Financial Results and Corporate Restructuring
MOUNTAIN VIEW, Calif. - August 13, 2008 - MIPS Technologies, Inc. (NasdaqGS: 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
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 www.mips.com/company/investor-relations/ soon thereafter.
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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.