MIPS Technologies Reports First Quarter Fiscal 2006 Financial Results

MIPS
Technologies, Inc. (Nasdaq: MIPS), today reported financial results for its
first fiscal quarter ended September 30, 2005. Revenue for the first quarter
of fiscal 2006 was down by 18 percent compared to the same period a year ago,
primarily as the result of delayed licensing decisions.
Total revenue for the first quarter of fiscal 2006 was $11.9 million
compared to $14.6 million for the same quarter a year ago. Royalties were
$8.1 million, an increase of 20 percent compared to $6.7 million in the same
quarter a year ago. Contract revenue was $3.9 million, a decrease of 51
percent compared to $7.9 million in the comparable period in fiscal 2005. Net
loss for the first quarter of fiscal 2006 on a generally accepted accounting
principles ("GAAP") basis was $3.9 million compared to a net income of $3.1
million for the same quarter a year ago. GAAP net loss per share for the first
quarter of fiscal 2006 was $0.09 compared to a net income per share of $0.07
on a fully diluted basis for the same quarter a year ago.
Beginning in the September 2005 quarter, the Company recognized equity-
based compensation expense pursuant to the fair value method under SFAS
123(R). This expense was $6.1 million in the first quarter of fiscal 2006.
First quarter of fiscal 2006 operating expense also included a one-time charge
of $570,000 for acquired in-process research and development expense related
to the acquisition of First Silicon Solutions (FS2) completed in September
2005. Non-GAAP net income for the first quarter of fiscal 2006, which
excludes the effects of these items, was $1.3 million or $0.03 per diluted
share compared to net income of $3.3 million or $0.08 per diluted shares for
the same quarter a year ago, for which period the non-GAAP number excludes
certain restructuring costs. A reconciliation of non-GAAP adjustments is
summarized in the tables below.
"The growth in our royalty revenue is encouraging as the MIPS architecture
continues to be the processor architecture of choice in key growth markets
such as digital consumer and networking," said Casey Eichler, chief financial
officer of MIPS Technologies. "We are disappointed however by the licensing
revenue realized in the first quarter and are taking actions to strengthen and
build up our pipeline of prospective licensees."
"Although our royalty growth indicates the resumption of a long term
upward trend in the shipments of MIPS-Based processors, we recognize a need to
take action to facilitate our return to licensing revenues at a level that
supports our long term growth plans," said John Bourgoin, president and CEO of
MIPS Technologies. "I'd like to emphasize that our engineering execution on
our next generation products during the quarter was excellent. This is one of
the keys to our long term growth, and it is on track. I'm also pleased with
the acquisition of First Silicon Solutions during the quarter which broadens
the MIPS offering and brings us a world class tools capability in support of
our customers."
MIPS Technologies invites you to listen to management's discussion of Q1
fiscal 2006 results and Q2 fiscal 2006 guidance in a live conference call on
October 20, 2005 beginning at 1:45 p.m. Pacific. Conference call number is 1-
719-457-2650. Replay number is 1-719-457-0820 and will be available for five
business days, beginning shortly after the end of the conference call. The
access code is 1764953.

Q1 FY2006 Highlights:
From its inception over 20 years ago, the MIPS(R) architecture has
represented innovation and performance. Today, MIPS Technologies and its
licensees continue to lead in system-performance and innovative solutions for
established and emerging markets. With multiple design teams actively
developing the architecture, hundreds of successful implementations throughout
the world, and a vibrant ecosystem of third-party tools and software-MIPS
continues to be at the core of the user experience.
Following are selected press release headlines from MIPS Technologies, and
the company's licensees, systems vendors and third party providers.

HDTV and DTV News

-- Zoran Powers Acer's New Families of Digital Terrestrial LCD Televisions
for Global Markets -- Powered by MIPS-Based(TM) SupraTV CPU
-- Toshiba Teams Up With Sigma on Linux Platform for Digital Multimedia
Appliances; Utilizes the MIPS-Based(TM) Toshiba TX4938 CPU and Sigma Decoder
-- Profilo Telra Integrates MIPS-Based(TM) ViXS Video Processor in its New
Wireless LCD Television
-- PLX, ViXS Develop First-Ever USB 2.0 Dual PC-TV Tuner Reference Design;
Leverages ViXS' MIPS-Based(TM) Xcode II-L MPEG encoder
-- Sigma Begins Sampling The Industry's First MIPS-Based(TM) Media
Processor With Dual High-Definition Decoding of H.264, VC-1 and MPEG-2
-- ATI Announces Highly Integrated Digital Television Solution for
Consumer Electronics Manufacturers
-- JVC Reaffirms ATI's Digital TV Technology Leadership; High-Definition
Displays Feature ATI's MIPS-Based(TM) Xilleon 226 and other Products

Media Server and Gateway News

-- Broadcom and Mediabolic Join Forces to Introduce MIPS-Based(TM) Turnkey
NAS Media Server Reference Design for Manufacturers
-- Pixelworks and AMD Collaborate on MIPS-Based(TM) Reference Platform
Enabling Broadband Video, Voice and Data on 'Triple-Play' Set-top Boxes
-- TI Highlights its Continued Success in the Residential Gateway Market;
TI's Industry-leading MIPS-Based(TM) AR7 is the Most Recognized DSL CPE
Solution Worldwide

Advanced DVD Player and Recorder News

-- WISchip Launches MIPS-Based(TM) Personal Video Recorder and IP Camera
Reference Designs

Set Top Box News

-- Zoran MIPS-Based(TM) SupraTV CPU Powers Homecast's New Family of
Satellite Set-top Box Models for Europe & Middle East
-- Microsoft and Sigma Designs Pave the Way for Low-Cost IPTV Devices;
MIPS-Based(TM) SoC Technology Stimulates High-Definition IPTV Services
-- Zoran MIPS-Based(TM) SupraTV CPU Powers Grundig's New Family of
Satellite and Terrestrial Set-top Box Products on display at IBC in Amsterdam
-- Micronas Introduces Complete Software Stack for Digital STB; Fully
integrated digital TV middleware for the MIPS-Based(TM) MDE 95xyD STB Chip
-- ViXS MIPS-Based(TM) WaveTV Reference Platform Offers Unique Multi-
Client Wireless Video Design for Television and Set-Top Box Manufacturers
-- SBC Communications Selects MIPS-Based(TM) Motorola and Scientific-
Atlanta as Set-Top Box Suppliers for SBC U-Verse TV
-- Broadcom Announces New Family of MIPS-Based(TM) High Definition
AVC/VC-1 Consumer Video Solutions at the CableLabs(R) Summer Conference

Broadband News

-- ZyXEL Broadens IP DSLAM Family With Wintegra MIPS-Based(TM) Processors
-- BroadLight's Newly Released BL2000 GPON System-on-Chip Incorporates
MIPS(R) Processor

Data Communications and Networking News

-- Cypress's network search engines to interoperate with Cavium Networks'
OCTEON EXP Multi-core MIPS64(R) processor family
-- Cavium Networks New MIPS-Based(TM) OCTEON(TM) EXP Processors: First
Multi-Gigabit Integration of Control and Data Plane Processing for Networking
& Storage Application
-- Corecess Chooses Wintegra for Next Generation IP-DSLAM Line Card; Will
Utilize MIPS-Based(TM) WinPath CPUs

VoIP News

-- Trinity Convergence to Port its VoIP Solution to the MIPS32(R) 24KE(TM)
Core Family
-- Broadcom's MIPS-Based(TM) VoIP Solutions Now Available in TCL
Communications Equipment VoIP Products
-- Infineon Achieves a 300 Percent Growth Rate in the VoIP Market in 2004;
Midas Communications Selects the Infineon MIPS-Based(TM) INCA-IP SoC for its
Broadband Solution
-- PMC-Sierra Announces the Availability of a MIPS-Based(TM) Carrier-Class
VoIP Wi-Fi Broadband Router Platform
-- NETGEAR Selects Centillium's MIPS-Based(TM) CPU to Speed
Next-Generation Consumer VoIP Platform to Market
-- Broadcom Recognized as the Fastest Growing Enterprise IP Phone Chip
Supplier, According to IDC; With More Than Three Million MIPS-Based(TM) IP
Phone Chips Shipped to Date

SOHO and Wireless News

-- Profilo Telra Integrates MIPS-Based(TM) ViXS Video Processor in its New
Wireless LCD Television
-- Atheros Communications and China Netcom Broadband to Enhance Broadband
User Experience in China; CNCBB to Feature MIPS-Based(TM) AR5006AP-G in New
Access Points & Routers

Corporate News

-- MIPS Technologies Expands Hard IP Core Family with High Performance
Cores for Budget-Conscious SoC Designers
-- MIPS Technologies Acquires First Silicon Solutions (FS2)
-- K-Micro is First MIPS Technologies Licensee with MIPS32(R) 24K(R)
Silicon
-- K-Micro Introduces MIPS32(R) 24Kf(TM) Core-Based Computing Subsystem
for SoCs
-- CoWare and MIPS Technologies Win OCP-IP Outstanding Contributor of the
Year Awards for 2005

Newly Announced Licenses

-- Opulan Licenses MIPS Technologies MIPS32(R) 4KEc(R) Core
-- Philips Licenses MIPS Technologies MIPS32(R) 4KEc(R) Core
-- Actions Semiconductor Licenses MIPS32(R) Cores for Portable Multimedia
Applications

Ecosystem News

-- MIPS Technologies and Virage Logic Expand Alliance to Provide SoC
Designers with Convenience of a Single License for MIPS(R) 32-Bit Cores and
Virage Logic IP
-- Express Logic and MIPS Technologies Bring ThreadX(R) RTOS Support to
the MIPS32(R) 24K(R) and 4KE(TM) Core Families
-- MontaVista Delivers "Real" Linux Alternative to Proprietary Embedded
Solutions
-- Denali Launches Blueprint, New Software for System-on-Chip Design
-- Accelerated Technology's Nucleus EDGE Embedded Development Environment
Supports MIPS Architecture

MIPS Technologies, Inc.
MIPS Technologies, Inc. is a leading provider of industry standard
processor architectures and cores for digital consumer and business
applications. The company drives the broadest architectural alliance that is
delivering 32- and 64-bit embedded RISC solutions. The company licenses its
intellectual property to semiconductor companies, ASIC developers, and system
OEMs. MIPS Technologies, Inc. and its licensees offer the widest range of
robust, scalable processors in standard, custom, semi-custom and application-
specific products. MIPS Technologies, Inc. is based in Mountain View,
California, and can be reached at 650-567-5000 or http://www.mips.com.

This press release contains forward-looking statements, including those
regarding MIPS Technologies' revenue expectations. Actual events or results
may differ materially from those anticipated in these forward looking
statements as a result of a number of different risk and uncertainties,
including but not limited to: our products may fail to achieve market
acceptance, 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 factor
affecting our business, we refer you to the documents we file from time to
time with the Securities and Exchange Commission, including our Annual Report
on Form 10-K for the year ended June 30, 2005 and subsequent Forms 10-Q and
8-K.

NOTE: MIPS, MIPS32, MIPS64, MIPS-Based, 4KE, 4KEc, 24K, 24Kf and 24KE are
trademarks or registered trademarks of MIPS Technologies, Inc. in the United
States and other countries. All other trademarks are the property of their
respective owners and are protected herein.


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

Three Months Ended
September 30,
2005 2004
(unaudited)
Revenue:

Royalties $8,054 $6,721

Contract Revenue 3,889 7,885

Total revenue 11,943 14,606

Costs and expenses:

Research and development 9,769 5,207

Sales and marketing 3,962 3,045

General and administrative 3,718 2,321

Acquired in-process research and development 570 --

Restructuring -- 277

Total costs and expenses 18,019 10,850

Operating income (loss) (6,076) 3,756

Other income, net 809 245

Income (loss) before income taxes (5,267) 4,001

Provision (benefit) for income taxes (1,406) 880

Net income (loss) $(3,861) $3,121

Net income (loss) per basic share $(0.09) $0.08

Net income (loss) per diluted share $(0.09) $0.07

Common shares outstanding-basic 42,382 40,695

Common shares outstanding-diluted 42,382 42,384


MIPS TECHNOLOGIES, INC.
RECONCILIATION OF NON-GAAP RESULTS OF OPERATIONS
(In thousands, except per share data)

Three Months Ended Three Months Ended
September 30, September 30,
2005 2004
(unaudited) (unaudited)
Non- Non-
GAAP GAAP
As Adjust- Non- As Adjust- Non-
Reported ments (a) GAAP Reported ments (a) GAAP
Revenue:
Royalties $8,054 $-- $8,054 $6,721 $-- $6,721
Contract
Revenue 3,889 -- 3,889 7,885 -- 7,885
Total
revenue 11,943 -- 11,943 14,606 -- 14,606

Costs and
expenses:
Research and
development 9,769 (4,262) (b) 5,507 5,207 -- 5,207
Sales and
marketing 3,962 (603) (b) 3,359 3,045 -- 3,045
General and
administrative 3,718 (1,245) (b) 2,473 2,321 -- 2,321
Acquired
in-process
research and
development 570 (570) (c) -- -- -- --
Restructuring -- -- -- 277 (277) (e) --
Total
costs and
expenses 18,019 (6,680) 11,339 10,850 (277) 10,573

Operating income
(loss) (6,076) 6,680 604 3,756 277 4,033
Other income,
net 809 -- 809 245 -- 245
Income (loss)
before income
taxes (5,267) 6,680 1,413 4,001 277 4,278
Provision
(benefit) for
income taxes (1,406) 1,536 (d) 130 880 61 (d) 941
Net income
(loss) $(3,861) $5,144 $1,283 $3,121 $216 $3,337
Net income
(loss) per
basic share $(0.09) $0.03 $0.08 $0.08
Net income
(loss) per
diluted share $(0.09) $0.03 $0.07 $0.08
Common shares
outstanding-
basic 42,382 42,382 40,695 40,695
Common shares
outstanding-
diluted 42,382 44,309 42,384 42,384


(a) These adjustments reconcile the Company's GAAP results of operations
to its non-GAAP results of operations. The Company believes that presentation
of results excluding items such as non-cash equity-based compensation,
acquired in-process research and development and restructuring costs provides
meaningful supplemental information to both management and investors that is
indicative of the Company's core 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.
(b) This adjustment reflects the non-cash equity-based compensation
expense related to the Company's adoption of SFAS No. 123 revised (123R)
beginning in the first quarter of fiscal 2006. The first quarter fiscal 2006
amount included in research and development includes a one-time charge of $3.3
million related to the Danish lawsuit settlement. Management believes that
excluding this expense from research and development, sales and marketing and
general and administrative expenses facilitates comparisons of these line
items to MIPS' historical core operating results since prior periods do not
include these expense amounts.
(c) This adjustment reflects the one-time charge for acquired in-process
research and development expense related to the acquisition of First Silicon
Solutions (FS2) completed in September 2005. Management believes that
excluding this charge facilitates comparisons to MIPS' historical core
operating results during periods when there were no acquisitions.
(d) Amount reflects the expected tax impact on the above noted non-GAAP
adjustments.
(e) This adjustment reflects the additional restructuring charge related
to terminating a long-term lease obligation for a Denmark design center
facility. Management believes it is useful in measuring MIPS' operations to
exclude expenses related to closing of facilities because restructuring
activities have been non-recurring and infrequent and therefore are not
considered directly related to our core business operations.


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


September 30, June 30,
2005 2005
(unaudited)
Assets
Current assets:
Cash and cash equivalents $85,651 $91,686
Short-term investments 19,864 19,825
Accounts receivable, net 3,466 2,544
Prepaid expenses and other current assets 2,425 2,813
Total current assets 111,406 116,868
Equipment and furniture, net 2,831 2,899
Other assets 12,522 7,779
$126,759 $127,546
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $293 $1,346
Accrued liabilities 8,887 12,058
Deferred revenue 1,992 2,825
Total current liabilities 11,172 16,229
Long-term liabilities 4,146 2,938
Stockholders' equity 111,441 108,379
$126,759 $127,546

Author:  

Email:    

Topic:    

Content:

Related Articles

• Winland Electronics, Inc. Announces Record Third Quarter 2005 Revenue of $7.4 Million and Earnings of $0.12 per Share
  21 October 2005



• STATS ChipPAC Ltd. Announces Acceptance Results of Tender Offer
  21 October 2005



• The Coca-Cola Company Reports Third Quarter and Year-to-Date 2005 Results
  21 October 2005



• Endo Pharmaceuticals Reports Third Quarter 2005 Financial Results
  21 October 2005



• ESCA Catalyst 2005 Winter Symposium Explores Constant Change in the Electronics Supply Chain; Offers Futuristic Look at the Industry
  20 October 2005



• LG Electronics Launches Production of HDTV Set-Top Boxes for DIRECTV
  20 October 2005



• PJM EIS Creates First Environmental Certificates for Electric Generation
  18 October 2005



• Provisional Definitive Results for Johnson Electric's Tender Offer for Saia-Burgess
  18 October 2005



• NEC Electronics America Introduces MOSFET Devices With Super Low On Resistance
  18 October 2005



• Direct Response Financial Services Launches Infomercial For Direct2own Finance Company
  17 October 2005