MIPS Technologies Reports Second Quarter Fiscal 2013 Financial Results

        Print
| Source: Imagination Technologies

SUNNYVALE, Calif., Jan. 30, 2013 (GLOBE NEWSWIRE) -- MIPS Technologies, Inc. (Nasdaq:MIPS), a leading provider of industry-standard processor architectures and cores for home entertainment, networking, mobile and embedded applications, today reported consolidated financial results for its second fiscal quarter of 2013 ended December 31, 2012. All financial results are reported in U.S. GAAP unless otherwise noted.

Summary Second Quarter Fiscal 2013 Financial Metrics:

  • Revenue was $14.6 million
  • Licensee royalty units grew to 194 million units from 182 million units in Q1 '13
  • GAAP net loss was $6.4 million or $0.12 per share; non-GAAP net loss was $0.5 million or $0.01 per share
  • Cash and investment balances ended the quarter at $131.3 million

Transaction Update

As previously announced, on November 5, 2012, MIPS entered into a patent sale agreement with Bridge Crossing, LLC ("Bridge Crossing"), an acquisition vehicle of Allied Security Trust ("AST"), and a merger agreement with Imagination Technologies Group plc (LSE:IMG) ("Imagination"), with anticipated net proceeds of approximately $7.31 per share in cash to each holder of MIPS common stock. On December 9, 2012, MIPS entered into an amendment to its merger agreement with Imagination that increased the purchase price being paid by Imagination to $80 million and removed the conditions to closing requiring the approval of the Committee on Foreign Investment in the United States and that MIPS is not a real property holding corporation. As a result of the amendment, the net proceeds to each holder of MIPS common stock following the consummation of the proposed patent sale transaction with Bridge Crossing, the proposed recapitalization and the proposed merger, increased to approximately $7.64 per share in cash. On December 16, 2012, MIPS entered into a second amendment to its merger agreement with Imagination that increased the purchase price being paid by Imagination to $100 million. As a result of the amendment, the net proceeds to each holder of MIPS common stock, following the consummation of the proposed patent sale transaction with Bridge Crossing, the proposed recapitalization and the proposed merger, increased to approximately $7.94 per share in cash.

Both the patent sale transaction and the merger transaction are subject to customary closing conditions, including the approval of MIPS Technologies' shareholders, who will vote separately on each of the transactions and the recapitalization. Approval of the patent sale transaction is not subject to stockholder approval of the Imagination merger transaction. The merger is subject to stockholder approval of the patent sale transaction and the recapitalization. The proceeds of the transactions, which are subject to a fixed holdback of approximately $100 million to cover tax and other liabilities, will be distributed to MIPS' stockholders on a pro-rata basis through a recapitalization of MIPS common stock. MIPS expects the transactions to close during the month of February 2013.

For more information on the proposed transactions, please visit www.mips.com/company/investor-relations/.

Conference Call and Webcast

In light of the pending transactions with Bridge Crossing and Imagination, MIPS will not conduct an investor conference call or webcast following the release of this earnings information, nor provide financial guidance. To access the Company's first quarter results and other financial information, please visit www.mips.com/company/investor-relations/.

About MIPS Technologies, Inc.

MIPS Technologies, Inc. (Nasdaq:MIPS) is a leading provider of industry-standard processor architectures and cores for home entertainment, networking, mobile and embedded applications. The MIPS architecture powers some of the world's most popular products. Our technology is broadly used in products such as digital televisions, set-top boxes, Blu-ray players, broadband customer premises equipment (CPE), WiFi access points and routers, networking infrastructure and portable/mobile communications and entertainment products. Founded in 1998, MIPS Technologies is headquartered in Sunnyvale, California, with offices worldwide. For more information, contact (408) 530-5000 or visit www.mips.com.

The MIPS Technologies, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=11351

Additional Information and Where You Can Find It

This communication may be deemed to be solicitation material in respect of the proposed transactions between MIPS and Bridge Crossing, and MIPS and Imagination. In connection with the proposed transactions, MIPS has filed a definitive proxy statement and other relevant materials with the SEC. The proxy statement and other relevant materials, and any other documents to be filed by MIPS with the SEC, may be obtained free of charge at the SEC's website at www.sec.gov or from MIPS' website at www.mips.com or by contacting MIPS Investor Relations at: ir@mips.com. Investors and security holders of MIPS are urged to read the proxy statement and the other relevant materials before making any voting or investment decision with respect to the proposed transactions because they will contain important information about the transactions and the parties to the transactions.

MIPS and its executive officers, directors, other members of its management and employees, under SEC rules, may be deemed to be participants in the solicitation of proxies from MIPS' stockholders in favor of the proposed transactions. A list of the names of MIPS' executive officers and directors and a description of their respective interests in MIPS are set forth in the definitive proxy statement for MIPS' 2012 Annual Meeting of Stockholders, MIPS' 2012 Annual Report on Form 10-K and Amendment No. 1 and Amendment No. 2 thereto, in any documents subsequently filed by its directors and executive officers under the Securities Exchange Act of 1934, as amended, and other relevant materials filed with the SEC in connection with the transactions when they become available. Certain executive officers and directors of MIPS have interests in the proposed transaction that may differ from the interests of stockholders generally, including benefits conferred under retention, severance and change in control arrangements and continuation of director and officer insurance and indemnification. These interests and any additional benefits in connection with the proposed transactions are described in the definitive proxy statement relating to the transactions.

Cautionary Statement Regarding Forward-Looking Statements

This press release contains statements that may be deemed to be forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. These statements are based on MIPS' and its Board of Directors' current expectations and beliefs and are subject to a number of factors and uncertainties that could cause actual results to differ materially from those described in these statements. These statements include the statements regarding the ability to complete the transactions considering the various closing conditions and the other statements regarding the proposed transactions. Any statements that are not statements of historical fact (including statements containing the words "believes," "should," "plans," "anticipates," "expects," "estimates" and similar expressions) should also be considered to be forward-looking statements. These statements are not guarantees of future performance, involve certain risks, uncertainties and assumptions that are difficult to predict, and are based upon assumptions as to future events that may not prove accurate. Therefore, actual outcomes and results may differ materially from what is expressed herein. The following factors, among others, could cause actual results to differ materially from those described in any forward-looking statements: actions and decisions of the respective boards of directors of MIPS, Bridge Crossing and Imagination following their respective evaluations of each other's further actions; the impact of actions of other parties with respect to any discussions and the potential consummation of the proposed transactions with Bridge Crossing and Imagination; the commencement or results of litigation relating to the discussions or to the proposed transactions with Bridge Crossing and Imagination; failure of the MIPS stockholders to approve the proposed transactions with Bridge Crossing and Imagination; the challenges and costs of closing the transactions with Bridge Crossing and Imagination; the ability to retain key employees; and other economic, business, competitive, and/or regulatory factors affecting the businesses of MIPS or Imagination Technologies generally, including those set forth in the filings of MIPS with the Securities and Exchange Commission, especially in the "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" sections of MIPS annual reports on Form 10-K, including any amendments thereto, and quarterly reports on Form 10-Q, MIPS current reports on Form 8-K and other SEC filings. MIPS is under no obligation to (and expressly disclaims any such obligation to) update or alter any forward-looking statements as a result of developments occurring after the date of this press release.

MIPS and MIPS-Based are trademarks or registered trademark of MIPS Technologies, Inc. in the United States and other countries.

 
MIPS TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
 
(In thousands)
 
  December 31, 2012 June 30, 2012
  (unaudited)  
Assets    
Current assets:    
Cash and cash equivalents $131,299 $76,242
Short-term investments -- 34,642
Accounts receivable, net 1,068 27,044
Prepaid expenses and other current assets 2,985 1,793
Total current assets 135,352 139,721
Equipment, furniture and property, net 3,214 2,892
Goodwill 565 565
Other assets  10,591 11,962
Total assets $149,722  $155,140 
     
Liabilities and Stockholders' Equity    
Current liabilities:    
Accounts payable $1,619 $2,578
Accrued liabilities 13,093 11,852
Deferred revenue 769 1,259
Total current liabilities 15,481 15,689
Long-term liabilities 8,874 9,815
Stockholders' equity 125,367 129,636
Total liabilities and stockholders' equity $149,722 $155,140
 
 
MIPS TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 
(In thousands, except per share data)
(unaudited)
 
  Three Months Ended
December 31,
Six Months Ended
December 31,
  2012 2011 2012 2011
Revenue:        
Royalties $10,751 $13,224 $21,224 $26,203
License and contract revenue 3,840 2,077 7,310 6,315
Total revenue 14,591 15,301 28,534 32,518
Costs and expenses:        
Cost of sales 332 344 694 605
Research and development 9,031 8,278 17,329 16,184
Sales and marketing 4,141 3,892 8,566 8,723
General and administrative 5,478 3,339 11,044 6,603
Transaction related costs 1,918 -- 1,918 --
Total costs and expenses 20,900 15,853 39,551 32,115
Operating income (loss) (6,309) (552) (11,017) 403
Other income, net 52 14 60 67
Income (loss) before income taxes (6,257) (538) (10,957) 470
Provision (benefit) for income taxes 130 434 (244) 919
Net loss $(6,387) $(972) $(10,713) $(449)
Net loss per share, basic $(0.12) $(0.02) $(0.20) $(0.01)
Net loss per share, diluted $(0.12) $(0.02) $(0.20) $(0.01)
Common shares outstanding, basic 54,109 52,886 53,904 52,773
Common shares outstanding, diluted 54,109 52,886 53,904 52,773
 
 
MIPS TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
 
(In thousands)
 
  Six Months Ended
December 31,
  2012 2011
Operating activities:    
Net loss $(10,713) $(449)
Adjustments to reconcile net loss to cash provided by operations    
Depreciation 724 471
Stock-based compensation 3,762 2,953
Excess tax benefits from stock-based compensation (168) --
Amortization of intangible assets 340 252
Amortization of investment premium, net 164 265
Other non-cash charges 124 139
Changes in operating assets and liabilities:    
Accounts receivable 25,976 1,500
Prepaid expenses (1,260) (230)
Other assets 1,459 791
Accounts payable (1,074) (613)
Accrued liabilities 1,283 (3,620)
Deferred revenue   (572) (488)
Long-term liabilities (1,196) 53
Net cash provided by operating activities 18,849 1,024
Investing activities:    
Purchases of marketable securities (16,857) (22,588)
Proceeds from sales of marketable securities 27,032 2,613
Proceeds from maturities of marketable securities 24,419 26,000
Capital expenditures (966) (659)
Net cash provided by investing activities 33,628 5,366
Financing activities:    
Net proceeds from issuance of common stock 2,410 1,269
Excess tax benefits from stock-based compensation 168 --
Net cash provided by financing activities 2,578 1,269
Effect of exchange rates on cash 2 (32)
Net increase in cash and cash equivalents 55,057 7,627
Cash and cash equivalents, beginning of period 76,242 69,202
Cash and cash equivalents, end of period $131,299 $76,829
     
     
MIPS TECHNOLOGIES, INC.
RECONCILIATION OF GAAP TO NON-GAAP NET INCOME (LOSS) and
NET INCOME (LOSS) PER SHARE
 
(In thousands, except per share data)
(unaudited)
 
    Three Months Ended
December 31, 2012
Three Months Ended
September 30, 2012
Three Months Ended
December 31, 2011
  GAAP net loss $(6,387) $(4,326) $(972)
  Net loss per basic share $(0.12) $(0.08) $(0.02)
  Net loss per diluted share $(0.12) $(0.08) $(0.02)
(a) Stock-based compensation expense 1,898 1,864 1,412
(b) Severance adjustment -- 44 49
(c) Expenses related to stockholder activities -- -- 158
(d) Expenses related to strategic opportunities 2,046 1,934 --
(e) Transaction related costs 1,918 -- --
  Non-GAAP net income  (loss) $(525) $(484) $647
  Non-GAAP net income (loss) per basic share $(0.01) $(0.01) $0.01
  Non-GAAP net income (loss) per diluted share $(0.01) $(0.01) $0.01
  Common shares outstanding – basic 54,109 53,699 52,886
  Common shares outstanding – diluted 54,109 53,699 53,658

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 loss and net loss per share excluding stock-based compensation expense, severance adjustment, expenses related to stockholder activities, expenses related to strategic opportunities, and transaction related costs 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 stock-based compensation expense. For the second quarter of fiscal 2013 ending December 31, 2012, $1.9 million stock-based compensation expense was allocated as follows: $710,000 to research and development, $434,000 to sales and marketing and $754,000 to general and administrative. For the first quarter of fiscal 2013 ending September 30, 2012, $1.9 million stock-based compensation expense was allocated as follows: $683,000 to research and development, $499,000 to sales and marketing and $682,000 to general and administrative. For the second quarter of fiscal 2012 ending December 31, 2011, $1.4 million stock-based compensation expense was allocated as follows: $532,000 to research and development, $239,000 to sales and marketing and $641,000 to general and administrative. 

(b) This adjustment reflects the severance to the Company's former executives.  For the first quarter of fiscal 2013 ending September 30, 2012, $44,000 was allocated to general and administrative. For the second quarter of fiscal 2012 ending December 31, 2011, $49,000 was allocated to general and administrative.

(c) This adjustment reflects the expenses in response to our activities and inquiries of Starboard Value LP allocated to general and administrative.

(d) This adjustment reflects the expenses incurred in connection with the Company's exploration of options related to patent monetization and other opportunities for increasing shareholder value prior to the announcement of the transaction on November 5, 2012, allocated to general and administrative.

(e) This adjustment reflects the transaction related costs primarily consisting of legal, banking fees and other professional charges subsequent to the announcement of the transaction on November 5, 2012.

MIPS TECHNOLOGIES, INC.
RECONCILIATION OF GAAP TO NON-GAAP NET INCOME (LOSS) and
NET INCOME (LOSS) PER SHARE
 
(In thousands, except per share data)
(unaudited)
 
    Six Months Ended
December 31, 2012
Six Months Ended
December 31, 2011
  GAAP net loss $(10,713) $(449)
  Net loss per basic share $(0.20) $(0.01)
  Net loss per diluted share $(0.20) $(0.01)
(f) Stock-based compensation expense 3,762 2,953
(g) Severance adjustment 44 361
(h) Expenses related to stockholder activities -- 423
(i) Expenses related to strategic opportunities 3,980 --
(j) Transaction related costs 1,918 --
  Non-GAAP net income  (loss) $(1,009) $3,288
  Non-GAAP net income (loss) per basic share $(0.02) $0.06
  Non-GAAP net income (loss) per diluted share $(0.02) $0.06
  Common shares outstanding – basic 53,904 52,773
  Common shares outstanding – diluted 53,904 53,702

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 loss and net loss per share excluding stock-based compensation expense, severance adjustment, expenses related to stockholder activities, expenses related to strategic opportunities, and transaction related costs 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.

(f) This adjustment reflects the stock-based compensation expense. For the six months ending December 31, 2012, $3.8 million stock-based compensation expense was allocated as follows: $1.4 million to research and development, $933,000 to sales and marketing and $1.4 million to general and administrative. For the six months ending December 31, 2011, $3.0 million stock-based compensation expense was allocated as follows: $995,000 to research and development, $735,000 to sales and marketing and $1.2 million to general and administrative. 

(g) This adjustment reflects the severance to the Company's former executives. For the six months ending December 31, 2012, $44,000 was allocated to general and administrative. For the six months ending December 31, 2011, $361,000 was allocated as follows: $312,000 to sales and marketing and $49,000 to general and administrative.

(h) This adjustment reflects the expenses in response to our activities and inquiries of Starboard Value LP allocated to general and administrative.

(i) This adjustment reflects the expenses incurred in connection with the Company's exploration of options related to patent monetization and other opportunities for increasing shareholder value prior to the announcement of the transaction on November 5, 2012 allocated to general and administrative.

(j) This adjustment reflects the transaction related costs primarily consisting of legal, banking fees and other professional charges subsequent to the announcement of the transaction on November 5, 2012.
 

Media Contact:
Jen Bernier-Santarini
MIPS Technologies, Inc.
+1 408-530-5178


Investor Contact:
Bill Slater
MIPS Technologies, Inc.
+1 408-530-5200