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