MOUNTAIN VIEW, Calif., Jan. 29 /PRNewswire-FirstCall/ -- MIPS
Technologies, Inc. (NASDAQ:MIPS), a leading provider of
industry-standard architectures, processors and analog IP for
digital consumer, home networking, wireless, communications and
business applications, today reported consolidated financial
results for its second quarter fiscal 2009 ended December 31, 2008.
All financial results are reported in U.S. GAAP unless otherwise
noted. Revenue for the second quarter was $26.4 million,
essentially flat compared with both the prior quarter revenue of
$26.2 million and to the $26.5 million reported in the second
fiscal quarter a year ago. The Q2 sequential revenue increase was
driven by increased revenues from royalties offset by slightly
lower license revenue. Revenue from royalties was $13.0 million, an
increase of $1.1 million or 9 percent from the prior quarter and
$0.4 million or 3 percent from the $12.5 million reported in the
second quarter a year ago. The sequential increase in royalty
revenue was a result of higher licensee unit volumes compared with
the prior quarter. Licensee units grew 13 percent sequentially to
126 million units and 18 percent on a year to year basis. Contract
and license revenue was $13.4 million, a decrease of 7 percent from
the $14.4 million reported in the prior quarter and a 4 percent
decrease from the $13.9 million reported in the second quarter a
year ago. Total operating expense, excluding restructuring charges,
declined $4.2 million to $15.1 million from $19.3 million in the
previous quarter, mainly reflecting the cost control measures
implemented earlier in the year. The Company's fiscal Q2 2009 GAAP
net income was $5.0 million or $0.11 per share on a diluted basis.
This compares with a net loss of $7.0 million or $0.16 per basic
and diluted share in the prior quarter and a net loss of $12.1
million or $0.28 per share in the second quarter a year ago. This
marks the Company's first GAAP profitable quarter since the fourth
quarter fiscal 2007. Non-GAAP net income in the second quarter of
fiscal 2009, which excludes the effect of equity based compensation
expense, restructuring costs, and certain costs related to the
acquisition of Chipidea, was $8.5 million or $0.19 per diluted
share. This represents a significant improvement when compared to
the non-GAAP net income of $1.5 million or $0.03 per diluted share
in the prior quarter and a net loss of $2.9 million or $0.07 per
diluted share in the second quarter a year ago. The tables below
provide a reconciliation of non-GAAP measures reported in this
release to the corresponding GAAP results. The Company's Q2 2009
ending cash balance was $20.5 million, an improvement of $4.3
million from the previous quarter including approximately a $0.6
million outflow related to the restructuring. Total outstanding
debt was also reduced by $1.6 million to $16.5 million during the
quarter. "I am pleased with the results of our Processor Business;
our cost controls, GAAP net income and positive cash flow, all of
which contributed to the strengthening of our balance sheet during
Q2," said John Bourgoin, president and CEO. "We are actively
managing our costs worldwide to ensure the overall financial health
of MIPS during these challenging economic times," added Bourgoin.
MIPS Technologies invites you to listen in a live conference call
to management's discussion of Q2 fiscal 2009 results, as well as
guidance for Q3 fiscal 2009. The conference call number is
210-839-8502 and the replay number is 203-369-0984. The password
for both calls is MIPS. The replay will be available for 30 days
shortly following the end of the conference call. An audio replay
of the conference call will also be posted on the company's website
at: http://www.mips.com/company/investor-relations/. About MIPS
Technologies, Inc. MIPS Technologies, Inc. (NasdaqGS: MIPS) is the
world's second largest semiconductor design IP company and the
number one analog IP company worldwide. With more than 250
customers around the globe, MIPS Technologies is the only company
that provides a combined portfolio of processors, analog IP and
software tools for the embedded market. The company powers some of
the world's most popular products for the digital entertainment,
home networking, wireless, and portable media markets -- including
broadband devices from Linksys, DTVs and digital consumer devices
from Sony, DVD recordable devices from Pioneer, digital set-top
boxes from Motorola, network routers from Cisco, 32-bit
microcontrollers from Microchip Technology and laser printers from
Hewlett-Packard. Founded in 1998, MIPS Technologies is
headquartered in Mountain View, California, with offices worldwide.
For more information, contact (650) 567-5000 or visit
http://www.mips.com/. Forward Looking Statements This press release
contains forward-looking statements; such statements are indicated
by forward-looking language such as "plans", "anticipates",
"expects", "will", and other words or phrases contemplating future
activities including statements regarding MIPS Technologies'
expectations regarding customers' use of MIPS' products. These
forward-looking statements include MIPS' expectation regarding
improvements in financial results. Actual events or results may
differ materially from those anticipated in these forward- looking
statements as a result of a number of different risks and
uncertainties, including but not limited to: the fact that there
can be no assurance that our products will achieve market
acceptance, difficulties that may be encountered in the integration
of the Chipidea business, changes in our research and development
expenses, the anticipated benefits of our partnering relationships
may be more difficult to achieve than expected, the timing of or
delays in customer orders, delays in the design process, the length
of MIPS Technologies' sales cycle, MIPS Technologies' ability to
develop, introduce and market new products and product
enhancements, and the level of demand for semiconductors and
end-user products that incorporate semiconductors. For a further
discussion of risk factors affecting our business, we refer you to
the risk factors section in the documents we file from time to time
with the Securities and Exchange Commission. MIPS TECHNOLOGIES,
INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) December
31, 2008 June 30, 2008 (unaudited) Assets Current assets: Cash and
cash equivalents $20,503 $13,938 Accounts receivable, net 9,808
14,462 Prepaid expenses and other current assets 21,685 24,803
Total current assets 51,996 53,203 Equipment, furniture and
property, net 12,707 16,307 Goodwill 30,852 40,624 Other assets
32,855 42,610 $128,410 $152,744 Liabilities and Stockholders'
Equity Current liabilities: Accounts payable $1,919 $3,441 Accrued
liabilities 37,853 51,963 Debt - short term 6,770 18,641 Deferred
revenue 3,807 4,283 Total current liabilities 50,349 78,328
Long-term liabilities Debt - long term 9,688 - Other long term
liabilities 25,590 29,496 Total long term liabilities 35,278 29,496
Stockholders' equity 42,783 44,920 $128,410 $152,744 MIPS
TECHNOLOGIES, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data) (unaudited) Three Months
Ended Six Months Ended December 31, December 31, 2008 2007 2008
2007 Revenue: Royalties $12,953 $12,515 $24,785 $23,035 Contract
Revenue 13,446 13,935 27,831 25,568 Total revenue 26,399 26,450
52,616 48,603 Cost of Sales 5,792 9,379 13,436 12,703 Gross Margin
20,607 17,071 39,180 35,900 Operating expenses: Research and
development 6,797 9,493 14,146 18,506 Sales and marketing 4,354
6,153 9,399 11,739 General and administrative 3,993 7,869 10,949
14,878 Acquired in-process research and development - 910 - 6,350
Restructuring 548 - 5,479 - Total operating expenses 15,692 24,425
39,973 51,473 Operating income (loss) 4,915 (7,354) (793) (15,573)
Other income (expense), net (875) (1,220) (2,312) (727) Income
(loss) before income taxes 4,040 (8,574) (3,105) (16,300) Provision
for (benefit from) income taxes (937) 3,511 (1,115) 2,816 Net
income (loss) $4,977 $(12,085) $(1,990) $(19,116) Net income (loss)
per basic share $0.11 $(0.28) $(0.04) $(0.44) Net income (loss) per
diluted share $0.11 $(0.28) $(0.04) $(0.44) Common shares
outstanding-basic 44,586 43,902 44,460 43,834 Common shares
outstanding-diluted 44,588 43,902 44,460 43,834 MIPS TECHNOLOGIES,
INC. RECONCILIATION OF GAAP TO NON-GAAP NET INCOME and NET INCOME
PER SHARE (In thousands, except per share data) (unaudited) Three
Months Three Months Three Months Ended Ended Ended December 31,
September 30, December 31, 2008 2008 2007 GAAP net income (loss)
$4,977 $(6,967) $(12,085) Net income (loss) per basic share $0.11
$(0.16) $(0.28) Net income (loss) per diluted share $0.11 $(0.16)
$(0.28) (a) Equity-based compensation expense under SFAS 123R
$1,312 $1,161 $2,082 (b) Amortization of intangibles 855 1,515
2,232 (c) Acquisition related cost 979 1,545 2,138 (d) Integration
cost - - 1,280 (e) Acquired in-process research and development - -
910 (f) Restructuring 548 4,931 - (g) Tax adjustment (157) (662)
551 Non-GAAP net income (loss) $8,514 $1,523 $(2,892) Non-GAAP net
income (loss) per basic share $0.19 $0.03 $(0.07) Non-GAAP net
income (loss) per diluted share $0.19 $0.03 $(0.07) Common shares
outstanding - basic 44,586 44,334 43,903 Common shares outstanding
- diluted 44,588 44,952 43,903 These adjustments reconcile the
Company's GAAP results of operations to the reported non-GAAP
results of operations. The Company believes that presentation of
net income and net income per share excluding non-cash equity-
based compensation, amortization of intangible assets,
restructuring costs, acquired in-process research and development,
integration and acquisition expenses in connection with the
acquisition of Chipidea provides meaningful supplemental
information to investors, as well as management that is indicative
of the Company's ongoing operating results and facilitates
comparison of operating results across reporting periods. The
Company uses these non-GAAP measures when evaluating its financial
results as well as for internal planning and budgeting purposes.
These non-GAAP measures should not be viewed as a substitute for
the Company's GAAP results, and may be different than non-GAAP
measures used by other companies. (a) This adjustment reflects the
non-cash equity-based compensation expense related to SFAS No. 123
revised (SFAS 123R). For the second fiscal quarter ending December
31, 2008, $1.3 million of equity-based compensation was allocated
as follows: $463,000 to research and development, $398,000 to sales
and marketing and $451,000 to general and administrative. For the
first fiscal quarter ending September 30, 2008, $1.2 million of
equity-based compensation expense was allocated as follows:
$202,000 to research and development, $433,000 to sales and
marketing and $526,000 to general and administrative. For the
second quarter of fiscal 2008 ending December 31, 2007, $2.1
million equity-based compensation expense was allocated as follows:
$825,000 to research and development, $636,000 to sales and
marketing and $621,000 to general and administrative. Management
believes that it is useful to investors to understand how the
expenses associated with the adoption of SFAS 123R are reflected in
net income. (b) This adjustment reflects the non-cash expense
related to the amortization of intangibles acquired in connection
with the acquisition of Chipidea included in operating expenses.
For the second fiscal quarter ending December 31, 2008, $855,000 of
amortization expense related to these intangible assets was
allocated as follows: $794,000 to cost of sales, $7,000 to research
and development and $54,000 to sales and marketing. For the first
fiscal quarter ending September 30, 2008, $1.5 million of
amortization expense related to these intangible assets was
allocated as follows: $1.4 million to cost of sales, $8,000 to
research and development and $62,000 to sales and marketing. For
the second quarter of fiscal 2008 ending December 31, 2007, $2.2
million of amortization expense related to these intangible assets
was allocated as follows: $2.2 million to cost of sales, $9,000 to
research and development and $29,000 to sales and marketing.
Management believes that excluding this charge facilitates
comparisons to MIPS' ongoing operating results because the expense
for the amortization of intangibles is not indicative of
operational performance and the amount of such charges varies
significantly based on the size and timing of our acquisitions and
the maturity of the business being acquired. (c) This adjustment
reflects the amortization expense related to the amount held in
escrow and payable to the founders of Chipidea in connection with
the acquisition of Chipidea. For the second fiscal quarter ending
December 31, 2007, this adjustment also reflects legal fees
incurred in association with certain financing activities and the
amortization of loan origination fees. For the second fiscal
quarter ending December 31, 2008, $979,000 was expensed related to
the escrow amount payable to the founders of Chipidea to research
and development. For the first fiscal quarter ending September 30,
2008, $1.5 million was expensed related to the escrow amount
payable to the founders of Chipidea and was allocated as follows:
$429,000 to general and administrative and $1.1 million to research
and development. For the second quarter of fiscal 2008 ending
December 31, 2007, $1.7 million was expensed related to the escrow
amount payable to the founders of Chipidea and was allocated as
follows: $558,000 to general and administrative and $1.1 million to
research and development. In addition, $464,000 was expensed
related to the amortization of loan origination fees. (d) This
adjustment reflects integration expense related to the acquisition
of Chipidea recorded in accounting and legal expense under general
and administrative. (e) This adjustment reflects acquired
in-process research and development expense related to the
acquisition of Chipidea. (f) This adjustment reflects restructuring
expense related to reduction in workforce and facilities exit
costs. (g) This adjustment reflects the net tax effect of the
specific items presented in the non-GAAP adjustments described
above. MIPS TECHNOLOGIES, INC. RECONCILIATION OF GAAP TO NON-GAAP
NET INCOME and NET INCOME PER SHARE (In thousands, except per share
data) (unaudited) Six Months Ended Six Months Ended December 31,
2008 December 31, 2007 GAAP net income (loss) $(1,990) $(19,116)
Net income (loss) per basic share $(0.04) $(0.44) Net income (loss)
per diluted share $(0.04) $(0.44) (h) Equity-based compensation
expense under SFAS 123R $2,473 $4,473 (i) Amortization of
intangibles 2,370 3,202 (j) Acquisition related cost 2,524 3,451
(k) Integration cost - 2,119 (l) Acquired in-process research and
development - 6,350 (m) Restructuring 5,479 - (n) Tax adjustment
(819) 551 Non-GAAP net income $10,037 $1,030 Non-GAAP net income
per basic share $0.23 $0.02 Non-GAAP net income per diluted share
$0.22 $0.02 Common shares outstanding - basic 44,460 43,834 Common
shares outstanding - diluted 44,770 46,209 These adjustments
reconcile the Company's GAAP results of operations to the reported
non-GAAP results of operations. The Company believes that
presentation of net income and net income per share excluding
non-cash equity-based compensation, amortization of intangible
assets, restructuring costs, acquired in-process research and
development, integration and acquisition expenses in connection
with the acquisition of Chipidea provides meaningful supplemental
information to investors, as well as management that is indicative
of the Company's ongoing operating results and facilitates
comparison of operating results across reporting periods. The
Company uses these non-GAAP measures when evaluating its financial
results as well as for internal planning and budgeting purposes.
These non-GAAP measures should not be viewed as a substitute for
the Company's GAAP results, and may be different than non-GAAP
measures used by other companies. (h) This adjustment reflects the
non-cash equity-based compensation expense related to SFAS 123R.
For the six months ending December 31, 2008, $2.5 million of
equity-based compensation was allocated as follows: $665,000 to
research and development, $831,000 to sales and marketing and
$977,000 to general and administrative. For the six months ending
December 31, 2007, $4.5 million equity-based compensation expense
was allocated as follows: $1.7 million to research and development,
$1.3 million to sales and marketing and $1.5 million to general and
administrative. Management believes that it is useful to investors
to understand how the expenses associated with the adoption of SFAS
123R are reflected in net income. (i) This adjustment reflects the
non-cash expense related to the amortization of intangibles
acquired in connection with the acquisition of Chipidea included in
operating expenses. For the six months ending December 31, 2008,
$2.4 million of amortization expense related to these intangible
assets was allocated as follows: $2.2 million to cost of sales,
$15,000 to research and development and $116,000 to sales and
marketing. For the six months ending December 31, 2007, $3.2
million of amortization expense related to these intangible assets
was allocated as follows: $3.0 million to cost of sales, $9,000 to
research and development and $165,000 to sales and marketing. (j)
This adjustment reflects the amortization expense related to the
amount held in escrow and payable to the founders of Chipidea in
connection with the acquisition of Chipidea. For the six months
ending December 31, 2007, this adjustment also reflects legal fees
incurred in association with certain financing activities and
amortization of loan origination fees. For the six months ending
December 31, 2008, $2.5 million was expensed related to the escrow
amount payable to the founders of Chipidea and was allocated as
follows: $0.4 million to general and administrative and $2.1
million to research and development. For the six months ending
December 31, 2007, $2.3 million was expensed related to the escrow
amount payable to the founders of Chipidea and was allocated as
follows: $0.8 million to general and administrative and $1.5
million to research and administrative. In addition, legal fees of
$0.3 million were expensed related to certain financing activities
and $0.8 million was expensed related to the amortization of loan
origination fees. (k) This adjustment reflects integration expense
related to the acquisition of Chipidea recorded in accounting and
legal expense under general and administrative. (l) This adjustment
reflects acquired in-process research and development expense
related to the acquisition of Chipidea. (m) This adjustment
reflects restructuring expense related to reduction in workforce
and facilities exit costs. (n) This adjustment reflects the
non-GAAP tax adjustment due to the adjustments described above.
MIPS is a trademark or registered trademark in the United States
and other countries of MIPS Technologies, Inc. Chipidea is a
trademark or registered trademark in the United States and other
countries of MIPSABG Chipidea, Lda. All other trademarks referred
to herein are the property of their respective owners. DATASOURCE:
MIPS Technologies, Inc. CONTACT: Media, Jen Bernier,
+1-650-567-5178, , or Investors, Juli Dowhan, +1-650-567-5100, ,
both of MIPS Technologies, Inc. Web site: http://www.mips.com/
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