MIPS Technologies Reports Third Quarter Fiscal 2008 Financial Results

These adjustments reconcile the Company's GAAP results of operations to the reported non-GAAP results of operations. The Company believes that presentation of net income and net income per share excluding equity-based compensation, amortization of intangible assets, acquired in-process research and development, integration and acquisition expenses in connection with the acquisition of Chipidea provides meaningful supplemental information to investors, as well as management that is indicative of the Company's ongoing operating results and facilitates comparison of operating results across reporting periods. The Company uses these non-GAAP measures when evaluating its financial results as well as for internal planning and budgeting purposes. These non-GAAP measures should not be viewed as a substitute for the Company's GAAP results, and may be different than non-GAAP measures used by other companies.

    (h) This adjustment reflects the equity-based compensation expense related
        to the Company's adoption of SFAS No. 123 revised (SFAS 123R)
        beginning July 1, 2005. For the nine month ending March 31,
        2008, $6.3 million of equity-based compensation was allocated as
        follows: $2.3 million to research and development, $1.9 million to
        sales and marketing and $2.1 million to general and administrative.
        For the nine month ending March 31, 2007, $6.1 million equity-based
        compensation expense was allocated as follows:  $2.4 million to
        research and development, $1.8 million to sales and marketing and
        $1.9 million to general and administrative.  Management believes that
        it is useful to investors to understand how the expenses associated
        with the adoption of SFAS 123R are reflected in net income.

    (i) This adjustment reflects the expense related to the amortization of
        intangibles acquired in connection with the acquisition of Chipidea.
        For the nine month ending March 31, 2008, $5.6 million of amortization
        expense related to these intangible assets was allocated as follows:
        $5.3 million to cost of sales, $17,000 to research and development and
        $291,000 to sales and marketing.  Management believes that excluding
        this charge facilitates comparisons to MIPS' ongoing operating results
        because the expense for the amortization of intangibles is not
        indicative of operational performance and the amount of such charges
        varies significantly based on the size and timing of our acquisitions
        and the maturity of the business being acquired.

    (j) This adjustment reflects the amortization expense related to the
        amount held in escrow and payable to the founders of Chipidea in
        connection with the acquisition of Chipidea.  This adjustment also
        reflects legal fees incurred in association with certain financing
        activities and the amortization of loan origination fees. For the nine
        month ending March 31, 2008, $4.0 million was expensed related to the
        escrow amount payable to the founders of Chipidea and legal fees of
        $335,000 were expensed related to certain financing activities and
        $1.5 million was expensed related to the amortization of loan
        origination fees.  Management believes that excluding the unique
        charges for the Chipidea escrow payments and the fees associated with
        financing activities necessitated by the acquisition facilitates
        comparisons to MIPS' ongoing operating results during periods when
        there was no escrow amortization or financing activities and also
        facilitates investors' understanding of ongoing operating performance.

    (k) This adjustment reflects integration expense related to the
        acquisition of Chipidea recorded in accounting and legal expense.
        Management believes that the integration charges associated with the
        acquisition are elements of the acquisition process and that excluding
        this charge facilitates comparisons to MIPS' ongoing operating results
        during periods when there were no acquisitions and also facilitates
        investors' understanding of ongoing operating performance.

    (l) This adjustment reflects acquired in-process research and development
        expense related to the acquisition of Chipidea.  Management believes
        that excluding this acquisition related charge facilitates comparisons
        to MIPS' ongoing operating results during periods when there were no
        acquisitions involving in-process research and development and also
        facilitates investors' understanding of ongoing operating performance.

    (m) This adjustment reflects restructuring expense related to reduction in
        workforce and facilities exit costs.  Management believes that
        excluding this charge facilitates comparisons to MIPS' ongoing
        operating results during periods when there were no restructuring
        charges and also facilitates investors' understanding of ongoing
        operating performance.

    (n) This adjustment reflects the non-GAAP tax adjustment due to the
        adjustments described above.

Web site: http://www.mips.com/



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