Item 6.
|
Selected Consolidated Financial Data.
|
You should read the selected consolidated financial data set forth below together with “Management’s Discussion and Analysis of Financial Condition and Results of Operation” and our consolidated financial statements and the notes to those statements included elsewhere in this report. The selected consolidated statements
of operations data for the fiscal years ended June 30, 2009, 2008, 2007, 2006 and 2005, and the selected consolidated balance sheet data as of June 30, 2009, 2008, 2007, 2006 and 2005, set forth below have been derived from our consolidated financial statements which have been audited by Ernst & Young LLP, independent auditors for all years.
|
|
Fiscal year ended June 30,
|
|
|
|
2009 (1)
|
|
|
2008(1)
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
|
(In thousands, except per share data)
|
|
Consolidated Statements of Operations Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Royalties
|
|
$
|
42,521
|
|
|
$
|
45,593
|
|
|
$
|
44,422
|
|
|
$
|
36,675
|
|
|
$
|
29,988
|
|
License and Contract revenue
|
|
|
27,672
|
|
|
|
29,984
|
|
|
|
38,888
|
|
|
|
27,379
|
|
|
|
31,231
|
|
Total revenue
|
|
|
70,193
|
|
|
|
75,577
|
|
|
|
83,310
|
|
|
|
64,054
|
|
|
|
61,219
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales
|
|
|
667
|
|
|
|
1,833
|
|
|
|
1,663
|
|
|
|
1,246
|
|
|
|
553
|
|
Research and development
|
|
|
21,496
|
|
|
|
30,150
|
|
|
|
33,068
|
|
|
|
27,104
|
|
|
|
21,427
|
|
Sales and marketing
|
|
|
11,015
|
|
|
|
17,874
|
|
|
|
22,255
|
|
|
|
18,455
|
|
|
|
14,902
|
|
General and administrative
|
|
|
15,523
|
|
|
|
19,588
|
|
|
|
20,960
|
|
|
|
12,229
|
|
|
|
10,312
|
|
Acquired-in process research and development (2)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
570
|
|
|
|
—
|
|
Impairment of Acquired Intangible Assets (3)
|
|
|
—
|
|
|
|
1,704
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Restructuring
|
|
|
659
|
|
|
|
1,559
|
|
|
|
—
|
|
|
|
—
|
|
|
|
277
|
|
Total operating expenses
|
|
|
49,360
|
|
|
|
72,708
|
|
|
|
77,946
|
|
|
|
59,604
|
|
|
|
47,471
|
|
Operating income
|
|
|
20,833
|
|
|
|
2,869
|
|
|
|
5,364
|
|
|
|
4,450
|
|
|
|
13,748
|
|
Other income (expense), net
|
|
|
(2,381
|
)
|
|
|
(4,113
|
)
|
|
|
6,470
|
|
|
|
4,373
|
|
|
|
2,750
|
|
Income (loss) before income taxes
|
|
|
18,452
|
|
|
|
(1,244
|
)
|
|
|
11,834
|
|
|
|
8,823
|
|
|
|
16,498
|
|
Provision for (benefit from) for income taxes
|
|
|
7,529
|
|
|
|
3,811
|
|
|
|
3,351
|
|
|
|
(2,198
|
)
|
|
|
1,312
|
|
Income (loss) from continuing operations
|
|
|
10,923
|
|
|
|
(5,055
|
)
|
|
|
8,483
|
|
|
|
11,021
|
|
|
|
15,186
|
|
Loss from discontinued operations, net of tax
|
|
|
(22,059
|
)
|
|
|
(126,780
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Gain on disposition, net of tax
|
|
|
1,698
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Net income (loss)
|
|
$
|
(9,438
|
)
|
|
$
|
(131,835
|
)
|
|
$
|
8,483
|
|
|
$
|
11,021
|
|
|
$
|
15,186
|
|
Net income (loss) per share, basic – continuing operations
|
|
$
|
0.24
|
|
|
$
|
(0.11
|
)
|
|
$
|
0.19
|
|
|
$
|
0.26
|
|
|
$
|
0.37
|
|
Net income (loss) per share, basic – discontinued operations
|
|
$
|
(0.45
|
)
|
|
$
|
(2.89
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Net income (loss) per share, basic
|
|
$
|
(0.21
|
)
|
|
$
|
(3.00
|
)
|
|
$
|
0.19
|
|
|
$
|
0.26
|
|
|
$
|
0.37
|
|
Net income (loss) per share, diluted – continuing operations
|
|
$
|
0.24
|
|
|
$
|
(0.11
|
)
|
|
$
|
0.18
|
|
|
$
|
0.25
|
|
|
$
|
0.34
|
|
Net income (loss) per share, diluted – discontinued operations
|
|
$
|
(0.45
|
)
|
|
$
|
(2.89
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Net income (loss) per share, diluted
|
|
$
|
(0.21
|
)
|
|
$
|
(3.00
|
)
|
|
$
|
0.18
|
|
|
$
|
0.25
|
|
|
$
|
0.34
|
|
Shares used in per share calculations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
44,634
|
|
|
|
43,964
|
|
|
|
43,516
|
|
|
|
42,894
|
|
|
|
41,518
|
|
Diluted
|
|
|
44,935
|
|
|
|
43,964
|
|
|
|
45,891
|
|
|
|
44,611
|
|
|
|
44,974
|
|
|
|
June 30,
|
|
|
|
|
2009
|
|
|
|
2008
|
|
|
|
2007
|
|
|
|
2006
|
|
|
|
2005
|
|
|
|
(In thousands)
|
|
Consolidated Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
44,507
|
|
|
$
|
12,713
|
|
|
$
|
119,039
|
|
|
$
|
101,481
|
|
|
$
|
91,686
|
|
Working capital
|
|
|
30,664
|
|
|
|
(10,214
|
)
|
|
|
133,314
|
|
|
|
117,251
|
|
|
|
100,944
|
|
Total assets (4)
|
|
|
63,406
|
|
|
|
36,688
|
|
|
|
174,862
|
|
|
|
147,939
|
|
|
|
127,546
|
|
Total long-term liabilities
|
|
|
17,416
|
|
|
|
8,443
|
|
|
|
5,726
|
|
|
|
2,966
|
|
|
|
2,938
|
|
Total stockholders’ equity
|
|
|
26,661
|
|
|
|
44,920
|
|
|
|
149,882
|
|
|
|
133,230
|
|
|
|
108,683
|
|
(1)
|
Consolidated statement of operations data for 2009 and 2008 for ABG has been classified as discontinued operations for the period from August 27, 2007 through June 30, 2009. On May 7, 2009, we divested the Analog Business Group (ABG).
|
(2)
|
Acquired in-process research and expenses are in connection with the FS2 acquisition in 2006.
|
(3)
|
Represents impairment charges recorded to write down the carrying value of acquired intangible assets in 2008. See Part II, Item 7 “MD&A—Impairment Analysis.”
|
(4)
|
Total assets at June 30, 2009 and 2008 from continuing operations, excludes amounts classified as assets of discontinued operations in the amount of $4.5 million and $116.1 million, respectively.
|
Item 7.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations.
|
You should read the following discussion and analysis together with our consolidated financial statements and notes to those statements included elsewhere in this report
. Except for the historical information contained in this Annual Report on Form 10-K,
this discussion contains forward-looking statements that involve risks and uncertainties including statements regarding our expectation for specific aspects of our results of operations in fiscal 2009. Our actual results could differ materially from those indicated in these forward-looking statements as a result of certain factors, as more fully described under “Risk Factors,” and other risks included from time to time in our other Securities and Exchange Commission reports, copies of which are available
from us upon request. The forward-looking statements within this Annual Report on Form 10-K are identified by words such as “believes,” “anticipates,” “expects,” “intends,” “may” and other similar expressions. However, these words are not the exclusive means of identifying such statements. We undertake no obligation to update any forward-looking statements included in this discussion.
Introduction
MIPS Technologies, Inc. is a leading provider of industry-standard processor architectures and cores that power some of the world’s most popular products for the home entertainment, communications, networking and portable multimedia markets. With more than 130 worldwide
customers, MIPS Technologies’ products are broadly used in markets such as mobile consumer electronics, digital entertainment, wired and wireless communications and networking, office automation, security, microcontrollers, and automotive. Our customers are global semiconductor companies. We offer our customers high-performance, easy-to-use functionality at a fraction of the cost and time to market that internal development would require. Our customers pay us license fees for processor architectural and
product rights, as well as royalties based on processor unit shipments. The majority of the license fees are for existing IP and the revenue recognition associated with the delivery of the IP is generally immediate.
Overview
On May 7, 2009, we completed the sale of the Analog Business Group to Synopsys, Inc. for $22 million in cash. In connection with the sale, we recorded a gain on disposition, net of tax of $1.7 million. With the divestiture we now report the ABG as a discontinued operation and have excluded it from our continuing operations
results.
We ended our fiscal 2009 with cash and cash equivalents of $44.5 million, up approximately $24.5 million from the prior quarter and up approximately $31.8 million from June 30, 2008. The increase was primarily due to our divestiture of ABG as we received $22 million of cash consideration received from the sale. Our aggregate
loan balance outstanding as of June 30, 2009 was $12.8 million which includes our credit facility in the United States through Silicon Valley Bank.
Our fiscal 2009 results were impacted by the slowdown in the worldwide economy. Total fiscal 2009 revenue of $70.2 million decreased 7% from the $75.6 million reported in the prior fiscal year.
Royalty revenue in fiscal 2009 was $42.5 million, a decrease of 7% from the $45.6 million reported during fiscal 2008. Total royalty units shipped in fiscal year 2009 were 427 million or 4 percent higher than the 412 million units shipped in fiscal 2008. Agreements with certain of our customers provide for a volume
related reduction in the per unit royalties that are due to us. The impact of the increase in units shipped in fiscal year 2009 was offset by lower average per unit royalty, as several customers’ units shipped exceeded the contractual threshold levels in their contracts. As our royalty revenue is reported one quarter in arrears, shipments and revenue reported in our fourth quarter represented our customer shipments from the quarter ended March 31, 2009.
Contract and license revenue in fiscal 2009 was $27.7 million, a decrease of 8% from the $30.0 million in the prior fiscal year. We completed 31 new license agreements during the year compared to 25 completed in the prior year. The contract revenue decrease was mainly due to global economic slowdown and lower average
selling price of our contract licenses as compared to the prior year.
We made significant strides in managing our cost structure in fiscal 2009 by reducing total operating expenses by $23.3 million as compared to 2008. Our operating expense in fiscal 2009 was $49.4 million, including a restructuring charge of $0.7 million as compared to our operating expense of $72.7 million in fiscal 2008,
including a restructuring charge of $1.6 million and an intangible asset impairment charge of $1.7 million. Our operating expense in fiscal 2009 benefitted from the closure of our UK R&D office, reductions to headcount and decreased outside services.
We recorded a $4.3 million benefit to our income tax provision during Q4 2009 driven by a combination of the impact of a $1.7 million investment write off on a small private technology company and a lower actual full year tax rate.
In fiscal 2010, we plan to focus our product development teams on providing more complete hardware and software solutions intended to leverage the Android platform. We believe Android can provide MIPS with strong medium to longer term revenue growth potential as it will require more processor computing capabilities – an area
where MIPS has had a historical competitive advantage.
Discontinued Operations
On May 7, 2009, we entered into a simultaneous sale and close agreement with Synopsys, Inc., an unrelated third party, to sell our ABG for $22 million in cash. As a result of the sale, the assets and liabilities related to ABG are presented as assets and liabilities of discontinued operations, respectively, and the results of ABG are classified
as discontinued operations on our statements of operations for all periods presented.
In connection with our sale of ABG, we agreed to retain responsibility for certain actual or contingent liabilities and to indemnify the purchaser against breaches of representations and warranties and other liabilities. To date, we have not incurred any losses and are not aware of any potential losses in respect of claims asserted
by the purchaser in connection with this transaction. Our potential liability to the purchaser is subject to certain limitations, including limitations on the time period during which claims may be asserted and the amounts for which we are liable. However, there can be no assurance that we will not incur future liabilities to the purchaser in connection with this transaction or that the amount of such liabilities will not be material.
The results from discontinued operations of ABG (exclusive of the gain on disposition) are as follows for the year ended June 30, 2009 and for the period from August 27, 2007 to June 30, 2008 (in thousands):
|
|
2009
|
|
|
2008
|
|
Revenue
|
|
$
|
19,729
|
|
|
$
|
29,222
|
|
Expenses
|
|
|
(40,534
|
)
|
|
|
(58,771
|
)
|
Impairment of goodwill and acquired intangible assets
|
|
|
—
|
|
|
|
(101,403
|
)
|
Restructuring expense
|
|
|
(6,813
|
)
|
|
|
—
|
|
Loss from discontinued operations, before tax
|
|
|
(27,618
|
)
|
|
|
(130,952
|
)
|
Tax benefit of discontinued operations
|
|
|
(5,559
|
)
|
|
|
(4,172
|
)
|
Loss from discontinued operations, net of tax
|
|
$
|
(22,059
|
)
|
|
$
|
(126,780
|
)
|
As we acquired ABG in fiscal 2008, there are no results relating to ABG in fiscal 2007.
In the fourth quarter of 2008, we conducted our annual impairment test of goodwill. As a result of this analysis, we concluded that the carrying amount of goodwill assigned to our ABG segment (discontinued operation in fiscal 2009 based on our divestiture) exceeded the implied fair value and recorded an impairment charge of approximately
$88.9 million, which is included in the caption “Loss from discontinued operations, net of tax” in our 2008 consolidated statement of operations. The impairment charge was determined by comparing the carrying value of goodwill assigned to the reporting unit (ABG Segment) as of June 30, 2008, with the implied fair value of the goodwill. We considered both the income and market approaches in determining the implied fair value of the goodwill, which required estimates of future operating results
and cash flows of the reporting unit discounted using estimated discount rates ranging from 18 percent to 24 percent. The estimates of future operating results and cash flows were principally derived from an updated long-term financial forecast, which is developed as part of our strategic planning cycle conducted annually during the our fourth quarter. The decline in the implied fair value of the goodwill and resulting impairment charge was primarily driven by the softening overall market for IP and delays experienced
in realizing expected synergies resulting in our updated long-term financial forecasts showing lower estimated near-term and longer-term profitability compared to estimates developed at the time of the completion of the acquisition. The updated long-term financial forecast used represented the best estimate that the Company’s management had at June 30, 2008 and the Company believed that its underlying assumptions were reasonable.
The outcome of our 2008 goodwill impairment analysis indicated that the carrying amount of certain acquisition related intangible assets or asset groups may not be recoverable. At June 30, 2008, we assessed the recoverability of the acquisition related intangible assets or asset groups, as appropriate, by determining whether the unamortized
balances could be recovered through undiscounted future net cash flows. We determined that certain of the acquisition related developed product technology associated with our ABG segment were impaired primarily due to the revised lower revenue forecasts associated with the products incorporating such developed product technology. We measured the amount of impairment by calculating the amount by which the carrying value of the assets exceeded their estimated fair values, which were based on projected discounted
future net cash flows. As a result of this impairment analysis, the Company recorded an impairment charge of $12.5 million which is included in the caption “Loss from discontinued operations, net of tax”.
The summarized balance sheet of discontinued operations of ABG consisted of the following (in thousands):
|
|
June 30, 2009
|
|
|
June 30, 2008
|
|
Assets:
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
—
|
|
|
$
|
1,225
|
|
Restricted cash
|
|
|
4,442
|
|
|
|
29,770
|
|
Other current assets
|
|
|
37
|
|
|
|
10,797
|
|
Fixed assets, net
|
|
|
—
|
|
|
|
12,017
|
|
Goodwill and acquired intangible assets
|
|
|
—
|
|
|
|
57,888
|
|
Other long term assets
|
|
|
—
|
|
|
|
4,359
|
|
Total assets of discontinued liabilities
|
|
$
|
4,479
|
|
|
$
|
116,056
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
Indemnification and founders escrow liabilities
|
|
$
|
4,442
|
|
|
$
|
21,547
|
|
Accounts payable and other current liabilities
|
|
|
1,496
|
|
|
|
27,984
|
|
Long term liabilities
|
|
|
—
|
|
|
|
20,840
|
|
Total liabilities of discontinued operations
|
|
$
|
5,938
|
|
|
$
|
70,371
|
|
The restricted cash balance at June 30, 2009 relates to the founder’s escrow liability that we incurred with our acquisition of Chipidea in August 2007. As per the terms of our acquisition, in August 2009, this balance was released in full to the founder’s of Chipidea. The other liabilities of the discontinued
operations at June 30, 2009 primarily related to severance costs. As these severance costs will be paid by us in our fiscal 2010, they will be reflected as cash outflows from our discontinued operations in fiscal 2010.
Critical Accounting Policies and Estimates
We prepare our financial statements in conformity with U.S. generally accepted accounting principles, which require us to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. We regularly
evaluate our accounting estimates and assumptions. We base our estimates and assumptions on historical experience and on various other factors that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results inevitably will differ from the estimates, and such differences may require material adjustments to our financial statements.
We believe the following critical accounting policies affect the significant judgments and estimates we use in the preparation of our consolidated financial statements.
Revenue Recognition.
Royalty Revenue.
We classify all revenue that involves the sale of a licensee’s products as royalty revenue. Royalty revenue is recognized in the quarter in which a report is received from a licensee detailing the shipments of products incorporating our IP components, which is generally in the quarter following the sale of the licensee’s
product to its customer. Royalties are calculated either as a percentage of the revenue received by the seller on sales of such products or on a per unit basis. We periodically engage a third party to perform royalty audits of our licensees, and if these audits indicate any over-or under-reported royalties, we account for the results when they are resolved.
License and Contract Revenue.
We generally derive revenue from license fees for the transfer of proven and reusable IP components. We enter into licensing agreements that provide licensees the right to incorporate our IP components in their products with terms and conditions that have historically varied by licensee. In arrangements with multiple deliverables,
we determine whether there is more than one unit of accounting. To the extent that the deliverables are separable into multiple units of accounting, we then allocate the total fee on such arrangements to the individual units of accounting using the residual method. We then recognize revenue for each unit of accounting depending on the nature of the deliverable(s) comprising the unit of accounting.
We generally derive revenue from license fees for currently available technology. Each of these types of contracts includes a nonexclusive license for the underlying IP. Fees for contracts for currently available technology include: license fees relating to our IP, including processor designs; maintenance and support, typically
for one year; and royalties payable following the sale by our licensees of products incorporating the licensed technology. Generally, our customers pay us a single upfront fee that covers the license and first year maintenance and support. Our deliverables in these arrangements include (a) processor designs and related IP and (b) maintenance and support. The license for our IP, which includes processor designs, has standalone value and can be used by the licensee without maintenance and support. Further,
objective and reliable evidence of fair value exists for maintenance and support based on specified renewal rates. Accordingly, (a) license fees and (b) maintenance and support fees are each treated as separate units of accounting. Total upfront fees are allocated to the license of processor designs and related IP and maintenance and support using the residual method. Designs and related IP are initially delivered followed by maintenance and support. Objective and reliable evidence of the fair value
exists for maintenance and support. However, no such evidence of fair value exists for processor designs and related IP. Consistent with the residual method, the amount of consideration allocated to processor designs and related IP equals the total arrangement consideration less the fair value of maintenance and support, which is based on specified renewal rates. Fees for or allocated to licenses to currently available technology are recorded as revenue upon the execution of the license agreement when there is
persuasive evidence of an arrangement, fees are fixed or determinable, delivery has occurred and collectability is reasonably assured. We assess the credit worthiness of each customer when a transaction under the agreement occurs. If collectability is not considered reasonably assured, revenue is recognized when the fee is collected. Other than maintenance and support, there is no continuing obligation under these arrangements after delivery of the IP.
Contracts relating to technology under development also can involve delivery of a license to intellectual property, including processor designs. However, in these arrangements we undertake best-efforts engineering services intended to further the development of certain technology that has yet to be developed into a final processor
design. Rather than paying an upfront fee to license completed technology, customers in these arrangements pay us milestone fees as we perform the engineering services. If the development work results in completed technology in the form of a processor design and related intellectual property, the customer is granted a license to such completed technology at no additional fee. These contracts typically include the purchase of first year maintenance and support commencing upon the
completion of a processor design and related intellectual property for an additional fee, which fee is equal to the renewal rate specified in the arrangement. The licensee is also obligated to pay us royalties following sale by our licensee of products incorporating the licensed technology. We continue to own the intellectual property that we develop and we retain the fees for engineering services regardless of whether the work performed results in a completed processor design. Fees
for engineering services in contracts for technology under development, which contracts are performed on a best efforts basis, are recognized as revenue as services are performed; however, we limit the amount of revenue recognized to the aggregate amount received or cuurently due pursuant to the milestone terms. As engineering activities are best-efforts and at-risk and because the customer must pay an additional fee for the first year of maintenance and support if the activities are successful, the
maintenance and support is a contingent deliverable that is not accounted for upfront under contracts relating to technology under development.
Maintenance and Support.
Certain arrangements also include maintenance and support obligation. Under such arrangements, we provide unspecified upgrades, bug fixes and technical support. No other upgrades, products or other post-contract support are provided. These arrangements are generally renewable annually by the customer. Maintenance and support revenue
is recognized at its fair value ratably over the period during which the obligation exists, typically 12 months. The fair value of any maintenance and support obligation is established based on the specified renewal rate for such maintenance and support. Maintenance and support revenue is included in license and contract revenue in the statement of operations and was $3.2 million, $3.7 million and $4.2 million in fiscal 2009, 2008 and 2007, respectively.
Income Taxes
.
Significant judgment is required in determining our worldwide income tax provision. In the ordinary course, there are many transactions and calculations for which the ultimate tax outcome is uncertain. Some of these uncertainties arise as a consequence of revenue sharing and cost reimbursement arrangements among related entities and
segregation of foreign and domestic income and expense to avoid double taxation. Although we believe that our estimates are reasonable, no assurance can be given that the final tax outcome of these matters will not be different from that which is reflected in our historical income tax provisions and accruals. Such differences could have a material effect on our income tax provision and net income in the period in which such determination is made.
We record a valuation allowance to reduce our deferred tax assets to the amount that is more likely than not to be realized. In order for us to realize our deferred tax assets, we must be able to generate sufficient taxable income in those jurisdictions where the deferred tax assets are located. We have provided a full valuation allowance
against our U.S. net deferred tax assets due to our history of net losses, difficulty in forecasting future results and belief that we cannot rely on projections of future taxable income to realize deferred tax assets. Significant management judgment is required in determining our deferred tax assets and liabilities and valuation allowances for purposes of assessing our ability to realize any future benefit from our net deferred tax assets. We intend to maintain this valuation allowance until sufficient positive
evidence exists to support the reversal of the valuation allowance. Future income tax expense will be reduced to the extent that we have sufficient positive evidence to support a reversal of, or decrease in, our valuation allowance.
We calculate our current and deferred tax provision based on estimates and assumptions that could differ from the actual results reflected in income tax returns filed during the subsequent year. Adjustments based on filed returns are generally recorded in the period when the tax returns are filed and the tax implications are known.
The amount of income taxes we pay is subject to ongoing audits by federal, state and foreign tax authorities, which often result in proposed assessments. Our future results may include favorable or unfavorable adjustments to our estimated tax liabilities in the period the assessments are made or resolved or when statutes of limitation
on potential assessments expire. As a result, our effective tax rate may fluctuate significantly on a quarterly basis.
We adopted the provisions of FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes – an interpretation of FASB Statement No. 109 (“FIN 48”) on July 1, 2007. FIN 48 prescribes a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position
for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained upon tax authority examination, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon ultimate settlement. At June 30, 2009 and June 30, 2008, we had gross unrecognized tax benefits of $3.8 million and $4.9 million, respectively.
The Company’s policy is to include interest and penalties related to unrecognized tax benefits, if any, within the provision for taxes in the consolidated statements of operations.
Goodwill.
Goodwill represents the excess of the purchase price over the fair value of net tangible and identifiable intangible assets acquired. Goodwill amounts are not amortized, but rather are tested for impairment at least annually or more frequently if there are indicators of impairment present. The Company performs its annual goodwill impairment
analysis in the fourth quarter of each fiscal year. The Company evaluates whether goodwill has been impaired at the reporting unit level by first determining whether the estimated fair value of the reporting unit is less than its carrying value and, if so, by determining whether the implied fair value of goodwill within the reporting unit is less than the carrying value. Fair values are determined by discounted future cash flow analyses.
Impairment of Long-Lived Assets including Acquisition Related Intangible Assets.
For long-lived assets other than goodwill, the Company evaluates whether impairment losses have occurred when events and circumstances indicate that these assets might be impaired and the undiscounted cash flows estimated to be generated by those assets are less than the carrying amounts of those assets. If less, the impairment losses
are based on the excess of the carrying amounts of these assets over their respective fair values. Their fair values would then become the new cost basis. Fair value is determined by discounted future cash flows, appraisals or other methods.
Stock-Based Compensation.
We recognize stock compensation expense for all share-based payments to employees, including grants of employee stock options in our financial statements based on the fair value of the grants. The fair value is estimated at the date
of grant using a Black-Scholes option pricing model with weighted average assumptions for the activity under our stock plans. Option pricing model assumptions such as expected term, expected volatility, and risk-free interest rate, impact the fair value estimate. Further, the forfeiture rate impacts the amount of aggregate compensation. These assumptions are subjective and generally require significant analysis and judgment to develop. When estimating fair value, some of the assumptions will be based on or determined
from external data and other assumptions may be derived from our historical experience with share-based payment arrangements. The appropriate weight to place on historical experience is a matter of judgment, based on relevant facts and circumstances.
As a result of the adjustment to our term and vesting schedule in July 2005 for stock options awarded under our 1998 and 2002 Plans, we do not believe that we are able to rely on our historical exercise and post-vested termination activity to provide relevant data for estimating our expected term for use in determining the fair value
of these options. Therefore, we have opted to use the simplified method for estimating our expected term equal to the midpoint between the vesting period and the contractual term.
We currently estimate volatility by considering the implied volatility derived from publicly traded options to purchase our common stock and our historical stock volatility.
The risk-free interest rate is the implied yield currently available on U.S. Treasury zero-coupon issues with a remaining term equal to the expected term used as the input to the Black-Scholes model.
We estimate forfeitures using a weighted average historical forfeiture rate. Our estimates of forfeitures will be adjusted over the requisite service period based on the extent to which actual forfeitures differ, or are expected to differ, from their estimate.
Results of Operations—Years Ended June 30, 2009, 2008 and 2007
Our results of continuing operations are discussed below. See Note 5 of the Notes to Consolidated Financial Statements for additional details on our discontinued operations.
Revenue.
Total revenue primarily consists of royalties, license and contract revenue. Royalties are based upon sales by licensees of products incorporating our technology. License and contract revenue consists of technology license fees generated from new
and existing license agreements for developed technology, associated maintenance agreements and engineering service fees generated from contracts for technology under development. Technology license fees vary based on, among other things, whether a particular technology is licensed for a single application or for multiple or unlimited applications, and whether the license granted covers a particular design or a broader architecture. Our revenues in fiscal 2009, 2008 and 2007 were as follows (in millions):
|
|
Fiscal Year
|
|
|
Fiscal Year
|
|
|
|
2009
|
|
|
2008
|
|
|
Change in Percent 2008-
2009
|
|
|
2007
|
|
|
Change in Percent 2007-
2008
|
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Royalties
|
|
$
|
42.5
|
|
|
$
|
45.6
|
|
|
|
-7
|
%
|
|
$
|
44.4
|
|
|
|
3
|
%
|
Percentage of Total Revenue
|
|
|
61
|
%
|
|
|
60
|
%
|
|
|
|
|
|
|
53
|
%
|
|
|
|
|
License and Contract Revenue
|
|
$
|
27.7
|
|
|
$
|
30.0
|
|
|
|
-8
|
%
|
|
|
38.9
|
|
|
|
-23
|
%
|
Percentage of Total Revenue
|
|
|
39
|
%
|
|
|
40
|
%
|
|
|
|
|
|
|
47
|
%
|
|
|
|
|
Total Revenue
|
|
$
|
70.2
|
|
|
$
|
75.6
|
|
|
|
-7
|
%
|
|
$
|
83.3
|
|
|
|
-9
|
%
|
Fiscal 2009 compared to fiscal 2008.
The 7% decrease in royalties primarily resulted from a decrease in average selling price as several customers met higher volume discount levels in their contracts. The 8% decrease in contract revenue is due
to the global economic slowdown and a decrease in our average selling price of licenses in 2009. There were 31 new agreements executed in fiscal 2009 compared to 25 in fiscal 2008. We entered into a number of unlimited use license agreements with some of our customers under which customers generally pay a larger fixed up-front fee to use one or more of our cores in unlimited SoC designs during the term of the agreement, which can be up to 7 years. We recognize all license revenues under these unlimited
use license agreements upon execution of the agreement, provided all revenue recognition criteria had been met. Contract revenue from unlimited use license agreements was $8.8 million in fiscal 2009 as compared with $16.3 million in fiscal 2008.
Fiscal 2008 compared to fiscal 2007.
The 3% increase in royalties primarily resulted from an increase in royalty volumes offset in part by a decline in the average royalty rate on chips sold by our licensees. The 23% decrease in contract revenue was primarily
due to a decrease in new agreements executed. There were 25 new agreements executed in fiscal 2008 compared to 31 in fiscal 2007. Contract revenue from unlimited use license agreements was $16.3 million in fiscal 2008 as compared with $15.5 million in fiscal 2007.
International revenue accounted for approximately 54% of our total revenue in fiscal 2009, 50% of our total revenue in fiscal 2008 and 53% of our total revenue in fiscal 2007. The majority of this revenue has been denominated in U.S. dollars. We expect that revenue derived from international licensees will continue to represent a significant
portion of our total revenue.
In 2009, 2008 and 2007, we have one customer accounted for 19%, 18%, and 14% of our revenue, respectively
Cost and Expenses.
Our cost and expenses in fiscal 2009, 2008 and 2007 were as follows (in millions, except percentages):
|
|
Fiscal Year
|
|
|
|
|
|
Fiscal Year
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
|
Change in Percent
2009-2008
|
|
|
2007
|
|
|
Change in Percent 2007-
2008
|
|
Cost and Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of Sales
|
|
$
|
0.7
|
|
|
$
|
1.8
|
|
|
|
-64
|
%
|
|
$
|
1.7
|
|
|
|
10
|
%
|
Research and Development
|
|
$
|
21.5
|
|
|
$
|
30.2
|
|
|
|
-29
|
%
|
|
$
|
33.1
|
|
|
|
-9
|
%
|
Sales and Marketing
|
|
$
|
11.0
|
|
|
$
|
17.9
|
|
|
|
-38
|
%
|
|
$
|
22.3
|
|
|
|
-20
|
%
|
General and Administrative
|
|
$
|
15.5
|
|
|
$
|
19.6
|
|
|
|
-21
|
%
|
|
$
|
21.0
|
|
|
|
-7
|
%
|
Impairment of acquired intangible assets
|
|
$
|
—
|
|
|
$
|
1.7
|
|
|
|
—
|
|
|
$
|
—
|
|
|
|
—
|
|
Restructuring
|
|
$
|
0.7
|
|
|
$
|
1.6
|
|
|
|
-58
|
%
|
|
$
|
—
|
|
|
|
—
|
|
Cost of Sales.
Cost of sales primarily includes costs associated with acquired third party software used in our products. Prior to fiscal 2009, our cost of sales also included amortization of intangible assets used to deliver the associated developed
technologies.
Fiscal 2009 compared to fiscal 2008.
The decrease in cost of sales in fiscal 2009 over fiscal 2008 is due to impairment of acquired intangible assets that the company recorded in June 2008. In connection with that impairment charge, we wrote off
all remaining acquired intangible assets relating to ABG being charged to our cost of sales.
Fiscal 2008 compared to fiscal 2007
. The increase in cost of sales in fiscal 2008 over fiscal 2007 is primarily due to additional costs associated with acquired third party software used in our products.
Research and Development.
Research and development expenses include salaries and contractor and consultant fees, as well as costs related to workstations, software, and computer aided design tools utilized in the development of new technologies. The costs
we incur with respect to internally developed technology and engineering services are included in research and development expenses as they are incurred and are not directly related to any particular licensee, license agreement or license fee.
Fiscal 2009 compared to fiscal 2008.
Research and development expenses in fiscal 2009 decreased by $8.7 million compared to fiscal 2008. Our 2009 research and development costs decreased by $3.6 million due to lower salary related costs resulting from general
cost saving measures, including a reduction in the number of employees engaged in research and development. In addition, we decreased spending on outside services and consulting by $1.3 million primarily due to decreased foreign contracting fees and outside service costs. Our research and development depreciation expense decreased by $1.3 million due to less spending on development related fixed assets provided by our vendors. Additionally, our stock compensation expense decreased
by $1.2 million due to decreased staffing levels and lower average grant date fair value of options in 2009 as compared to 2008. In addition, we had a $0.6 million decrease in benefits expense and a $0.3 million decrease in bonus expenses.
Fiscal 2008 compared to fiscal 2007
. Research and development expenses decreased in fiscal 2008 due to a decrease of $0.7 million in salary and benefits expense as a result of the restructuring efforts in fiscal 2008. There was a decrease in bonus
expense of $1.9 million as targets under our fiscal 2008 bonus plans were not achieved. In addition, there was a decrease of $0.2 million due to milestones completed under ongoing projects in fiscal 2008.
Our research and development staff decreased to 81 employees at June 30, 2009 compared to 90 employees at June 30, 2008 and compared to 116 employees at June 30, 2007. At June 30, 2008, we had 315 research and development staff from discontinued operations.
Sales and Marketing.
Sales and marketing expenses include salaries, commissions and costs associated with third party independent software development tools, direct marketing and other marketing efforts. Our sales and marketing efforts are directed at establishing
and supporting our licensing relationships.
Fiscal 2009 compared to fiscal 2008.
Our sales and marketing expense decreased by $6.9 million in fiscal 2009 compared to fiscal 2008. Salary related expenses, including commissions, decreased by $3.8 million
from the prior year due mainly to restructuring efforts. In addition, our stock compensation expense decreased by $0.9 million due to decreased staffing levels and lower average grant date fair value of options in 2009 as compared to 2008. As a result of the cost reduction plans, we also reduced sales and marketing spending by $0.6 million in supplies and maintenance, $0.5 million in travel, $0.4 million in marketing program expenses, consulting and outside services, $0.3 million in benefits and $0.3
million in facilities expenses.
Fiscal 2008 compared to fiscal 2007.
Sales and marketing expense decreased by $4.4 million in fiscal 2008 compared to fiscal 2007. Sales costs decreased by $3.1 million as a result of
our sales teams’ substantial focus on selling ABG products in 2008. The sales costs associated with ABG are classified as discontinued operations due to our divestiture of ABG in May 2009. In addition, commission and bonus expense decreased by $1.5 million as a result of decrease in commissionable revenue and decrease in bonus and profit sharing expenses as targets under our fiscal 2008 bonus plans were not achieved. Also, outside service fees decreased by 0.8 million due
to less outside consultants used in sales and marketing. The decreases were partially offset by an increase in salary and benefit expenses of $1.1 million due to increased headcount in the sales team.
Our sales and marketing staff decreased to 37 employees at June 30, 2009 compared to 53 employees at June 30, 2008 and compared to 55 employees at June 30, 2007. We had two discontinued operations sales staff at June 30, 2009 who were being terminated in connection with our restructuring efforts. At June 30, 2008,
we had 6 sales and marketing staff from discontinued operations.
General and Administrative.
General and administrative expenses comprise salaries, legal fees including those associated with the establishment and protection of our patent, trademark and other intellectual property rights which are integral to our business
and expenses related to compliance with the reporting and other requirements of a publicly traded company including directors and officers liability insurance and financial audit fees.
Fiscal 2009 compared to fiscal 2008.
The decrease in general and administrative expense of $4.1 million in fiscal 2009 compared to fiscal 2008 was primarily due to a $3.1 million decrease in outside services resulting from the lower legal, tax and audit fees in fiscal 2009. In
addition our stock compensation expense decreased by $1.0 million primarily due to decreased staffing levels and lower average grant date fair value of options in 2009 as compared to 2008.
Fiscal 2008 compared to fiscal 2007.
General and administrative expense decreased in fiscal 2008 by $1.4 million primarily due to a decrease in fees for legal, accounting, and audit services of $1.5 million due to the investigation of our historical stock option
practices in fiscal 2007. There was also a decrease in bonus expense of $2.1 million as targets under our fiscal 2008 bonus plans were not achieved. This was somewhat offset by an increase in consulting expense of $0.6 million as more outside contractors were utilized, increase in travel expense of $0.3 million with more international travel, increase in hiring expense of $0.3 million, increase in salary and benefit expense of $0.4 million with more headcount, increase in stock compensation expense
of $0.2 million with more equity grants, and increase of $0.2 million in other expense.
Our general and administrative staff was 28 employees at June 30, 2009 compared to 27 employees at June 30, 2008 and compared to 25 employees at June 30, 2007. At June 30, 2008, we had 21 general and administrative staff from discontinued operations.
Restructuring.
The 2009 restructuring expense of $0.7 million from continuing operations was primarily driven by two executive terminations and reductions in our sales force. The fiscal 2008 restructuring expense related to the closure of the UK
office and terminations of headcount in the US.
Other Income, Net.
Other income, net in fiscal 2009, 2008 and 2007 were as follows (in thousands):
|
|
Years Ended June 30,
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
Interest income
|
|
$
|
194
|
|
|
$
|
999
|
|
|
$
|
6,656
|
|
Interest expense
|
|
|
(662
|
)
|
|
|
(950
|
)
|
|
|
(4
|
)
|
Impairment - Other-than temporary
|
|
|
(1,728
|
)
|
|
|
(2,289
|
)
|
|
|
—
|
|
Loan amortization fees
|
|
|
(130
|
)
|
|
|
(1,760
|
)
|
|
|
—
|
|
Other
|
|
|
(55
|
)
|
|
|
(113
|
)
|
|
|
(182
|
)
|
Total interest and other income, net
|
|
$
|
(2,381
|
)
|
|
$
|
(4,113
|
)
|
|
$
|
6,470
|
|
The decrease in interest income in fiscal 2009 compared with prior years was due to a lower average cash and cash equivalents balance in fiscal 2009. The decrease in other-than temporary impairment expense in fiscal 2009 compared to 2008 was primarily due to a smaller write down in the value of equity held in a privately held company. The
investment in the privately held company was not impaired in 2007. The loan amortization fees for fiscal 2009 and 2008 was $0.1 million and $1.8 million, respectively. There were no loan amortization fees in 2007. The increase in interest income in fiscal 2007 was primarily due to higher cash and investment balances and higher interest rates.
Income Taxes.
In fiscal 2009, we recorded an income tax provision of approximately $7.5 million from continuing operations and an income tax benefit of $8.3 million from discontinued operations for a total consolidated income tax benefit of $0.8
million. The tax provision from continuing operations is primarily comprised of foreign withholding taxes on royalties and license fee and income taxes in jurisdictions where there is taxable income. The tax benefit for discontinued operations reflects a benefit associated with using the discontinued operations losses to offset US taxable income from continuing operations and a tax benefit associated with foreign losses, partially offset by foreign withholding tax on royalties and license fees.
In fiscal 2008, we recorded an income tax provision of $3.8 million from continuing operations and an income tax benefit of $4.1 million from discontinued operations with a total income tax benefit of $0.3 million. The tax provision from continuing operations is primarily comprised of foreign withholding tax on royalties and license
fees, and income taxes in jurisdictions where there is taxable income. The tax benefit rate for discontinued operations is lower than the applicable combined federal and state statutory rate primarily due to the impairment of goodwill, foreign taxes, and other items not deductible for tax purposes.
In fiscal 2007, we recorded an income tax provision of $3.4 million at an annual effective rate of 28%. This is primarily the result of foreign withholding tax on royalties and license fees, and foreign income tax in jurisdictions where there is taxable income.
Segment Operating Metrics
In the first quarter of fiscal 2008 following the acquisition of Chipidea, we organized into two business groups, the Processor Business Group and the Analog Business Group (ABG). As a result of the divestiture of the ABG, effective May 7, 2009, we operated in one reportable business group.
Impact of Currency
Certain of our international licensees pay royalties based on revenues that are reported in a local currency and translated into U.S. dollars at the exchange rate in effect when such revenues are reported by the licensee. To date, the majority of our revenue from international customers has been denominated in U.S. dollars. However,
to the extent that sales by our manufacturing licensees are denominated in foreign currencies, royalties we receive on such sales could be subject to fluctuations in currency exchange rates.
Liquidity and Capital Resources
In fiscal 2009, we divested our ABG and therefore it is no longer part of our ongoing operations. As a result of the divestiture, we have separately classified the cash flows of the discontinued operations from operating activities in our Statements of Cash Flows for all impacted periods that have been presented. For
cash flows from investing and financing activities, we have combined our disclosure of cash flows from continuing and discontinued operations.
We ended our fiscal 2009 with cash and cash equivalents of $44.5 million, up approximately $24.5 million from the prior quarter and up approximately $31.8 million from June 30, 2008 cash from continuing operations. The increase was largely due to our divesture of ABG. Our aggregate loan balance outstanding as of
June 30, 2009 was $12.8 million which represented our credit facility in the United States through Silicon Valley Bank.
On July 3, 2008 we entered into a new credit facility with Silicon Valley Bank (SVB). This new facility includes a four year term loan of $15 million and a revolving credit line in the amount of $10 million due on July 2, 2009. Loans under this facility are secured by virtually all of our assets with the exception of IP, and
the facility contains affirmative and negative covenants that impose restrictions on the operation of our business. Proceeds from this new facility were used to pay off the prior loan balance. We borrowed $15 million under the term loan and $1.2 million under the revolving credit line on July 3, 2008. Our debt balance at June 30, 2009 was $12.8 million. On July 2, 2009, we repaid the $1.2 million of debt we borrowed under the revolving credit line. In addition, we pay
approximately $0.3 million per month to SVB in connection with paying off the term loan, which had a balance of $11.6 million on June 30, 2009.
At June 30, 2008, we had cash and cash equivalents of $13.9 million (including $1.2 million of cash and cash equivalents from discontinued operations), a reduction of $131 million from June 30, 2007. This significant decrease represents the impact of our cash acquisition of Chipidea in August 2007. We completed this acquisition
for an aggregate cash purchase price, including expenses, of approximately $148 million. In connection with the acquisition we established a $35 million credit facility to fund a portion of the acquisition costs and support our working capital needs. As of June 30, 2008 we had an outstanding balance of $16 million under this facility which was paid off in July 2008 when we obtained a term loan and revolving line of credit with Silicon Valley Bank.
At June 30, 2007, we had cash, cash equivalents and marketable investments of $144.9 million, an increase of $23.7 million from June 30, 2006, and working capital of $133.3 million. In fiscal 2007, we primarily generated cash from operations and financing activities and we used cash primarily for investing activities.
For complete statements of cash flows for fiscal 2009, 2008 and 2007, see Item 8 “Financial Statements and Supplementary Data”.
For fiscal 2009, our operating activities provided net cash of $13.1 million. The cash generated from operating activities included $21.0 million from continuing operations, partially offset by cash used by discontinued operations of $7.9 million. The cash generation from continuing operations was primarily a result
of our positive net income, net of non-cash expenses. Our net income from continuing operations included the effects of non-cash charges of (i) $4.2 million from stock compensation expense, (ii) $2.2 million in depreciation and amortization, (iii) $1.7 million impairment of private investment company and (iv) $0.1 million of other non-cash charges, including non-cash activities relating to our disposition of Chipidea. The majority of remaining increase in cash was due to timing of customer
receipts and timing of paying liabilities as our accounts receivable and accounts payable accounted for an additional increase in cash of $3.2 million in the aggregate in 2009. The negative cash flow from operating activities of discontinued operations was primarily driven by the $22.1 million loss from discontinued operations, net of tax, being partially offset by $5.7 million of cash being provided from customer accounts receivables. In addition, $4.9 million of the discontinued
operations loss resulted from non-cash charges from depreciation and amortization expenses.
For fiscal 2008, our operating activities provided net cash of 2.2 million. The 2008 net loss was substantially offset by non-cash activities specifically related to Chipidea, including (i) $101.4 million impairment of Chipidea goodwill and acquired intangible assets, (ii) $8.2 million of amortization of Chipidea acquired intangible
assets and (iii) $6.4 million of acquired in-process research and development. Other non-cash charges of $2.7 million of depreciation, $1.7 million impairment of acquired intangible assets, $1.2 million of intangible asset amortization, $7.4 million of stock compensation expense and the $2.3 million unrealized loss of a private company investment accounted for the majority of the remaining adjustments to operating cash flows in 2008. In total, cash provided from operating activities of continuing
operations in 2008 was $13.3 million, and cash used in operating activities from discontinued operations was $11.1 million.
For fiscal 2007, our operating activities provided net cash of $27.5 million primarily reflecting our net income adjusted for non-cash charges including stock-based compensation under SFAS No. 123R, depreciation expense and amortization of intangibles. In addition, cash was generated by an increase in accrued compensation due to
earned bonuses and commissions, and other accrued current liabilities due to costs from our stock option investigation and financial restatement and payments due from purchases of computer-aided time-based design licenses. In addition, cash increased from long-term liabilities due to extended payment terms for computer-aided time-based licenses. The net cash provided by these sources was partially offset by an increase in accounts receivable due to new license agreements signed near the end of the year, and an
increase in other assets primarily due to purchases of computer-aided time-based licenses, and an increase in the cash surrender value on life insurance policies of $0.3 million.
Net cash provided by investing activities was $20.4 million in 2009, primarily as a result of the receipt of net proceeds of $21.8 million from our disposition of Chipidea which includes $1.0 million of cash from the settlement of indemnification claims made by us against Chipidea shareholders in connection with our acquisition of Chipidea
in August 2007. These sources of cash were partially offset by $1.3 million of cash used for capital expenditures.
Net cash used in investing activities was $125.6 million for fiscal 2008. The primary driver of cash outflow from investing activities was the usage of $148.1 million for the Chipidea acquisition including $27.2 million in cash that was used to set up the required acquisition
escrow accounts. We also used $3.4 million of cash for capital expenditures. These uses of cash were partially offset by $25.9 million of cash provided from the maturity of marketable investments.
Net cash used in investing activities was $10.4 million for fiscal 2007 primarily due to net purchases of marketable investments and capital expenditure.
Net cash used in financing activities was $3.9 million in fiscal 2009. Net cash provided by short-term debt financing of $16.2 million was the primary driver of cash provided by financing activities. This inflow was more than offset by payments of debt of $21.3 million. In addition, we received $1.7 million from
the issuance of common stock from stock option exercises and purchases under our employee stock purchase plans. We also used $0.5 million to repay capital lease obligations.
Net cash provided by financing activities was $19.6 million in fiscal 2008. Net cash provided by short-term debt financing of $15.6 million was the primary driver of cash provided by financing activities. In addition, we also received $3.7 million from the issuance of common stock from stock option exercises and purchases under our employee
stock purchase plans and $0.3 million from net capital lease activities.
Net cash provided by financing activities was $0.4 million in fiscal 2007. Net cash provided by financing activities for 2007 consisted primarily of net proceeds to us from the issuance of common stock upon the exercise of stock options and purchases under our employee stock purchase plans.
Our future liquidity and capital requirements could vary significantly from quarter to quarter, depending on numerous factors, including, among others:
|
•
|
from time to time we have certain significant payments to suppliers including Computer Aided Design (CAD) system vendors required under long term purchase agreements. These payments vary and can be up to $2 million a quarter.
|
|
•
|
in connection with our sale of ABG, we agreed to retain responsibility for certain actual or contingent liabilities and agreed to indemnify the purchaser against certain breaches of representations and warranties and other liabilities. To date, we have not incurred any losses in respect of claims asserted by the purchaser in connection with this transaction. Our potential liability to the
purchaser is subject to certain limitations, including limitations on the time period during which claims may be asserted and the amounts for which we are liable. However, there can be no assurance that we will not incur future liabilities to the purchaser in connection with this transaction or that the amount of such liabilities will not be material.
|
|
•
|
our ability to continue to generate cash flow from operations.
|
|
•
|
financing activities under borrowing arrangements. Our borrowing availability with SVB varies according to MIPS’ accounts receivable and recurring royalty revenues and other terms and conditions described in the loan and security agreement.
|
|
•
|
the costs associated with capital expenditures.
|
|
•
|
level and timing of restructuring activities. See Note 7 of the Notes to Consolidated Financial Statements for additional details on our restructuring activities.
|
We believe that we have sufficient cash and borrowing capabilities to meet our projected operating and capital requirements for the foreseeable future and at least the next twelve months. However, we may in the future be required to raise additional funds through public or private financing, strategic relationships or other arrangements.
Additional equity financing may be dilutive to holders of our common stock, and debt financing, if available, may involve restrictive covenants. Our failure to raise capital when needed could have a material adverse effect on our business, results of operations and financial condition.
Contractual Obligations
Our contractual obligations as of June 30, 2009, were as follows:
Payments due by period
(in thousands)
|
|
Total
|
|
|
Less than
1 year
|
|
|
1-3
years
|
|
|
3-5
years
|
|
|
More than
5 years
|
|
Contractual Obligations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating lease obligations (1)
|
|
$
|
5,759
|
|
|
$
|
890
|
|
|
$
|
2,012
|
|
|
$
|
1,443
|
|
|
$
|
1,414
|
|
Purchase obligations (2)
|
|
|
9,067
|
|
|
|
4,480
|
|
|
|
4,587
|
|
|
|
—
|
|
|
|
—
|
|
Short term debt (3)
|
|
|
5,439
|
|
|
|
5,439
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Long term debt (4)
|
|
|
8,199
|
|
|
|
—
|
|
|
|
7,885
|
|
|
|
314
|
|
|
|
—
|
|
Other long-term liabilities and obligations (5)
|
|
|
1,655
|
|
|
|
—
|
|
|
|
1,655
|
|
|
|
—
|
|
|
|
—
|
|
Total
|
|
$
|
30,119
|
|
|
$
|
10,809
|
|
|
$
|
16,139
|
|
|
$
|
1,757
|
|
|
$
|
1,414
|
|
(1)
|
We lease office facilities and equipment under non-cancelable operating leases including the lease for our headquarter facility in Sunnyvale. In connection with the lease for our former headquarter facility in Mountain View prior to our move to Sunnyvale, we entered into a letter of credit as a security deposit with a financial institution for $0.3 million, which was guaranteed by a time-based
certificate of deposit. We received the deposit back in full in July 2009.
|
(2)
|
Outstanding purchase orders for ongoing operations. Payments of these obligations are subject to the provision of services or products. Since June 30, 2008, purchase obligations have increased by approximately $1.0 million largely due to additional engineering software design licenses.
|
(3)
|
Short term debt includes $5.4 million of principal and interest due under our SVB term loan and revolving credit facility
.
|
(4) Long term debt includes $8.2 million of principal and interest due under the SVB term loan.
(5) Long-term liabilities and obligations include: $1.7 million due to employees under a deferred compensation plan, under which distributions are elected by the employees.
The table above excludes liabilities, aggregating $1.3 million, estimated under FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes” as we are unable to reasonably estimate the ultimate amount or timing of settlement.
Off-Balance-Sheet Arrangements
As of June 30, 2009, we did not have any off-balance-sheet arrangements, as defined in Item 303(a)(4)(ii) of SEC Regulation S-K.
New Accounting Pronouncements
In June 2009, the FASB issued SFAS No. 168, “The FASB Accounting Standards Codification and Hierarchy of Generally Accepted Accounting Principles, a replacement of FASB Statement No. 162” (“SFAS 168”). SFAS 168 establishes the FASB Standards Accounting Codification (“Codification”)
as the source of authoritative U.S. generally accepted accounting principles (“GAAP”) recognized by the FASB to be applied to nongovernmental entities and rules and interpretive releases of the SEC as authoritative GAAP for SEC registrants. The Codification will supersede all the existing non-SEC accounting and reporting standards upon its effective date and subsequently, the FASB will not issue new standards in the form of Statements, FASB Staff Positions or Emerging Issues Task Force Abstracts.
SFAS 168 also replaces FASB Statement No. 162, “The Hierarchy of Generally Accepted Accounting Principles” given that once in effect, the Codification will carry the same level of authority. We adopted this statement on July 1, 2009, and it had no material impact on our consolidated financial statement.
In May 2009, the FASB issued SFAS No. 165,
Subsequent Events
(“SFAS 165”). SFAS 165 requires an entity to recognize in the financial statements the effects of all subsequent events that provide additional evidence about conditions that existed at the date of the balance
sheet. For nonrecognized subsequent events that must be disclosed to keep the financial statements from being misleading, an entity will be required to disclose the nature of the event as well as an estimate of its financial effect, or a statement that such an estimate cannot be made. In addition, SFAS 165 requires an entity to disclose the date through which subsequent events have been evaluated. SFAS No. 165 was effective for us beginning in the fourth quarter of fiscal 2009 and was required to be applied
prospectively. The adoption of SFAS 165 had no material effect on our consolidated financial statements.
In April 2008, the FASB finalized Staff Position (“FSP”) No. 142-3,
Determination of the Useful Life of Intangible Assets
(FSP 142-3). The position amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful
life of a recognized intangible asset under FASB SFAS 142,
Goodwill and Other Intangible Assets
. The position applies to intangible assets that are acquired individually or with a group of other assets and both intangible assets acquired in business combinations and asset acquisitions. FSP 142-3 is effective for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years. We adopted this statement
on July 1, 2009, and it had no material impact on our consolidated financial statement.
In December 2007, the FASB issued SFAS No. 141(R),
Business Combinations
(SFAS 141R). SFAS 141R retains the fundamental requirements in SFAS 141 that the acquisition method of accounting (which SFAS 141 called the
purchase method
)
be used for all business combinations and for an acquirer to be identified for each business combination. SFAS 141R also establishes principles and requirements for how the acquirer: (a) recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any non-controlling interest in the acquiree; (b) recognizes and measures the goodwill acquired in the business combination or a gain from a bargain purchase; and (c) determines what information to
disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. SFAS 141R applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. We are currently evaluating the impact that SFAS 141R will have on our financial statements.
In September 2006, the FASB issued SFAS No. 157,
Fair Value Measurements
(SFAS 157), which defines fair value, establishes a framework for measuring fair value and expands disclosure, about fair value measurements. SFAS 157 is effective for fiscal year ending June 30, 2009. In
February 2008, the FASB issued Staff Positions 157-2 (FSP 157-2) amending FAS 157 to delay the effective date of SFAS 157 for certain non-financial assets and non-financial liabilities to fiscal years beginning after November 15, 2008. Adoption of this standard did not have a material impact to us.
Item 7A.
|
Quantitative and Qualitative Disclosures About Market Risk
|
We are exposed to interest rate risk on investments of our excess cash. The primary objective of our investment activities is to preserve capital. To achieve this objective and minimize the exposure due to adverse shifts in interest rates, we invest in high quality short-term maturity commercial paper, municipal bonds, and money market
funds operated by reputable financial institutions in the United States. Due to the nature of our investments, we believe that we do not have a material interest rate risk exposure.
We are exposed to fluctuations in currency exchange rates because a substantial portion of our revenue has been, and is expected to continue to be, derived from customers outside the United States. To date, the majority of our revenue from international customers has been denominated in U.S. dollars. Because we cannot predict the amount
of non-U.S. dollar denominated revenue earned by us or our licensees, we have not historically attempted to mitigate the effect that currency fluctuations may have on our revenue, and we do not presently intend to do so in the future.
Item 8.
|
Financial Statements and Supplementary Data.
|
The following table presents selected unaudited quarterly information for fiscal 2008 and 2009 (in thousands except per share data):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
2007
|
|
|
December 31,
2007
|
|
|
March 31,
200
8
|
|
|
June 30,
2008
|
|
|
September 30,
2008
|
|
|
December 31,
2008
|
|
|
March 31,
2009
|
|
|
June 30,
2009
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Royalties
|
|
$
|
10,469
|
|
|
$
|
12,078
|
|
|
$
|
12,306
|
|
|
$
|
10,740
|
|
|
$
|
11,632
|
|
|
$
|
12,553
|
|
|
$
|
10,664
|
|
|
$
|
7,672
|
|
Contract revenue
|
|
|
9,463
|
|
|
|
4,545
|
|
|
|
5,804
|
|
|
|
10,172
|
|
|
|
7,949
|
|
|
|
7,782
|
|
|
|
6,999
|
|
|
|
4,942
|
|
Total revenue
|
|
|
19,932
|
|
|
|
16,623
|
|
|
|
18,110
|
|
|
|
20,912
|
|
|
|
19,581
|
|
|
|
20,335
|
|
|
|
17,663
|
|
|
|
12,614
|
|
Operating Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales
|
|
|
302
|
|
|
|
545
|
|
|
|
445
|
|
|
|
541
|
|
|
|
166
|
|
|
|
290
|
|
|
|
74
|
|
|
|
137
|
|
Research and development
|
|
|
8,230
|
|
|
|
7,570
|
|
|
|
7,583
|
|
|
|
6,767
|
|
|
|
5,606
|
|
|
|
5,040
|
|
|
|
5,401
|
|
|
|
5,449
|
|
Sales and marketing
|
|
|
5,082
|
|
|
|
4,814
|
|
|
|
3,896
|
|
|
|
4,082
|
|
|
|
2,876
|
|
|
|
2,473
|
|
|
|
2,419
|
|
|
|
3,247
|
|
General and administrative
|
|
|
5,576
|
|
|
|
4,866
|
|
|
|
4,571
|
|
|
|
4,575
|
|
|
|
5,197
|
|
|
|
3,068
|
|
|
|
3,672
|
|
|
|
3,586
|
|
Impairment of acquired intangible assets
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,704
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Restructuring
|
|
|
—
|
|
|
|
—
|
|
|
|
1,278
|
|
|
|
281
|
|
|
|
257
|
|
|
|
13
|
|
|
|
374
|
|
|
|
15
|
|
Total costs and expenses
|
|
|
19,190
|
|
|
|
17,795
|
|
|
|
17,773
|
|
|
|
17,950
|
|
|
|
14,102
|
|
|
|
10,884
|
|
|
|
11,940
|
|
|
|
12,434
|
|
Operating income (loss)
|
|
|
742
|
|
|
|
(1,172
|
)
|
|
|
337
|
|
|
|
2,962
|
|
|
|
5,479
|
|
|
|
9,451
|
|
|
|
5,723
|
|
|
|
180
|
|
Other income (expense), net
|
|
|
208
|
|
|
|
( 844
|
)
|
|
|
(885
|
)
|
|
|
(2,592
|
)
|
|
|
(460
|
)
|
|
|
(1
|
)
|
|
|
(83
|
)
|
|
|
(1,837
|
)
|
Income (loss) before income taxes
|
|
|
950
|
|
|
|
(2,016
|
)
|
|
|
(548
|
)
|
|
|
370
|
|
|
|
5,019
|
|
|
|
9,450
|
|
|
|
5,640
|
|
|
|
(1,657
|
)
|
Provision for (benefit from) income taxes
|
|
|
1,004
|
|
|
|
916
|
|
|
|
371
|
|
|
|
1,520
|
|
|
|
54
|
|
|
|
9,399
|
|
|
|
2,421
|
|
|
|
(4,345
|
)
|
Net income (loss) from continuing operations
|
|
|
(54
|
)
|
|
|
(2,932
|
)
|
|
|
(919
|
)
|
|
|
(1,150
|
)
|
|
|
4,965
|
|
|
|
51
|
|
|
|
3,219
|
|
|
|
2,688
|
|
Loss from discontinued operations, net of tax
|
|
|
(6,977
|
)
|
|
|
(9,154
|
)
|
|
|
(3,337
|
)
|
|
|
(107,312
|
)
|
|
|
(11,933
|
)
|
|
|
4,926
|
|
|
|
(4,026
|
)
|
|
|
(11,026
|
)
|
Gain on disposition, net of tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,698
|
|
Net income (loss)
|
|
$
|
(7,031
|
)
|
|
$
|
(12,086
|
)
|
|
$
|
(4,256
|
)
|
|
$
|
(108,462
|
)
|
|
$
|
(6,968
|
)
|
|
$
|
4,977
|
|
|
$
|
(807
|
)
|
|
$
|
(6,640
|
)
|
Net income (loss) per share, basic – continuing operations
|
|
$
|
(0.00
|
)
|
|
$
|
(0.07
|
)
|
|
$
|
(0.02
|
)
|
|
$
|
(0.03
|
)
|
|
$
|
0.11
|
|
|
$
|
0.00
|
|
|
$
|
0.07
|
|
|
$
|
0.06
|
|
Net income (loss) per share, basic – discontinued operations
|
|
$
|
(0.16
|
)
|
|
$
|
(0.21
|
)
|
|
$
|
(0.08
|
)
|
|
$
|
(2.42
|
)
|
|
$
|
(0.27
|
)
|
|
$
|
0.11
|
|
|
$
|
(0.09
|
)
|
|
$
|
(0.21
|
)
|
Net income (loss) per basic share
|
|
$
|
(0.16
|
)
|
|
$
|
(0.28
|
)
|
|
$
|
(0.10
|
)
|
|
$
|
(2.45
|
)
|
|
$
|
(0.16
|
)
|
|
$
|
0.11
|
|
|
$
|
(0.02
|
)
|
|
$
|
(0.15
|
)
|
Net income (loss) per share, diluted – continuing operations
|
|
$
|
(0.00
|
)
|
|
$
|
(0.07
|
)
|
|
$
|
(0.02
|
)
|
|
$
|
(0.03
|
)
|
|
$
|
0.11
|
|
|
$
|
0.00
|
|
|
$
|
0.07
|
|
|
$
|
0.06
|
|
Net loss per share, diluted – discontinued operations
|
|
$
|
(0.16
|
)
|
|
$
|
(0.21
|
)
|
|
$
|
(0.08
|
)
|
|
$
|
(2.42
|
)
|
|
$
|
(0.27
|
)
|
|
$
|
0.11
|
|
|
$
|
(0.09
|
)
|
|
$
|
(0.21
|
)
|
Net income (loss) per share, diluted
|
|
$
|
(0.16
|
)
|
|
$
|
(0.28
|
)
|
|
$
|
(0.10
|
)
|
|
$
|
(2.45
|
)
|
|
$
|
(0.16
|
)
|
|
$
|
0.11
|
|
|
$
|
(0.02
|
)
|
|
$
|
(0.15
|
)
|
Common shares outstanding, basic
|
|
|
43,766
|
|
|
|
43,902
|
|
|
|
43,992
|
|
|
|
44,193
|
|
|
|
44,334
|
|
|
|
44,586
|
|
|
|
44,682
|
|
|
|
44,936
|
|
Shares outstanding, diluted
|
|
|
43,766
|
|
|
|
43,902
|
|
|
|
43,992
|
|
|
|
44,193
|
|
|
|
44,952
|
|
|
|
44,588
|
|
|
|
44,719
|
|
|
|
45,465
|
|
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors and Stockholders
MIPS Technologies, Inc.
We have audited the accompanying consolidated balance sheets of MIPS Technologies, Inc. as of June 30, 2009 and 2008 and the related consolidated statements of operations, stockholders’ equity and cash flows for each of the three years in the period ended June 30, 2009. Our audits also included the financial statement
schedule listed in the Index at Part IV, Item 15(a)2. These consolidated financial statements and schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements and schedule based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of MIPS Technologies, Inc. at June 30, 2009 and 2008, and the consolidated results of its operations and its cash flows for each of the three years in the period ended June 30, 2009, in conformity
with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.
As discussed in Note No. 2 to the consolidated financial statements, MIPS Technologies, Inc. on July 1, 2007, changed its method of accounting for uncertain tax positions.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of MIPS Technologies, Inc.’s internal control over financial reporting as of June 30, 2009, based on criteria established in Internal Control—Integrated Framework issued by the Committee
of Sponsoring Organizations of the Treadway Commission and our report dated September 14, 2009 expressed an unqualified opinion thereon.
Palo Alto, California
September 14, 2009
MIPS TECHNOLOGIES, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
|
|
June 30,
|
|
|
|
2009
|
|
|
2008
|
|
ASSETS
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
44,507
|
|
|
$
|
12,713
|
|
Accounts receivable, net
|
|
|
2,461
|
|
|
|
4,950
|
|
Short term restricted cash
|
|
|
264
|
|
|
|
264
|
|
Prepaid expenses and other current assets
|
|
|
1,302
|
|
|
|
869
|
|
Total current assets
|
|
|
48,534
|
|
|
|
18,796
|
|
Equipment, furniture and property, net
|
|
|
2,608
|
|
|
|
4,290
|
|
Intangible assets, net
|
|
|
385
|
|
|
|
495
|
|
Goodwill
|
|
|
565
|
|
|
|
565
|
|
Other assets
|
|
|
11,314
|
|
|
|
12,542
|
|
Assets of discontinued operations
|
|
|
4,479
|
|
|
|
116,056
|
|
Total Assets
|
|
$
|
67,885
|
|
|
$
|
152,744
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
2,305
|
|
|
$
|
1,037
|
|
Accrued liabilities
|
|
|
8,568
|
|
|
|
9,821
|
|
Debt – short term
|
|
|
4,986
|
|
|
|
16,000
|
|
Deferred revenue
|
|
|
2,011
|
|
|
|
2,152
|
|
Total current liabilities
|
|
|
17,870
|
|
|
|
29,010
|
|
Long-term liabilities
|
|
|
|
|
|
|
|
|
Debt – long term
|
|
|
7,813
|
|
|
|
-
|
|
Other long term liabilities
|
|
|
9,603
|
|
|
|
8,443
|
|
|
|
|
17,416
|
|
|
|
8,443
|
|
Liabilities of discontinued operations
|
|
|
5,938
|
|
|
|
70,371
|
|
Stockholders’ equity:
|
|
|
|
|
|
|
|
|
Common stock, $0.001 par value: 250,000,000 shares authorized at June 30, 2009 and 2008; and 45,061,546 and 44,325,703 shares outstanding at June 30,
2009 and 2008, respectively, net of 59,876 and 58,089 re acquired shares at June 30, 2009 and at June 30, 2008, respectively
|
|
|
45
|
|
|
|
44
|
|
Preferred stock, $0.001 par value: 50,000,000 shares authorized; none issued and outstanding
|
|
|
—
|
|
|
|
—
|
|
Additional paid-in capital
|
|
|
258,273
|
|
|
|
252,263
|
|
Accumulated other comprehensive income
|
|
|
392
|
|
|
|
15,224
|
|
Accumulated deficit
|
|
|
(232,049
|
)
|
|
|
(222,611
|
)
|
Total stockholders’ equity
|
|
|
26,661
|
|
|
|
44,920
|
|
Total Liabilities and Stockholders’ Equity
|
|
$
|
67,885
|
|
|
$
|
152,744
|
|
See accompanying notes.
MIPS TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
|
Years ended June 30,
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
Royalties
|
|
$
|
42,521
|
|
|
$
|
45,593
|
|
|
$
|
44,422
|
|
License and Contract revenue
|
|
|
27,672
|
|
|
|
29,984
|
|
|
|
38,888
|
|
Total revenue
|
|
|
70,193
|
|
|
|
75,577
|
|
|
|
83,310
|
|
Operating Expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales
|
|
|
667
|
|
|
|
1,833
|
|
|
|
1,663
|
|
Research and development
|
|
|
21,496
|
|
|
|
30,150
|
|
|
|
33,068
|
|
Sales and marketing
|
|
|
11,015
|
|
|
|
17,874
|
|
|
|
22,255
|
|
General and administrative
|
|
|
15,523
|
|
|
|
19,588
|
|
|
|
20,960
|
|
Impairment of acquired intangible assets
|
|
|
—
|
|
|
|
1,704
|
|
|
|
—
|
|
Restructuring
|
|
|
659
|
|
|
|
1,559
|
|
|
|
—
|
|
Total operating expenses
|
|
|
49,360
|
|
|
|
72,708
|
|
|
|
77,946
|
|
Operating income
|
|
|
20,833
|
|
|
|
2,869
|
|
|
|
5,364
|
|
Other income (expense), net
|
|
|
(2,381
|
)
|
|
|
(4,113
|
)
|
|
|
6,470
|
|
Income (loss) before income taxes
|
|
|
18,452
|
|
|
|
(1,244
|
)
|
|
|
11,834
|
|
Provision for income taxes
|
|
|
7,529
|
|
|
|
3,811
|
|
|
|
3,351
|
|
Income (loss) from continuing operations
|
|
|
10,923
|
|
|
|
(5,055
|
)
|
|
|
8,483
|
|
Loss from discontinued operations, net of tax
|
|
|
(22,059
|
)
|
|
|
(126,780
|
)
|
|
|
—
|
|
Gain on disposition, net of tax
|
|
|
1,698
|
|
|
|
—
|
|
|
|
—
|
|
Net income (loss)
|
|
$
|
(9,438
|
)
|
|
$
|
(131,835
|
)
|
|
$
|
8,483
|
|
Net income (loss) per share, basic – continuing operations
|
|
$
|
0.24
|
|
|
$
|
(0.11
|
)
|
|
$
|
0.19
|
|
Net loss, basic – discontinued operations
|
|
$
|
(0.45
|
)
|
|
$
|
(2.89
|
)
|
|
$
|
—
|
|
Net income (loss) per share, basic
|
|
$
|
(0.21
|
)
|
|
$
|
(3.00
|
)
|
|
$
|
0.19
|
|
Net income (loss) per share, diluted – continuing operations
|
|
$
|
0.24
|
|
|
$
|
(0.11
|
)
|
|
$
|
0.18
|
|
Net loss per share, diluted – discontinued operations
|
|
$
|
(0.45
|
)
|
|
$
|
(2.89
|
)
|
|
$
|
—
|
|
Net income (loss) per share, diluted
|
|
$
|
(0.21
|
)
|
|
$
|
(3.00
|
)
|
|
$
|
0.18
|
|
Common shares outstanding, basic
|
|
|
44,634
|
|
|
|
43,964
|
|
|
|
43,516
|
|
Shares outstanding, diluted
|
|
|
44,935
|
|
|
|
43,964
|
|
|
|
45,891
|
|
See accompanying notes.
MIPS TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In thousands, except share data)
|
|
Common Stock
|
|
|
Additional
Paid-in-
Capital
|
|
|
Accumulated
Other
Comprehensive
Income(loss)
|
|
|
Accumulated
Deficit
|
|
|
Total
Stockholders’
Equity
|
|
|
|
Common
Shares
|
|
|
Amount
|
|
Balances at June 30, 2006
|
|
|
43,507,685
|
|
|
|
43
|
|
|
|
232,568
|
|
|
|
142
|
|
|
|
(99,523
|
)
|
|
|
133,230
|
|
Common stock issued under employee stock option and purchase plans, net
|
|
|
87,767
|
|
|
|
—
|
|
|
|
385
|
|
|
|
—
|
|
|
|
—
|
|
|
|
385
|
|
Stock-based employee compensation cost
|
|
|
—
|
|
|
|
—
|
|
|
|
7,479
|
|
|
|
—
|
|
|
|
—
|
|
|
|
7,479
|
|
Tax benefits relating to stock option exercises
|
|
|
—
|
|
|
|
—
|
|
|
|
12
|
|
|
|
—
|
|
|
|
—
|
|
|
|
12
|
|
Comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
8,483
|
|
|
|
8,483
|
|
Unrealized gain on available-for-sale securities
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
8
|
|
|
|
—
|
|
|
|
8
|
|
Currency translation adjustment
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
285
|
|
|
|
—
|
|
|
|
285
|
|
Total comprehensive income
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
8,776
|
|
Balances at June 30, 2007
|
|
|
43,595,452
|
|
|
$
|
43
|
|
|
$
|
240,444
|
|
|
$
|
435
|
|
|
$
|
(91,040
|
)
|
|
$
|
149,882
|
|
Common stock issued under employee stock option and purchase plans, net
|
|
|
730,251
|
|
|
|
1
|
|
|
|
3,464
|
|
|
|
—
|
|
|
|
—
|
|
|
|
3,465
|
|
Stock-based employee compensation cost
|
|
|
—
|
|
|
|
—
|
|
|
|
8,100
|
|
|
|
—
|
|
|
|
—
|
|
|
|
8,100
|
|
Tax benefits relating to stock option exercises
|
|
|
—
|
|
|
|
—
|
|
|
|
255
|
|
|
|
—
|
|
|
|
—
|
|
|
|
255
|
|
Comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(131,835
|
)
|
|
|
(131,835
|
)
|
Unrealized gain on available-for-sale securities
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(9
|
)
|
|
|
—
|
|
|
|
(9
|
)
|
Currency translation adjustment
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
14,798
|
|
|
|
—
|
|
|
|
14,798
|
|
Cumulative FIN 48 impact
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
264
|
|
|
|
264
|
|
Total comprehensive income
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(116,782
|
)
|
Balances at June 30, 2008
|
|
|
44,325,703
|
|
|
$
|
44
|
|
|
$
|
252,263
|
|
|
$
|
15,224
|
|
|
$
|
(222,611
|
)
|
|
$
|
44,920
|
|
Common stock issued under employee stock option and purchase plans, net
|
|
|
735,843
|
|
|
|
1
|
|
|
|
1,676
|
|
|
|
—
|
|
|
|
—
|
|
|
|
1,677
|
|
Stock-based employee compensation cost
|
|
|
—
|
|
|
|
—
|
|
|
|
4,589
|
|
|
|
—
|
|
|
|
—
|
|
|
|
4,589
|
|
Tax benefits relating to stock option exercises
|
|
|
—
|
|
|
|
—
|
|
|
|
(255
|
)
|
|
|
—
|
|
|
|
—
|
|
|
|
(255
|
)
|
Comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(9,438
|
)
|
|
|
(9,438
|
)
|
Unrealized gain on available-for-sale securities
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(1
|
)
|
|
|
—
|
|
|
|
(1
|
)
|
Currency translation adjustment
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(14,831
|
)
|
|
|
—
|
|
|
|
(14,831
|
)
|
Total comprehensive loss
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
(24,270
|
)
|
Balances at June 30, 2009
|
|
|
45,061,546
|
|
|
$
|
45
|
|
|
$
|
258,273
|
|
|
$
|
392
|
|
|
$
|
(232,049
|
)
|
|
$
|
26,661
|
|
See accompanying notes.
MIPS TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
|
|
Years ended June 30,
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
Operating activities:
|
|
|
|
|
|
|
|
|
|
Net income (loss) – continuing operations
|
|
$
|
10,923
|
|
|
$
|
(5,055
|
)
|
|
$
|
8,483
|
|
Adjustments to reconcile net income (loss) to cash provided by operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
2,087
|
|
|
|
2,670
|
|
|
|
2,231
|
|
Stock based compensation.
|
|
|
4,187
|
|
|
|
7,357
|
|
|
|
7,872
|
|
Impairment of acquired intangible assets
|
|
|
—
|
|
|
|
1,704
|
|
|
|
—
|
|
Amortization of intangible assets
|
|
|
110
|
|
|
|
1,185
|
|
|
|
1,316
|
|
Impairment of private company investment
|
|
|
1,723
|
|
|
|
2,277
|
|
|
|
—
|
|
Other non-cash charges
|
|
|
149
|
|
|
|
2,529
|
|
|
|
(1,147
|
)
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
2,489
|
|
|
|
119
|
|
|
|
(580
|
)
|
Prepaid expenses
|
|
|
(580
|
)
|
|
|
1,603
|
|
|
|
685
|
|
Other assets
|
|
|
(1,394
|
)
|
|
|
(2,510
|
)
|
|
|
(1,600
|
)
|
Accounts payable
|
|
|
673
|
|
|
|
534
|
|
|
|
(810
|
)
|
Accrued liabilities
|
|
|
(430
|
)
|
|
|
(6,643
|
)
|
|
|
7,780
|
|
Deferred revenue
|
|
|
527
|
|
|
|
206
|
|
|
|
957
|
|
Long-term liabilities
|
|
|
492
|
|
|
|
7,312
|
|
|
|
2,292
|
|
Net cash provided by operating activities – continuing operations
|
|
|
20,956
|
|
|
|
13,288
|
|
|
|
27,479
|
|
Net cash used in operating activities – discontinued operations
|
|
|
(7,878
|
)
|
|
|
(11,107
|
)
|
|
|
—
|
|
Net cash provided by operating activities
|
|
|
13,078
|
|
|
|
2,181
|
|
|
|
27,479
|
|
Investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchases of marketable investments
|
|
|
—
|
|
|
|
—
|
|
|
|
(67,015
|
)
|
Maturities of marketable investments
|
|
|
—
|
|
|
|
25,940
|
|
|
|
62,000
|
|
Capital expenditures
|
|
|
(1,337
|
)
|
|
|
(3,412
|
)
|
|
|
(5,295
|
)
|
Acquisitions, net
|
|
|
—
|
|
|
|
(120,944
|
)
|
|
|
(54
|
)
|
Increase in restricted cash
|
|
|
—
|
|
|
|
(27,163
|
)
|
|
|
—
|
|
Disposition of ABG, net
|
|
|
21,750
|
|
|
|
—
|
|
|
|
—
|
|
Net cash provided by (used in) investing activities
|
|
|
20,413
|
|
|
|
(125,579
|
)
|
|
|
(10,364
|
)
|
Financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net proceeds from issuance of common stock
|
|
|
1,677
|
|
|
|
3,720
|
|
|
|
397
|
|
Proceeds from short-term debt, net
|
|
|
16,236
|
|
|
|
19,607
|
|
|
|
—
|
|
Repayments of short-term debt
|
|
|
(21,293
|
)
|
|
|
(4,021
|
)
|
|
|
—
|
|
Borrowings under capital leases
|
|
|
—
|
|
|
|
546
|
|
|
|
—
|
|
Repayments under capital leases
|
|
|
(499
|
)
|
|
|
(240
|
)
|
|
|
—
|
|
Net cash provided by (used in) financing activities
|
|
|
(3,879
|
)
|
|
|
19,612
|
|
|
|
397
|
|
Effect of exchange rate on cash and cash equivalents
|
|
|
957
|
|
|
|
(1,315
|
)
|
|
|
46
|
|
Net increase (decrease) in cash and cash equivalents
|
|
|
30,569
|
|
|
|
(105,101
|
)
|
|
|
17,558
|
|
Cash and cash equivalents, beginning of year
|
|
|
13,938
|
|
|
|
119,039
|
|
|
|
101,481
|
|
Cash and cash equivalents, end of year
|
|
|
44,507
|
|
|
|
13,938
|
|
|
|
119,039
|
|
Less cash and cash equivalents, end of year – discontinued operations
|
|
|
—
|
|
|
|
1,225
|
|
|
|
—
|
|
Cash and cash equivalents, end of year – continuing operations
|
|
$
|
44,507
|
|
|
$
|
12,713
|
|
|
$
|
119,039
|
|
Supplemental disclosures of cash transactions from continuing operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
Income taxes paid
|
|
$
|
764
|
|
|
$
|
1,980
|
|
|
$
|
794
|
|
Interest paid
|
|
$
|
685
|
|
|
$
|
1,200
|
|
|
$
|
—
|
|
See accompanying notes.
MIPS TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1.
|
Description of Business and Basis of Presentation
|
MIPS Technologies, Inc. is a leading provider of industry-standard processor architectures and cores that power some of the world’s most popular products for the home entertainment, communications, networking and portable multimedia markets. Our technology is broadly used in markets such as mobile consumer electronics, digital entertainment,
wired and wireless communications and networking, office automation, security, microcontrollers, and automotive. Our customers are global semiconductor companies and system original equipment manufacturers (system OEMs). We offer our customers high-performance, easy-to-use functionality at a fraction of the cost and time to market that internal development would require. Our customers pay us license fees for architectural and product rights, as well as royalties based on processor unit shipments.
On May 7, 2009, we completed the sale of our Analog Business Group (ABG) to Synopsys, Inc., an unrelated third party, for $22 million in cash. In connection with this divestiture, we have classified the financial statements of the ABG as discontinued operations. The ABG was initially formed through MIPS' acquisition of Chipidea
Microelectronica S.A. in August 2007.
Basis of Presentation.
The consolidated financial statements include the accounts of our wholly owned subsidiaries after elimination of intercompany transactions and balances.
Note 2.
|
Summary of Significant Accounting Policies
|
Use of Estimates.
The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results inevitably will differ from those estimates, and such differences may be material to the financial statements.
Discontinued operations.
In fiscal 2009, we divested our ABG and therefore it is no longer part of our ongoing operations. Accordingly,
we have separately classified the results of operations, assets and liabilities, and cash flows of the discontinued operations of ABG on our Statements of Operations, Balance Sheets and Statements of Cash Flows, respectively, for all periods presented.
Revenue Recognition.
Royalty Revenue
We classify all revenue that involves the sale of a licensee’s products as royalty revenue. Royalty revenue is recognized in the quarter in which a report is received from a licensee detailing the shipments of products incorporating our IP components, which is generally in the quarter following the sale of the licensee’s
product to its customer. Royalties are calculated either as a percentage of the revenue received by the seller on sales of such products or on a per unit basis. We periodically engage a third party to perform royalty audits of our licensees, and if these audits indicate any over-or under-reported royalties, we account for the results when they are resolved.
License and Contract Revenue
We generally derive revenue from license fees for the transfer of proven and reusable IP components. We enter into licensing agreements that provide licensees the right to incorporate our IP components in their products with terms and conditions that have historically varied by licensee. In arrangements with multiple deliverables, we
determine whether there is more than one unit of accounting. To the extent that the deliverables are separable into multiple units of accounting, we then allocate the total fee on such arrangements to the individual units of accounting using the residual method. We then recognize revenue for each unit of accounting depending on the nature of the deliverable(s) comprising the unit of accounting.
We generally derive revenue from license fees for currently available technology. Each of these types of contracts includes a nonexclusive license for the underlying IP. Fees for contracts for currently available technology include: license fees relating to our IP, including processor designs; maintenance and support, typically
for one year; and royalties payable following the sale by our licensees of products incorporating the licensed technology. Generally, our customers pay us a single upfront fee that covers the license and first year maintenance and support. Our deliverables in these arrangements include (a) processor designs and related IP and (b) maintenance and support. The license for our IP, which includes processor designs, has standalone value and can be used by the licensee without maintenance and support. Further,
objective and reliable evidence of fair value exists for maintenance and support based on specified renewal rates. Accordingly, (a) license fees and (b) maintenance and support fees are each treated as separate units of accounting. Total upfront fees are allocated to the license of processor designs and related IP and maintenance and support using the residual method. Designs and related IP are initially delivered followed by maintenance and support. Objective and reliable evidence of the fair value
exists for maintenance and support. However, no such evidence of fair value exists for processor designs and related IP. Consistent with the residual method, the amount of consideration allocated to processor designs and related IP equals the total arrangement consideration less the fair value of maintenance and support, which is based on specified renewal rates. Fees allocated to licenses to currently available technology are recorded as revenue upon the execution of the license agreement when there
is persuasive evidence of an arrangement, fees are fixed or determinable, delivery has occurred and collectability is reasonably assured. . We assess the credit worthiness of each customer when a transaction under the agreement occurs. If collectability is not considered reasonably assured, revenue is recognized when the fee is collected. Other than maintenance and support, there is no continuing obligation under these arrangements after delivery of the IP.
Contracts relating to technology under development also can involve delivery of a license to intellectual property, including processor designs. However, in these arrangements we undertake best-efforts engineering services intended to further the development of certain technology that has yet to be developed into a final processor
design. Rather than paying an upfront fee to license completed technology, customers in these arrangements pay us milestone fees as we perform the engineering services. If the development work results in completed technology in the form of a processor design and related intellectual property, the customer is granted a license to such completed technology at no additional fee. These contracts typically include the purchase of first year maintenance and support commencing upon the
completion of a processor design and related intellectual property for an additional fee, which fee is equal to the renewal rate specified in the arrangement. The licensee is also obligated to pay us royalties following sale by our licensee of products incorporating the licensed technology. We continue to own the intellectual property that we develop and we retain the fees for engineering services regardless of whether the work performed results in a completed processor design. Fees
for engineering services in contracts for technology under development, which contracts are performed on a best efforts basis, are recognized as revenue as services are performed; however, we limit the amount of revenue recognized to the aggregate amount received or cuurently due pursuant to the milestone terms. As engineering activities are best-efforts and at-risk and because the customer must pay an additional fee for the first year of maintenance and support if the activities are successful, the
maintenance and support is a contingent deliverable that is not accounted for upfront under contracts relating to technology under development.
Maintenance and Support
Certain arrangements also include maintenance and support obligation. Under such arrangements, we provide unspecified upgrades, bug fixes and technical support. No other upgrades, products or other post-contract support are provided. These arrangements are generally renewable annually by the customer. Maintenance and support revenue is recognized
at its fair value ratably over the period during which the obligation exists, typically 12 months. The fair value of any maintenance and support obligation is established based on the specified renewal rate for such maintenance and support. Maintenance and support revenue is included in license and contract revenue in the statement of operations and was $3.2 million, $3.7 million and $4.2 million in fiscal 2009, 2008 and 2007, respectively.
Cash and Cash Equivalents.
Cash and cash equivalents consists mainly of cash, money market funds, and other highly liquid investments which have original maturities of three months or less at the time of acquisition. The fair value of cash and
cash equivalents approximates their carrying value at June 30, 2009 and 2008.
Currency Translation.
The assets and liabilities of international non-U.S. functional currency entities are translated into U.S. dollars at the rates of exchange in effect at the end of the period. Revenues and expenses are translated using
rates that approximate those in effect during the period. Gains and losses from currency translation are included in stockholders’ equity in the consolidated balance sheets. Gains and losses from foreign currency transactions are included in current income.
Cost of Sales.
Cost of sales primarily includes amortization costs associated with acquired third party software used in our products.
Research and Development Expenses.
Costs incurred with respect to internally developed technology and engineering services are included in research and development expenses, as they are not directly related to an8y particular licensee,
license agreement or license fees. Such costs are expensed as incurred.
Equipment, Furniture and Property.
Equipment, furniture and property are stated at cost and depreciation is computed using the straight-line method. Useful lives of three years are used for equipment and furniture, and useful lives of up
to fifty years are used for buildings. Leasehold improvements are depreciated over the shorter of the remaining life of the improvement or the terms of the related leases.
Computer Aided Design Tools.
An increasing number of our computer aided design tools, consisting of software used to develop our intellectual property, are now acquired through term licenses of three to seven years. These licenses are recorded
in other assets and amortized over the term of the license.
Prepaid Expenses and Other Current Assets.
Prepaid expenses and other current assets consist principally of amounts paid by us in advance for maintenance contracts on our computer-aided software design tools which typically cover a one-year
period over which the cost is amortized, amounts paid by us in advance for our directors and officers and business insurance, which typically covers a one year period over which the cost is amortized, taxes receivable and deferred tax assets.
Accounts Receivable.
Accounts receivable includes amounts billed and currently due from customers, net of the allowance for doubtful accounts.
Allowance for Doubtful Accounts.
We maintain allowances for doubtful accounts for estimated losses resulting from the inability of our customers to make required payments. When we become aware of a specific customer’s inability to pay
their outstanding obligation for reasons such as deterioration in their operating results or financial position or bankruptcy proceedings, we record a specific reserve for bad debt to reduce their receivable to an amount we reasonably believe is collectible. If the financial condition of specific customers were to change, our estimates of the recoverability of receivables could be further adjusted.
Goodwill.
Goodwill represents the excess of the purchase price over the fair value of net tangible and identifiable intangible assets acquired. Goodwill amounts are not amortized, but rather are tested for impairment at least annually or more
frequently if there are indicators of impairment present. The Company performs its annual goodwill impairment analysis in the fourth quarter of each fiscal year. The Company evaluates whether goodwill has been impaired at the reporting unit level by first determining whether the estimated fair value of the reporting unit is less than its carrying value and, if so, by determining whether the implied fair value of goodwill within the reporting unit is less than the carrying value. Fair values are determined by
discounted future cash flow analyses. Our reporting units are consistent with the reportable segments identified. As a result of the divestiture of the ABG, we now operate in one reportable segment.
Impairment of Long-Lived Assets including Acquisition Related Intangible Assets
.
For long-lived assets other than goodwill, we evaluate whether impairment losses have occurred when events
and circumstances indicate that these assets might be impaired and the undiscounted cash flows estimated to be generated by those assets are less than the carrying amounts of those assets. If less, the impairment losses are based on the excess of the carrying amounts of these assets over their respective fair values. Their fair values would then become the new cost basis. Fair value is determined using discounted future cash flows, appraisals or other methods.
Stock-Based Compensation.
Stock based compensation cost recognized for the years ended June 30, 2009 and 2008 includes: (a) compensation cost for all share-based payments granted prior to, but not yet vested as of July 1, 2005,
based on the grant date fair value . The compensation expense for grants prior to July 1, 2005 is being amortized on an accelerated basis over the options’ vesting period, and (b) compensation cost based on the grant date fair value for all share-based payments granted subsequent to July 1, 2005 is being amortized on a straight-line basis over the requisite service period for the entire awards.
The following table shows total stock-based employee compensation expense (see “Note 13 Stockholder Equity” under Notes to Consolidated Financial Statements for types of stock-based employee arrangements) included in the consolidated statement of operations for the years ended June 30, 2009, 2008 and 2007 (in thousands):
|
|
Year Ended
June 30, 2009
|
|
|
Year Ended
June 30, 2008
|
|
|
Year Ended
June 30, 2007
|
|
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
Research and development
|
|
$
|
1,501
|
|
|
$
|
2,741
|
|
|
$
|
2,941
|
|
Sales and marketing
|
|
|
1,431
|
|
|
|
2,466
|
|
|
|
2,472
|
|
General and administrative
|
|
|
1,657
|
|
|
|
2,682
|
|
|
|
2,459
|
|
Total stock-based compensation expense
|
|
$
|
4,589
|
|
|
$
|
7,889
|
|
|
$
|
7,872
|
|
Stock based compensation included in discontinued operations was $0.4 million and $0.5 million for the years ended June 30, 2009 and 2008, respectively. There was no stock based compensation from discontinued operations in 2007.
We recognize a benefit from stock-based compensation in paid-in-capital if an incremental tax benefit is realized after all other tax attributes currently available to us have been utilized. In addition, we have elected to account for the indirect benefits of stock-based compensation (including the research tax credits) through the income
statement (continuing operations) rather than through paid-in-capital. We have also elected to net deferred tax assets and the associated valuation allowance related to the net operating loss and tax credit carryforwards for the accumulated stock award tax benefits determined for income tax footnote disclosure purposes. We track these stock award attributes separately and will only recognize these attributes through paid-in-capital.
For restricted common stock issued at discounted prices, we recognize compensation expense over the vesting period for the difference between the exercise or purchase price and the fair market value on the measurement date. Total compensation expense recognized
in our financial statements for restricted stock awards was $14,000, $111,000 and $142,000 for the years ended June 30, 2009, 2008 and 2007, respectively.
Income Taxes.
We account for income taxes in accordance with SFAS No. 109, Accounting for Income Taxes, (SFAS 109) which requires that deferred tax assets and liabilities be recognized for the effect of temporary differences between the
carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.
We adopted the provisions of Financial Accounting Standards Board (FASB) Interpretation No. 48, Accounting for Uncertainty in Income Taxes—an interpretation of FASB Statement No. 109, (“FIN 48”), on July 1, 2007. FIN48 is an interpretation of FASB Statement 109, Accounting for Income Taxes, and it seeks to
reduce the diversity in practice associated with certain aspects of measurement and recognition in accounting for income taxes. FIN48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position that an entity takes or expects to take in a tax return. Additionally, FIN48 provides guidance on de-recognition, classification, interest, and penalties, accounting in interim periods, disclosures, and translation. Under FIN48, an entity may recognize
or continue to recognize tax positions that do not meet a “more likely than not” recognition threshold. In accordance with our accounting policy, we recognize accrued interest and penalties related to unrecognized tax benefits as a component of tax expense. This policy did not change as a result of our adoption of FIN48.
Earnings per Share.
We present basic and fully diluted earnings per share. Basic earnings per share is computed by dividing income available to common stockholders by the weighted average number of common shares that were outstanding during
the period. Diluted earnings per share is computed giving effect to all dilutive potential common shares that were outstanding for any periods presented in these financial statements.
The following table sets forth the computation of basic and diluted net income (loss) per share (in thousands, except per share amounts):
|
|
Years ended June 30,
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
Numerator:
|
|
|
|
|
|
|
|
|
|
Net income (loss) from continuing operations
|
|
$
|
10,923
|
|
|
$
|
(5,055
|
)
|
|
$
|
8,483
|
|
Net income (loss) from discontinued operations
|
|
$
|
(20,361
|
)
|
|
$
|
(126,780
|
)
|
|
|
—
|
|
Net income (loss)
|
|
$
|
(9,438
|
)
|
|
$
|
(131,835
|
)
|
|
$
|
8,483
|
|
Denominator:
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average shares of common stock outstanding
|
|
|
44,634
|
|
|
|
43,987
|
|
|
|
43,576
|
|
Less: Weighted-average shares subject to repurchase
|
|
|
—
|
|
|
|
(23
|
)
|
|
|
(60
|
)
|
Shares used in computing basic net income (loss) per share
|
|
|
44,634
|
|
|
|
43,964
|
|
|
|
43,516
|
|
Effect of dilutive securities-employee stock options and shares subject to repurchase
|
|
|
301
|
|
|
|
—
|
|
|
|
2,375
|
|
Shares used in computing diluted net income (loss) per share
|
|
|
44,935
|
|
|
|
43,964
|
|
|
|
45,891
|
|
Net income (loss) per share, basic - from continuing operations
|
|
$
|
0.24
|
|
|
$
|
(0.11
|
)
|
|
$
|
0.19
|
|
Net loss per share, basic - from discontinued operations
|
|
$
|
(0.45
|
)
|
|
$
|
(2.89
|
)
|
|
$
|
—
|
|
Net income (loss) per share, basic
|
|
$
|
(0.21
|
)
|
|
$
|
(3.00
|
)
|
|
$
|
0.19
|
|
Net income (loss) per share, diluted - from continuing operations
|
|
$
|
0.24
|
|
|
$
|
(0.11
|
)
|
|
$
|
0.18
|
|
Net loss per share, diluted - from discontinued operations
|
|
$
|
(0.45
|
)
|
|
$
|
(2.89
|
)
|
|
$
|
—
|
|
Net income (loss) per share, diluted
|
|
$
|
(0.21
|
)
|
|
$
|
(3.00
|
)
|
|
$
|
0.18
|
|
Potentially dilutive securities excluded from diluted net income (loss) per share because they are anti-dilutive
|
|
|
12,031
|
|
|
|
10,697
|
|
|
|
7,126
|
|
Comprehensive Income (loss).
Total comprehensive income (loss) includes net income (loss) and other comprehensive income, which for us primarily comprises adjustments from foreign currency translations.
Total comprehensive loss was $24.3 million in fiscal 2009 and $116.8 million in fiscal 2008. Comprehensive income was $8.8 million in fiscal 2007.
The components of accumulated other comprehensive income were as follows (in thousands):
|
|
June 30,
|
|
|
|
2009
|
|
|
2008
|
|
Accumulated net unrealized gain on available-for-sale securities
|
|
$
|
2
|
|
|
$
|
3
|
|
Accumulated foreign currency translation adjustment
|
|
|
390
|
|
|
|
15,221
|
|
Total accumulated other comprehensive income
|
|
$
|
392
|
|
|
$
|
15,224
|
|
Segment Information
.
In the first quarter of fiscal 2008 following the acquisition of Chipidea, we organized into two business groups, the Processor Business Group (PBG) and the Analog
Business Group (ABG). As a result of the divestiture of the ABG, effective May 7, 2009, we operate in one reportable business group.
Reclassifications.
Certain reclassifications have been made to prior year balances in order to conform to current year’s presentation of financial information.
As a result of our divestiture of ABG, we have classified the results of operations of the ABG as discontinued operations in our statements of operations and segregated balances related to ABG from balances related to continuing operations on our consolidated balance sheets for all periods presented.
Restructuring
. We account for restructuring activities in accordance with SFAS No. 146,
Accounting for Costs Associated with Exit or Disposal Activities
(SFAS 146) and SFAS
No. 144,
Accounting for the Impairment or Disposal of Long-Lived Assets
(SFAS 144). Restructuring costs include severance costs, asset write-offs and facilities closure costs.
Subsequent Events.
In accordance with Statement of Financial Accounting Standard No. 165, “
Subsequent Events
” (“SFAS 165”), we evaluate events or
transactions that occur after the balance sheet date but before financial statements are issued for potential recognition or disclosure in the financial statements. We have evaluated all subsequent events through September 14, 2009, the date the financial statements were issued.
Recent Accounting Pronouncements.
In June 2009, the FASB issued SFAS No. 168, “The FASB Accounting Standards Codification and Hierarchy of Generally Accepted Accounting Principles, a replacement of FASB Statement No. 162” (“SFAS 168”). SFAS 168 establishes the FASB Standards Accounting Codification (“Codification”)
as the source of authoritative U.S. generally accepted accounting principles (“GAAP”) recognized by the FASB to be applied to nongovernmental entities and rules and interpretive releases of the SEC as authoritative GAAP for SEC registrants. The Codification will supersede all the existing non-SEC accounting and reporting standards upon its effective date and subsequently, the FASB will not issue new standards in the form of Statements, FASB Staff Positions or Emerging Issues Task Force Abstracts.
SFAS 168 also replaces FASB Statement No. 162, “The Hierarchy of Generally Accepted Accounting Principles” given that once in effect, the Codification will carry the same level of authority. We adopted this statement on July 1, 2009, and it had no material impact on our consolidated financial statement.
In May 2009, the FASB issued SFAS No. 165,
Subsequent Events
(“SFAS 165”). SFAS 165 requires an entity to recognize in the financial statements the effects of all subsequent events that provide additional evidence about conditions that existed at the date of the balance sheet. For
nonrecognized subsequent events that must be disclosed to keep the financial statements from being misleading, an entity will be required to disclose the nature of the event as well as an estimate of its financial effect, or a statement that such an estimate cannot be made. In addition, SFAS 165 requires an entity to disclose the date through which subsequent events have been evaluated. SFAS No. 165 was effective for us beginning in the fourth quarter of fiscal 2009 and was required to be applied prospectively.
The adoption of SFAS 165 had no material effect on our consolidated financial statements.
In April 2008, the FASB finalized Staff Position (“FSP”) No. 142-3,
Determination of the Useful Life of Intangible Assets
(FSP 142-3). The position amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful
life of a recognized intangible asset under FASB SFAS 142,
Goodwill and Other Intangible Assets
. The position applies to intangible assets that are acquired individually or with a group of other assets and both intangible assets acquired in business combinations and asset acquisitions. FSP 142-3 is effective for fiscal years beginning after December 15, 2008, and interim periods within those fiscal years. We adopted this
statement on July 1, 2009, and it had no material impact on our consolidated financial statement.
In December 2007, the FASB issued SFAS No. 141(R),
Business Combinations
(SFAS 141R). SFAS 141R retains the fundamental requirements in SFAS 141 that the acquisition method of accounting (which SFAS 141 called the
purchase method
)
be used for all business combinations and for an acquirer to be identified for each business combination. SFAS 141R also establishes principles and requirements for how the acquirer: (a) recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any non-controlling interest in the acquiree; (b) recognizes and measures the goodwill acquired in the business combination or a gain from a bargain purchase; and (c) determines what information to
disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. SFAS 141R applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. We are currently evaluating the impact that SFAS 141R will have on our financial statements.
In September 2006, the FASB issued SFAS No. 157,
Fair Value Measurements
(SFAS 157), which defines fair value, establishes a framework for measuring fair value and expands disclosure, about fair value measurements. SFAS 157 is effective for fiscal year ending June 30, 2009. In
February 2008, the FASB issued Staff Positions 157-2 (FSP 157-2) amending FAS 157 to delay the effective date of SFAS 157 for certain non-financial assets and non-financial liabilities to fiscal years beginning after November 15, 2008. Adoption of this standard did not have a material impact to us.
Note 3.
|
Business Risk and Customer Concentration
|
We operate in the intensely competitive semiconductor industry, which has been characterized by price erosion, rapid technological change, short product life cycles, cyclical market patterns and heightened foreign and domestic competition. Significant technological changes in the industry could adversely affect our operating results. We market
and license our technology to a limited number of customers and generally do not require collateral. Revenue from our largest customers accounted for the following percentages of revenue by year:
|
|
Years Ended June 30,
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
Customer A
|
|
|
19
|
%
|
|
|
18
|
%
|
|
|
14
|
%
|
We expect that a significant portion of our future revenue will continue to be generated by a limited number of customers. The non-renewal or expiration of contracts with our current customers could adversely affect our near-term future operating results.
A substantial portion of our revenue is derived from licensees based outside the United States. We anticipate that revenue from international licensees will continue to represent a substantial portion of our total revenue. To date, substantially all of the revenue from international customers has been denominated in U.S. dollars. However,
to the extent that sales to digital consumer and business product manufacturers by our licensees are denominated in foreign currencies, royalties received by us on such sales could be subject to fluctuations in currency exchange rates. The relative significance of our international operations exposes us to a number of additional risks including political and economic instability, longer accounts receivable collection periods and greater difficulty in collection of accounts receivable, reduced or limited protection
for intellectual property, export license requirements, tariffs and other trade barriers and potentially adverse tax consequences. There can be no assurance that we will be able to sustain revenue derived from international customers or that the foregoing factors will not have a material adverse effect on our business, operating results and financial condition.
Note 4.
|
Goodwill and Purchased Intangible Assets
|
Goodwill represents the excess of the purchase price over the fair value of the net tangible and intangible assets acquired. Our goodwill balance from continuing operations of $565,000 is primarily attributable to the FS2 acquisition and did not change
in 2008 and 2009.
In the fourth quarter of 2009, we conducted our annual impairment test of goodwill. The outcome of the Company’s goodwill impairment analysis in 2009 was that no impairment was indicated.
In the fourth quarter of 2008, we conducted our annual impairment test of goodwill and intangible assets. The outcome of our goodwill and intangible assets impairment analysis indicated that the carrying amount of certain acquisition related intangible assets or asset groups may not be recoverable. We assessed the recoverability of the acquisition
related intangible assets or asset groups, as appropriate, by determining whether the unamortized balances could be recovered through undiscounted future net cash flows. We determined that certain of the acquisition related developed product technology associated were impaired primarily due to the revised lower revenue forecasts associated with the products incorporating such developed product technology. We measured the amount of impairment by calculating the amount by which the carrying value of the assets
exceeded their estimated fair values, which were based on projected discounted future net cash flows. As a result of this impairment analysis, we recorded an impairment charge of $1.7 million in the caption “Impairment of acquired intangible assets” in its 2008 consolidated statement of operations.
The balances of acquisition related intangible assets as of June 30, 2009, were as follows:
|
|
June 30, 2009
|
|
|
|
Weighted
Average
Amortization
Period (in
months)
|
|
|
Gross
Carrying
Value
|
|
|
Accumulated
Amortization
|
|
|
Net
Carrying
Value
|
|
|
|
(In thousands)
|
|
Developed and core technology
|
|
|
83
|
|
|
$
|
5,050
|
|
|
$
|
(4,665
|
)
|
|
$
|
385
|
|
Customer relationships and backlog
|
|
|
72
|
|
|
|
619
|
|
|
|
(619
|
)
|
|
|
—
|
|
Other
|
|
|
36
|
|
|
|
109
|
|
|
|
(109
|
)
|
|
|
—
|
|
Total
|
|
|
80
|
|
|
$
|
5,778
|
|
|
$
|
(5,393
|
)
|
|
$
|
385
|
|
The balances of acquisition related intangible assets as of June 30, 2008, were as follows:
|
|
June 30, 2008
|
|
|
|
Weighted
Average
Amortization
Period (in
months)
|
|
|
Gross
Carrying
Value
|
|
|
Accumulated
Amortization
|
|
|
Impairment
Losses
|
|
|
Net
Carrying
Value
|
|
|
|
(In thousands)
|
|
Developed and core technology
|
|
|
83
|
|
|
$
|
6,062
|
|
|
$
|
(4,555
|
)
|
|
$
|
(1,012
|
)
|
|
$
|
495
|
|
Customer relationships and backlog
|
|
|
72
|
|
|
|
1,310
|
|
|
|
(619
|
)
|
|
|
(691
|
)
|
|
|
—
|
|
Other
|
|
|
36
|
|
|
|
110
|
|
|
|
(109
|
)
|
|
|
(1
|
)
|
|
|
—
|
|
Total
|
|
|
80
|
|
|
$
|
7,482
|
|
|
$
|
(5,283
|
)
|
|
$
|
(1,704
|
)
|
|
$
|
495
|
|
The intangible assets are stated at the gross carrying value and depreciation is computed using the straight-line method. Developed and core technology are being amortized over their useful lives of 2 to 10 years. Customer relationships and backlog are being amortized over their useful life of 6 years. Other intangible assets
are being amortized over their useful lives of 3 years.
Estimated future amortization expense related to acquisition related intangible assets is as follows:
|
|
in thousands
|
|
Fiscal Year
|
|
|
|
2010
|
|
$
|
110
|
|
2011
|
|
|
110
|
|
2012
|
|
|
110
|
|
2013
|
|
|
55
|
|
Total
|
|
$
|
385
|
|
On May 7, 2009, we completed the sale of our Analog Business Group (ABG) to an unrelated third party. In connection with this divestiture, we have classified goodwill and related intangible assets of the ABG as assets of discontinued operations. Goodwill from ABG was $40.1 million at June 30, 2008 and acquired intangible
assets were $17.8 million at June 30, 2008.
Note 5.
|
Discontinued Operations
|
On May 7, 2009, we entered into a simultaneous sale and close agreement with an unrelated third party to sell our ABG for $22 million in cash. As a result of the sale, the assets related to ABG are presented as assets of discontinued operations, the liabilities related to ABG are presented as liabilities of discontinued operations,
and the results of ABG are classified as discontinued operations on our statements of operations for all periods presented.
In connection with our sale of ABG, we agreed to retain responsibility for certain actual or contingent liabilities and agreed to indemnify the purchaser against certain breaches of representations and warranties and other liabilities. To date, we have not incurred any losses in respect of claims asserted by the purchaser in connection
with this transaction. Our potential liability to the purchaser is subject to certain limitations, including limitations on the time period during which claims may be asserted and the amounts for which we are liable. However, there can be no assurance that we will not incur future liabilities to the purchaser in connection with this transaction or that the amount of such liabilities will not be material.
The results from discontinued operations of ABG (exclusive of the gain on disposition) are as follows for the years ended June 30 (in thousands):
|
|
2009
|
|
|
2008
|
|
Revenue
|
|
$
|
19,729
|
|
|
$
|
29,222
|
|
Expenses
|
|
|
(40,534
|
)
|
|
|
(58,771
|
)
|
Impairment of goodwill and acquired intangible assets
|
|
|
—
|
|
|
|
(101,403
|
)
|
Restructuring expense
|
|
|
(6,813
|
)
|
|
|
—
|
|
Loss from discontinued operations, before tax
|
|
|
(27,618
|
)
|
|
|
(130,952
|
)
|
Tax benefit of discontinued operations
|
|
|
(5,559
|
)
|
|
|
(4,172
|
)
|
Loss from discontinued operations, net of tax
|
|
$
|
(22,059
|
)
|
|
$
|
(126,780
|
)
|
As we acquired ABG in fiscal 2008, there are no results relating to ABG in fiscal 2007.
In the fourth quarter of 2008, we conducted our annual impairment test of goodwill. As a result of this analysis, we concluded that the carrying amount of goodwill assigned to our ABG segment (discontinued operation in fiscal 2009 based on our divestiture) exceeded the implied fair value and recorded an impairment charge of approximately
$88.9 million, which is included in the caption “Loss from discontinued operations, net of tax” in our 2008 consolidated statement of operations. The impairment charge was determined by comparing the carrying value of goodwill assigned to the reporting unit (ABG Segment) as of June 30, 2008, with the implied fair value of the goodwill. We considered both the income and market approaches in determining the implied fair value of the goodwill, which required estimates of future operating results
and cash flows of the reporting unit discounted using estimated discount rates ranging from 18 percent to 24 percent. The estimates of future operating results and cash flows were principally derived from an updated long-term financial forecast, which is developed as part of our strategic planning cycle conducted annually during the our fourth quarter. The decline in the implied fair value of the goodwill and resulting impairment charge was primarily driven by the softening overall market for IP and delays experienced
in realizing expected synergies resulting in our updated long-term financial forecasts showing lower estimated near-term and longer-term profitability compared to estimates developed at the time of the completion of the acquisition. The updated long-term financial forecast used represented the best estimate that the Company’s management had at June 30, 2008 and the Company believed that its underlying assumptions were reasonable.
The outcome of our 2008 goodwill impairment analysis indicated that the carrying amount of certain acquisition related intangible assets or asset groups may not be recoverable. At June 30, 2008, we assessed the recoverability of the acquisition related intangible assets or asset groups, as appropriate, by determining whether the unamortized
balances could be recovered through undiscounted future net cash flows. We determined that certain of the acquisition related developed product technology associated with our ABG segment were impaired primarily due to the revised lower revenue forecasts associated with the products incorporating such developed product technology. We measured the amount of impairment by calculating the amount by which the carrying value of the assets exceeded their estimated fair values, which were based on projected discounted
future net cash flows. As a result of this impairment analysis, the Company recorded an impairment charge of $12.5 million which is included in the caption “Loss from discontinued operations, net of tax”.
The summarized balance sheet of discontinued operations of ABG consisted of the following (in thousands):
|
|
June 30, 2009
|
|
|
June 30, 2008
|
|
Assets:
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
—
|
|
|
$
|
1,225
|
|
Restricted cash
|
|
|
4,442
|
|
|
|
29,770
|
|
Other current assets
|
|
|
37
|
|
|
|
10,797
|
|
Fixed assets, net
|
|
|
—
|
|
|
|
12,017
|
|
Goodwill and acquired intangible assets
|
|
|
—
|
|
|
|
57,888
|
|
Long term assets
|
|
|
—
|
|
|
|
4,359
|
|
Total assets of discontinued operations
|
|
$
|
4,479
|
|
|
$
|
116,056
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
Indemnification and founders escrow liabilities
|
|
$
|
4,442
|
|
|
$
|
21,547
|
|
Accounts payable and other current liabilities
|
|
|
1,496
|
|
|
|
27,984
|
|
Long term liabilities
|
|
|
—
|
|
|
|
20,840
|
|
Total liabilities of discontinued operations
|
|
$
|
5,938
|
|
|
$
|
70,371
|
|
The restricted cash balance at June 30, 2009 relates to the founder’s escrow liability that we incurred with our acquisition of Chipidea in August 2007. As per the terms of our acquisition, in August 2009, this balance was released in full to the founder’s of Chipidea. The other liabilities of the discontinued
operations at June 30, 2009 primarily related to severance costs. As these severance costs will be paid by us in our fiscal 2010, they will be reflected as cash outflows from our discontinued operations in fiscal 2010.
The gain on disposition was calculated as follows:
|
|
(In thousands)
|
|
Sales proceeds
|
|
$
|
22,000
|
|
Net assets related to discontinued operations and direct expenses
|
|
|
(33,718
|
)
|
Cumulative translation adjustment (1)
|
|
|
10,608
|
|
Loss on disposition, before tax
|
|
|
( 1,110
|
)
|
Tax benefit from disposition
|
|
|
2,808
|
|
Gain on disposition, net of tax
|
|
$
|
1,698
|
|
(1)
|
Represents the cumulative gain on translation of the ABG balance sheet since the acquisition of Chipidea business.
|
Note 6.
|
Debt and Capital Lease Obligations
|
The components of short-term debt are as follows (in thousands):
|
|
June 30, 2009
|
|
|
June 30, 2008
|
|
Credit agreement
|
|
$
|
11,563
|
|
|
$
|
16,000
|
|
Bank lines of credit
|
|
|
1,236
|
|
|
|
—
|
|
Total Debt
|
|
|
12,799
|
|
|
|
16,000
|
|
Less current portion
|
|
|
(4,986
|
)
|
|
|
(16,000
|
)
|
Long term debt, net of current portion
|
|
$
|
7,813
|
|
|
$
|
—
|
|
Revolving Credit Agreement.
On July 3, 2008, we entered into a loan and security agreement with Silicon Valley Bank (“SVB”). The loan and security agreement provides for a $15 million term loan and a revolving credit facility
in an amount up to $10 million. The borrowing availability under the revolving credit facility varies according to MIPS’ accounts receivable and recurring royalty revenues and other terms and conditions described in the loan and security agreement. The revolving credit facility will also be available for the issuance of letters of credit, cash management services and foreign exchange contracts. Loans under this facility are secured by virtually all of our assets with the
exception of IP, and the facility contains affirmative and negative covenants that impose restrictions on the operation of our business. At the Company’s election, borrowings under the facility bear interest at the SVB’s prime rate plus 0.50%, and borrowings under the revolving credit agreement bear interest at the SVB’s prime plus 0.25% as defined in the loan and security agreement. In July 2008, we borrowed the full amount of the $15 million term loan, together with approximately
$1.2 million of borrowings under the revolving credit facility to repay all outstanding loans under our prior revolving credit agreement with Jefferies Finance LLC that was entered into in connection with the completion of the Chipidea acquisition. In December 2008, we amended our credit facility agreement with SVB, providing us more flexibility to fund the international operations of our subsidiaries. At June 30, 2009, we had $8.8 million available to borrow under the revolving credit line.
SVB’s prime rate at June 30, 2009 was 4.0%.
At June 30, 2009, the Company’s future minimum payments for debt obligations are as follows:
|
|
Debt obligations
|
|
|
|
(In thousands)
|
|
2010
|
|
$
|
4,986
|
|
2011
|
|
|
3,750
|
|
2012
|
|
|
3,750
|
|
2013
|
|
|
313
|
|
Total minimum operating lease payments
|
|
$
|
12,799
|
|
The term loan is being repaid in 48 equal monthly payments of principal plus accrued interest. On July 2, 2009, we repaid the $1.2 million that we borrowed under the revolving credit line.
The 2009 restructuring expense of $0.7 million was primarily driven by two executive terminations and reductions in our sales force. All of our restructuring expense in 2009 related to severance and benefit costs and all terminations were completed by June 30, 2009.
In our fiscal 2008, we terminated the employment of certain employees in our United States locations and also closed our research and development center in the United Kingdom. In total, 28 employees were terminated during fiscal 2008, resulting in approximately $0.9 million of severance and benefit costs recorded as restructuring expense.
All of the impacted employees were terminated by March 31, 2008. In addition, asset disposal and transfer costs of approximately $0.3 million and facilities costs of approximately $0.4 million were recorded as restructuring expense in fiscal 2008 related to contract cancellation costs, termination of office lease and other closure costs from the United Kingdom research and development center. The total charge to restructuring expense in fiscal 2008 was approximately $1.6 million which is included in the
caption “Restructuring” in 2008 consolidated statement of operations. All costs were paid as of June 30, 2008, except for approximately $0.2 million related to facilities closure costs, which was accrued as of June 30, 2008. This restructuring action was fully implemented by December 2008.
During the fourth quarter of 2009, the Company completed the sale of ABG for cash. In fiscal 2009, we recorded $6.8 million of restructuring expenses relating to ABG, which is reflected in discontinued operations in our statements of operations. All costs were paid as of June 30, 2009 except for approximately $1.0 million
related to severance and benefits which was recorded as liabilities of discontinued operations. This restructuring action will be fully implemented by September 2009.
Note 8. Equipment, Furniture and Property
The components of equipment, furniture and property are as follows (in thousands):
|
|
June 30,
|
|
|
|
2009
|
|
|
2008
|
|
Equipment
|
|
$
|
9,679
|
|
|
$
|
14,215
|
|
Furniture and fixtures
|
|
|
2,104
|
|
|
|
1,512
|
|
Leasehold Improvements
|
|
|
530
|
|
|
|
812
|
|
|
|
|
12,313
|
|
|
|
16,539
|
|
Accumulated depreciation
|
|
|
(9,705
|
)
|
|
|
(12,249
|
)
|
Equipment and furniture, net
|
|
$
|
2,608
|
|
|
$
|
4,290
|
|
Note 9.
|
Other Long-Term Assets
|
The components of other long-term assets are as follows (in thousands):
|
|
June 30,
|
|
|
|
2009
|
|
|
2008
|
|
Investments in other companies
|
|
$
|
417
|
|
|
$
|
2,156
|
|
Long-term computer aided design licenses
|
|
|
9,045
|
|
|
|
7,992
|
|
Cash surrender value of insurance contracts tied to our deferred compensation plan
|
|
|
1,549
|
|
|
|
2,070
|
|
Other
|
|
|
303
|
|
|
|
324
|
|
Other Long-Term Assets
|
|
$
|
11,314
|
|
|
$
|
12,542
|
|
In fiscal 2006, we acquired equity interests in two privately-held companies for $4.5 million that were accounted for under the cost method as we do not have significant influence on their financial and operating plans. The investments are included in other assets on the consolidated balance sheet. In fiscal 2008, based on our
impairment assessment of our equity investments, we recorded an other-than-temporary impairment loss of $2.3 million on one of the equity investments based on the market valuation of the company at June 30, 2008. In fiscal 2009, based on our impairment assessment of both of the equity investments, we recorded an additional other-than-temporary impairment loss of $1.7 million on the same investment that was impaired in 2008. The impairment loss in 2009 was based on the current market valuation
of the company and its negative operating cash flow and working capital deficiency and resulted in the full impairment of that asset. These losses have been reflected in the caption “Other income (expense), net” in our consolidated statements of operations. At June 30, 2009, total remaining value of our “Investments in other companies” is approximately $0.4 million.
Note 10.
|
Accrued and Long-Term Liabilities
|
The components of accrued liabilities are as follows (in thousands):
|
|
June 30,
|
|
|
|
2009
|
|
|
2008
|
|
Accrued compensation and employee-related expenses
|
|
$
|
2,991
|
|
|
$
|
2,737
|
|
Income taxes payable
|
|
|
—
|
|
|
|
316
|
|
Accrued restructuring
|
|
|
—
|
|
|
|
236
|
|
Engineering design software licenses
|
|
|
3,131
|
|
|
|
3,335
|
|
Other accrued liabilities
|
|
|
2,446
|
|
|
|
3,197
|
|
Accrued Liabilities
|
|
$
|
8,568
|
|
|
$
|
9,821
|
|
The components of long-term liabilities are as follows (in thousands):
|
|
June 30,
|
|
|
|
2009
|
|
|
2008
|
|
Deferred compensation
|
|
$
|
1,655
|
|
|
$
|
2,530
|
|
Long-term income tax liability
|
|
|
1,307
|
|
|
|
1,465
|
|
Long-term related to engineering design software licenses
|
|
|
4,587
|
|
|
|
3,054
|
|
Long-term deferred revenue
|
|
|
2,021
|
|
|
|
1,353
|
|
Other
|
|
|
33
|
|
|
|
41
|
|
Long term liabilities
|
|
$
|
9,603
|
|
|
$
|
8,443
|
|
Note 11. Interest and Other Income, Net
The components of interest and other income, net are as follows (in thousands):
|
|
Years Ended June 30,
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
Interest income
|
|
$
|
194
|
|
|
$
|
999
|
|
|
$
|
6,656
|
|
Interest expense
|
|
|
(662
|
)
|
|
|
(950
|
)
|
|
|
(4
|
)
|
Other than temporary impairment of investment
|
|
|
(1,728
|
)
|
|
|
(2,289
|
)
|
|
|
—
|
|
Loan amortization fees
|
|
|
(130
|
)
|
|
|
(1,760
|
)
|
|
|
—
|
|
Other
|
|
|
(55
|
)
|
|
|
(113
|
)
|
|
|
(182
|
)
|
Total interest and other income, net
|
|
$
|
(2,381
|
)
|
|
$
|
(4,113
|
)
|
|
$
|
6,470
|
|
We lease certain facilities under non-cancelable operating leases that have expiration dates between fiscal 2010 and fiscal 2016.
In connection with the lease for our former headquarter facility in Mountain View, California, we entered into a letter of credit as a security deposit with a financial institution for $0.3 million, which was guaranteed by a time-based certificate of deposit. We received the deposit back in full in July 2009. On February
27, 2009, the Company entered into a new operating lease to move our headquarters to Sunnyvale, California for an initial lease period of seven years commencing May 29, 2009, with an option to renew for additional five years. Payments due to the landlord commence in the seventh month of our occupancy of the space, and the lease includes annual increases of three percent per year plus certain operating expenses. We account for lease expense based on a straight line basis of total amounts
due over the term of the lease.
At June 30, 2009, the Company’s future minimum payments for operating lease obligations are as follows:
:
|
|
Operating Leases
|
|
|
|
(In thousands)
|
|
2010
|
|
$
|
890
|
|
2011
|
|
|
1,109
|
|
2012
|
|
|
903
|
|
2013
|
|
|
732
|
|
2014
|
|
|
711
|
|
Thereafter
|
|
|
1,414
|
|
Total minimum operating lease payments
|
|
$
|
5,759
|
|
Rent expense under non-cancelable operating leases was approximately $1.8 million in fiscal 2009, $1.8 million in fiscal 2008 and $1.7 million in fiscal 2007.
Commitments for purchases of products or services to be received in future periods totaled $9.1 million at June 30, 2009, including $4.5 million for fiscal 2010, $3.7 million for fiscal 2011 and $0.9 million for fiscal 2012. These commitments are inclusive of purchase orders with a time period of less than one year and also
inclusive of engineering design software licenses that are reflected in the Company’s accrued liabilities and other long term liabilities (see Note 10).
Note 13.
|
Stockholders’ Equity
|
Preferred Stock.
There are 50,000,000 shares of preferred stock, par value $0.001 per share authorized for issuance. No shares of preferred stock have been issued.
1998 Long-Term Incentive Plan.
The 1998 Long-Term Incentive Plan was adopted by our board of directors and approved by our stockholder in May 1998 and was amended by our board of directors in August 1998 and May 1999 with the approval of our
stockholders in October 1999 and was amended by our board of directors in January 2003. In August 2007 our board of directors adopted the 1998 Long-Term Incentive Plan, as Amended and Restated (the “1998 Plan”), which was approved by stockholders in December 2007. The Compensation Committee of our board of directors administers the 1998 Plan. The 1998 Plan authorizes the issuance of various forms of stock-based awards including incentive and non-statutory stock options, stock appreciation rights,
restricted stock, stock units, bonus stock and other stock related awards to officers and other key employees, consultants and members of the board of directors. Stock options and stock appreciation rights may not be granted with an exercise price less than the fair value on the date of grant; the board of directors determines the prices of other stock awards. Options awarded under the 1998 Plan prior to July 2005 expire ten years from the date of grant unless expiration occurs earlier in connection with termination
of employment.
Initial stock options grants awarded prior to July 2005 generally vest over a 50-month period, with 24% of the total shares vesting on the first anniversary of the date of grant and 2% of the total shares vesting each month thereafter over a 38-month period. Annual stock option grants awarded prior to fiscal 2002 vest over a 48-month period,
with approximately 8.33% vesting each month over a 12-month period beginning on the third anniversary of the date of grant. Annual grants awarded during and after fiscal year 2002, but prior to July 2005, vest over a 50-month period from the date of grant with 2% of the total shares vesting each month. In July 2005, the term and vesting schedule for both the initial and annual stock option grants were adjusted, effective immediately. Beginning in July 2005, options expire seven years from the date of grant unless
expiration occurs earlier in connection with termination of employment. Under the vesting schedule employed since 2005, initial stock option grants vest over a 36-month period with one-third of the total shares vesting on the first anniversary of the date of grant and approximately 2.78% of the total shares vesting each month thereafter over the remaining 24-month period. Annual stock option grants vest over a 36-month period from the date of grant with approximately 2.78% of the total shares vesting each month.
Vested options granted under the 1998 Plan to optionees other than executives generally may be exercised for three months after termination of the optionee’s service to us, other than for termination due to death or disability, in which case the vested options generally may be exercised up to 12 months following the date of death or termination of service, or termination for cause, in which case the option may not be exercised following termination. Options granted to executives generally may be exercised
for 12 months following the date of termination. The number of shares subject to any award, the exercise price and the number of shares issuable under this plan are subject to adjustments in the event of a change relating to our capital structure.
In connection with the amendment and restatement of the 1998 Plan in 2007, we terminated our Directors’ Stock Option Plan and 2002 Non-qualified Stock Option Plan (the “terminated plans”), and provided that if any shares subject to an award previously granted under the terminated plans are forfeited, expire or otherwise
terminate without issuance or any award is settled for cash or otherwise does not result in the issuance of all or a portion of such shares, such unissued shares shall again become available under the 1998 Plan. On July 1, 2007 and July 11, 2006, the number of shares available for issuance increased by approximately 1.7 million and 1.7 million shares, respectively. At June 30, 2009, a total of approximately 16.9 million shares of common stock were reserved for issuance upon the exercise
of outstanding stock options (including restricted stock units and awards) under the 1998 Plan and 6.1 million shares were available for future awards.
Directors’ Stock Option Plan.
The Directors’ Stock Option Plan (the “Director Plan”) was adopted by our board of directors and our stockholder in July 1998, and was amended by our board of directors in May 1999 and in
January 2002. The Compensation Committee of our board of directors administers the Director Plan. Upon a non-employee director’s election or appointment to the board, he or she will automatically receive a non-statutory stock option to purchase 40,000 shares of common stock. Each non-employee director who has been a director for at least six months will automatically receive a non-statutory stock option to purchase 10,000 shares of common stock each year on the date of the annual stockholder meeting. All
stock options are granted at an exercise price equal to the fair market value of our common stock on the date of grant. Options expire ten years from the date of grant. Prior to January 2002, initial stock option grants vested over a 50-month period with 24% of the total shares vesting on the first anniversary of the grant date and 2% of the total shares vesting each month thereafter over a 38-month period; annual stock option grants vested over a 50-month period, with 2% of the total shares each month. The vesting
schedule for both the initial and annual stock option grants were adjusted, effective immediately in January 2002, such that, initial stock option grants vest over a 36-month period with approximately 2.78% of the total shares vesting each month; annual grants are fully vested on the date of grant. The change to the vesting schedule of the initial grant was designed to align the vesting period with the three-year period for which a director holds office. The change to the vesting schedule of the annual grant
was designed to increase the independence of the board of directors by not making compensation contingent upon continued service. In February 2002, the board of directors adjusted the vesting schedule of all outstanding options under the Director Plan to be consistent with these new vesting schedules. Vested options granted under the Director Plan generally may be exercised for three months after termination of the director’s service to us, except in the case of death or disability, in which case the options
generally may be exercised up to six months following the date of death or termination of service. The number of shares subject to any award, the exercise price and the number of shares issuable under this plan are subject to adjustments in the event of a change relating to our capital structure.
In connection with the amendment and restatement of the 1998 Plan in 2007, we terminated the Directors’ Stock Option Plan, although it remains in place with respect to outstanding awards. As of June 30, 2009, a total of 440,000 shares of common stock were reserved for awards outstanding under the Directors’ Plan, and no shares
were available for future awards.
Employee Stock Purchase Plan.
The Employee Stock Purchase Plan was adopted by our board of directors and approved by our sole stockholder in May 1998, and was amended by our board of directors in August 1998 and May 1999, with the approval of
our stockholders in October 1999, as amended in January 2000 and September 2005 by our board of directors. In August 2007 our board of directors adopted the Amended and Restated Employee Stock Purchase Plan (the “Purchase Plan”), which was approved by stock holders in December 2007. The Compensation Committee of our board of directors administers the Purchase Plan. The purpose of the Purchase Plan is to provide our employees who participate in the Purchase Plan with an opportunity to purchase our
common stock through payroll deductions. Under this Purchase Plan eligible employees may purchase stock at 85% of the lower of the fair market value of the common stock (a) on the date of commencement of the offering period or (b) the applicable exercise date within such offering period. A 6 month offering period commences every six months, generally at May 1 and November 1 of each year. For offering periods that commenced prior to September 2005, the offering period was a 24-month period
divided into four 6-month periods. Purchases are limited to ten percent of each employee’s eligible compensation. The number of shares subject to any award, the exercise price and the number of shares issuable under this plan are subject to adjustments in the event of a change relating to our capital structure.
The number of shares that may be issued under the Purchase Plan for awards made after its amendment and restatement in 2007 is approximately 1.5 million. At June 30, 2009, 2.9 million shares had been issued under the Purchase Plan and 0.7 million shares were reserved for future issuance.
2002 Non-Qualified Stock Option Plan.
Our board of directors adopted the 2002 Non-Qualified Stock Option Plan (the “2002 Plan”) in April 2002. The Compensation Committee of our board of directors administers the 2002 Plan. The 2002
Plan authorizes the issuance of 1,000,000 shares of non-qualified stock options to employees and consultants. Stock options are granted at an exercise price of not less than the fair value on the date of grant. In July 2005, the board of directors amended the award documents for the stock options granted under the 2002 Plan. Options awarded prior to July 2005 expire ten years from the date of grant unless expiration occurs earlier in connection with termination of employment. Stock option grants awarded prior
to July 2005 generally vest over a 50-month period with 2% of the total shares vesting each month. In July 2005, the term and vesting schedule for both the initial and annual stock option grants were adjusted, effective immediately. Beginning in July 2005, options expire seven years from the date of grant unless expiration occurs earlier in connection with termination of employment. Under the new vesting schedule, initial stock option grants vest over a 36-month period with one-third of the total shares vesting
on the first anniversary of the date of grant and approximately 2.78% of the total shares vesting each month thereafter over the remaining 24-month period. Annual stock option grants vest over a 36-month period from the date of grant with approximately 2.78% of the total shares vesting each month. Vested options granted under the 2002 Plan generally may be exercised for three months after termination of the optionee’s service to us, except for options granted to executives or in the case of death or disability,
in which case the vested options generally may be exercised up to 12 months following the date of death or termination of service. The number of shares subject to any award, the exercise price and the number of shares issuable under this plan are subject to adjustments in the event of a change relating to our capital structure. To date, the 2002 Plan has been primarily used for annual grants to employees.
In connection with the amendment and restatement of the 1998 Plan in 2007, we terminated the 2002 Plan, although it remains in place with respect to outstanding awards. At June 30, 2009, and no shares were available for future awards under the 2002 Plan.
Supplemental Stock Purchase Plan.
The Supplemental Stock Purchase Plan (the “Supplemental Purchase Plan”), formerly known as the Non-U.S. Purchase Plan, was adopted by our board of directors in July 1998 and amended by the board
in May 1999 and October 2005. The Compensation Committee of our board of directors administers the Supplemental Plan. The purpose of the Supplemental Purchase Plan is to provide our employees and consultants who do not provide services in the United States and who participate in the Supplemental Purchase Plan with an opportunity to purchase our common stock through periodic contributions at the same discount and subject to the same general rules as the Purchase Plan. The Supplemental Purchase Plan, like the Purchase
Plan, has 6-month offering periods commencing every six months, generally at May 1 and October 1 and each offering period is divided into four six-month exercise periods. For offering periods that commenced prior to October 2005, the offering period was a 24-month period divided into four 6-month periods. The number of shares subject to any award, the exercise price and the number of shares issuable under this plan are subject to adjustments in the event of a change relating to our capital structure.
The maximum number of shares reserved under the Supplemental Plan is 60,000. At June 30, 2009, 37,945 shares have been issued under the Supplemental Purchase Plan and 22,055 shares were reserved for future issuance.
As of June 30, 2009, total shares reserved for future awards under all plans were 6.8 million shares.
Activity under our Stock Option Plans is summarized as follows:
|
|
Number of
Shares
|
|
|
Weighted
Average
Exercise Price
|
|
|
Weighted
Average
Remaining
Contractual
Life
|
|
|
Aggregate
Intrinsic
Value
(in thousands)
|
|
Outstanding at July 1, 2008
|
|
|
13,662,661
|
|
|
$
|
6.90
|
|
|
|
4.47
|
|
|
$
|
1,353
|
|
Options granted
|
|
|
2,817,585
|
|
|
$
|
2.64
|
|
|
|
|
|
|
|
|
|
Options exercised
|
|
|
(209,341
|
)
|
|
$
|
2.27
|
|
|
|
|
|
|
|
|
|
Options forfeited
|
|
|
(1,456,796
|
)
|
|
$
|
4.86
|
|
|
|
|
|
|
|
|
|
Options expired
|
|
|
(3,090,703
|
)
|
|
$
|
7.91
|
|
|
|
|
|
|
|
|
|
Outstanding at June 30, 2009
|
|
|
11,723,406
|
|
|
$
|
5.95
|
|
|
|
4.06
|
|
|
$
|
1,875
|
|
Exercisable at June 30, 2009
|
|
|
9,225,815
|
|
|
$
|
6.59
|
|
|
|
3.51
|
|
|
$
|
541
|
|
The weighted average grant date fair value of options granted in 2009 was $1.23.
Aggregate intrinsic value represents the excess of our closing stock price on the last trading day of the period over the exercise price multiplied by the number of options outstanding or exercisable. The intrinsic value of options exercised represents the excess of our closing stock price on the exercise date over the exercise price
multiplied by the number of options exercised. Total intrinsic value of options at time of exercise was $0.2 million, $1.2 million and $0.2 million for 2009, 2008 and 2007, respectively.
Non-vested share activity under our Stock Options Plans for the year ended June 30, 2009 is summarized as follows:
|
|
Non-vested
Number of
Shares
|
|
|
Weighted Average
Grant-Date
Fair Value
|
|
Non-vested balance at July 1, 2008
|
|
|
22,500
|
|
|
$
|
4.79
|
|
Vested
|
|
|
(22,500
|
)
|
|
$
|
4.79
|
|
Cancelled
|
|
|
—
|
|
|
|
—
|
|
Non-vested balance at June 30, 2009
|
|
|
—
|
|
|
$
|
—
|
|
As of June 30, 2009, $14,204 of total unrecognized compensation costs related to non-vested awards was recognized during the year. The fair value of shares vested during fiscal 2009 was $80,203.
Grant Date Fair Values
.
The weighted-average fair value has been estimated at the date of grant using a Black-Scholes option-pricing model. For stock options, we estimated volatility
by considering both the implied volatility derived from publicly traded options to purchase our common stock and historical stock volatility. As a result of the adjustment to our term and vesting schedule in July 2005 for stock options awarded under our 1998 and 2002 Plans, we do not believe that we are able to rely on our historical exercise and post-vested termination activity to provide relevant data for estimating our expected term for use in determining the fair value of these options. Therefore, we have
opted to use the simplified method for estimating our expected term equal to the midpoint between the vesting period and the contractual term.
The following are significant weighted average assumptions used for estimating the fair value of the activity under our stock option plans:
|
|
Employee Stock Options
Year Ended June 30,
|
|
|
Employee Stock Purchase Plan
Year Ended June 30,
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
2009
|
|
|
2008
|
|
|
2007(1)
|
|
Expected life (in years)
|
|
|
4.20
|
|
|
|
4.20
|
|
|
|
4.20
|
|
|
|
0.50
|
|
|
|
0.70
|
|
|
|
—
|
|
Risk-free interest rate
|
|
|
2.19
|
%
|
|
|
3.61
|
%
|
|
|
4.82
|
%
|
|
|
0.74
|
%
|
|
|
3.6
|
%
|
|
|
—
|
|
Expected volatility
|
|
|
0.57
|
|
|
|
0.51
|
|
|
|
0.63
|
|
|
|
0.78
|
|
|
|
0.40
|
|
|
|
—
|
|
Dividend yield
|
|
|
0.00
|
%
|
|
|
0.00
|
%
|
|
|
0.00
|
%
|
|
|
0.00
|
%
|
|
|
0.00
|
%
|
|
|
—
|
|
Grant date fair value
|
|
$
|
1.23
|
|
|
$
|
2.85
|
|
|
$
|
3.70
|
|
|
$
|
1.18
|
|
|
$
|
3.87
|
|
|
|
—
|
|
(1)
|
There were no employee stock purchases made in fiscal 2007.
|
Income before income taxes and the provision for taxes consisted of the following (in thousands):
|
|
Years Ended June 30,
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
United States
|
|
$
|
13,371
|
|
|
$
|
(7,400
|
)
|
|
$
|
2,644
|
|
Foreign
|
|
$
|
5,081
|
|
|
$
|
6,156
|
|
|
$
|
9,190
|
|
Total income before taxes
|
|
$
|
18,452
|
|
|
$
|
(1,244
|
)
|
|
$
|
11,834
|
|
The provision for income taxes consists of the following (in thousands):
|
|
Years Ended June 30,
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
Federal:
|
|
|
|
|
|
|
|
|
|
Current
|
|
$
|
4,622
|
|
|
$
|
886
|
|
|
$
|
284
|
|
Deferred
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
$
|
4,622
|
|
|
$
|
886
|
|
|
$
|
284
|
|
State:
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
525
|
|
|
|
(260
|
)
|
|
|
70
|
|
Deferred
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
525
|
|
|
|
(260
|
)
|
|
|
70
|
|
Foreign:
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
2,382
|
|
|
|
3,185
|
|
|
|
2,997
|
|
Deferred
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
2,382
|
|
|
|
3,185
|
|
|
|
2,997
|
|
Total provision for income taxes
|
|
$
|
7,529
|
|
|
$
|
3,811
|
|
|
$
|
3,351
|
|
The provision for income taxes differs from the amount estimated by applying the statutory federal income tax rate to income before taxes as follows (in thousands):
|
|
Years Ended June 30,
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
Federal tax at statutory rate
|
|
$
|
6,458
|
|
|
$
|
(435
|
)
|
|
$
|
4,142
|
|
State income taxes
|
|
|
918
|
|
|
|
59
|
|
|
|
70
|
|
Stock-based compensation
|
|
|
239
|
|
|
|
385
|
|
|
|
473
|
|
Foreign rate differential
|
|
|
—
|
|
|
|
—
|
|
|
|
(52
|
)
|
Research tax credits
|
|
|
(824
|
)
|
|
|
584
|
|
|
|
(409
|
)
|
Changes in valuation allowance
|
|
|
1,063
|
|
|
|
2,403
|
|
|
|
(1,088
|
)
|
Foreign losses not benefited
|
|
|
117
|
|
|
|
152
|
|
|
|
—
|
|
Uncertain tax positions
|
|
|
(155
|
)
|
|
|
402
|
|
|
|
—
|
|
Other
|
|
|
(287
|
)
|
|
|
261
|
|
|
|
215
|
|
Total provision for income taxes
|
|
$
|
7,529
|
|
|
$
|
3,811
|
|
|
$
|
3,351
|
|
The components of the net deferred income tax asset are as follows (in thousands):
|
|
Years Ended June 30,
|
|
|
|
2009
|
|
|
2008
|
|
Cumulative temporary differences:
|
|
|
|
|
|
|
Depreciation and amortization related items
|
|
$
|
1,015
|
|
|
$
|
855
|
|
Accrued expenses
|
|
|
800
|
|
|
|
842
|
|
Stock-based compensation
|
|
|
9,176
|
|
|
|
7,399
|
|
Deferred revenue
|
|
|
777
|
|
|
|
471
|
|
Capital loss and tax loss carry forward
|
|
|
9,331
|
|
|
|
960
|
|
Tax credit carry forward
|
|
|
5,413
|
|
|
|
878
|
|
Other, net
|
|
|
1,578
|
|
|
|
250
|
|
Total deferred income tax asset
|
|
|
28,090
|
|
|
|
11,655
|
|
Valuation allowance
|
|
|
(28,090
|
)
|
|
|
(11,655
|
)
|
Net deferred income tax asset
|
|
$
|
—
|
|
|
$
|
—
|
|
Based on the available objective evidence, management believes it is more likely than not that the net deferred tax assets will not be fully realizable. Accordingly, we have provided a full valuation allowance against our net deferred tax assets at June 30, 2009 and June 30 2008. In fiscal 2009, the valuation allowance
increased by $16.4 million.
There are federal research credit carryforwards of approximately $4.6 million that will start to expire beginning 2020 through 2029, if not utilized. We also have state research tax credit carryforwards of approximately $7.8 million at June 30, 2009 that have no expiration date. Federal foreign tax credit carry forwards also exist
of approximately $6.5 million, which expire beginning in 2016 through 2019, if not utilized. We also have federal AMT credit carry forwards of approximately $0.6 million at June 30, 2009 that has no expiration date.
As of June 30, 2009, as a result of disposition of ABG, the Company had net operating loss of carryforwards of approximately $14.7 million for federal income tax reporting purposes and approximately $67.6 million for state income tax reporting purposes, which expires beginning in 2018 through 2029, if not utilized.
Utilization of federal and state tax credits may be subject to substantial limitation due to the ownership changes provided by the Internal Revenue Code and similar state provisions. The annual limitation may result in expiration of tax credits before utilization.
Current U.S. income taxes have been provided for undistributed earnings of our non-U.S. subsidiaries because of certain provisions of the U.S. Internal Revenue Code. However, these earnings are generally considered to be indefinitely reinvested, and accordingly, no provision for foreign withholding taxes has been
provided thereon. Upon any distribution of these earnings, we may be subject to foreign withholding taxes associated with these earnings for which foreign tax credits may be available. Determination of the potential foreign tax credits is not practicable because of the complexity of this hypothetical calculation.
We adopted the provisions of FIN 48 on July 1, 2007. The cumulative effect of adopting FIN 48 on July 1, 2007 is recognized as a change in accounting principle, recorded as an adjustment to the opening balance of accumulated deficit on the adoption date. As a result of the implementation of FIN 48, we recognized a decrease
of approximately $0.3 million in the liability for unrecognized tax benefits related to tax positions taken in prior periods, which resulted in a decrease of $0.3 million in accumulated deficit. The total amount of gross unrecognized tax benefits was $3.7 million as of July 1, 2007 (the date of adoption of FIN 48), $4.9 million as of June 30, 2008 (excluding the gross unrecognized tax benefits from discontinued operations) and $3.8 million as of June 30, 2009. Also, the total amount of unrecognized
tax benefits that, if recognized, would affect the effective tax rate was $0.8 million, and $0.6 million as of June 30, 2008, and June 30, 2009, respectively. A reconciliation of the beginning and ending balances of the total amounts of unrecognized tax are as follows (in thousands, prior year reconciliation has been restated to exclude discontinued operations for comparative purpose):
Balance at July 1, 2007
|
|
$
|
3,749
|
|
Gross increases related to tax positions for current year
|
|
|
62
|
|
Gross increases related to tax positions for prior year
|
|
|
1,179
|
|
Gross decreases related to tax positions for prior year
|
|
|
(123
|
)
|
Balance at June 30, 2008
|
|
$
|
4,867
|
|
Gross increases related to tax positions for current year
|
|
|
—
|
|
Gross increases related to tax positions for prior year
|
|
|
291
|
|
Gross decreases related to tax positions for prior year
|
|
|
(1,286
|
)
|
Gross decreases related to lapsing of the statute of limitations
|
|
|
(30
|
)
|
Balance at June 30, 2009
|
|
$
|
3,842
|
|
We recognize interest and penalties related to uncertain tax positions as a component of provision for income taxes. Accrued interest and penalties relating to the income tax on the unrecognized tax benefits was approximately $0.2 million and $0.3 million as of June 30, 2008 and June 30, 2009, respectively.
Although we file U.S. federal, U.S. state, and foreign tax returns, our major tax jurisdiction is the United States. Our fiscal 2006 and subsequent tax years remain subject to examination by the IRS for U.S. federal tax purposes. The Company has determined that it is reasonably possible that the total amount of uncertain tax benefits
relating to certain foreign tax liabilities will change in the next 12 months due to various statute of limitations expiring. The amount of unrecognized tax benefits that could change is approximately $0.3 million.
Litigation
From time to time, we receive communications from third parties asserting patent or other rights allegedly covering our products and technologies. Based upon our evaluation, we may take no action or we may seek to obtain a license, redesign an accused product or technology, initiate a formal proceeding with the appropriate agency (e.g.,
the U.S. Patent and Trademark Office) and/or initiate litigation. There can be no assurance in any given case that a license will be available on terms we consider reasonable or that litigation can be avoided if we desire to do so. If litigation does ensue, the adverse third party will likely seek damages (potentially including treble damages) and may seek an injunction against the sale of our products that incorporate allegedly infringed intellectual property or against the operation of our business as presently
conducted, which could result in our having to stop the sale of some of our products or to increase the costs of selling some of our products. Such lawsuits could also damage our reputation. The award of damages, including material royalty payments, or the entry of an injunction against the sale of some or all of our products, could have a material adverse affect on us. Even if we were to initiate litigation, such action could be extremely expensive and time-consuming and could have a material adverse effect
on us. We cannot assure you that litigation related to our intellectual property rights or the intellectual property rights of others can always be avoided or successfully concluded.
Even if we were to prevail, any litigation could be costly and time-consuming and would divert the attention of our management and key personnel from our business operations, which could have a material adverse effect on us.
Note 16.
|
Operating and Geographic Segment Information
|
In the first quarter of fiscal 2008 following the acquisition of Chipidea, we organized into two business groups, the Processor Business Group and the Analog Business Group (ABG). As a result of the divestiture of the ABG, effective May 7, 2009, we operated in one reportable business group.
Our revenue by geographic area is as follows (in thousands):
|
|
Years Ended June 30,
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
United States .
|
|
$
|
32,046
|
|
|
$
|
38,063
|
|
|
$
|
39,296
|
|
Japan
|
|
|
11,020
|
|
|
|
12,519
|
|
|
|
14,117
|
|
Pacific Rim
|
|
|
14,029
|
|
|
|
10,477
|
|
|
|
7,091
|
|
Europe
|
|
|
7,685
|
|
|
|
7,490
|
|
|
|
7,219
|
|
Rest of World
|
|
|
5,413
|
|
|
|
7,028
|
|
|
|
15,587
|
|
Total revenue
|
|
$
|
70,193
|
|
|
$
|
75,577
|
|
|
$
|
83,310
|
|
As disclosed in Note 3, in 2009, 2008 and 2007, one customer accounted for 19%, 18%, and 14% of our revenue, respectively.
Accounts receivable from our largest customers accounted for the following percentages of accounts receivable at June 30:
|
|
2009
|
|
|
2008
|
|
Customer A
|
|
$
|
—
|
|
|
$
|
41
|
%
|
Customer B
|
|
|
46
|
%
|
|
|
26
|
%
|
Customer C
|
|
|
27
|
%
|
|
|
—
|
Our long-lived assets include tangible long-term assets. The following is a summary of our long-lived assets by geographic area (in thousands):
|
|
June 30,
|
|
|
|
2009
|
|
|
2008
|
|
United States
|
|
$
|
13,117
|
|
|
$
|
15,446
|
|
Japan
|
|
|
194
|
|
|
|
187
|
|
Pacific Rim
|
|
|
581
|
|
|
|
1,128
|
|
Europe
|
|
|
19
|
|
|
|
58
|
|
Rest of World
|
|
|
11
|
|
|
|
13
|
|
Total long lived assets
|
|
$
|
13,922
|
|
|
$
|
1
6,832
|
|
Item 9.
|
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
|
Not applicable.
Item 9A.
|
Controls and Procedures
|
(a)
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures to ensure that information we are required to disclose in reports that we file or submit under the Securities Exchange Act of 1934, as amended (“Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commissions
rules and forms. Our management evaluated, with the participation of our chief executive officer and our chief financial officer, the effectiveness of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) under the Exchange Act.
Based on our evaluation, our chief executive officer and our chief financial officer have concluded that our disclosure controls and procedures, at a reasonable assurance level, were effective as of June 30, 2009.
(b)
Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rule 13a-15(f) under the Exchange Act. Internal control over financial reporting refers to the process designed by, or under the supervision of, our Chief Executive Officer and Chief Financial Officer,
and effected by our Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles, and includes those policies and procedures that:
(1)
Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company;
(2)
Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance
with authorizations of management and directors of the Company; and
(3)
Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.
Internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Internal control over financial reporting cannot provide absolute assurance
of achieving financial reporting objectives because of its inherent limitations. Internal control over financial reporting is a process that involves human diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failures. Internal control over financial reporting also can be circumvented by collusion or improper management override. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. However,
these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design safeguards to reduce, though not eliminate, this risk. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework set forth in “Internal Control — Integrated Framework”
issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on our evaluation under the framework set forth in “Internal Control — Integrated Framework,” our management concluded that our internal control over financial reporting was effective as of June 30, 2009.
The effectiveness of internal control over financial reporting as of June 30, 2009, has been audited by Ernst & Young LLP, an independent registered public accounting firm, as stated in their report which is included below.
John E Bourgoin
|
Maury Austin
|
President and Chief Executive Office
r,
|
Vice President and Chief Financial Officer
,
|
MIPS Technologies, Inc.
|
MIPS Technologies, Inc.
|
(c)
Report of Independent Registered Public Accounting Firm
The Board of Directors and Stockholders
MIPS Technologies, Inc.
We have audited MIPS Technologies, Inc.’s internal control over financial reporting as of June 30, 2009, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). MIPS Technologies, Inc.’s management
is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included as Management’s Report on Internal Control over Financial Reporting in Item 9A(b) above. Our responsibility is to express an opinion on the company’s internal control over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included
obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial
reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations
of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies
or procedures may deteriorate.
In our opinion, MIPS Technologies, Inc. maintained, in all material respects, effective internal control over financial reporting as of June 30, 2009, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of MIPS Technologies, Inc. as of June 30, 2009 and 2008, and the related consolidated statements of operations, stockholders’ equity, and cash flows for each of the three years in
the period ended June 30, 2009 of MIPS Technologies, Inc. and our report dated September 14, 2009 expressed an unqualified opinion thereon.
Palo Alto, California
September 14, 2009
(d)
Remediation of a Material Weakness Identified in Prior Year
In June 2007, during preparation of the fiscal 2006 consolidated financial statements, our management identified as of June 30, 2006 a material weakness pertaining to controls relating to the process of accounting for income taxes. While management commenced executing on the remediation plan for this material weakness in late June
2007, the plan was in progress as of June 30, 2008, primarily due to employee turnover during fiscal 2008 and challenges in recruiting and retaining personnel with adequate experience and skills in application of complex tax rules and related accounting. Our remediation plan included: a) reduction in the turnover of internal and external tax professionals, b) consideration and implementation of additional review of tax provision and reconciliations by qualified personnel experienced in application of tax
rules and regulations and accounting for income taxes, and c) consultation with tax experts in a timely manner. We completed the implementation of the controls included in this remediation plan during fiscal 2009.
(e)
Changes in Internal Control over Financial Reporting
Except for the changes implemented to remediate the material weakness relative to the process of accounting for income taxes, there were no significant changes in our internal control over the financial reporting that occurred during the fourth quarter of fiscal 2009 that have materially affected, or are reasonably likely to materially
affect, our internal control over financial reporting.
Item 9B.
|
Other Information
|
None.
PART III
Item 10.
|
Directors, and Executive Officers and Corporate Governance.
|
Information concerning our directors is incorporated by reference to the information in the section entitled “Proposal No. 1—Election of Directors” in our Proxy Statement for the 2009 Annual Meeting of Stockholders to be filed with the Commission within 120 days after the end of our fiscal year ended June 30,
2009.
Information concerning our executive officers is in Item 4A of this Annual Report on Form 10-K.
Information concerning compliance with Section 16(a) of the Securities Exchange Act of 1934, as amended, is incorporated by reference to information in the section entitled “Section 16(a) Beneficial Ownership Reporting Compliance” in our Proxy Statement for the 2009 Annual Meeting of Stockholders to be filed with the
Commission within 120 days after the end of our fiscal year ended June 30, 2009.
We have adopted a code of business conduct that applies to all of our directors, officers and employees and a code of ethics that applies to our chief executive officer, chief financial officer, and controller. A copy of this code is located on the Company’s website at
www.mips.com
.
Item 11.
|
Executive Compensation
|
Information regarding executive compensation is incorporated by reference to the information in the section entitled “Executive Compensation” in our Proxy Statement for the 2009 Annual Meeting of Stockholders to be filed with the Commission within 120 days after the end of our fiscal year ended June 30, 2009.
Item 12.
|
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
|
Information regarding security ownership of certain beneficial owners and management is incorporated by reference to the information in the section entitled “Security Ownership of Certain Beneficial Owners and Management” in our Proxy Statement for the 2009 Annual Meeting of Stockholders to be filed with the Commission within
120 days after the end of our fiscal year ended June 30, 2009.
Equity Compensation Plan Information
We maintain the 1998 Long-Term Incentive Plan, as Amended and Restated, Directors’ Stock Option Plan, and Employee Stock Purchase Plan, all of which were approved by our stockholders, and the 2002 Non-Qualified Stock Option Plan and the Supplemental Stock Purchase Plan, neither of which was subject to stockholder approval. The
features of these plans are described in Note 14 of our Notes to Consolidated Financial Statements. In connection with the adoption of the 1998 Long-Term Incentive Plan, as Amended and Restated in 2007, we terminated the Directors’ Stock Option Plan and the 2002 Non-Qualified Stock Option Plan, except with respect to awards remaining outstanding under those plans. The following table presents information about these plans as of June 30, 2009.
|
|
(a)
|
|
|
(b)
|
|
|
(c)
|
|
Plan Category
|
|
Number of securities
to be issued upon
exercise of
outstanding options,
warrants and rights (1)
|
|
|
Weighted-average
exercise price of
outstanding
options, warrants
and rights
|
|
|
Number of securities
remaining available
for future issuance
under equity
compensation plans
(excluding securities
reflected in column (a))
|
|
Equity compensation plans approved by security holders
|
|
|
11,198,716
|
|
|
|
5.94
|
|
|
|
6,804,637
|
(2)
|
Equity compensation plans not approved by security holders
|
|
|
524,690
|
|
|
|
5.95
|
|
|
|
22,055
|
(3)
|
Total
|
|
|
11,723,406
|
|
|
|
|
|
|
|
6,826,692
|
|
(1)
|
Excludes purchase rights currently accruing under the Employee Stock Purchase Plan and the Supplemental Stock Purchase Plan.
|
(2)
|
These shares include 6,132,506 shares that remain available under the 1998 Long-Term Incentive Plan, as Amended and Restated and 672,131 shares that remain available under the Employee Stock Purchase Plan. The shares available under the 1998 Long-Term Incentive Plan, as Amended and Restated, may be issued as stock-based awards including incentive and non-statutory stock options, stock appreciation rights,
restricted stock, stock units, bonus stock and other stock related awards.
|
(3)
|
These shares remain available under the Supplemental Stock Purchase Plan.
|
Item 13.
|
Certain Relationships and Related Transactions, and Director Independence.
|
Information regarding certain relationships and related transactions is incorporated by reference to the information in the section entitled “Certain Relationships and Related Transactions, and Director Independence” in our Proxy Statement for the 2009 Annual Meeting of Stockholders to be filed with the Commission within
120 days after the end of our fiscal year ended June 30, 2009.
Item 14.
|
Principal Accountant Fees and Services.
|
Information regarding principal accountant fees and services is incorporated by reference to the information in the section entitled “Fees Paid to the Independent Registered Public Accounting Firm” in our Proxy Statement for the 2009 Annual Meeting of Stockholders to be filed with the Commission within 120 days after the
end of our fiscal year ended June 30, 2009.
PART IV
Item 15.
|
Exhibits and Financial Statement Schedules
|
|
(a)
|
The following documents are filed as a part of this Report:
|
|
1.
|
Financial Statements. The following consolidated financial statements and supplementary information and Report of Independent Auditors are included in Part II of this Report:
|
|
2.
|
Financial Statement Schedule:
|
SCHEDULE II—VALUATION AND QUALIFYING ACCOUNTS
(In Thousands)
|
|
Balance at
Beginning of
Year
|
|
|
Additions
Charged
(Credited)
to Expenses
|
|
|
Net
Deductions
(Recoveries)
|
|
|
Balance at
End of Year
|
|
Allowance for doubtful receivables for the year ended June 30,
|
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
$
|
—
|
|
|
$
|
4
|
|
|
$
|
—
|
|
|
$
|
4
|
|
2008
|
|
$
|
4
|
|
|
$
|
142
|
|
|
$
|
(4
|
)
|
|
$
|
142
|
|
2009
|
|
$
|
142
|
|
|
$
|
19
|
|
|
$
|
(161
|
)
|
|
$
|
—
|
|
Valuation allowance for deferred tax assets for the year ended June 30,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal 2007
|
|
$
|
10,882
|
|
|
$
|
—
|
|
|
$
|
2,866
|
|
|
$
|
8,016
|
|
Fiscal 2008
|
|
$
|
8,016
|
|
|
$
|
3,639
|
|
|
$
|
—
|
|
|
$
|
11,655
|
|
Fiscal 2009
|
|
$
|
11,655
|
|
|
$
|
16,435
|
|
|
$
|
—
|
|
|
$
|
28,090
|
|
Deductions represent uncollectible accounts written off, net of recoveries.
|
3.
|
Exhibits. The following Exhibits are filed as part of, or incorporated by reference into, this Report:
|
Exhibit No.
|
List of Exhibits
|
|
|
2.1
|
Share Purchase Agreement, dated as of August 24, 2007, by and among the Registrant, Atlantic Acqco, Limitada, the shareholders of Chipidea—Microelectrónica S.A. and Espírito Santo Ventures—Sociedade De Capital De Risco, SA, as the Shareholders’ Representative (incorporated herein by reference to Exhibit
2.1 to the Company’s Form 8-K filed on August 24, 2007).
|
|
|
2.2
|
Membership Interest Purchase Agreement, dated May 7, 2009 by and between Synopsys, Inc. and MIPS Technology, Inc. (incorporated hereby by reference to Exhibit 10.1 to the Company’ Current Report on Form 8-K filed on May 11, 2009)
|
|
|
3.1
|
Certificate of Incorporation (incorporated herein by reference to Exhibit 3.1 to the Company’s Form 8-K filed on November 14, 2003).
|
|
|
3.2
|
Amended and Restated By-Laws (incorporated herein by reference to Exhibit 3.01 to the Company’s Form 8-K filed on December 20, 2007).
|
|
|
4.1
|
Amended and Restated Preferred Stock Rights Agreement, as amended (incorporated herein by reference to Exhibit 10.11.3 to the Company’s Form 8-A12G/A filed on November 18, 2003).
|
Exhibit No.
|
List of Exhibits
|
|
|
10.1
|
The Amended and Restated Separation Agreement between the Company and Silicon Graphics, Inc. (incorporated herein by reference to Exhibit 10.1 to the Company’s Annual Report on Form 10-K for the year ended June 30, 1999).
|
|
|
10.2
|
The Corporate Agreement between the Company and Silicon Graphics, Inc. (incorporated herein by reference to Exhibit 10.2 to the Registration Statement on Form S-1, Registration No. 333-73071 (the “Registration Statement”)).
|
|
|
10.3
|
The Management Services Agreement between the Company and Silicon Graphics, Inc. (incorporated herein by reference to Exhibit 10.3 to the Registration Statement).
|
|
|
10.4
|
The Tax Sharing Agreement between the Company and Silicon Graphics, Inc. (incorporated herein by reference to Exhibit 10.4 to the Registration Statement).
|
|
|
10.5
|
The Technology Agreement between the Company and Silicon Graphics, Inc. (incorporated herein by reference to Exhibit 10.5 to the Registration Statement).
|
|
|
10.6
|
The Trademark Agreement between the Company and Silicon Graphics, Inc. (incorporated herein by reference to Exhibit 10.6 to the Registration Statement).
|
|
|
10.7*
|
The 1998 Long-Term Incentive Plan, as amended (incorporated herein by reference to Exhibit 10.8 to the Company’s Annual Report on Form 10-K for the year ended June 30, 2004).
|
|
|
10.8*
|
The Employee Stock Purchase Plan, as amended (incorporated herein by reference to Exhibit 4.03 to the Company’s Current Report on Form 8-K filed on January 11, 2008).
|
|
|
10.9*
|
Directors’ Stock Option Plan, as amended (incorporated herein by reference to Exhibit 10.10 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2002).
|
|
|
10.10
|
The Tax Indemnification Agreement between the Company and Silicon Graphics (incorporated herein by reference to Exhibit 10.11 to the Company’s Annual Report on Form 10-K for the year ended June 30, 2000).
|
|
|
10.11*
|
Nonqualified Deferred Compensation Plan (incorporated herein by reference to Exhibit 10.12 to the Company’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2000).
|
|
|
10.12*
|
2002 Non-Qualified Stock Option Plan (incorporated herein by reference to Exhibit 4.1 to the Company’s Form S-8 filed with the Commission on April 29, 2002).
|
|
|
10.13*
|
Form of Award Document, as amended for Stock Option Grant to Director/Officer under the 1998 Long-Term Incentive Plan comprised of Stock Option Agreement and Notice of Stock Option Grant (incorporated herein by reference to Exhibit 99.02 to the Company’s Current Report on Form 8-K filed on December 6, 2007).
|
|
|
10.14*
|
Form of Award Document, as amended for Stock Option Grant to Employee under the 1998 Long-Term Incentive Plan comprised of Stock Option Agreement and Notice of Stock Option Grant (incorporated herein by reference to Exhibit 99.03 to the Company’s Current Report on Form 8-K filed on December 6, 2007).
|
|
|
10.15*
|
Form of Award Document for Restricted Stock Purchase Agreement under the 1998 Long-Term Incentive Plan (incorporated herein by reference to Exhibit 10.18 to the Company’s Annual Report on Form 10-K for the year ended June 30, 2004).
|
Exhibit No.
|
List of Exhibits
|
|
|
10.16*
|
Form of Award Document for Director Stock Option Agreement (Initial Grant) under the Directors’ Stock Option Plan (incorporated herein by reference to Exhibit 10.19 to the Company’s Annual Report on Form 10-K for the year ended June 30, 2004).
|
|
|
10.17*
|
Form of Award Document for Director Stock Option Agreement (Renewal Grant) under the Directors’ Stock Option Plan (incorporated herein by reference to Exhibit 10.20 to the Company’s Annual Report on Form 10-K for the year ended June 30, 2004).
|
|
|
10.18*
|
Form of Award Document, as amended for Stock Option Grant to International Employee under the 1998 Long-Term Incentive Plan comprised of Stock Option Agreement and Notice of Stock Option Grant (incorporated herein by reference to Exhibit 99.4 to the Company’s Current Report on Form 8-K filed on August 3, 2005).
|
|
|
10.19
|
Form of Indemnity Agreement (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on January 31, 2005).
|
|
|
10.20*
|
Separation Agreement between Russ Bell and the Company (incorporated herein by reference to Exhibit 99.02 to the Company’s Current Report on Form 8-K filed on November 22, 2005)
|
|
|
10.21*
|
Separation Agreement between Kevin C. Eichler and the Company (incorporated hereby by reference to Exhibit 99.01 to the Company’s Current Report on Form 8-K filed on January 4, 2006).
|
|
|
10.22*
|
Separation Agreement between Catherine Hunt Rundle and the Company (incorporated hereby by reference to Exhibit 10.24 to the Company’s Annual Report on Form 10-K filed on September 13, 2007).
|
|
|
10.23
|
Revolving Credit Agreement, dated as of August 24, 2007, by and among MIPS Technologies, Inc., the various financial institutions party thereto, and Jefferies Finance LLC, as Administrative Agent, sole bookrunner, sole lead arranger, sole syndication agent and sole underwriter (incorporated hereby by reference to Exhibit 10.01 to the Company’s
Current Report on Form 8-K filed on August 24, 2007).
|
|
|
10.24
|
Security Agreement, dated as of August 24, 2007, by and among MIPS Technologies, Inc., MIPS Technologies Holding LLC, MIPS Technologies International AG, and each other Subsidiary of MIPS Technologies, Inc. as may from time to time become a party hereto in favor of Jefferies Finance LLC, as Collateral Agent for the Secured Parties (incorporated
hereby by reference to Exhibit 10.02 to the Company’s Current Report on Form 8-K filed on August 24, 2007).
|
|
|
10.25*
|
Performance-Based Bonus Plan for Executives (incorporated hereby by reference to Exhibit 99.01 to the Company’s Current Report on Form 8-K filed on October 10, 2007).
|
|
|
10.26*
|
Special Bonus Plan Letter Agreement (incorporated hereby by reference to Exhibit 99.02 to the Company’s Current Report on Form 8-K filed on October 10, 2007).
|
|
|
10.27*
|
Change in Control Agreement (incorporated hereby by reference to Exhibit 99.03 to the Company’s Current Report on Form 8-K filed on October 10, 2007).
|
|
|
10.28
|
Use and Construction Rights Agreement between Tagusparque - Sociedade de Promocão e Desenvolvimento do Parque de Ciên e Tecnologia da Area de Lisboa ("Tagusparque") to Banco Comercial Português, S.A. (BCP), dated November 5, 2004 (described in Section 1.2.1 of the Summary of Documents filed as Exhibit 10.31 to the Company’s
Quarterly Report on Form 10-Q filed on September 30, 2007).
|
|
|
10.29
|
Financial real estate lease agreement dated November 5, 2004, and Addendum thereto dated May 4, 2007, between BCP and Chipidea (described in Sections 1.2.2 and 1.2.3 of the Summary of Documents filed as Exhibit 10.31 to the Company’s Quarterly Report on Form 10-Q filed on September 30, 2007).
|
Exhibit No.
|
List of Exhibits
|
|
|
10.30
|
Promissory sale and purchase agreement and acknowledge of initial payment dated June 12, 2006, and Addendum thereto dated March 16, 2007, between Chpidea and Fundimo—Sociedade Gestora de Fudos de Investimento Imobiliario, S.A. (Fundimo) (described in Sections 1.2.4 and 1.2.5 of the Summary of Documents filed as Exhibit 10.31 to
the Company’s Quarterly Report on Form 10-Q filed on September 30, 2007).
|
|
|
10.31
|
Promissory real estate lease agreement dated July 12, 2006 between Chipidea and Fundimo (described in Section 1.2.6 of the Summary of Documents filed as Exhibit 10.31 to the Company’s Quarterly Report on Form 10-Q filed on September 30, 2007).
|
|
|
10.32*
|
Offer Letter, dated November 15, 2007 from the registrant to Stuart J. Nichols (incorporated hereby by reference to Exhibit 99.02 to the Company’s Current Report on Form 8-K filed on November 19, 2007).
|
|
|
10.33*
|
Offer Letter, dated December 12, 2007 from the registrant to John E. Derrick (incorporated hereby by reference to Exhibit 99.02 to the Company’s Current Report on Form 8-K filed on January 1, 2008).
|
|
|
10.34
|
Amendment No. 1, dated as of February 22, 2008, to the Credit Agreement, dated as of August 24, 2007, among the Registrant and various financial institutions, as the Lenders, and Jefferies Finance LLC, as Sole Lead Arranger, Sole Bookrunner, Collateral Agent, Administrative Agent, Sole Syndication Agent and Sole Underwriter (incorporated hereby
by reference to Exhibit 99.01 to the Company’s Current Report on Form 8-K filed on February 15, 2008)
|
|
|
10.35*
|
Offer Letter, dated March 6, 2008 from the registrant to Maury Austin (incorporated hereby by reference to Exhibit 99.02 to the Company’s Current Report on Form 8-K filed on March 18, 2008).
|
|
|
10.36
|
Loan and Security Agreement, dated as of July 3, 2008, by and among Silicon Valley Bank and the Registrant (incorporated hereby by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on July 8, 2008)
|
|
|
10.37
|
Amendment No. 1, dated as of February 22, 2008, to the Credit Agreement, dated as of August 24, 2007, among the Registrant and various financial institutions, as the Lenders, and Jefferies Finance LLC, as Sole Lead Arranger, Sole Bookrunner, Collateral Agent, Administrative Agent, Sole Syndication Agent and Sole Underwriter (incorporated
hereby by reference to Exhibit 99.01 to the Company’s Current Report on Form 8-K filed on February 15, 2008)
|
|
|
10.38*
|
Memorandum defining special compensation paid to Maury Austin, CFO (incorporated hereby by reference to Exhibit 110.2 to the Company’s Quarterly Report on Form 10-Q filed on November 10, 2008)
|
|
|
10.39
|
Amendment No. 1 to Loan and Security Agreement with Silicon Valley Bank (incorporated hereby by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed on February 6, 2009)
|
|
|
10.40*
|
Amendment to Change in Control Agreement (incorporated hereby by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed on February 6, 2009)
|
|
|
10.41
|
Industrial Lease dated February 27, 2009 (incorporated hereby by reference to Exhibit 99.01 to the Company’s Current Report on Form 8-K filed on March 4, 2009)
|
|
|
10.42
|
Amendment No. 2 to Loan and Security Agreement and Consent, dated May 7, 2009, by and among MIPS Technologies, Inc., Silicon Valley Bank and MIPS Technologies Holding LLC (incorporated hereby by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on May 13, 2009)
|
|
|
10.43*
|
Form of Stock Unit Award Agreement (incorporated hereby by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on August 18, 2009)
|
|
|
21.1
|
Subsidiaries of the Registrant.
|
|
|
23.1
|
Consent of Independent Registered Public Accounting Firm.
|
|
|
31.1
|
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
|
31.2
|
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
|
32.1
|
Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
|
32.2
|
Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
*
|
Management contract or compensatory plan or arrangement required to be filed as an exhibit to this Annual Report on Form 10-K pursuant to Item 15(b) of said form.
|
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.
|
|
MIPS Technologies, Inc.
|
|
By:
|
/s/ J
OHN
E. B
OURGOIN
|
|
|
John E. Bourgoin
|
|
|
President and Chief Executive Officer
.
|
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
|
|
|
Signature
|
Title
|
Date
|
/s/ JOHN E. BOURGOIN
|
|
|
John E. Bourgoin
|
Chief Executive Officer and Director (Principal Executive Officer)
|
September 14, 2009
|
|
|
|
/s/ MAURY AUSTIN
|
|
|
Maury Austin
|
Vice President and Chief Financial
Officer (Principal Financial
and Accounting Officer)
|
September 14, 2009
|
/s/ KENNETH L. COLEMAN
|
|
|
Kenneth L. Coleman
|
Director
|
September 14, 2009
|
|
|
|
/s/ FRED M. GIBBONS
|
|
|
Fred M. Gibbons
|
Director
|
September 14, 2009
|
|
|
|
/s/ ROBERT R. HERB
|
|
|
Robert R. Herb
|
Director
|
September 14, 2009
|
|
|
|
/s/ ANTHONY B. HOLBROOK
|
|
|
Anthony B. Holbrook
|
Director and Chairman of the Board
|
September 14, 2009
|
|
|
|
/s/ WILLIAM M. KELLY
|
|
|
William M. Kelly
|
Director
|
September 14, 2009
|
|
|
|
/s/ ROBIN L. WASHINGTON
|
|
|
Robin L. Washington
|
Director
|
September 14, 2009
|
EXHIBIT INDEX
|
|
Exhibit No.
|
Index of Exhibits
|
|
|
2.1
|
Share Purchase Agreement, dated as of August 24, 2007, by and among the Registrant, Atlantic Acqco, Limitada, the shareholders of Chipidea—Microelectrónica S.A. and Espírito Santo Ventures—Sociedade De Capital De Risco, SA, as the Shareholders’ Representative (incorporated herein by reference to Exhibit
2.1 to the Company’s Form 8-K filed on August 24, 2007).
|
|
|
2.2
|
Membership Interest Purchase Agreement, dated May 7, 2009 by and between Synopsys, Inc. and MIPS Technology, Inc. (incorporated hereby by reference to Exhibit 10.1 to the Company’ Current Report on Form 8-K filed on May 11, 2009)
|
|
|
3.1
|
Certificate of Incorporation (incorporated herein by reference to Exhibit 3.1 to the Company’s Form 8-K filed on November 14, 2003).
|
|
|
3.2
|
Amended and Restated By-Laws (incorporated herein by reference to Exhibit 3.01 to the Company’s Form 8-K filed on December 20, 2007).
|
|
|
4.1
|
Amended and Restated Preferred Stock Rights Agreement, as amended (incorporated herein by reference to Exhibit 10.11.3 to the Company’s Form 8-A12G/A filed on November 18, 2003).
|
|
|
Exhibit No.
|
Index of Exhibits
|
|
|
10.1
|
The Amended and Restated Separation Agreement between the Company and Silicon Graphics, Inc. (incorporated herein by reference to Exhibit 10.1 to the Company’s Annual Report on Form 10-K for the year ended June 30, 1999).
|
|
|
10.2
|
The Corporate Agreement between the Company and Silicon Graphics, Inc. (incorporated herein by reference to Exhibit 10.2 to the Registration Statement on Form S-1, Registration No. 333-73071 (the “Registration Statement”)).
|
|
|
10.3
|
The Management Services Agreement between the Company and Silicon Graphics, Inc. (incorporated herein by reference to Exhibit 10.3 to the Registration Statement).
|
|
|
10.4
|
The Tax Sharing Agreement between the Company and Silicon Graphics, Inc. (incorporated herein by reference to Exhibit 10.4 to the Registration Statement).
|
|
|
10.5
|
The Technology Agreement between the Company and Silicon Graphics, Inc. (incorporated herein by reference to Exhibit 10.5 to the Registration Statement).
|
|
|
10.6
|
The Trademark Agreement between the Company and Silicon Graphics, Inc. (incorporated herein by reference to Exhibit 10.6 to the Registration Statement).
|
|
|
10.7*
|
The 1998 Long-Term Incentive Plan, as amended (incorporated herein by reference to Exhibit 10.8 to the Company’s Annual Report on Form 10-K for the year ended June 30, 2004).
|
|
|
10.8*
|
The Employee Stock Purchase Plan, as amended (incorporated herein by reference to Exhibit 4.03 to the Company’s Current Report on Form 8-K filed on January 11, 2008).
|
|
|
10.9*
|
Directors’ Stock Option Plan, as amended (incorporated herein by reference to Exhibit 10.10 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2002).
|
|
|
10.10
|
The Tax Indemnification Agreement between the Company and Silicon Graphics (incorporated herein by reference to Exhibit 10.11 to the Company’s Annual Report on Form 10-K for the year ended June 30, 2000).
|
|
|
10.11*
|
Nonqualified Deferred Compensation Plan (incorporated herein by reference to Exhibit 10.12 to the Company’s Quarterly Report on Form 10-Q for the quarter ended December 31, 2000).
|
|
|
10.12*
|
2002 Non-Qualified Stock Option Plan (incorporated herein by reference to Exhibit 4.1 to the Company’s Form S-8 filed with the Commission on April 29, 2002).
|
|
|
10.13*
|
Form of Award Document, as amended for Stock Option Grant to Director/Officer under the 1998 Long-Term Incentive Plan comprised of Stock Option Agreement and Notice of Stock Option Grant (incorporated herein by reference to Exhibit 99.02 to the Company’s Current Report on Form 8-K filed on December 6, 2007).
|
|
|
10.14*
|
Form of Award Document, as amended for Stock Option Grant to Employee under the 1998 Long-Term Incentive Plan comprised of Stock Option Agreement and Notice of Stock Option Grant (incorporated herein by reference to Exhibit 99.03 to the Company’s Current Report on Form 8-K filed on December 6, 2007).
|
|
|
10.15*
|
Form of Award Document for Restricted Stock Purchase Agreement under the 1998 Long-Term Incentive Plan (incorporated herein by reference to Exhibit 10.18 to the Company’s Annual Report on Form 10-K for the year ended June 30, 2004).
|
|
|
Exhibit No.
|
Index of Exhibits
|
|
|
10.16*
|
Form of Award Document for Director Stock Option Agreement (Initial Grant) under the Directors’ Stock Option Plan (incorporated herein by reference to Exhibit 10.19 to the Company’s Annual Report on Form 10-K for the year ended June 30, 2004).
|
|
|
10.17*
|
Form of Award Document for Director Stock Option Agreement (Renewal Grant) under the Directors’ Stock Option Plan (incorporated herein by reference to Exhibit 10.20 to the Company’s Annual Report on Form 10-K for the year ended June 30, 2004).
|
|
|
10.18*
|
Form of Award Document, as amended for Stock Option Grant to International Employee under the 1998 Long-Term Incentive Plan comprised of Stock Option Agreement and Notice of Stock Option Grant (incorporated herein by reference to Exhibit 99.4 to the Company’s Current Report on Form 8-K filed on August 3, 2005).
|
|
|
10.19
|
Form of Indemnity Agreement (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on January 31, 2005).
|
|
|
10.20*
|
Separation Agreement between Russ Bell and the Company (incorporated herein by reference to Exhibit 99.02 to the Company’s Current Report on Form 8-K filed on November 22, 2005)
|
|
|
10.21*
|
Separation Agreement between Kevin C. Eichler and the Company (incorporated hereby by reference to Exhibit 99.01 to the Company’s Current Report on Form 8-K filed on January 4, 2006).
|
|
|
10.22*
|
Separation Agreement between Catherine Hunt Rundle and the Company (incorporated hereby by reference to Exhibit 10.24 to the Company’s Annual Report on Form 10-K filed on September 13, 2007).
|
|
|
10.23
|
Revolving Credit Agreement, dated as of August 24, 2007, by and among MIPS Technologies, Inc., the various financial institutions party thereto, and Jefferies Finance LLC, as Administrative Agent, sole bookrunner, sole lead arranger, sole syndication agent and sole underwriter (incorporated hereby by reference to Exhibit 10.01 to the Company’s
Current Report on Form 8-K filed on August 24, 2007).
|
|
|
10.24
|
Security Agreement, dated as of August 24, 2007, by and among MIPS Technologies, Inc., MIPS Technologies Holding LLC, MIPS Technologies International AG, and each other Subsidiary of MIPS Technologies, Inc. as may from time to time become a party hereto in favor of Jefferies Finance LLC, as Collateral Agent for the Secured Parties (incorporated
hereby by reference to Exhibit 10.02 to the Company’s Current Report on Form 8-K filed on August 24, 2007).
|
|
|
10.25*
|
Performance-Based Bonus Plan for Executives (incorporated hereby by reference to Exhibit 99.01 to the Company’s Current Report on Form 8-K filed on October 10, 2007).
|
|
|
10.26*
|
Special Bonus Plan Letter Agreement (incorporated hereby by reference to Exhibit 99.02 to the Company’s Current Report on Form 8-K filed on October 10, 2007).
|
|
|
10.27*
|
Change in Control Agreement (incorporated hereby by reference to Exhibit 99.03 to the Company’s Current Report on Form 8-K filed on October 10, 2007).
|
|
|
10.28
|
Use and Construction Rights Agreement between Tagusparque - Sociedade de Promocão e Desenvolvimento do Parque de Ciên e Tecnologia da Area de Lisboa ("Tagusparque") to Banco Comercial Português, S.A. (BCP), dated November 5, 2004 (described in Section 1.2.1 of the Summary of Documents filed as Exhibit 10.31 to the Company’s
Quarterly Report on Form 10-Q filed on September 30, 2007).
|
|
|
10.29
|
Financial real estate lease agreement dated November 5, 2004, and Addendum thereto dated May 4, 2007, between BCP and Chipidea (described in Sections 1.2.2 and 1.2.3 of the Summary of Documents filed as Exhibit 10.31 to the Company’s Quarterly Report on Form 10-Q filed on September 30, 2007).
|
|
|
Exhibit No.
|
Index of Exhibits
|
|
|
10.30
|
Promissory sale and purchase agreement and acknowledge of initial payment dated June 12, 2006, and Addendum thereto dated March 16, 2007, between Chpidea and Fundimo—Sociedade Gestora de Fudos de Investimento Imobiliario, S.A. (Fundimo) (described in Sections 1.2.4 and 1.2.5 of the Summary of Documents filed as Exhibit 10.31 to
the Company’s Quarterly Report on Form 10-Q filed on September 30, 2007).
|
|
|
10.31
|
Promissory real estate lease agreement dated July 12, 2006 between Chipidea and Fundimo (described in Section 1.2.6 of the Summary of Documents filed as Exhibit 10.31 to the Company’s Quarterly Report on Form 10-Q filed on September 30, 2007).
|
|
|
10.32*
|
Offer Letter, dated November 15, 2007 from the registrant to Stuart J. Nichols (incorporated hereby by reference to Exhibit 99.02 to the Company’s Current Report on Form 8-K filed on November 19, 2007).
|
|
|
10.33*
|
Offer Letter, dated December 12, 2007 from the registrant to John E. Derrick (incorporated hereby by reference to Exhibit 99.02 to the Company’s Current Report on Form 8-K filed on January 1, 2008).
|
|
|
10.34
|
Amendment No. 1, dated as of February 22, 2008, to the Credit Agreement, dated as of August 24, 2007, among the Registrant and various financial institutions, as the Lenders, and Jefferies Finance LLC, as Sole Lead Arranger, Sole Bookrunner, Collateral Agent, Administrative Agent, Sole Syndication Agent and Sole Underwriter (incorporated hereby
by reference to Exhibit 99.01 to the Company’s Current Report on Form 8-K filed on February 15, 2008)
|
|
|
10.35*
|
Offer Letter, dated March 6, 2008 from the registrant to Maury Austin (incorporated hereby by reference to Exhibit 99.02 to the Company’s Current Report on Form 8-K filed on March 18, 2008).
|
|
|
10.36
|
Loan and Security Agreement, dated as of July 3, 2008, by and among Silicon Valley Bank and the Registrant (incorporated hereby by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on July 8, 2008)
|
|
|
10.37
|
Amendment No. 1, dated as of February 22, 2008, to the Credit Agreement, dated as of August 24, 2007, among the Registrant and various financial institutions, as the Lenders, and Jefferies Finance LLC, as Sole Lead Arranger, Sole Bookrunner, Collateral Agent, Administrative Agent, Sole Syndication Agent and Sole Underwriter (incorporated
hereby by reference to Exhibit 99.01 to the Company’s Current Report on Form 8-K filed on February 15, 2008)
|
|
|
10.38*
|
Memorandum defining special compensation paid to Maury Austin, CFO (incorporated hereby by reference to Exhibit 110.2 to the Company’s Quarterly Report on Form 10-Q filed on November 10, 2008)
|
|
|
10.39
|
Amendment No. 1 to Loan and Security Agreement with Silicon Valley Bank (incorporated hereby by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed on February 6, 2009)
|
|
|
10.40*
|
Amendment to Change in Control Agreement (incorporated hereby by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed on February 6, 2009)
|
|
|
10.41
|
Industrial Lease dated February 27, 2009 (incorporated hereby by reference to Exhibit 99.01 to the Company’s Current Report on Form 8-K filed on March 4, 2009)
|
|
|
10.42
|
Amendment No. 2 to Loan and Security Agreement and Consent, dated May 7, 2009, by and among MIPS Technologies, Inc., Silicon Valley Bank and MIPS Technologies Holding LLC (incorporated hereby by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on May 13, 2009)
|
|
|
10.43*
|
Form of Stock Unit Award Agreement (incorporated hereby by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on August 18, 2009)
|
|
|
21.1
|
Subsidiaries of the Registrant.
|
|
|
23.1
|
Consent of Independent Registered Public Accounting Firm.
|
|
|
31.1
|
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
|
31.2
|
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
|
32.1
|
Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
|
32.2
|
Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
*
|
Management contract or compensatory plan or arrangement required to be filed as an exhibit to this Annual Report on Form 10-K pursuant to Item 15(b) of said form.
|