MOUNTAIN VIEW, Calif., April 30 /PRNewswire-FirstCall/ -- MIPS Technologies, Inc. (NASDAQ: MIPS), a leading provider of industry-standard architectures, processors and analog IP for digital consumer, home networking, wireless, communications and business applications, today reported consolidated financial results for its third quarter fiscal 2009 ended March 31, 2009. All financial results are reported in U.S. GAAP unless otherwise noted.
Revenue for the third quarter was $22.7 million, a 14% decline compared with the prior quarter revenue of $26.4 million and a 17% decline from the $27.3 million reported in the third fiscal quarter a year ago. The Q3 sequential revenue decrease was anticipated and reflects the softness in the consumer electronics and semiconductor industry.
Revenue from royalties was $10.9 million, a decrease of $2.1 million or 16 percent from the prior quarter and $1.7 million or 13 percent from the $12.6 million reported in the third quarter a year ago. The sequential decrease in royalty revenue was a result of lower licensee unit volumes compared with the prior quarter and is consistent with lower consumer electronics spending. Licensee units declined 15 percent sequentially to 107 million units and also declined 7 percent on a year to year basis. Contract and license revenue was $11.8 million, a decrease of 12 percent from the $13.4 million reported in the prior quarter and a 20 percent decrease from the $14.8 million reported in the third quarter a year ago.
Total costs of sales and operating expense, excluding restructuring charges, increased $0.2 million to $21.1 million from $20.9 million in the previous quarter mainly reflecting the absence of certain one-time credits incurred in Q2 fiscal 2009.
The Company's fiscal Q3 2009 GAAP net loss was $0.8 million or $0.02 per share on a diluted basis. This compares with a net income of $5.0 million or $0.11 per basic and diluted share in the prior quarter and a net loss of $4.3 million or $0.10 per share in the third quarter a year ago.
Non-GAAP net income in the third quarter of fiscal 2009, which excludes the effect of equity based compensation expense, restructuring costs, and certain costs related to the acquisition of Chipidea, was $2.8 million or $0.06 per diluted share. This compares to the non-GAAP net income of $8.5 million or $0.19 per diluted share in the prior quarter and a net income of $2.4 million or $0.05 per diluted share in the third quarter a year ago. The tables below provide a reconciliation of non-GAAP measures reported in this release to the corresponding GAAP results.
The Company's Q3 2009 ending cash balance was $21.1 million, an improvement of $0.6 million and $5.9 million from the previous quarter and the period ending one year ago respectively. Included in the positive net cash inflows were certain net liability and debt repayments of $3.4 million and outflows related to restructurings of $1.1 million.
"Q3 marks the third quarter in a row of positive cash flow for MIPS as we continue strengthening our financial position despite a weakening market," said John Bourgoin, president and CEO. "MIPS is well positioned with an excellent and unique product line leveraging advanced multi-threading, multicore, and high performance single core products that are generating good profits," said Bourgoin.
MIPS Technologies invites you to listen in a live conference call to management's discussion of Q3 fiscal 2009 results, as well as guidance for Q4 fiscal 2009. The conference call number is 210-839-8502 and the replay number is 203-369-0164. The password for both calls is MIPS. The replay will be available for 30 days shortly following the end of the conference call. An audio replay of the conference call will also be posted on the company's website at: www.mips.com/company/investor-relations/.
About MIPS Technologies, Inc.
MIPS Technologies, Inc. (NasdaqGS: MIPS) is the world's second largest semiconductor design IP company and the number one analog IP company worldwide. With more than 250 customers around the globe, MIPS Technologies is the only company that provides a combined portfolio of processors, analog IP and software tools for the embedded market. The company powers some of the world's most popular products for the digital entertainment, home networking, wireless, and portable media markets--including broadband devices from Linksys, DTVs and digital consumer devices from Sony, DVD recordable devices from Pioneer, digital set-top boxes from Motorola, network routers from Cisco, 32-bit microcontrollers from Microchip Technology and laser printers from Hewlett-Packard. Founded in 1998, MIPS Technologies is headquartered in Mountain View, California, with offices worldwide. For more information, contact (650) 567-5000 or visit www.mips.com.
Forward Looking Statements
This press release contains forward-looking statements; such statements are indicated by forward-looking language such as "plans", "anticipates", "expects", "will", and other words or phrases contemplating future activities including statements regarding MIPS Technologies' expectations regarding customers' use of MIPS' products. These forward-looking statements include MIPS' expectation regarding improvements in financial results. Actual events or results may differ materially from those anticipated in these forward-looking statements as a result of a number of different risks and uncertainties, including but not limited to: the fact that there can be no assurance that our products will achieve market acceptance, difficulties that may be encountered in integrating the Chipidea business, changes in our research and development expenses, the anticipated benefits of our partnering relationships may be more difficult to achieve than expected, the timing of or delays in customer orders, delays in the design process, the length of MIPS Technologies' sales cycle, MIPS Technologies' ability to develop, introduce and market new products and product enhancements, and the level of demand for semiconductors and end-user products that incorporate semiconductors, in particular the level of demand in these markets during the recessionary period currently affecting global economies. For a further discussion of risk factors affecting our business, we refer you to the risk factors section in the documents we file from time to time with the Securities and Exchange Commission.
MIPS and MIPS-Based are trademarks or registered trademarks in the United States and other countries of MIPS Technologies, Inc. All other trademarks referred to herein are the property of their respective owners.
MIPS TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
March 31, 2009 June 30, 2008
(unaudited)
Assets
Current assets:
Cash and cash equivalents $21,064 $13,938
Accounts receivable, net 9,401 14,462
Prepaid expenses and other current assets 21,084 24,803
------ ------
Total current assets 51,549 53,203
Equipment, furniture and property, net 11,594 16,307
Goodwill 29,336 40,624
Other assets 29,533 42,610
------ ------
Total assets $122,012 $152,744
======== ========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $2,055 $3,441
Accrued liabilities 35,746 51,963
Debt - short term 6,587 18,641
Deferred revenue 4,079 4,283
----- -----
Total current liabilities 48,467 78,328
Long-term Liabilities:
Debt - long term 8,750 -
Other long term liabilities 23,209 29,496
------ ------
Total long term liabilities 31,959 29,496
Stockholders' equity 41,586 44,920
------ ------
Total liabilities and stockholders'
equity $122,012 $152,744
======== ========
MIPS TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(unaudited)
Three Months Ended Nine Months Ended
March 31, March 31,
2009 2008 2009 2008
---- ---- ---- ----
Revenue:
Royalties $10,901 $12,556 $35,686 $35,590
Contract Revenue 11,805 14,767 39,635 40,336
------ ------ ------ ------
Total Revenue 22,706 27,323 75,321 75,926
Cost of Sales 4,325 9,407 17,761 22,110
----- ----- ------ ------
Gross Margin 18,381 17,916 57,560 53,816
Operating expenses:
Research and development 7,809 9,315 21,955 27,821
Sales and marketing 4,211 6,056 13,610 17,796
General and administrative 4,744 6,559 15,693 21,437
Acquired in-process
research and development - - - 6,350
Restructuring 959 1,279 6,438 1,279
--- ----- ----- -----
Total Operating expenses 17,723 23,209 57,696 74,683
------ ------ ------ ------
Operating income (loss) 658 (5,293) (136) (20,867)
Other income (expense), net (1,142) (762) (3,455) (1,488)
------- ----- ------- -------
Loss before income taxes (484) (6,055) (3,591) (22,355)
Provision for (benefit from)
income taxes 323 (1,798) (792) 1,018
--- ------- ----- -----
Net loss $(807) $(4,257) $(2,799) $(23,373)
====== ======== ======== =========
Net loss per share,
basic and diluted $(0.02) $(0.10) $(0.06) $(0.53)
======= ======= ======= =======
Common shares outstanding,
basic and diluted 44,682 43,992 44,534 43,887
====== ====== ====== ======
MIPS TECHNOLOGIES, INC.
RECONCILIATION OF GAAP TO NON-GAAP NET INCOME and NET INCOME PER SHARE
(In thousands, except per share data)
(unaudited)
Three Months Three Months Three Months
Ended Ended Ended
March 31, December 31, March 31,
2009 2008 2008
-------------- ------------ --------------
GAAP net income (loss) $(807) $4,977 $(4,257)
Net income (loss) per
basic share $(0.02) $0.11 $(0.10)
======= ===== =======
Net income (loss) per
diluted share $(0.02) $0.11 $(0.10)
======= ===== =======
(a) Equity-based compensation
expense under SFAS 123R 1,085 1,312 $1,799
(b) Amortization of intangibles 847 855 2,438
(c) Acquisition related cost 948 979 2,386
(d) Integration cost - - 120
(e) Restructuring 959 548 1,279
(f) Tax adjustment (192) (157) (1,323)
Non-GAAP net income $2,840 $8,514 $2,442
====== ====== ======
Non-GAAP net income per
basic share $0.06 $0.19 $0.06
===== ===== =====
Non-GAAP net income per
diluted share $0.06 $0.19 $0.05
===== ===== =====
Common shares outstanding -
basic 44,682 44,586 43,992
====== ====== ======
Common shares outstanding -
diluted 44,719 44,588 44,620
====== ====== ======
These adjustments reconcile the Company's GAAP results of operations to the reported non-GAAP results of operations. The Company believes that presentation of net income and net income per share excluding equity-based compensation, amortization of intangible assets, acquired in-process research and development, integration and acquisition expenses in connection with the acquisition of Chipidea provides meaningful supplemental information to investors, as well as management that is indicative of the Company's ongoing operating results and facilitates comparison of operating results across reporting periods. The Company uses these non-GAAP measures when evaluating its financial results as well as for internal planning and budgeting purposes. These non-GAAP measures should not be viewed as a substitute for the Company's GAAP results, and may be different than non-GAAP measures used by other companies.
(a) This adjustment reflects the equity-based compensation expense related to SFAS No. 123 revised (SFAS 123R). For the third fiscal quarter ending March 31, 2009, $1.1 million of equity-based compensation was allocated as follows: $437,000 to research and development, $281,000 to sales and marketing and $367,000 to general and administrative. For the second fiscal quarter ending December 31, 2008, $1.3 million of equity-based compensation expense was allocated as follows: $463,000 to research and development, $398,000 to sales and marketing and $451,000 to general and administrative. For the third quarter of fiscal 2008 ending March 31, 2008, $1.8 million equity-based compensation expense was allocated as follows: $604,000 to research and development, $577,000 to sales and marketing and $618,000 to general and administrative. Management believes that it is useful to investors to understand how the expenses associated with the adoption of SFAS 123R are reflected in net income.
(b) This adjustment reflects the non-cash expense related to the amortization of intangibles acquired in connection with the acquisition of Chipidea included in operating expenses. For the third fiscal quarter ending March 31, 2009, $847,000 of amortization expense related to these intangible assets was allocated as follows: $786,000 to cost of sales, $7,000 to research and development and $54,000 to sales and marketing. For the second fiscal quarter ending December 31, 2008, $855,000 of amortization expense related to these intangible assets was allocated as follows: $794,000 to cost of sales, $7,000 to research and development and $54,000 to sales and marketing. For the third quarter of fiscal 2008 ending March 31, 2008, $2.4 million of amortization related to these intangible assets was allocated as follows: $2.3 million to cost of sales, $8,000 to research and development and $126,000 to sales and marketing. Management believes that excluding this charge facilitates comparisons to MIPS' ongoing operating results because the expense for the amortization of intangibles is not indicative of operational performance and the amount of such charges varies significantly based on the size and timing of our acquisitions and the maturity of the business being acquired.
(c) This adjustment reflects the amortization expense related to the amount held in escrow and payable to the founders of Chipidea in connection with the acquisition of Chipidea. For the third fiscal quarter ending March 31, 2009, $948,000 was expensed to research and development related to the escrow amount payable to the founders of Chipidea. For the second fiscal quarter ending December 31, 2008, $979,000 was expensed related to the escrow amount payable to the founders of Chipidea to research and development. For the third quarter of fiscal 2008 ending March 31, 2008, $1.7 million was expensed related to the escrow amount payable to the founders of Chipidea and was allocated as follows: $567,000 to general and administrative and $1.1 million to research and development. In addition, $686,000 was expensed to other expenses related to the amortization of loan origination fees.
(d) This adjustment reflects integration expense related to the acquisition of Chipidea recorded in accounting and legal expense under general and administrative.
(e) This adjustment reflects restructuring expense related to reduction in workforce and facilities exit costs.
(f) This adjustment reflects the net tax effect of the specific items presented in the non-GAAP adjustments described above.
MIPS TECHNOLOGIES, INC.
RECONCILIATION OF GAAP TO NON-GAAP NET INCOME and NET INCOME PER SHARE
(In thousands, except per share data)
(unaudited)
Nine Months Nine Months
Ended Ended
March 31, 2009 March 31, 2008
-------------- ---------------
GAAP net loss $(2,799) $(23,373)
Net loss per basic share, basic
and diluted $(0.06) $(0.53)
======= =======
(g) Equity-based compensation expense
under SFAS 123R $3,558 $6,272
(h) Amortization of intangibles 3,217 5,640
(i) Acquisition related cost 3,472 5,837
(j) Integration cost - 2,239
(k) Acquired in-process research and
development - 6,350
(l) Restructuring 6,438 1,279
(m) Tax adjustment (1,011) (1,390)
Non-GAAP net income $12,875 $2,854
======= ======
Non-GAAP net income per basic
share $0.29 $0.07
===== =====
Non-GAAP net income per diluted
share $0.29 $0.06
===== =====
Common shares outstanding - basic 44,534 43,887
====== ======
Common shares outstanding -
diluted 44,755 45,680
====== ======
These adjustments reconcile the Company's GAAP results of operations to the reported non-GAAP results of operations. The Company believes that presentation of net income and net income per share excluding equity-based compensation, amortization of intangible assets, acquired in-process research and development, integration and acquisition expenses in connection with the acquisition of Chipidea provides meaningful supplemental information to investors, as well as management that is indicative of the Company's ongoing operating results and facilitates comparison of operating results across reporting periods. The Company uses these non-GAAP measures when evaluating its financial results as well as for internal planning and budgeting purposes. These non-GAAP measures should not be viewed as a substitute for the Company's GAAP results, and may be different than non-GAAP measures used by other companies.
(g) This adjustment reflects the equity-based compensation expense related to the Company's adoption of SFAS No. 123 revised (SFAS 123R). For the nine months ending March 31, 2009, $3.6 million of equity-based compensation was allocated as follows: $1.1 million to research and development, $1.1 million to sales and marketing and $1.4 million to general and administrative. For the nine months ending March 31, 2008, $6.3 million equity-based compensation expense was allocated as follows: $2.3 million to research and development, $1.9 million to sales and marketing and $2.1 million to general and administrative. Management believes that it is useful to investors to understand how the expenses associated with the adoption of SFAS 123R are reflected in net income.
(h) This adjustment reflects the expense related to the amortization of intangibles acquired in connection with the acquisition of Chipidea included in operating expenses. For the nine months ending March 31, 2009, $3.2 million of amortization expense related to these intangible assets was allocated as follows: $3.0 million to cost of sales, $22,000 to research and development and $170,000 to sales and marketing. For the nine months ending March 31, 2008, $5.6 million of amortization expense related to these intangible assets was allocated as follows: $5.3 million to cost of sales, $17,000 to research and development and $291,000 to sales and marketing.
(i) This adjustment reflects the amortization expense related to the amount held in escrow and payable to the founders of Chipidea in connection with the acquisition of Chipidea. For the nine months ending March 31, 2009, this adjustment also reflects legal fees incurred in association with certain financing activities and amortization of loan origination fees. For the nine months ending March 31, 2009, $3.5 million was expensed related to the escrow amount payable to the founders of Chipidea and was allocated as follows: $0.4 million to general and administrative and $3.1 million to research and development. For the nine months ending March 31, 2008, $4.0 million was expensed related to the escrow amount payable to the founders of Chipidea and was allocated as follows: $1.3 million to general and administrative and $2.7 million to research and development. In addition, legal fees of $0.3 million were expensed to general and administrative related to certain financing activities and $1.5 million was expensed to other expenses related to the amortization of loan origination fees.
(j) This adjustment reflects integration expense related to the acquisition of Chipidea recorded in accounting and legal expense under general and administrative.
(k) This adjustment reflects acquired in-process research and development expense related to the acquisition of Chipidea.
(l) This adjustment reflects restructuring expense related to reduction in workforce and facilities exit costs.
(m) This adjustment reflects the non-GAAP tax adjustment due to the adjustments described above.
Web site: http://www.mips.com/