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.
CONTACT: Media Contact:
Jen Bernier-Santarini
MIPS Technologies, Inc.
+1 408-530-5178
jenb@mips.com
Investor Contact:
Bill Slater
MIPS Technologies, Inc.
+1 408-530-5200
ir@mips.com
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