Financial Results Highlighting Continued Positive Cash Flow
MOUNTAIN VIEW, Calif., April 30 /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 third quarter fiscal 2009 ended March 31, 2009. All
financial results are reported in U.S. GAAP unless otherwise noted.
Revenue for the third quarter was $22.7 million, a 14% decline
compared with the prior quarter revenue of $26.4 million and a 17%
decline from the $27.3 million reported in the third fiscal quarter
a year ago. The Q3 sequential revenue decrease was anticipated and
reflects the softness in the consumer electronics and semiconductor
industry. Revenue from royalties was $10.9 million, a decrease of
$2.1 million or 16 percent from the prior quarter and $1.7 million
or 13 percent from the $12.6 million reported in the third quarter
a year ago. The sequential decrease in royalty revenue was a result
of lower licensee unit volumes compared with the prior quarter and
is consistent with lower consumer electronics spending. Licensee
units declined 15 percent sequentially to 107 million units and
also declined 7 percent on a year to year basis. Contract and
license revenue was $11.8 million, a decrease of 12 percent from
the $13.4 million reported in the prior quarter and a 20 percent
decrease from the $14.8 million reported in the third quarter a
year ago. Total costs of sales and operating expense, excluding
restructuring charges, increased $0.2 million to $21.1 million from
$20.9 million in the previous quarter mainly reflecting the absence
of certain one-time credits incurred in Q2 fiscal 2009. The
Company's fiscal Q3 2009 GAAP net loss was $0.8 million or $0.02
per share on a diluted basis. This compares with a net income of
$5.0 million or $0.11 per basic and diluted share in the prior
quarter and a net loss of $4.3 million or $0.10 per share in the
third quarter a year ago. Non-GAAP net income in the third 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 $2.8 million or $0.06
per diluted share. This compares to the non-GAAP net income of $8.5
million or $0.19 per diluted share in the prior quarter and a net
income of $2.4 million or $0.05 per diluted share in the third
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 Q3 2009 ending cash balance was $21.1
million, an improvement of $0.6 million and $5.9 million from the
previous quarter and the period ending one year ago respectively.
Included in the positive net cash inflows were certain net
liability and debt repayments of $3.4 million and outflows related
to restructurings of $1.1 million. "Q3 marks the third quarter in a
row of positive cash flow for MIPS as we continue strengthening our
financial position despite a weakening market," said John Bourgoin,
president and CEO. "MIPS is well positioned with an excellent and
unique product line leveraging advanced multi-threading, multicore,
and high performance single core products that are generating good
profits," said Bourgoin. MIPS Technologies invites you to listen in
a live conference call to management's discussion of Q3 fiscal 2009
results, as well as guidance for Q4 fiscal 2009. The conference
call number is 210-839-8502 and the replay number is 203-369-0164.
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 integrating 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, in particular
the level of demand in these markets during the recessionary period
currently affecting global economies. 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 and MIPS-Based are
trademarks or registered trademarks in the United States and other
countries of MIPS Technologies, Inc. All other trademarks referred
to herein are the property of their respective owners. MIPS
TECHNOLOGIES, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In
thousands) March 31, 2009 June 30, 2008 (unaudited) Assets Current
assets: Cash and cash equivalents $21,064 $13,938 Accounts
receivable, net 9,401 14,462 Prepaid expenses and other current
assets 21,084 24,803 ------ ------ Total current assets 51,549
53,203 Equipment, furniture and property, net 11,594 16,307
Goodwill 29,336 40,624 Other assets 29,533 42,610 ------ ------
Total assets $122,012 $152,744 ======== ======== Liabilities and
Stockholders' Equity Current liabilities: Accounts payable $2,055
$3,441 Accrued liabilities 35,746 51,963 Debt - short term 6,587
18,641 Deferred revenue 4,079 4,283 ----- ----- Total current
liabilities 48,467 78,328 Long-term Liabilities: Debt - long term
8,750 - Other long term liabilities 23,209 29,496 ------ ------
Total long term liabilities 31,959 29,496 Stockholders' equity
41,586 44,920 ------ ------ Total liabilities and stockholders'
equity $122,012 $152,744 ======== ======== MIPS TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands,
except per share data) (unaudited) Three Months Ended Nine Months
Ended March 31, March 31, 2009 2008 2009 2008 ---- ---- ---- ----
Revenue: Royalties $10,901 $12,556 $35,686 $35,590 Contract Revenue
11,805 14,767 39,635 40,336 ------ ------ ------ ------ Total
Revenue 22,706 27,323 75,321 75,926 Cost of Sales 4,325 9,407
17,761 22,110 ----- ----- ------ ------ Gross Margin 18,381 17,916
57,560 53,816 Operating expenses: Research and development 7,809
9,315 21,955 27,821 Sales and marketing 4,211 6,056 13,610 17,796
General and administrative 4,744 6,559 15,693 21,437 Acquired
in-process research and development - - - 6,350 Restructuring 959
1,279 6,438 1,279 --- ----- ----- ----- Total Operating expenses
17,723 23,209 57,696 74,683 ------ ------ ------ ------ Operating
income (loss) 658 (5,293) (136) (20,867) Other income (expense),
net (1,142) (762) (3,455) (1,488) ------- ----- ------- -------
Loss before income taxes (484) (6,055) (3,591) (22,355) Provision
for (benefit from) income taxes 323 (1,798) (792) 1,018 --- -------
----- ----- Net loss $(807) $(4,257) $(2,799) $(23,373) ======
======== ======== ========= Net loss per share, basic and diluted
$(0.02) $(0.10) $(0.06) $(0.53) ======= ======= ======= =======
Common shares outstanding, basic and diluted 44,682 43,992 44,534
43,887 ====== ====== ====== ====== 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 March 31,
December 31, March 31, 2009 2008 2008 -------------- ------------
-------------- GAAP net income (loss) $(807) $4,977 $(4,257) Net
income (loss) per basic share $(0.02) $0.11 $(0.10) ======= =====
======= Net income (loss) per diluted share $(0.02) $0.11 $(0.10)
======= ===== ======= (a) Equity-based compensation expense under
SFAS 123R 1,085 1,312 $1,799 (b) Amortization of intangibles 847
855 2,438 (c) Acquisition related cost 948 979 2,386 (d)
Integration cost - - 120 (e) Restructuring 959 548 1,279 (f) Tax
adjustment (192) (157) (1,323) Non-GAAP net income $2,840 $8,514
$2,442 ====== ====== ====== Non-GAAP net income per basic share
$0.06 $0.19 $0.06 ===== ===== ===== Non-GAAP net income per diluted
share $0.06 $0.19 $0.05 ===== ===== ===== Common shares outstanding
- basic 44,682 44,586 43,992 ====== ====== ====== Common shares
outstanding - diluted 44,719 44,588 44,620 ====== ====== ======
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 equity-based compensation, amortization of
intangible assets, 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
equity-based compensation expense related to SFAS No. 123 revised
(SFAS 123R). For the third fiscal quarter ending March 31, 2009,
$1.1 million of equity-based compensation was allocated as follows:
$437,000 to research and development, $281,000 to sales and
marketing and $367,000 to general and administrative. For the
second fiscal quarter ending December 31, 2008, $1.3 million of
equity-based compensation expense 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 third
quarter of fiscal 2008 ending March 31, 2008, $1.8 million
equity-based compensation expense was allocated as follows:
$604,000 to research and development, $577,000 to sales and
marketing and $618,000 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 third fiscal quarter ending March 31, 2009, $847,000 of
amortization expense related to these intangible assets was
allocated as follows: $786,000 to cost of sales, $7,000 to research
and development and $54,000 to sales and marketing. 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 third
quarter of fiscal 2008 ending March 31, 2008, $2.4 million of
amortization related to these intangible assets was allocated as
follows: $2.3 million to cost of sales, $8,000 to research and
development and $126,000 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 third fiscal quarter ending March
31, 2009, $948,000 was expensed to research and development related
to the escrow amount payable to the founders of Chipidea. 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 third quarter of
fiscal 2008 ending March 31, 2008, $1.7 million was expensed
related to the escrow amount payable to the founders of Chipidea
and was allocated as follows: $567,000 to general and
administrative and $1.1 million to research and development. In
addition, $686,000 was expensed to other expenses 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 restructuring expense related to
reduction in workforce and facilities exit costs. (f) 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) Nine Months Nine Months Ended Ended March 31, 2009
March 31, 2008 -------------- --------------- GAAP net loss
$(2,799) $(23,373) Net loss per basic share, basic and diluted
$(0.06) $(0.53) ======= ======= (g) Equity-based compensation
expense under SFAS 123R $3,558 $6,272 (h) Amortization of
intangibles 3,217 5,640 (i) Acquisition related cost 3,472 5,837
(j) Integration cost - 2,239 (k) Acquired in-process research and
development - 6,350 (l) Restructuring 6,438 1,279 (m) Tax
adjustment (1,011) (1,390) Non-GAAP net income $12,875 $2,854
======= ====== Non-GAAP net income per basic share $0.29 $0.07
===== ===== Non-GAAP net income per diluted share $0.29 $0.06 =====
===== Common shares outstanding - basic 44,534 43,887 ====== ======
Common shares outstanding - diluted 44,755 45,680 ====== ======
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 equity-based compensation, amortization of
intangible assets, 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. (g) This adjustment reflects the
equity-based compensation expense related to the Company's adoption
of SFAS No. 123 revised (SFAS 123R). For the nine months ending
March 31, 2009, $3.6 million of equity-based compensation was
allocated as follows: $1.1 million to research and development,
$1.1 million to sales and marketing and $1.4 million to general and
administrative. For the nine months ending March 31, 2008, $6.3
million equity-based compensation expense was allocated as follows:
$2.3 million to research and development, $1.9 million to sales and
marketing and $2.1 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. (h) This adjustment reflects the expense
related to the amortization of intangibles acquired in connection
with the acquisition of Chipidea included in operating expenses.
For the nine months ending March 31, 2009, $3.2 million of
amortization expense related to these intangible assets was
allocated as follows: $3.0 million to cost of sales, $22,000 to
research and development and $170,000 to sales and marketing. For
the nine months ending March 31, 2008, $5.6 million of amortization
expense related to these intangible assets was allocated as
follows: $5.3 million to cost of sales, $17,000 to research and
development and $291,000 to sales and marketing. (i) 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 nine months
ending March 31, 2009, this adjustment also reflects legal fees
incurred in association with certain financing activities and
amortization of loan origination fees. For the nine months ending
March 31, 2009, $3.5 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 $3.1
million to research and development. For the nine months ending
March 31, 2008, $4.0 million was expensed related to the escrow
amount payable to the founders of Chipidea and was allocated as
follows: $1.3 million to general and administrative and $2.7
million to research and development. In addition, legal fees of
$0.3 million were expensed to general and administrative related to
certain financing activities and $1.5 million was expensed to other
expenses related to the amortization of loan origination fees. (j)
This adjustment reflects integration expense related to the
acquisition of Chipidea recorded in accounting and legal expense
under general and administrative. (k) This adjustment reflects
acquired in-process research and development expense related to the
acquisition of Chipidea. (l) This adjustment reflects restructuring
expense related to reduction in workforce and facilities exit
costs. (m) This adjustment reflects the non-GAAP tax adjustment due
to the adjustments described above. 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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