
    $
    5,534
    
    
    $
    5,314
    
    
    $
    4,012Royalties
    
    
    1,820
    
    
    
    1,438
    
    
    
    1,410
    
    
    
    1,656
    
    
    
    1,957
    
    
    
    1,918
    
    
    
    2,178
    
    
    
    3,042Other revenue
    
    
    974
    
    
    
    957
    
    
    
    955
    
    
    
    1,135
    
    
    
    1,130
    
    
    
    1,063
    
    
    
    1,237
    
    
    
    1,187Total revenues
    
    
    8,134
    
    
    
    8,412
    
    
    
    7,893
    
    
    
    8,066
    
    
    
    7,726
    
    
    
    8,515
    
    
    
    8,729
    
    
    
    8,241Cost of revenues
    
    
    895
    
    
    
    1,135
    
    
    
    992
    
    
    
    1,013
    
    
    
    1,007
    
    
    
    918
    
    
    
    1,001
    
    
    
    925Gross profit
    
    
    7,239
    
    
    
    7,277
    
    
    
    6,901
    
    
    
    7,053
    
    
    
    6,719
    
    
    
    7,597
    
    
    
    7,728
    
    
    
    7,316Operating expenses:Research and development, net
    
    
    5,016
    
    
    
    4,873
    
    
    
    4,270
    
    
    
    4,610
    
    
    
    4,700
    
    
    
    4,610
    
    
    
    4,705
    
    
    
    5,121Sales and marketing
    
    
    1,771
    
    
    
    1,606
    
    
    
    1,414
    
    
    
    1,477
    
    
    
    1,555
    
    
    
    1,619
    
    
    
    1,471
    
    
    
    1,608General and administrative
    
    
    1,484
    
    
    
    1,474
    
    
    
    1,577
    
    
    
    1,347
    
    
    
    1,246
    
    
    
    1,373
    
    
    
    1,515
    
    
    
    1,587Amortization of other
intangible assets
    
    
    190
    
    
    
    141
    
    
    
    42
    
    
    
    41
    
    
    
    42
    
    
    
    41
    
    
    
    41
    
    
    
    24Total operating expenses
    
    
    8,461
    
    
    
    8,094
    
    
    
    7,303
    
    
    
    7,475
    
    
    
    7,543
    
    
    
    7,643
    
    
    
    7,732
    
    
    
    8,340Operating loss
    
    
    (1,222
    )
    
    
    (817
    )
    
    
    (402
    )
    
    
    (422
    )
    
    
    (824
    )
    
    
    (46
    )
    
    
    (4
    )
    
    
    (1,024
    )Financial income, net
    
    
    541
    
    
    
    573
    
    
    
    778
    
    
    
    728
    
    
    
    824
    
    
    
    626
    
    
    
    745
    
    
    
    1,016Other income
    
    
    
    
    
    
    57
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    425
    
    
    
    Income (loss) before taxes on
income (loss)
    
    
    (681
    )
    
    
    (187
    )
    
    
    376
    
    
    
    306
    
    
    
    
    
    
    
    580
    
    
    
    1,166
    
    
    
    (8
    )Income taxes expense (income)
    
    
    120
    
    
    
    30
    
    
    
    35
    
    
    
    (273
    )
    
    
    
    
    
    
    150
    
    
    
    54
    
    
    
    243
  25




---



##### Table of Contents



Three months endedMarch 31,
    
    
    June 30,
    
    
    September 30,
    
    
    December 31,
    
    
    March 31,
    
    
    June 30,
    
    
    September 30,
    
    
    December 31,2006
    
    
    2007Net income (loss)
    
    $
    (801
    )
    
    $
    (217
    )
    
    $
    341
    
    
    $
    579
    
    
    $
    
    
    
    $
    430
    
    
    $
    1,112
    
    
    $
    (251
    )Basic net income (loss) per share
    
    $
    (0.04
    )
    
    $
    (0.01
    )
    
    $
    0.02
    
    
    $
    0.03
    
    
    $
    0.00
    
    
    $
    0.02
    
    
    $
    0.06
    
    
    $
    (0.01
    )Diluted net income (loss) per share
    
    $
    (0.04
    )
    
    $
    (0.01
    )
    
    $
    0.02
    
    
    $
    0.03
    
    
    $
    0.00
    
    
    $
    0.02
    
    
    $
    0.05
    
    
    $
    (0.01
    )Weighted average number of shares
of Common Stock used in
computation of net income (loss)
per share (in thousands):Basic
    
    
    19,061
    
    
    
    19,142
    
    
    
    19,239
    
    
    
    19,315
    
    
    
    19,420
    
    
    
    19,473
    
    
    
    19,647
    
    
    
    19,873Diluted
    
    
    19,061
    
    
    
    19,142
    
    
    
    19,324
    
    
    
    19,432
    
    
    
    19,420
    
    
    
    19,776
    
    
    
    20,287
    
    
    
    19,873
  26




---



##### Table of Contents



ITEM 7.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 You should read the following discussion together with the consolidated financials statements
and related notes appearing elsewhere in this annual report. This discussion contains
forward-looking statements that involve risks and uncertainties. Actual results may differ
materially from those included in such forward-looking statements. Factors that could cause actual
results to differ materially include those set forth under Risk Factors, as well as those
otherwise discussed in this section and elsewhere in this annual report. See Forward-Looking
Statements and Industry Data.
 BUSINESS OVERVIEW
        27




---



##### Table of Contents



CRITICAL ACCOUNTING POLICIES, ESTIMATES AND ASSUMPTIONS
  
    
    revenue recognition;
    
    allowances for doubtful accounts;
    
    accounting for income taxes;
    
    impairment of goodwill and other intangible assets;
    
    stock based compensation;
    
    reorganization, restructuring and severance charges;
    
    investments in other companies; and
    
    foreign currency.
  28




---



##### Table of Contents



Revenue Recognition
          29




---



##### Table of Contents



Allowances for Doubtful Accounts
  Accounting for Income Taxes
       30




---



##### Table of Contents



Goodwill
 st
  Other Intangible Assets
  
    
    significant underperformance relative to expected historical or projected future
operating results;
    
    significant changes in the manner of our use of the acquired assets or the strategy
for our overall business;
    
    significant negative industry or economic trends;
    
    significant decline in our stock price for a sustained period; and
    
    significant decline in our market capitalization relative to net book value.
   Accounting for Equity-Based Compensation:
     31




---



##### Table of Contents



Reorganization, Restructuring and Severance Charge
      32




---



##### Table of Contents



Investment in Other Company, Net:
    Foreign Currency
   Recently issued accounting standards:
    33




---



##### Table of Contents



RESULTS OF OPERATIONS
  2005
    
    
    2006
    
    
    2007Consolidated Statements of Operations Data:Revenues:Licensing
    
    
    67.2
    %
    
    
    68.2
    %
    
    
    58.7
    %Royalties
    
    
    19.1
    %
    
    
    19.4
    %
    
    
    27.4
    %Other revenue
    
    
    13.7
    %
    
    
    12.4
    %
    
    
    13.9
    %Total revenues
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Cost of revenues
    
    
    11.8
    %
    
    
    12.4
    %
    
    
    11.6
    %Gross profit
    
    
    88.2
    %
    
    
    87.6
    %
    
    
    88.4
    %Operating expenses:Research and development, net
    
    
    56.6
    %
    
    
    57.7
    %
    
    
    57.6
    %Sales and marketing
    
    
    18.5
    %
    
    
    19.3
    %
    
    
    18.8
    %General and administrative
    
    
    16.1
    %
    
    
    18.1
    %
    
    
    17.2
    %Amortization of other intangible assets
    
    
    2.3
    %
    
    
    1.3
    %
    
    
    0.5
    %Reorganization, restructuring and severance charge
    
    
    9.0
    %
    
    
    
    
    
    
    Impairment of assets
    
    
    1.4
    %
    
    
    
    
    
    
    Total operating expenses
    
    
    103.9
    %
    
    
    96.4
    %
    
    
    94.1
    %Operating loss
    
    
    (15.7
    )%
    
    
    (8.8
    )%
    
    
    (5.7
    )%Financial income, net
    
    
    5.1
    %
    
    
    8.0
    %
    
    
    9.6
    %Other income
    
    
    4.2
    %
    
    
    0.2
    %
    
    
    1.3
    %Income (loss) before taxes on income
    
    
    (6.4
    )%
    
    
    (0.6
    )%
    
    
    5.2
    %Taxes on income
    
    
    
    
    
    
    (0.3
    )%
    
    
    1.3
    %Net income (loss)
    
    
    (6.4
    )%
    
    
    (0.3
    )%
    
    
    3.9
    %
 Discussion and Analysis
  34




---



##### Table of Contents



Revenues
 Total Revenues
 2005
    
    
    2006
    
    
    2007Total revenues (in millions)
    
    $
    35.6
    
    
    $
    32.5
    
    
    $
    33.2Change year-on-year
    
    
    
    
    
    
    (8.8
    )%
    
    
    2.2
    %
     Licensing Revenues
 2005
    
    
    2006
    
    
    2007Licensing revenues (in millions)
    
    $
    23.9
    
    
    $
    22.2
    
    
    $
    19.5Change year-on-year
    
    
    
    
    
    
    (7.4
    )%
    
    
    (12.0
    )%
    35




---



##### Table of Contents



Royalty Revenues
 2005
    
    
    2006
    
    
    2007Royalty revenues (in millions)
    
    $
    6.8
    
    
    $
    6.3
    
    
    $
    9.1Change year-on-year
    
    
    
    
    
    
    (7.3
    )%
    
    
    43.8
    %
   Other Revenues
  2005
    
    
    2006
    
    
    2007Other revenues (in millions)
    
    $
    4.9
    
    
    $
    4.0
    
    
    $
    4.6Change year-on-year
    
    
    
    
    
    
    (17.6
    )%
    
    
    14.8
    %
  Geographic Revenue Analysis
 2005
    
    
    2006
    
    
    2007(in millions, except percentages)United States
    
    $
    12.5
    
    
    
    35.2
    %
    
    $
    11.7
    
    
    
    35.9
    %
    
    $
    6.9
    
    
    
    20.9
    %Europe, Middle East, Africa (EMEA)
    
    $
    7.9
    
    
    
    22.1
    %
    
    $
    11.7
    
    
    
    35.9
    %
    
    $
    11.5
    
    
    
    34.6
    %Asia Pacific (APAC)
    
    $
    15.2
    
    
    
    42.7
    %
    
    $
    9.2
    
    
    
    28.2
    %
    
    $
    14.8
    
    
    
    44.5
    %
    36




---



##### Table of Contents



Cost of Revenues
 2005
    
    
    2006
    
    
    2007Cost of revenues (in millions)
    
    $
    4.2
    
    
    $
    4.0
    
    
    $
    3.9Change year-on-year
    
    
    
    
    
    
    (4.3
    )%
    
    
    (4.6
    )%
   Operating Expenses
 (in millions)
    
    2005
    
    
    2006
    
    
    2007Research and development, net
    
    $
    20.2
    
    
    $
    18.8
    
    
    $
    19.1Sales and marketing
    
    $
    6.6
    
    
    $
    6.2
    
    
    $
    6.2General and administration
    
    $
    5.7
    
    
    $
    5.9
    
    
    $
    5.7Amortization of intangible assets
    
    $
    0.8
    
    
    $
    0.4
    
    
    $
    0.2Reorganization, restructuring and severance charge
    
    $
    3.2
    
    
    $
    
    
    
    $
    Impairment of assets
    
    $
    0.5
    
    
    $
    
    
    
    $
    Total operating expenses
    
    $
    37.0
    
    
    $
    31.3
    
    
    $
    31.2Change year-on-year
    
    
    
    
    
    
    (15.3
    )%
    
    
    (0.2
    )%
  Research and Development Expenses, Net
 2005
    
    
    2006
    
    
    2007Research and development expenses, net (in millions)
    
    $
    20.2
    
    
    $
    18.8
    
    
    $
    19.1Change year-on-year
    
    
    
    
    
    
    (6.9
    )%
    
    
    2.0
    %
    37




---



##### Table of Contents



Sales and Marketing Expenses
 2005
    
    
    2006
    
    
    2007Sales and marketing expenses (in millions)
    
    $
    6.6
    
    
    $
    6.2
    
    
    $
    6.2Change year-on-year
    
    
    
    
    
    
    (4.7
    )%
    
    
    (0.2
    )%
   General and Administrative Expenses
 2005
    
    
    2006
    
    
    2007General and administrative expenses (in millions)
    
    $
    5.7
    
    
    $
    5.9
    
    
    $
    5.7Change year-on-year
    
    
    
    
    
    
    2.4
    %
    
    
    (2.7
    )%
  Amortization of Other Intangible Assets
 2005
    
    
    2006
    
    
    2007Amortization of other intangible assets (in millions)
    
    $
    0.8
    
    
    $
    0.4
    
    
    $
    0.2Change year-on-year
    
    
    
    
    
    
    (49.7
    )%
    
    
    (64.3
    )%
   38




---



##### Table of Contents



Reorganization, Restructuring and Severance Charge
 2005
    
    
    2006
    
    
    2007Reorganization, restructuring and severance charge (in millions)
    
    $
    3.2
    
    
    $
    
    
    
    $
    
     Impairment of Assets
 2005
    
    
    2006
    
    
    2007Impairment of assets (in millions)
    
    $
    0.5
    
    
    $
    
    
    
    $
    
   39




---



##### Table of Contents



Financial Income, net and Other Income
 2005
    
    
    2006
    
    
    2007Financial income, net (in millions)
    
    $
    1.82
    
    
    $
    2.62
    
    
    $
    3.21of which:Interest income and gains from marketable securities (in millions)
    
    $
    1.71
    
    
    $
    2.77
    
    
    $
    3.17Foreign exchange gain (loss) (in millions)
    
    $
    0.11
    
    
    $
    (0.15
    )
    
    $
    0.04Other incomeGain on realization of investment (in millions)
    
    $
    1.51
    
    
    $
    0.06
    
    
    $
    0.43
    Provision for Income Taxes
    40




---



##### Table of Contents



LIQUIDITY AND CAPITAL RESOURCES
        41




---



##### Table of Contents



Contractual Obligations
  Payments Due by Period($ in thousands)Less than
    
    
    
    
    
    
    
    
    
    
    More thanTotal
    
    

1 year
    
    
    1-3 years
    
    
    3-5 years
    
    
    5 yearsOperating Lease Obligations  Leasehold properties (*)
    
    
    21,351
    
    
    
    2,545
    
    
    
    4,318
    
    
    
    2,823
    
    
    
    11,665Operating Lease Obligations  Other
    
    
    1,461
    
    
    
    999
    
    
    
    462
    
    
    
    
    
    
    
    Purchase Obligations
    
    
    185
    
    
    
    185
    
    
    
    
    
    
    
    
    
    
    
    Severance
Pay (**)
    
    
    3,141
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    26,138
    
    
    
    3,729
    
    
    
    4,780
    
    
    
    2,823
    
    
    
    11,665
   (*)
    
    Total operating lease obligations for leasehold properties, excluding the Harcourt Street
property post the lease termination, would be approximately $3.1 million.(**)
    
    Severance pay relates to accrued severance obligations to our
Israeli employees as required under Israeli labor law. These
obligations are payable only upon termination, retirement or death of
the respective employee. Of this amount, only $50,000 is unfunded. Off-Balance Sheet Arrangements
  
 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    42




---



##### Table of Contents



ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
  
 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
  
 ITEM 9A. CONTROLS AND PROCEDURES
 Evaluation of Disclosure Controls and Procedures
   Managements Annual Report on Internal Control Over Financial Reporting.
    43




---



##### Table of Contents



ITEM 9B.   OTHER INFORMATION
   44




---



##### Table of Contents



PART III
 
 ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
   
 ITEM 11. EXECUTIVE COMPENSATION
  
 ITEM 12.
    
    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCK HOLDER
MATTERS
  
 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
  
 ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
   45




---



##### Table of Contents



PART IV
 
 ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
 The following documents are filed as part of or are included in this Annual Report on Form
10-K:
  
    
    Consolidated Balance Sheets as of December 31, 2007 and 2006.
 
    
    Consolidated Statements of Operations for the Years Ended December 31, 2007, 2006
and 2005.
 
    
    Statements of Changes in Stockholders Equity for the Years Ended December 31,
2007, 2006 and 2005.
 
    
    Consolidated Statements of Cash Flows for the Years Ended December 31, 2007, 2006
and 2005.
 
    
    Notes to Consolidated Financial Statements.
  
    
    Schedule II: Valuation and Qualifying Accounts
     46




---



##### Table of Contents



ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 
 CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2007
 PageReport of Independent Registered Public Accounting Firm (Kost Forer
Gabbay & Kasierer, a member of Ernst & Young Global)
    
    
    F-2Consolidated Balance Sheets
    
    
    F-4Consolidated Statements of Operations
    
    
    F-5Statements of Changes in Stockholders Equity
    
    
    F-6Consolidated Statements of Cash Flows
    
    
    F-7Notes to Consolidated Financial Statements
    
    
    F-9
  F-1




---



##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
             F-2




---



##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
        Kost Forer Gabbay & Kasierer
     F-3




---



##### Table of Contents



CEVA, INC.
 
 CONSOLIDATED BALANCE SHEETS
 (U.S. dollars in thousands, except share and per share data)
 December 31,
    
    
    December 31,2006
    
    
    2007ASSETSCurrent assets:Cash and cash equivalents
    
    $
    37,968
    
    
    $
    40,697Short term bank deposits
    
    
    3,029
    
    
    
    7,130Marketable securities (Note 2)
    
    
    23,237
    
    
    
    28,548Trade receivables (net of allowance for doubtful accounts of $682 in 2006 and $868 in 2007)
    
    
    8,421
    
    
    
    2,502Deferred tax assets (Note 11)
    
    
    613
    
    
    
    861Prepaid expenses (Note 6)
    
    
    564
    
    
    
    904Investment in other company, net (Note 4)
    
    
    
    
    
    
    4,233Other accounts receivable (Note 6)
    
    
    1,890
    
    
    
    2,391Total current assets
    
    
    75,722
    
    
    
    87,266Long-term assets:Severance pay fund
    
    
    2,338
    
    
    
    3,091Deferred tax assets (Note 11)
    
    
    382
    
    
    
    455Property and equipment, net (Note 3)
    
    
    1,706
    
    
    
    1,626Investment in other company, net (Note 4)
    
    
    4,233
    
    
    
    Goodwill (Note 5)
    
    
    36,498
    
    
    
    36,498Other intangible assets, net (Note 5)
    
    
    201
    
    
    
    53Total long term assets
    
    
    45,358
    
    
    
    41,723Total assets
    
    $
    121,080
    
    
    $
    128,989LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Trade payables
    
    $
    718
    
    
    $
    455Accrued expenses and other payables (Note 7)
    
    
    9,462
    
    
    
    8,452Taxes payable
    
    
    135
    
    
    
    320Deferred revenues
    
    
    406
    
    
    
    727Total current liabilities
    
    
    10,721
    
    
    
    9,954Long term liabilities:Accrued severance pay
    
    
    2,519
    
    
    
    3,141Accrued liabilities (Note 12)
    
    
    1,697
    
    
    
    1,506Total long term liabilities
    
    
    4,216
    
    
    
    4,647Commitments and contingencies liabilities (Note 14)Stockholders equity:Preferred Stock:$0.001 par value: 5,000,000 shares authorized at December 31, 2006 and 2007; none
issued and outstanding
    
    
    
    
    
    
    Common Stock:$0.001 par
value: 60,000,000 shares authorized at December 31, 2006, and
2007; 19,330,144 and 20,033,897 shares issued and outstanding at December 31, 2006 and 2007, respectively
    
    
    19
    
    
    
    20Additional paid in capital
    
    
    142,826
    
    
    
    149,772Accumulated other comprehensive income
    
    
    
    
    
    
    7Accumulated deficit
    
    
    (36,702
    )
    
    
    (35,411
    )Total stockholders equity
    
    
    106,143
    
    
    
    114,388Total liabilities and stockholders equity
    
    $
    121,080
    
    
    $
    128,989
   F-4




---



##### Table of Contents



CEVA, INC.
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 (U.S. dollars in thousands, except share and per share data)
 Year Ended December 31,2005
    
    
    2006
    
    
    2007Revenues:Licensing
    
    $
    23,935
    
    
    $
    22,160
    
    
    $
    19,499Royalties
    
    
    6,820
    
    
    
    6,324
    
    
    
    9,095Other revenues
    
    
    4,881
    
    
    
    4,021
    
    
    
    4,617Total revenues
    
    
    35,636
    
    
    
    32,505
    
    
    
    33,211Cost of revenues
    
    
    4,217
    
    
    
    4,035
    
    
    
    3,851Gross profit
    
    
    31,419
    
    
    
    28,470
    
    
    
    29,360Operating expenses:Research and development, net
    
    
    20,153
    
    
    
    18,769
    
    
    
    19,136Sales and marketing
    
    
    6,577
    
    
    
    6,268
    
    
    
    6,253General and administrative
    
    
    5,742
    
    
    
    5,882
    
    
    
    5,721Amortization of intangible assets
    
    
    823
    
    
    
    414
    
    
    
    148Reorganization, restructuring and severance charge (Note 12)
    
    
    3,207
    
    
    
    
    
    
    
    Impairment of assets
    
    
    510
    
    
    
    
    
    
    
    Total operating expenses
    
    
    37,012
    
    
    
    31,333
    
    
    
    31,258Operating loss
    
    
    (5,593
    )
    
    
    (2,863
    )
    
    
    (1,898
    )Financial income, net (Note 10)
    
    
    1,820
    
    
    
    2,620
    
    
    
    3,211Other income (Note 10)
    
    
    1,507
    
    
    
    57
    
    
    
    425Income (loss) before taxes on income
    
    
    (2,266
    )
    
    
    (186
    )
    
    
    1,738Income taxes expense (income) (Note 11)
    
    
    
    
    
    
    (88
    )
    
    
    447Net income (loss)
    
    $
    (2,266
    )
    
    $
    (98
    )
    
    $
    1,291Basic net income (loss) per share
    
    $
    (0.12
    )
    
    $
    (0.01
    )
    
    $
    0.07Diluted net income (loss) per share
    
    $
    (0.12
    )
    
    $
    (0.01
    )
    
    $
    0.06Weighted average number of shares of Common Stock used in
computation of net income (loss) per share (in thousands)Basic
    
    
    18,807
    
    
    
    19,191
    
    
    
    19,606Diluted
    
    
    18,807
    
    
    
    19,191
    
    
    
    20,150
   F-5




---



##### Table of Contents



CEVA, INC.
 
 CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY
 (U.S. dollars in thousands, except share data)
 AccumulatedAdditional
    
    
    other
    
    
    
    
    
    
    TotalCommon Stock
    
    
    paid-in
    
    
    comprehensive
    
    
    Accumulated
    
    
    stockholdersShares
    
    
    Amount
    
    
    capital
    
    
    income (loss)
    
    
    deficit
    
    
    equityBalance as of January 1, 2005
    
    
    18,557,818
    
    
    $
    19
    
    
    $
    136,868
    
    
    $
    
    
    
    $
    (34,338
    )
    
    $
    102,549Issuance of Common Stock upon
exercise of employee stock
options (a)
    
    
    72,820
    
    
    
    (*
    )
    
    
    369
    
    
    
    
    
    
    
    
    
    
    
    369Issuance of Common Stock under
employee stock purchase plan (a)
    
    
    292,433
    
    
    
    (*
    )
    
    
    1,386
    
    
    
    
    
    
    
    
    
    
    
    1,386Equity-based compensation
    
    
    
    
    
    
    
    
    
    
    195
    
    
    
    
    
    
    
    
    
    
    
    195Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,266
    )
    
    
    (2,266
    )Balance as of December 31, 2005
    
    
    18,923,071
    
    
    $
    19
    
    
    $
    138,818
    
    
    $
    
    
    
    $
    (36,604
    )
    
    $
    102,233Issuance of Common Stock upon
exercise of employee stock
options (a)
    
    
    86,536
    
    
    
    (*
    )
    
    
    430
    
    
    
    
    
    
    
    
    
    
    
    430Issuance of Common Stock under
employee stock purchase plan (a)
    
    
    320,537
    
    
    
    (*
    )
    
    
    1,374
    
    
    
    
    
    
    
    
    
    
    
    1,374Equity-based compensation
    
    
    
    
    
    
    
    
    
    
    2,204
    
    
    
    
    
    
    
    
    
    
    
    2,204Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (98
    )
    
    
    (98
    )Balance as of December 31, 2006
    
    
    19,330,144
    
    
    $
    19
    
    
    $
    142,826
    
    
    $
    
    
    
    $
    (36,702
    )
    
    $
    106,143Issuance of Common Stock upon
exercise of employee stock
options (a)
    
    
    498,043
    
    
    
    1
    
    
    
    3,918
    
    
    
    
    
    
    
    
    
    
    
    3,919Issuance of Common Stock under
employee stock purchase
plan (a)
    
    
    205,710
    
    
    
    (*
    )
    
    
    897
    
    
    
    
    
    
    
    
    
    
    
    897Equity-based compensation
    
    
    
    
    
    
    
    
    
    
    2,131
    
    
    
    
    
    
    
    
    
    
    
    2,131Unrealized loss from
available-for-sale securities,
net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (58
    )
    
    
    
    
    
    
    (58
    )Unrealized gain from hedging
activities, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    65
    
    
    
    
    
    
    
    65Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,291
    
    
    
    1,291Balance as of December 31, 2007
    
    
    20,033,897
    
    
    $
    20
    
    
    $
    149,772
    
    
    $
    7
    
    
    $
    (35,411
    )
    
    $
    114,388
 
 (*)
    
    Represent an amount lower than $ 1.(a)
    
    See Note 8 to these consolidated financial statements.   F-6




---



##### Table of Contents



CEVA, INC.
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 (U.S. dollars in thousands)
 Year ended December 31,2005
    
    
    2006
    
    
    2007Cash flows from operating activities:Net income (loss)
    
    $
    (2,266
    )
    
    $
    (98
    )
    
    $
    1,291Adjustments
required to reconcile net income (loss) to net cash provided by
(used in) operating activities:Depreciation
    
    
    2,016
    
    
    
    1,422
    
    
    
    882Impairment of assets
    
    
    510
    
    
    
    
    
    
    
    Amortization of intangible assets
    
    
    823
    
    
    
    414
    
    
    
    148Equity-based compensation
    
    
    195
    
    
    
    2,204
    
    
    
    2,131Gain from sale of property and equipment
    
    
    (14
    )
    
    
    
    
    
    
    (3
    )Loss (gain) on marketable securities
    
    
    16
    
    
    
    52
    
    
    
    (159
    )Unrealized foreign exchange loss (gain)
    
    
    (109
    )
    
    
    48
    
    
    
    (40
    )Accrued interest on short term bank deposits
    
    
    (131
    )
    
    
    102
    
    
    
    (127
    )Gain on realization of investment
    
    
    (1,507
    )
    
    
    (57
    )
    
    
    (425
    )Trading marketable securities, net
    
    
    12,604
    
    
    
    (5,115
    )
    
    
    21,312Changes in operating assets and liabilities:Decrease (increase) in trade receivables
    
    
    4,526
    
    
    
    (2,262
    )
    
    
    5,919Increase in other accounts receivable and prepaid expenses
    
    
    (806
    )
    
    
    (332
    )
    
    
    (712
    )Increase in deferred tax assets
    
    
    (697
    )
    
    
    (103
    )
    
    
    (321
    )Increase (decrease) in trade payables
    
    
    (1,052
    )
    
    
    145
    
    
    
    (283
    )Increase (decrease) in deferred revenues
    
    
    (1,298
    )
    
    
    (47
    )
    
    
    321Increase (decrease) in accrued expenses and other payables
    
    
    142
    
    
    
    582
    
    
    
    (1,735
    )Increase (decrease) in taxes payable
    
    
    (265
    )
    
    
    (307
    )
    
    
    185Increase (decrease) in accrued severance pay, net
    
    
    57
    
    
    
    (19
    )
    
    
    (151
    )Net cash provided by (used in) operating activities
    
    
    12,744
    
    
    
    (3,371
    )
    
    
    28,233Cash flows from investing activities:Purchase of property and equipment
    
    
    (908
    )
    
    
    (424
    )
    
    
    (807
    )Proceeds from sale of property and equipment
    
    
    14
    
    
    
    
    
    
    
    8Investment in short term bank deposits
    
    
    (8,204
    )
    
    
    (3,930
    )
    
    
    (5,000
    )Proceeds from short term bank deposits
    
    
    
    
    
    
    9,134
    
    
    
    1,026Investment in available-for-sale marketable securities
    
    
    
    
    
    
    
    
    
    
    (39,990
    )Proceeds from available-for-sale marketable securities
    
    
    
    
    
    
    
    
    
    
    13,468Transaction cost related to the GPS divestment
    
    
    
    
    
    
    (927
    )
    
    
    (39
    )Proceeds from realization of investment
    
    
    1,507
    
    
    
    57
    
    
    
    425Purchase of technology
    
    
    (153
    )
    
    
    
    
    
    
    Net cash provided by (used in) investing activities
    
    
    (7,744
    )
    
    
    3,910
    
    
    
    (30,909
    )Cash flows from financing activities:Proceeds from issuance of Common Stock upon exercise of employee stock options
    
    
    369
    
    
    
    430
    
    
    
    3,919Proceeds from issuance of Common Stock under employee stock purchase plan
    
    
    1,386
    
    
    
    1,374
    
    
    
    897Net cash provided by financing activities
    
    
    1,755
    
    
    
    1,804
    
    
    
    4,816Effect of exchange rate movements on cash
    
    
    (488
    )
    
    
    514
    
    
    
    589Increase in cash and cash equivalents
    
    
    6,267
    
    
    
    2,857
    
    
    
    2,729Cash and cash equivalents at the beginning of the year
    
    
    28,844
    
    
    
    35,111
    
    
    
    37,968Cash and cash equivalents at the end of the year
    
    $
    35,111
    
    
    $
    37,968
    
    
    $
    40,697
   F-7




---



##### Table of Contents



CEVA, INC.
 CONSOLIDATED STATEMENTS OF CASH FLOWS(Continued)
 (U.S. dollars in thousands)
 Year ended December 31,2005
    
    
    2006
    
    
    2007Supplemental information of cash-flows activities:Cash paid during the year for:Income and withholding taxes, net
    
    $
    1,383
    
    
    $
    652
    
    
    $
    889Non-cash transactions (see Note 4):Goodwill
    
    
    
    
    
    
    (1,900
    )
    
    
    Intangible asset
    
    
    
    
    
    
    (845
    )
    
    
    Net working capital
    
    
    
    
    
    
    (522
    )
    
    
    Transaction cost related to the GPS divestment
    
    
    
    
    
    
    (39
    )
    
    
    Deferred gain related to GPS divestment transaction
    
    
    
    
    
    
    (1,751
    )
    
    
    
   F-8




---



##### Table of Contents



CEVA, INC.
 
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
( in thousands, except share data )
 NOTE 1: ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
 Organization:
    a. Basis of presentation
  b. Use of estimates:
  c. Financial statements in U.S. dollars:
   d. Principles of consolidation:
   F-9




---



##### Table of Contents



CEVA, INC.
 NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS(Continued)
( in thousands, except share data )
 e. Cash equivalents:
  f. Short term bank deposits:
  g. Marketable securities:
   h. Property and equipment, net:
  %Computers, software and equipment
    
    15-33Office furniture and equipment
    
    7-25Leasehold improvements
    
    10-25(the shorter of the lease term or usefuleconomic life)
   F-10




---



##### Table of Contents



CEVA, INC.
 NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS(Continued)
( in thousands, except share data )
 i. Investment in other company, net:
     j. Goodwill:
   st
   F-11




---



##### Table of Contents



CEVA, INC.
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Continued)
( in thousands, except share data )
    k. Other intangible assets net:
   
    
    significant underperformance relative to expected historical or projected future
operating results;
 
    
    significant changes in the manner of the Companys use of the acquired assets or
the strategy for the Companys overall business;
 
    
    significant negative industry or economic trends;
 
    
    significant decline in the Companys stock price for a sustained period; and
 
    
    significant decline in the Companys market capitalization relative to net book
value.
   F-12




---



##### Table of Contents



CEVA, INC.
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Continued)
( in thousands, except share data )
 l. Revenue recognition:
         F-13




---



##### Table of Contents



CEVA, INC.
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Continued)
( in thousands, except share data )
      m. Cost of revenue:
  n. Income taxes:
     F-14




---



##### Table of Contents



CEVA, INC.
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Continued)
( in thousands, except share data )
  o. Research and development:
  p. Government grants:
   q. Employee benefit plan:
    r. Accrued severance pay:
     F-15




---



##### Table of Contents



CEVA, INC.
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Continued)
( in thousands, except share data )
 s. Accounting for equity-based compensation:
        F-16




---



##### Table of Contents



CEVA, INC.
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Continued)
( in thousands, except share data )
   2005
    
    
    2006Expected dividend yield
    
    
    0
    %
    
    
    0
    %Expected volatility
    
    
    35
    %
    
    
    40
    %Risk-free interest rate
    
    
    3
    %
    
    
    5
    %Expected option term
    
    4 years
    
    4 yearsExpected forfeiture (employees)
    
    
    
    
    
    
    10
    %Expected forfeiture (executives)
    
    
    
    
    
    
    10
    %
  2007Expected dividend yield
    
    
    0
    %Expected volatility
    
    
    30%-46
    %Risk-free interest rate
    
    
    4%-5
    %Expected forfeiture (employees)
    
    
    20
    %Expected forfeiture (executives)
    
    
    10
    %Contractual term of up to
    
    7 yearsSuboptimal exercise multiple
    
    
    1.6
   Year ended
December 31,2005Net loss as reported
    
    $
    (2,266
    )Add: Total equity-based employee compensation
expense determined under the fair value based
method of SFAS 123 for all awards, net of related
tax effects
    
    
    (2,892
    )Pro forma net loss:
    
    $
    (5,158
    )Net loss per share:Basic and
diluted  as reported
    
    $
    (0.12
    )Basic and
diluted  pro forma
    
    $
    (0.27
    )
  F-17




---



##### Table of Contents



CEVA, INC.
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Continued)
( in thousands, except share data )
   Year ended December 31,2006
    
    
    2007Cost of revenue
    
    $
    53
    
    
    $
    83Research and development, net
    
    
    656
    
    
    
    935Sales and marketing
    
    
    449
    
    
    
    334General and administrative
    
    
    1,046
    
    
    
    779Total equity-based compensation expense
    
    $
    2,204
    
    
    $
    2,131
 .
  t. Fair value of financial instruments:
  u. Comprehensive Income
  v. Concentration of credit risk:
     F-18




---



##### Table of Contents



CEVA, INC.
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Continued)
( in thousands, except share data )
    w. Derivative and Hedging Activities:
     x. Advertising expenses:
  y. Net income (loss) per share of common stock:
   F-19




---



##### Table of Contents



CEVA, INC.
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Continued)
( in thousands, except share data )
 Year ended December 31,(in thousands except per share data)
    
    2005
    
    
    2006
    
    
    2007Numerator:Numerator for basic and diluted net income (loss) per share
    
    $
    (2,266
    )
    
    $
    (98
    )
    
    $
    1,291Denominator:Denominator for basic net income (loss) per share
    
    
    18,807
    
    
    
    19,191
    
    
    
    19,606Effect of employee stock options
    
    
    
    
    
    
    
    
    
    
    544Denominator for diluted net income (loss) per share
    
    
    18,807
    
    
    
    19,191
    
    
    
    20,150Basic net income (loss) per share
    
    $
    (0.12
    )
    
    $
    (0.01
    )
    
    $
    0.07Diluted net income (loss) per share
    
    $
    (0.12
    )
    
    $
    (0.01
    )
    
    $
    0.06
 z. Recently issued accounting standards:
    NOTE 2: MARKETABLE SECURITIES
    F-20




---



##### Table of Contents



CEVA, INC.
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Continued)
( in thousands, except share data )
 As at December 31, 2006Cost
    
    
    Gain (loss)
    
    
    Market ValueTrading securitiesCorporate bonds and securities
    
    
    15,382
    
    
    
    (112
    )
    
    
    15,270U.S. government and agency securities
    
    
    7,923
    
    
    
    44
    
    
    
    7,967$
    23,305
    
    
    $
    (68
    )
    
    $
    23,237
 As at December 31, 2007Gross
    
    
    GrossAmortized Cost
    
    
    unrealized gains
    
    
    unrealized losses
    
    
    Market ValueAvailable-for-sale securitiesContractual maturities of less than 1 yearCorporate bonds and securities
    
    $
    5,353
    
    
    $
    
    
    
    $
    (7
    )
    
    $
    5,346U.S. government and agency securities
    
    
    2,001
    
    
    
    1
    
    
    
    
    
    
    
    2,0027,354
    
    
    
    1
    
    
    
    (7
    )
    
    
    7,348Contractual maturities of after 1 year
through 2 yearsCorporate bonds and securities
    
    $
    18,256
    
    
    $
    13
    
    
    $
    (72
    )
    
    $
    18,197U.S. government and agency securities
    
    
    2,996
    
    
    
    7
    
    
    
    
    
    
    
    3,00321,252
    
    
    
    20
    
    
    
    (72
    )
    
    
    21,200$
    28,606
    
    
    $
    21
    
    
    $
    (79
    )
    
    $
    28,548
  NOTE 3: PROPERTY AND EQUIPMENT, NET
  Year ended December 31,2006
    
    
    2007Cost:Computers, software and equipment
    
    $
    10,424
    
    
    $
    11,150Office furniture and equipment
    
    
    957
    
    
    
    960Leasehold improvements
    
    
    1,056
    
    
    
    1,12612,437
    
    
    
    13,236Less  Accumulated depreciation
    
    
    (10,731
    )
    
    
    (11,610
    )Depreciated cost
    
    $
    1,706
    
    
    $
    1,626
    F-21




---



##### Table of Contents



CEVA, INC.
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Continued)
( in thousands, except share data )
 NOTE 4: INVESTMENT IN OTHER COMPANY, NET
  Equity investment in GloNav
    
    $
    5,984Goodwill
    
    
    (1,900
    )Intangible asset
    
    
    (845
    )Net working capital
    
    
    (522
    )Transaction cost related to the GPS divestment
    
    
    (966
    )Deferred gain related to GPS divestment transaction
    
    $
    1,751
 December 31,2006 and 2007Investment in other company, net:Investment in other company
    
    $
    5,984Deferred gain
    
    
    (1,751
    )Total investment in other company, net
    
    $
    4,233
    F-22




---



##### Table of Contents



CEVA, INC.
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Continued)
( in thousands, except share data )
 NOTE 5: GOODWILL AND OTHER INTANGIBLE ASSETS, NET
 Year ended December 31, 2006
    
    
    Year ended December 31, 2007Accumulated
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    AccumulatedGross
    
    
    Impairment
    
    
    
    
    
    
    
    
    
    
    Gross
    
    
    ImpairmentCarrying
    
    
    Loss/Asset
    
    
    Accumulated
    
    
    
    
    
    
    Carrying
    
    
    Loss/Asset
    
    
    AccumulatedAmount
    
    
    write down
    
    
    Amortization
    
    
    Net
    
    
    Amount
    
    

write down
    
    
    Amortization
    
    
    NetGoodwill
    
    $
    38,398
    
    
    $
    1,900
    
    
    $
    
    
    
    $
    36,498
    
    
    $
    38,398
    
    
    $
    1,900
    
    
    $
    
    
    
    $
    36,498Other intangible assets
amortizableParthus name
    
    
    610
    
    
    
    478
    
    
    
    132
    
    
    
    
    
    
    
    610
    
    
    
    478
    
    
    
    132
    
    
    
    Patent portfolio
    
    
    2,247
    
    
    
    640
    
    
    
    1,607
    
    
    
    
    
    
    
    2,247
    
    
    
    640
    
    
    
    1,607
    
    
    
    Current technology and
customer backlog
    
    
    2,824
    
    
    
    1,264
    
    
    
    1,493
    
    
    
    67
    
    
    
    2,824
    
    
    
    1,264
    
    
    
    1,560
    
    
    
    Purchased technology
    
    
    347
    
    
    
    
    
    
    
    213
    
    
    
    134
    
    
    
    347
    
    
    
    
    
    
    
    294
    
    
    
    53Total identifiable intangible assets
    
    $
    6,028
    
    
    $
    2,382
    
    
    $
    3,445
    
    
    $
    201
    
    
    $
    6,028
    
    
    $
    2,382
    
    
    $
    3,593
    
    
    $
    53
    NOTE 6: PREPAID EXPENSES AND OTHER ACCOUNTS RECEIVABLE
 PREPAID EXPENSES
 Year ended December 31,2006
    
    
    2007Prepaid leased design tools
    
    $
    219
    
    
    $
    336Prepaid directors and officers insurance
    
    
    103
    
    
    
    90Prepaid car leases
    
    
    116
    
    
    
    172Prepaid rent
    
    
    51
    
    
    
    216Other prepaid expenses
    
    
    75
    
    
    
    90$
    564
    
    
    $
    904
  F-23




---



##### Table of Contents



CEVA, INC.
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Continued)
( in thousands, except share data )
 OTHER ACCOUNTS RECEIVABLE
 Year ended December 31,2006
    
    
    2007Indirect taxes
    
    $
    880
    
    
    $
    1,260Rental deposits
    
    
    119
    
    
    
    144Interest receivable
    
    
    642
    
    
    
    718Other accounts receivable
    
    
    249
    
    
    
    269$
    1,890
    
    
    $
    2,391
 NOTE 7: ACCRUED EXPENSES AND OTHER PAYABLES
 Year ended December 31,2006
    
    
    2007Accrued compensation and benefits
    
    $
    4,237
    
    
    $
    4,691Restructuring accruals (see Note 12)
    
    
    1,609
    
    
    
    868Engineering accruals
    
    
    606
    
    
    
    933Professional fees
    
    
    1,137
    
    
    
    795Other accruals
    
    
    1,873
    
    
    
    1,165$
    9,462
    
    
    $
    8,452
 NOTE 8: STOCKHOLDERS EQUITY
 a. Common stock:
    F-24




---



##### Table of Contents



CEVA, INC.
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Continued)
( in thousands, except share data )
  b. Preferred stock:
  c. Employee and non-employee stock plans:
    WeightedWeighted
    
    
    average
    
    
    AggregateNumber of
    
    
    average exercise
    
    
    remaining
    
    
    intrinsic valueoptions
    
    
    price
    
    
    contractual term
    
    
    ($000)Outstanding at the beginning of the year
    
    
    4,250,910
    
    
    $
    8.15Granted
    
    
    939,500
    
    
    
    7.78Exercised
    
    
    (498,043
    )
    
    
    7.87Forfeited or expired
    
    
    (1,103,697
    )
    
    
    10.63Outstanding at the end of the year
    
    
    3,588,670
    
    
    $
    7.33
    
    
    
    5.1
    
    
    $
    17,510Vested or expected to vest as of December 31
    
    
    3,331,093
    
    
    $
    7.35
    
    
    
    5.0
    
    
    $
    16,181Exercisable as of December 31,
    
    
    2,010,356
    
    
    $
    7.55
    
    
    
    4.4
    
    
    $
    9,375
  F-25




---



##### Table of Contents



CEVA, INC.
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Continued)
( in thousands, except share data )
   Weighted averageExercise price
    
    Options
    
    
    Weighted average
    
    
    Weighted average
    
    
    
    
    
    
    exercise price of(range)
    
    outstanding as of
    
    
    remaining contractual
    
    
    exercise price
    
    
    Options exercisable as of
    
    
    options exercisable$
    
    December 31, 2007
    
    
    life (years)
    
    
    $
    
    
    December 31, 2007
    
    
    $4.25
    
    
    296,251
    
    
    
    5.3
    
    
    
    4.25
    
    
    
    296,251
    
    
    
    4.254.26-7.60
    
    
    2,345,056
    
    
    
    5.4
    
    
    
    6.59
    
    
    
    1,131,018
    
    
    
    6.677.61-11.40
    
    
    785,604
    
    
    
    5.0
    
    
    
    9.26
    
    
    
    421,370
    
    
    
    9.6211.41-15.0
    
    
    154,216
    
    
    
    1.1
    
    
    
    14.15
    
    
    
    154,174
    
    
    
    14.1515.01-20.0
    
    
    7,543
    
    
    
    1.4
    
    
    
    17.64
    
    
    
    7,543
    
    
    
    17.643,588,670
    
    
    
    5.1
    
    
    
    7.33
    
    
    
    2,010,356
    
    
    
    7.55
 2003 Director Stock Option Plan
   Year ended December 31,2005
    
    
    2006
    
    
    2007Weighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    WeightedNumber of
    
    
    average exercise
    
    
    Number of
    
    
    average exercise
    
    
    Number of
    
    
    average exerciseoptions
    
    
    price
    
    
    options
    
    
    price
    
    
    options
    
    
    priceOutstanding at the beginning of the year
    
    
    423,000
    
    
    $
    7.81
    
    
    
    581,000
    
    
    $
    7.30
    
    
    
    687,000
    
    
    $
    7.02Granted
    
    
    158,000
    
    
    
    5.95
    
    
    
    132,000
    
    
    
    5.76
    
    
    
    
    
    
    
    Exercised
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (19,500
    )
    
    
    6.87Forfeited or expired
    
    
    
    
    
    
    
    
    
    
    (26,000
    )
    
    
    6.88
    
    
    
    
    
    
    
    Outstanding at the end of the year
    
    
    581,000
    
    
    $
    7.30
    
    
    
    687,000
    
    
    $
    7.02
    
    
    
    667,500
    
    
    $
    7.03
  F-26




---



##### Table of Contents



CEVA, INC.
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Continued)
( in thousands, except share data )
        2002 Stock Incentive Plan
   F-27




---



##### Table of Contents



CEVA, INC.
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Continued)
( in thousands, except share data )
  Year ended December 31,2005
    
    
    2006
    
    
    2007Weighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    WeightedNumber of
    
    
    average exercise
    
    
    Number of
    
    
    average exercise
    
    
    Number of
    
    
    average exerciseoptions
    
    
    price
    
    
    options
    
    
    price
    
    
    options
    
    
    priceOutstanding at the beginning of the year
    
    
    2,767,866
    
    
    $
    6.95
    
    
    
    2,317,436
    
    
    $
    6.30
    
    
    
    1,971,377
    
    
    $
    6.14Granted
    
    
    941,700
    
    
    
    5.76
    
    
    
    203,000
    
    
    
    6.04
    
    
    
    
    
    
    
    Exercised
    
    
    (21,428
    )
    
    
    4.00
    
    
    
    (64,377
    )
    
    
    4.64
    
    
    
    (285,931
    )
    
    
    6.90Forfeited or expired
    
    
    (1,370,702
    )
    
    
    7.30
    
    
    
    (484,682
    )
    
    
    7.05
    
    
    
    (126,954
    )
    
    
    6.96Outstanding at the end of the year
    
    
    2,317,436
    
    
    $
    6.30
    
    
    
    1,971,377
    
    
    $
    6.14
    
    
    
    1,558,492
    
    
    $
    5.94
     2000 Stock Incentive Plan
   Year ended December 31,2005
    
    
    2006
    
    
    2007Weighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    WeightedNumber of
    
    
    average exercise
    
    
    Number of
    
    
    average exercise
    
    
    Number of
    
    
    average exerciseoptions
    
    
    price
    
    
    options
    
    
    price
    
    
    options
    
    
    priceOutstanding at the beginning of the year
    
    
    2,706,768
    
    
    $
    10.93
    
    
    
    2,121,947
    
    
    $
    11.33
    
    
    
    1,592,533
    
    
    $
    11.12Granted (*)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    939,500
    
    
    
    7.78Exercised
    
    
    (51,392
    )
    
    
    5.52
    
    
    
    (22,159
    )
    
    
    5.93
    
    
    
    (192,612
    )
    
    
    9.42Forfeited or expired
    
    
    (533,429
    )
    
    
    9.87
    
    
    
    (507,255
    )
    
    
    12.16
    
    
    
    (976,743
    )
    
    
    11.10Outstanding at the end of the year
    
    
    2,121,947
    
    
    $
    11.33
    
    
    
    1,592,533
    
    
    $
    11.12
    
    
    
    1,362,678
    
    
    $
    9.07
 (*)
    
    Options to purchase 132,000 shares of common stock were granted to non-employee directors
during 2007. The weighted average exercise price was $8.50.  F-28




---



##### Table of Contents



CEVA, INC.
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Continued)
( in thousands, except share data )
   2002 Employee Stock Purchase Plan
     
    
    85% of the fair market value of the common stock on the date of the grant of the
option, which is the commencement of the offer period; or
    
    85% of the fair market value of the common stock on the exercise date, which is the
last day of a purchase period.
  F-29




---



##### Table of Contents



CEVA, INC.
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Continued)
( in thousands, except share data )
    d. Dividend policy:
  NOTE 9: GEOGRAPHIC INFORMATION AND MAJOR CUSTOMER DATA
 a. Summary information about geographic areas:
  Year ended December 31,2005
    
    
    2006
    
    
    2007Revenues based on customer location:United States
    
    $
    12,545
    
    
    $
    11,657
    
    
    $
    6,937Europe, Middle East and Africa
    
    
    7,890
    
    
    
    11,670
    
    
    
    11,477Asia Pacific (1)
    
    
    15,201
    
    
    
    9,178
    
    
    
    14,797$
    35,636
    
    
    $
    32,505
    
    
    $
    33,211(1) Japan
    
    $
    4,969
    
    
    $
    3,070
    
    
    $
    4,375
  F-30




---



##### Table of Contents



CEVA, INC.
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Continued)
( in thousands, except share data )
 December 31,2005
    
    
    2006
    
    
    2007Long-lived assets by geographic region:United States
    
    $
    39,986
    
    
    $
    41,012
    
    
    $
    36,542Ireland
    
    
    1,193
    
    
    
    253
    
    
    
    336Israel
    
    
    1,615
    
    
    
    1,280
    
    
    
    1,261Other
    
    
    290
    
    
    
    93
    
    
    
    38$
    43,084
    
    
    $
    42,638
    
    
    $
    38,177
 b. Major customer data as a percentage of total revenues:
  Year ended December 31,2005
    
    
    2006
    
    
    2007Customer A
    
    
    10
    %
    
    
    
    
    
    
    Customer B
    
    
    
    
    
    
    16
    %
    
    
    Customer C
    
    
    
    
    
    
    
    
    
    
    17
    %Customer D
    
    
    
    
    
    
    
    
    
    
    12
    %Customer E
    
    
    
    
    
    
    
    
    
    
    11
    %
  c. Information about Products and Services:
   F-31




---



##### Table of Contents



CEVA, INC.
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Continued)
( in thousands, except share data )
 NOTE 10: SELECTED STATEMENTS OF OPERATIONS DATA
  Year ended December 31,2005
    
    
    2006
    
    
    2007Interest income and gains from marketable securities
    
    $
    1,711
    
    
    $
    2,770
    
    
    $
    3,173Foreign exchange gain (loss)
    
    
    109
    
    
    
    (150
    )
    
    
    38$
    1,820
    
    
    $
    2,620
    
    
    $
    3,211
  Year ended December 31,2005
    
    
    2006
    
    
    2007Gain on realization of investment (See Note 1i.)
    
    $
    1,507
    
    
    $
    57
    
    
    $
    425
 NOTE 11: TAXES ON INCOME
 a. A number of the Companys operating subsidiaries are taxed at rates lower than U.S. rates.
 1. Irish Subsidiaries
  2. Israeli Subsidiary
       F-32




---



##### Table of Contents



CEVA, INC.
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Continued)
( in thousands, except share data )
            F-33




---



##### Table of Contents



CEVA, INC.
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Continued)
( in thousands, except share data )
            b. The provision for income taxes is as follows:
 Year ended December 31,2005
    
    
    2006
    
    
    2007Domestic taxes:Current
    
    $
    3
    
    
    $
    17
    
    
    $
    52Foreign taxes:Current
    
    
    694
    
    
    
    (2
    )
    
    
    716Deferred
    
    
    (697
    )
    
    
    (103
    )
    
    
    (321
    )Taxes on income
    
    $
    
    
    
    $
    (88
    )
    
    $
    447Income (loss) before taxes on income:Domestic
    
    $
    (1,879
    )
    
    $
    (939
    )
    
    $
    (2,123
    )Foreign
    
    
    (387
    )
    
    
    753
    
    
    
    3,861$
    (2,266
    )
    
    $
    (186
    )
    
    $
    1,738
  F-34




---



##### Table of Contents



CEVA, INC.
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Continued)
( in thousands, except share data )
 c. Reconciliation between the Companys effective tax rate and the U.S. statutory rate:
 Year ended December 31,2005
    
    
    2006
    
    
    2007Income (loss) before taxes on income
    
    $
    (2,266
    )
    
    $
    (186
    )
    
    $
    1,738Theoretical tax at U.S. statutory rate-35%
    
    
    (794
    )
    
    
    (65
    )
    
    
    608Foreign income taxes at rates other than U.S. rate
    
    
    217
    
    
    
    (88
    )
    
    
    (962
    )Non-deductible items
    
    
    27
    
    
    
    707
    
    
    
    1,554Valuation allowance
    
    
    1,222
    
    
    
    (924
    )
    
    
    (810
    )Other
    
    
    (672
    )
    
    
    282
    
    
    
    57Taxes on income
    
    $
    
    
    
    $
    (88
    )
    
    $
    447
 d. Deferred taxes on income:
  Year ended December 31,2005
    
    
    2006
    
    
    2007Operating loss carryforward
    
    $
    9,941
    
    
    $
    9,065
    
    
    $
    8,272Accrued expenses
    
    
    511
    
    
    
    481
    
    
    
    540Temporary differences related to R&D expenses
    
    
    722
    
    
    
    812
    
    
    
    1,088Other
    
    
    158
    
    
    
    153
    
    
    
    122Valuation allowance
    
    
    (10,440
    )
    
    
    (9,516
    )
    
    
    (8,706
    )Balance at the end of the year (*)
    
    $
    892
    
    
    $
    995
    
    
    $
    1,316
 (*)
    
    Deferred tax for the years ended December 31, 2005, 2006 and 2007 was only from a foreign jurisdiction.  F-35




---



##### Table of Contents



CEVA, INC.
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Continued)
( in thousands, except share data )
  e. Separation from DSPG:
  f. Tax loss carryforwards:
  NOTE 12: REORGANIZATION, RESTRUCTURING AND SEVERANCE CHARGE
   F-36




---



##### Table of Contents



CEVA, INC.
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Continued)
( in thousands, except share data )
       Under-utilizedbuilding operating
    
    
    Legal andlease obligations
    
    
    professional fees
    
    
    TotalBalance as of December 31, 2005
    
    $
    2,884
    
    
    $
    330
    
    
    $
    3,214Effect of exchange rate
    
    
    315
    
    
    
    
    
    
    
    315Cash outlays
    
    
    (223
    )
    
    
    
    
    
    
    (223
    )Balance as of December 31, 2006 (1)
    
    $
    2,976
    
    
    $
    330
    
    
    $
    3,306Effect of exchange rate
    
    
    292
    
    
    
    
    
    
    
    292Reallocation
    
    
    100
    
    
    
    (100
    )
    
    
    Cash outlays
    
    
    (1,224
    )
    
    
    
    
    
    
    (1,224
    )Balance as of December 31, 2007 (1)
    
    $
    2,144
    
    
    $
    230
    
    
    $
    2,374
 (1)
    
    The legal and professional fees were related to the under-utilized building.  F-37




---



##### Table of Contents



CEVA, INC.
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Continued)
( in thousands, except share data )
 Year ended December 31,2006
    
    
    2007Short Term  Restructuring accruals (see Note 7)
    
    
    1,609
    
    
    
    868Long Term  Restructuring accruals
    
    $
    1,697
    
    
    $
    1,506
 NOTE 13: RELATED PARTY TRANSACTIONS
    NOTE 14: COMMITMENTS AND CONTINGENCIES
     F-38




---



##### Table of Contents



CEVA, INC.
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Continued)
( in thousands, except share data )
  Minimum rentalpayments2008
    
    $
    3,7292009
    
    
    2,5952010
    
    
    2,1852011
    
    
    1,5152012 and thereafter
    
    
    12,973$
    22,997
      F-39




---



##### Table of Contents



SIGNATURES
  CEVA, INC.By:
    
    /S/ Gideon WertheizerGideon WertheizerChief Executive Officer
  POWER OF ATTORNEY
   Signature
    
    Title
    
    Date/S/ Gideon Wertheizer

Gideon Wertheizer
    
    Chief Executive Officer
(Principal Executive Officer)
    
    March 14, 2008/S/ Yaniv Arieli

Yaniv Arieli
    
    Chief Financial Officer and Treasurer
(Principal Financial Officer and
Principal Accounting Officer)
    
    March 14, 2008/S/ Peter Mcmanamon

Peter McManamon
    
    Director and Chairman
    
    March 14, 2008/S/ Eliyahu Ayalon

Eliyahu Ayalon
    
    Director
    
    March 14, 2008/S/ Zvi Limon

Zvi Limon
    
    Director
    
    March 14, 2008/S/ Bruce Mann

Bruce Mann
    
    Director
    
    March 14, 2008/S/ Sven-Christer-Nilsson

Sven-Christer Nilsson
    
    Director
    
    March 14, 2008/S/ Louis SIlver

Louis Silver
    
    Director
    
    March 14, 2008/S/ Dan Tocatly

Dan Tocatly
    
    Director
    
    March 14, 2008




---



##### Table of Contents



CEVA, INC.
 SCHEDULE II  VALUATION AND QUALIFYING ACCOUNTS
 Balance atbeginning of
    
    
    
    
    
    
    
    
    
    
    Balance at endperiod
    
    
    Additions
    
    
    Deduction (1)
    
    
    of periodYear ended December 31, 2007Allowance for doubtful accounts
    
    $
    682
    
    
    $
    186
    
    
    $
    
    
    
    $
    868Year ended December 31, 2006Allowance for doubtful accounts
    
    $
    667
    
    
    $
    15
    
    
    $
    
    
    
    $
    682Year ended December 31, 2005Allowance for doubtful accounts
    
    $
    813
    
    
    $
    
    
    
    $
    146
    
    
    $
    667
 (1)
    
    Actual write-offs of uncollectible accounts receivables




---



##### Table of Contents



EXHIBIT INDEX
 ExhibitNumber
    
    Description2.1(1)
    
    Combination Agreement, dated as of April 4, 2002, among DSP Group, Inc., the Registrant and CEVA
Technologies Limited (formerly Parthus Technologies plc)2.2(2)
    
    Amendment No. 1 to Combination Agreement, dated as of August 29, 2002, among DSP Group, Inc., the
Registrant and CEVA Technologies Limited (formerly Parthus Technologies plc)3.1(1)
    
    Amended and Restated Certificate of Incorporation of the Registrant3.2(3)
    
    Certificate of Ownership and Merger (merging CEVA, Inc. into ParthusCeva, Inc.)3.3(7)
    
    Second Amended and Restated Bylaws of the Registrant3.4(8)
    
    Bylaws Amendment to the Second Amended and Restated Bylaws of the Registrant3.5(9)
    
    Bylaws Amendment to the Second Amended and Restated Bylaws of the Registrant3.6(10)
    
    Bylaws Amendment to the Second Amended and Restated Bylaws of the Registrant3.7(11)
    
    Amendment to the Amended and Restated Certificate of Incorporation of the Registrant4.1(2)
    
    Specimen of Common Stock Certificate10.1(4)
    
    Separation Agreement among DSP Group, Inc., DSP Group, Ltd., the Registrant, CEVA Technologies, Inc.
(formerly DSP CEVA, Inc.) and CEVA D.S.P. Ltd. (formerly Corage, Ltd.) dated as of November 1, 200210.2(4)
    
    Tax Indemnification and Allocation Agreement between DSP Group, Inc. and the Registrant dated as of
November 1, 200210.3(4)
    
    Technology Transfer Agreement between DSP Group, Inc. and the Registrant dated as of November 1, 200210.4(4)
    
    Technology Transfer Agreement between DSP Group, Ltd. and CEVA D.S.P. Ltd. (formerly Corage, Ltd.) dated
as of November 1, 200210.5(4)
    
    Technology Transfer Agreement between CEVA Technologies, Inc. (formerly DSP CEVA, Inc.) and the
Registrant dated as of November 1, 200210.6*
    
    CEVA, Inc. 2000 Stock Incentive Plan10.7*
    
    CEVA, Inc. 2002 Stock Incentive Plan10.8(13)
    
    CEVA, Inc. 2002 Employee Stock Purchase Plan10.9*
    
    CEVA, Inc. 2003 Director Stock Option Plan10.10*
    
    Parthus 2000 Share Option Plan10.13(1)
    
    Form of Indemnification Agreement10.17(4)
    
    Employment Agreement between the Registrant and Gideon Wertheizer dated as of November 1, 200210.18(4)
    
    Employment Agreement between the Registrant and Issachar Ohana dated as of November 1, 200210.19(7)
    
    Lease dated November 8, 1996 with Veton Properties Limited, as amended by an Assignment dated May 16,
2003 and Memorandum of Rent Review dated as of May 23, 200310.20(12)
    
    Personal and Special Employment Agreement between the Registrant and Yaniv Arieli dated as of August 18,
200510.21(14)
    
    CEVA, Inc. 2006 Executive Bonus Plan10.21(15)
    
    Form of Stock Option Agreement under the CEVA, Inc. 2002 Stock Incentive Plan10.22(15)
    
    Form of Israeli Stock Option Agreement under the CEVA, Inc. 2002 Stock Incentive Plan10.21(15)
    
    Form of Stock Option Agreement under the CEVA, Inc. 2000 Stock Incentive Plan10.22(15)
    
    Form of Israeli Stock Option Agreement under the CEVA, Inc. 2000 Stock Incentive Plan




---



##### Table of Contents



ExhibitNumber
    
    Description10.23(15)
    
    Form of Option Agreement under the CEVA, Inc. 2003 Director Stock Option Plan10.24(16)
    
    Form of Stock Option Agreement for Directors under the CEVA, Inc. 2000 Stock Incentive Plan10.25(16)
    
    Yaniv Arielis Amended and Restated Nonstatutory Stock Option Agreement under the CEVA, Inc. 2002 Stock
Incentive Plan, dated as of August 1, 200710.26(16)
    
    CEVA, Inc. 2007 Executive Bonus Plan10.27(17)
    
    Amendment, dated July 22, 2003, to the Employment Agreement by and between Issachar Ohana and CEVA, Inc.,
dated November 1, 200210.28(18)
    
    Amendment, effective as of November 1, 2007, to the Employment Agreement by and between Issachar Ohana
and CEVA, Inc., dated November 1, 2002 and as amended on July 22, 200310.29(19)
    
    Assignment of Leasehold Interest, dated January 18, 2008, by and between CEVA Ireland Limited and Ivor
Fitzpatrick.21.1*
    
    Subsidiaries of the Registrant23.1*
    
    Consent of Kost Forer Gabbay & Kasierer, a member of Ernst & Young Global24.1*
    
    Power of Attorney (See signature
page of this Annual Report on Form 10-K)31.1*
    
    Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer31.2*
    
    Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer32*
    
    Section 1350 Certification of Chief Executive Officer and Chief Financial Officer
 
 (1)
    
    Filed as an exhibit to CEVAs registration statement on Form 10, as amended, initially filed
with the Commission on June 3, 2002 (registration number 000-49842), and incorporated herein
by reference.(2)
    
    Filed as an exhibit to CEVAs registration statement on Form S-1, as amended, initially filed
with the Commission on July 30, 2002 (registration number 333-97353), and incorporated herein
by reference.(3)
    
    Filed as an exhibit to CEVAs Report on Form 8-K, filed with the Commission on December 8,
2003, and incorporated hereby by reference.(4)
    
    Filed as an exhibit to CEVAs 2002 Annual Report on Form 10-K, filed with the Commission on
March 28, 2003, and incorporated hereby by reference.(5)
    
    Filed as an exhibit to CEVAs Quarterly Report on Form 10-Q/A, filed with the Commission on
August 12, 2003, and incorporated hereby by reference.(6)
    
    Filed as an exhibit to the registration statement on Form S-8 of Parthus Technologies plc,
filed with the Commission on June 6, 2000 (registration number 333-12090), and incorporated
herein by reference.(7)
    
    Filed as an exhibit to CEVAs 2003 Annual Report on Form 10-K, filed with the Commission on
March 12, 2004, and incorporated hereby by reference.(8)
    
    Filed as an exhibit to CEVAs Quarterly Report on Form 10-Q, filed with the Commission on May
7, 2004, and incorporated hereby by reference.(9)
    
    Filed as an exhibit to CEVAs Report on Form 8-K, filed with the Commission on January 31,
2005, and incorporated hereby by reference.(10)
    
    Filed as an exhibit to CEVAs Report on Form 8-K, filed with the Commission on June 10, 2005,
and incorporated hereby by reference.(11)
    
    Filed as an exhibit to CEVAs Report on Form 8-K, filed with the Commission on July 22, 2005,
and incorporated hereby by reference.(12)
    
    Filed as an exhibit to CEVAs Quarterly Report on Form 10-Q, filed with the Commission on
November 9, 2005, and incorporated hereby by reference.(13)
    
    Filed as an exhibit to CEVAs Quarterly Report on Form 10-Q, filed with the Commission on May
10, 2006, and incorporated hereby by reference.(14)
    
    Filed as an exhibit to CEVAs Report on Form 8-K, filed with the Commission on May 30, 2006,
and incorporated hereby by reference.(15)
    
    Filed as an exhibit to CEVAs Quarterly Report on Form 10-Q, filed with the Commission on
August 9, 2006, and incorporated hereby by reference.(16)
    
    Filed as an exhibit of the same number to CEVAs Quarterly Report on Form 10-Q, filed with
the Securities and Exchange Commission on August 9, 2007, and incorporated hereby by
reference.(17)
    
    Filed as Exhibit 10.27 to CEVAs Quarterly Report on Form 10-Q, filed with the Securities and
Exchange Commission on November 9, 2007, and incorporated hereby by reference.(18)
    
    Filed as Exhibit 99.1 to CEVAs Current Report on
Form 8-K, filed with the Securities and
Exchange Commission on November 7, 2007, and incorporated hereby by reference.




---



##### Table of Contents



(19)
    
    Filed as Exhibit 10.1 to CEVAs Current Report on Form 8-K, filed with the Securities and
Exchange Commission on January 18, 2008, and incorporated hereby by reference.
    
    Management contract or compensatory plan or arrangement required to be filed as an exhibit
pursuant to Item 15(c) of Form 10-K.*
    
    Filed herewith.