Mail Stop 6010
November 2, 2005
VIA U.S. MAIL AND FAX (650) 567-5152
Mr. Kevin C. Eichler
Vice President and Chief Financial Officer
MIPS Technologies, Inc.
1225 Charleston Road
Mountain View, California 94043
Re: MIPS Technologies, Inc.
Form 10-K for the year ended June 30, 2005
Filed September 9, 2005
File No. 000-24487
Dear Mr. Eichler:
We have reviewed your filings and have the following
comments.
We have limited our review to only your financial statements and
related disclosures and will make no further review of your
documents. Where indicated, we think you should revise your
documents
in response to these comments. If you disagree, we will consider
your explanation as to why our comment is inapplicable or a
revision
is unnecessary. Please be as detailed as necessary in your
explanation. In some of our comments, we may ask you to provide
us
with information so we may better understand your disclosure.
After
reviewing this information, we may or may not raise additional
comments.
Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your
filings.
We look forward to working with you in these respects. We welcome
any questions you may have about our comments or on any other
aspect
of our review. Feel free to call us at the telephone numbers
listed
at the end of this letter.
Form 10-K for the year ended June 30, 2005
Consolidated Financial Statements
Note 2. Summary of Significant Accounting Policies, page 36
Revenue Recognition, page 36
1. We see that you have multiple revenue generating activities,
including licensing of technology, royalty agreements, and
maintenance and support contracts. Please tell us and revise
future
filings to disclose how EITF 00-21 impacts your revenue
recognition
for each type of revenue source.
2. We noted that payments for licensing your technology generally
include a nonrefundable technology license fee for currently
available technology or a nonrefundable engineering service fee,
which generally is payable upon achievement of defined milestones.
Please explain to us in greater detail when you recognize amounts
received under license agreements as revenue. It appears from your
disclosure that you recognize all license fees as revenue upon
execution of the license agreement, however, it also appears that
you
may have continuing obligations under certain arrangements. Please
cite the authoritative accounting literature upon which you based
your accounting. Consider expanding your revenue policy
disclosures
in future filings to address our concerns.
3. We see that you reduced your royalty revenue by $900,000 in the
second quarter of fiscal 2005 due to an over-reporting by one of
your
licensees. Please clarify for us when this error was detected and
whether you restated any previously issued financial statements or
quarterly data. If not restated, please tell us why no
restatement
was necessary. We may have further comments after reviewing your
response.
Form 8-K dated October 20, 2005
4. We note that you present non-GAAP measures in the form of a
statement of operations. That format may be confusing to investors
as
it reflects several non-GAAP measures, including research and
development, sales and marketing as well as general and
administrative line items that exclude GAAP amounts and which have
not been identified or individually described to investors. In
addition, you have not explained your purpose for presenting non-
GAAP
operational measures that are the same as the GAAP amounts.
Please
note that Instruction 2 to Item 2.02 of Form 8-K requires that
when
furnishing information under this item you must provide all the
disclosures required by paragraph (e)(1)(i) of Item 10 of
Regulation
S-K and Question 8 of the FAQ Regarding the Use of Non-GAAP
Financial
Measures dated June 13, 2003, including a reconciliation to the
directly comparable GAAP measure for each non-GAAP measure
presented.
a) To eliminate investor confusion, please remove the non-GAAP
statements of operation format from future filings and instead
only
disclose those non-GAAP measures used by management with the
appropriate reconciliations.
b) Otherwise, confirm that you will revise your Forms 8-K in
future
periods to provide all the disclosures required by Item
10(e)(1)(i)
of Regulation S-K for each non-GAAP measure presented in the
statement, and provide us with a sample of your proposed
disclosure.
We may have further comment.
As appropriate, please respond to these comments within 10
business days or tell us when you will provide us with a response.
You may wish to provide us with marked copies of the amendment to
expedite our review. Please furnish a cover letter that keys your
responses to our comments and provides any requested supplemental
information. Detailed cover letters greatly facilitate our
review.
Please understand that we may have additional comments after
reviewing your responses to our comments.
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filing to be certain that the
filing includes all information required under the Securities
Exchange Act of 1934 and that they have provided all information
investors require for an informed investment decision. Since the
company and its management are in possession of all facts relating
to
a company`s disclosure, they are responsible for the accuracy and
adequacy of the disclosures they have made.
In connection with responding to our comments, please
provide,
in writing, a statement from the company acknowledging that
* the company is responsible for the adequacy and accuracy of the
disclosure in the filings;
? staff comments or changes to disclosure in response to staff
comments do not foreclose the Commission from taking any action
with
respect to the filing; and
? the company may not assert staff comments as a defense in any
proceeding initiated by the Commission or any person under the
federal securities laws of the United States.
In addition, please be advised that the Division of
Enforcement
has access to all information you provide to the staff of the
Division of Corporation Finance in our review of your filing or in
response to our comments on your filing.
You may contact Julie Sherman, Staff Accountant, at (202)
551-
3640 or me at (202) 551-3603 if you have any questions regarding
these comments. In this regard, do not hesitate to contact Angela
Crane, Accounting Branch Chief, at (202) 551-3554.
Sincerely,
Jay Webb
Reviewing Accountant
Mr. Kevin C. Eichler
MIPS Technologies, Inc.
November 2, 2005
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