Revenue for the second quarter was $26.4 million, essentially flat compared with both the prior quarter revenue of $26.2 million and to the $26.5 million reported in the second fiscal quarter a year ago. The Q2 sequential revenue increase was driven by increased revenues from royalties offset by slightly lower license revenue.
Revenue from royalties was $13.0 million, an increase of $1.1 million or 9 percent from the prior quarter and $0.4 million or 3 percent from the $12.5 million reported in the second quarter a year ago. The sequential increase in royalty revenue was a result of higher licensee unit volumes compared with the prior quarter. Licensee units grew 13 percent sequentially to 126 million units and 18 percent on a year to year basis. Contract and license revenue was $13.4 million, a decrease of 7 percent from the $14.4 million reported in the prior quarter and a 4 percent decrease from the $13.9 million reported in the second quarter a year ago.
Total operating expense, excluding restructuring charges, declined $4.2 million to $15.1 million from $19.3 million in the previous quarter, mainly reflecting the cost control measures implemented earlier in the year.
The Company's fiscal Q2 2009 GAAP net income was $5.0 million or $0.11 per share on a diluted basis. This compares with a net loss of $7.0 million or $0.16 per basic and diluted share in the prior quarter and a net loss of $12.1 million or $0.28 per share in the second quarter a year ago. This marks the Company's first GAAP profitable quarter since the fourth quarter fiscal 2007.
Non-GAAP net income in the second 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 $8.5 million or $0.19 per diluted share. This represents a significant improvement when compared to the non-GAAP net income of $1.5 million or $0.03 per diluted share in the prior quarter and a net loss of $2.9 million or $0.07 per diluted share in the second 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 Q2 2009 ending cash balance was $20.5 million, an improvement of $4.3 million from the previous quarter including approximately a $0.6 million outflow related to the restructuring. Total outstanding debt was also reduced by $1.6 million to $16.5 million during the quarter.
"I am pleased with the results of our Processor Business; our cost controls, GAAP net income and positive cash flow, all of which contributed to the strengthening of our balance sheet during Q2," said John Bourgoin, president and CEO. "We are actively managing our costs worldwide to ensure the overall financial health of MIPS during these challenging economic times," added Bourgoin.
MIPS Technologies invites you to listen in a live conference call to management's discussion of Q2 fiscal 2009 results, as well as guidance for Q3 fiscal 2009. The conference call number is 210-839-8502 and the replay number is 203-369-0984. 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: http://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 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)
December 31, 2008 June 30, 2008
(unaudited)
Assets
Current assets:
Cash and cash equivalents $20,503 $13,938
Accounts receivable, net 9,808 14,462
Prepaid expenses and other current
assets 21,685 24,803
Total current assets 51,996 53,203
Equipment, furniture and property, net 12,707 16,307
Goodwill 30,852 40,624
Other assets 32,855 42,610
$128,410 $152,744
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $1,919 $3,441
Accrued liabilities 37,853 51,963
Debt - short term 6,770 18,641
Deferred revenue 3,807 4,283
Total current liabilities 50,349 78,328
Long-term liabilities
Debt - long term 9,688 -
Other long term liabilities 25,590 29,496
Total long term liabilities 35,278 29,496
Stockholders' equity 42,783 44,920
$128,410 $152,744
MIPS TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(unaudited)
Three Months Ended Six Months Ended
December 31, December 31,
2008 2007 2008 2007
Revenue:
Royalties $12,953 $12,515 $24,785 $23,035
Contract Revenue 13,446 13,935 27,831 25,568
Total revenue 26,399 26,450 52,616 48,603
Cost of Sales 5,792 9,379 13,436 12,703
Gross Margin 20,607 17,071 39,180 35,900
Operating expenses:
Research and development 6,797 9,493 14,146 18,506
Sales and marketing 4,354 6,153 9,399 11,739
General and administrative 3,993 7,869 10,949 14,878
Acquired in-process
research and development - 910 - 6,350
Restructuring 548 - 5,479 -
Total operating expenses 15,692 24,425 39,973 51,473
Operating income (loss) 4,915 (7,354) (793) (15,573)
Other income (expense), net (875) (1,220) (2,312) (727)
Income (loss) before income taxes 4,040 (8,574) (3,105) (16,300)
Provision for (benefit from)
income taxes (937) 3,511 (1,115) 2,816
Net income (loss) $4,977 $(12,085) $(1,990) $(19,116)
Net income (loss) per basic share $0.11 $(0.28) $(0.04) $(0.44)
Net income (loss) per diluted share $0.11 $(0.28) $(0.04) $(0.44)
Common shares outstanding-basic 44,586 43,902 44,460 43,834
Common shares outstanding-diluted 44,588 43,902 44,460 43,834
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
December 31, September 30, December 31,
2008 2008 2007
GAAP net income (loss) $4,977 $(6,967) $(12,085)
Net income (loss) per
basic share $0.11 $(0.16) $(0.28)
Net income (loss) per
diluted share $0.11 $(0.16) $(0.28)
(a) Equity-based compensation
expense under SFAS 123R $1,312 $1,161 $2,082
(b) Amortization of intangibles 855 1,515 2,232
(c) Acquisition related cost 979 1,545 2,138
(d) Integration cost - - 1,280
(e) Acquired in-process research
and development - - 910
(f) Restructuring 548 4,931 -
(g) Tax adjustment (157) (662) 551
Non-GAAP net income (loss) $8,514 $1,523 $(2,892)
Non-GAAP net income (loss)
per basic share $0.19 $0.03 $(0.07)
Non-GAAP net income (loss)
per diluted share $0.19 $0.03 $(0.07)
Common shares outstanding
- basic 44,586 44,334 43,903
Common shares outstanding
- diluted 44,588 44,952 43,903
