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 income and net income per share excluding the items listed below 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 non-cash equity-based compensation
expense related to the Company's adoption of SFAS No. 123 revised
(SFAS 123R) beginning July 1, 2005. For the fourth fiscal quarter
ending June 30, 2008, $1.6 million of equity-based compensation was
allocated as follows: $478,000 to research and development, $592,000
to sales and marketing and $547,000 to general and administrative. For
the third fiscal quarter ending March 31, 2008, $1.8 million of
equity-based compensation was allocated as follows: $604,000 to
research and development, $577,000 to sales and marketing and $618,000
to general and administrative. For the fourth quarter of fiscal 2007
ending June 30, 2007, $1.6 million equity-based compensation expense
was allocated as follows: $539,000 to research and development,
$508,000 to sales and marketing and $572,000 to general and
administrative.
(b) This adjustment reflects the non-cash expense related to the
amortization of intangibles acquired in connection with the
acquisition of Chipidea included in operating expenses. For the fourth
fiscal quarter ending June 30, 2008, $2.5 million of amortization
expense related to these intangible assets was allocated as follows:
$2.4 million to cost of sales, $9,000 to research and development and
$131,000 to sales and marketing. For the third fiscal quarter ending
March 31, 2008, $2.4 million of amortization expense related to these
intangible assets was allocated as follows: $2.3 million to cost of
sales, $8,000 to research and development and $126,000 to sales and
marketing.
(c) This adjustment reflects the amortization expense related to the
amount held in escrow and payable to the founders of Chipidea in
connection with the acquisition of Chipidea. This adjustment also
reflects legal fees incurred in association with certain financing
activities and the amortization of loan origination fees. For the
fourth fiscal quarter ending June 30, 2008, $1.8 million was expensed
related to the escrow amount payable to the founders of Chipidea and
was allocated as follows: $694,000 to general and administrative and
$1.1 million to research and development. $280,000 was expensed
related to the amortization of loan origination fees and was allocated
to Other Income/Expense. For the third fiscal quarter ending March
31, 2008, $1.7 million was expensed related to the escrow amount
payable to the founders of Chipidea and was allocated as follows:
$567,000 to general and administrative and $1.1 million to research
and development. $686,000 was expensed related to the amortization of
loan origination fees and was allocated to Other Income/Expense.
(d) This adjustment reflects integration expense related to the
acquisition of Chipidea recorded in accounting and legal expense under
general and administrative.
(e) This adjustment reflects the impairment charge of goodwill and
acquired intangible assets associated with Chipidea and certain other
transactions.
(f) This adjustment reflects restructuring expense related to reduction in
workforce and facilities exit costs.
(g) This adjustment reflects certain equity write down under Other
Income/Expense related to investment associated with an equity
position in a private company.
(h) This adjustment reflects the non-GAAP tax adjustment due to the
adjustments described above. The Company believes that in the short
to intermediate term a 35% tax rate is a reasonable estimate of an
ongoing tax rate that can be used by investors to estimate post tax
non-GAAP income.
MIPS TECHNOLOGIES, INC.
RECONCILIATION OF GAAP TO NON-GAAP NET INCOME and NET INCOME PER SHARE
(In thousands, except per share data)
(unaudited)
Twelve Months Twelve Months
Ended Ended
June 30, 2008 June 30, 2007
GAAP net income (loss) $(131,835) $8,483
Net income (loss) per basic share $(3.00) $0.19
Net income (loss) per diluted share $(3.00) $0.18
(i) Equity-based compensation expense
under SFAS 123R $7,889 $7,701
(j) Amortization of intangibles 8,181 -
(k) Acquisition related cost 7,889 -
(l) Integration cost 2,239 -
(m) Acquired in-process research
and development 6,350 -
(n) Impairment of goodwill and
acquired intangible assets 103,107 -
(o) Restructuring 1,560 -
(p) Equity Write-Down 2,276 -
(q) Tax adjustment (2,864) -
Non-GAAP net income $4,792 $16,184
Non-GAAP net income per basic share $0.11 $0.37
Non-GAAP net income per diluted share $0.11 $0.35
Common shares outstanding - basic 43,964 43,516
Common shares outstanding - diluted 45,477 45,891
