MIPS Technologies Reports Fourth Quarter and Fiscal 2008 Financial Results and Corporate Restructuring

MOUNTAIN VIEW, Calif., Aug. 13 /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 the quarter ended June 30, 2008, as well as a corporate restructuring. All financial results are reported in U.S. GAAP unless otherwise noted.

Revenue for the fourth quarter was $28.9 million, an increase of 6 percent over the prior quarter revenue of $27.3 million and an increase of 22 percent from the $23.7 million reported in the fourth fiscal quarter a year ago. Q4 revenue growth was driven primarily by increased processor license fees.

Contract and license revenue was $18.1 million, an increase of 22 percent from the $14.8 million reported in the prior quarter and an increase of 46 percent from the $12.4 million reported in the fourth quarter a year ago. This fourth quarter contract and license revenue increase was due to strong Processor Business Group licensing results partially offset by lower Analog Business Group license results. Revenue from royalties was $10.8 million, a decrease of $1.8 million or 14 percent from the prior quarter and $0.5 million or 4 percent from the $11.3 million reported in the fourth quarter a year ago. The reduction in royalty revenue was driven by a combination of lower volumes and the impact of reduced per-unit royalties attributable to certain customers reaching specified volume levels. The Company said that although royalties were seasonally lower and reflected some market softness, it expects royalty growth in the coming year in line with market projections in its major markets.

In connection with the completion of accounts for the fiscal year, the Company evaluated the intangible and goodwill assets recorded for the Chipidea acquisition and concluded that a significant reduction in value was required given the softening overall market for IP and delays experienced in realizing expected synergies. MIPS Technologies also concluded that several other impairments should be recorded with respect to other acquisitions and investments. Accordingly, fiscal Q4 operating expenses of $126.1 million included a $103.1 million impairment of goodwill and intangible assets, of which $101.4 million was associated with the Analog Business Group (Chipidea). Fiscal Q4 operating expenses excluding the impairment and restructuring charges increased $0.7 million.

In light of these charges, the Company's fiscal Q4 GAAP net loss was $108.5 million. Net loss per share on a basic and diluted basis in the fourth quarter of 2008 was $2.45. This compared with a net loss of $4.3 million or $0.10 per basic and diluted share in the prior quarter and a net income of $2.3 million or $0.05 per share in the fourth quarter a year ago.

Non-GAAP net income in the fourth quarter of fiscal 2008, which excludes the effect of equity based compensation expense, restructuring costs, certain costs related to the acquisition of Chipidea and the previously discussed impairments and investment write downs, was $1.3 million or $0.03 per diluted share, compared with a non-GAAP net income of $2.4 million or $0.05 per diluted share in the prior quarter and $4.0 million or $0.09 per diluted share in the fourth quarter a year ago. The tables below provide a reconciliation of non-GAAP measures used in this release to the corresponding GAAP results.

Revenue for the 2008 fiscal year increased to $104.8 million, an increase of 26 percent over the prior fiscal year revenue of $83.3 million, due primarily to the additional revenues associated with the Chipidea acquisition.

Additionally, MIPS Technologies announced today a broad restructuring of its business to better integrate its Analog Business Group and reduce its overall cost structure to enhance profitability and cash flow. During fiscal Q1 and Q2 2009, the Company expects to incur a restructuring charge of approximately $4.0 - $5.5 million. These costs include the effects of reductions in employees and facilities-related costs.

"Our fourth quarter results reflect both progress and continuing challenges," said John Bourgoin, president and CEO. "We had a good revenue quarter, reaching the upper end of our guidance and recording the highest quarterly revenues in the history of our company. But we believe the market continues to show signs of softness, and so we have taken decisive restructuring actions to resize the company in both of our business groups to enable the sustainable profitability and cash flows that investors expect from our combined IP businesses. These restructuring actions, along with the restructuring of our debt facility accomplished in the fourth quarter, will, when completed, reduce our quarterly spending by approximately $5 million. The write-down reflects current market realities, but our belief in the long term growth and strategic value of the Chipidea analog business remains strong."

MIPS Technologies invites you to listen to management's discussion of Q4 and fiscal 2008 results, as well as guidance for Q1 fiscal 2009 in a live conference call. The conference call number is 210-839-8502 and the replay number is 402-998-1520. The replay will be available for 30 days shortly following the end of the conference call. The password for both calls is MIPS. An audio replay of the conference call will be posted on the company's website at http://www.mips.com/company/investor-relations/ soon thereafter.

About MIPS Technologies, Inc.

MIPS Technologies, Inc. (NasdaqGS: MIPS) is the world's second largest semiconductor design IP company and the number one analog IP company worldwide. With more than 250 customers around the globe, MIPS Technologies is the only company that provides a combined portfolio of processors, analog IP and software tools for the embedded market. The company powers some of the world's most popular products for the digital entertainment, home networking, wireless, and portable media markets-including broadband devices from Linksys, DTVs and digital consumer devices from Sony, DVD recordable devices from Pioneer, digital set-top boxes from Motorola, network routers from Cisco, 32- bit microcontrollers from Microchip Technology and laser printers from Hewlett-Packard. Founded in 1998, MIPS Technologies is headquartered in Mountain View, California, with offices worldwide. For more information, contact (650) 567-5000 or visit http://www.mips.com.

Forward Looking Statements

This press release contains forward-looking statements; such statements are indicated by forward-looking language such as "plans", "anticipates", "expects", "will", and other words or phrases contemplating future activities including statements regarding MIPS Technologies' expectations regarding customers' use of MIPS' products. These forward-looking statements include MIPS' expectation regarding improvements in financial results. Actual events or results may differ materially from those anticipated in these forward- looking statements as a result of a number of different risks and uncertainties, including but not limited to: the fact that there can be no assurance that our products will achieve market acceptance, difficulties that may be encountered in the integration of the Chipidea business, changes in our research and development expenses, the anticipated benefits of our partnering relationships may be more difficult to achieve than expected, the timing of or delays in customer orders, delays in the design process, the length of MIPS Technologies' sales cycle, MIPS Technologies' ability to develop, introduce and market new products and product enhancements, and the level of demand for semiconductors and end-user products that incorporate semiconductors. For a further discussion of risk factors affecting our business, we refer you to the risk factors section in the documents we file from time to time with the Securities and Exchange Commission.



                           MIPS TECHNOLOGIES, INC.
                    CONDENSED CONSOLIDATED BALANCE SHEETS
                                (In thousands)

                                                 June 30, 2008   June 30, 2007
                                                                                      (unaudited)
                                              Assets
        Current  assets:
            Cash  and  cash  equivalents                                            $13,938                $119,039
            Short-term  investments                                                              -                    25,845
            Accounts  receivable,  net                                                14,462                      5,212
            Prepaid  expenses  and  other  current  assets              24,803                      2,472
                Total  current  assets                                                    53,203                  152,568
        Equipment,  furniture  and  property,  net                        16,307                      5,781
        Goodwill                                                                                    40,624                          565
        Other  assets                                                                            44,313                    15,948
                                                                                                        $154,447                $174,862
                    Liabilities  and  Stockholders'  Equity
        Current  liabilities:
            Accounts  payable                                                                $3,441                        $503
            Accrued  liabilities                                                          51,963                    16,118
            Debt  -  short  term                                                              18,641                              -
            Deferred  revenue                                                                  4,283                      2,633
                Total  current  liabilities                                          78,328                    19,254
        Long-term  liabilities                                                          31,199                      5,726
        Stockholders'  equity                                                            44,920                  149,882
                                                                                                        $154,447                $174,862



                                                      MIPS  TECHNOLOGIES,  INC.
                              CONDENSED  CONSOLIDATED  STATEMENTS  OF  OPERATIONS
                                        (In  thousands,  except  per  share  data)
                                                                  (unaudited)

                                                                      Three  Months  Ended            Twelve  Months  Ended
                                                                                June  30,                                  June  30,
                                                                      2008                  2007                  2008              2007
        Revenue:
            Royalties                                    $10,796            $11,294            $46,386        $44,422
            License  and  Contract
              Revenue  -  PBG                            10,172              12,386              29,984          38,888
            License  and  Contract
              Revenue  -  ABG                              7,899                        -              28,423                    -
                Total  revenue                          28,867              23,680            104,793          83,310
        Costs  and  expenses:
            Costs  of  contract  revenue      10,051                    402              32,161            1,663
            Research  and  development          8,656                8,884              36,478          33,068
            Sales  and  marketing                    6,599                6,939              24,394          22,255
            General  and  administrative      7,422                7,093              28,860          20,960
            Acquired  in-process
              research  and  development                -                        -                6,350                    -
            Impairment  of  goodwill  and
              acquired  intangible
              assets                                        103,107                        -            103,107                    -
            Restructuring                                    281                        -                1,559                    -
                Total  costs  and
                  expenses                                136,116              23,318            232,909          77,946
        Operating  income  (loss)          (107,249)                  362          (128,116)          5,364
        Other  income  (expense),
          net                                                    (2,594)              1,653              (4,081)          6,470
        Income  (loss)  before
          income  taxes                              (109,843)              2,015          (132,197)        11,834
        Provision  for  income
          taxes                                                (1,381)                (321)                (362)          3,351
        Net  income  (loss)                    $(108,462)            $2,336        $(131,835)        $8,483
        Net  income  (loss)  per
          basic  share                                    $(2.45)              $0.05              $(3.00)          $0.19
        Net  income  (loss)  per
          diluted  share                                $(2.45)              $0.05              $(3.00)          $0.18
        Common  shares
          outstanding-basic                        44,193              43,535              43,964          43,516
        Common  shares
          outstanding-diluted                    44,193              46,374              43,964          45,891



                                                      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
                                                                    June  30,  2008      March  31,  2008  June  30,  2007
                GAAP  net  income  (loss)              $(108,462)                $(4,257)            $2,336
                Net  income  (loss)per
                  basic  share                                        $(2.45)                  $(0.10)              $0.05
                Net  income  (loss)  per
                  diluted  share                                    $(2.45)                  $(0.10)              $0.05
        (a)  Equity-based  compensation
                  expense  under  SFAS  123R                $1,617                    $1,799              $1,619
        (b)  Amortization  of  intangibles            2,541                      2,438                        -
        (c)  Acquisition  related  cost                  2,052                      2,386                        -
        (d)  Integration  cost                                          -                          120                        -
        (e)  Impairment  of  goodwill
                  and  acquired  intangible
                  assets                                                103,107                              -                        -
        (f)  Restructuring                                            281                      1,279                        -
        (g)  Equity  Write-Down                                2,276                              -                        -
        (h)  Tax  adjustment                                    (2,092)                  (1,323)                      -
                Non-GAAP  net  income                          $1,320                    $2,442              $3,955
                Non-GAAP  net  income  per
                  basic  share                                          $0.03                      $0.06                $0.09
                Non-GAAP  net  income  per
                  diluted  share                                      $0.03                      $0.05                $0.09
                Common  shares  outstanding  -
                  basic                                                    44,193                    43,992              43,535
                Common  shares  outstanding  -
                  diluted                                                44,869                    44,620              46,374

 


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