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.
(i) 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 twelve month ending
June 30, 2008, $7.9 million of equity-based compensation was allocated
as follows: $2.7 million to research and development, $2.5 million to
sales and marketing and $2.7 million to general and administrative.
For the twelve month ending June 30, 2007, $7.7 million equity-based
compensation expense was allocated as follows: $2.9 million to
research and development, $2.3 million to sales and marketing and $2.5
million to general and administrative.
(j) 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 twelve
month ending June 30, 2008, $8.2 million of amortization expense
related to these intangible assets was allocated as follows:
$7.7 million to cost of sales, $26,000 to research and development and
$422,000 to sales and marketing.
(k) 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
twelve month ending June 30, 2008, $5.8 million was expensed related
to the escrow amount payable to the founders of Chipidea and was
allocated as follows: $2.0 million to general and administrative and
$3.8 million to research and development. $1.8 million was expensed
related to the amortization of loan origination fees and was allocated
to Other Income/Expense and $335,000 legal fee was expensed related to
certain financing activities and was allocated to general and
administrative.
(l) This adjustment reflects integration expense related to the
acquisition of Chipidea recorded in accounting and legal expense under
general and administrative.
(m) This adjustment reflects acquired in-process research and development
expense related to the acquisition of Chipidea.
(n) This adjustment reflects the impairment charge of goodwill and
acquired intangible assets associated with Chipidea and certain other
transactions.
(o) This adjustment reflects restructuring expense related to reduction in
workforce and facilities exit costs.
(p) This adjustment reflects certain equity write down under Other
Income/Expense related to investment associated with an equity
position in a private company.
(q) 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 is a trademark or registered trademark in the United States and other countries of MIPS Technologies, Inc. Chipidea is a trademark or registered trademark in the United States and other countries of MIPSABG Chipidea, Lda. All other trademarks referred to herein are the property of their respective owners.
Web site: http://www.mips.com/
