Transmeta Reports Third Quarter 2008
Results
Transmeta Corporation (NASDAQ: TMTA) today announced financial results for
the third quarter ended September 30, 2008.
Revenue for the third quarter of 2008 was $25.3 million, compared with
$366,000 for the second quarter of 2008. Revenue in both the third and second
quarters of 2008 was derived from licensing activities.
Total operating expenses for the third quarter of 2008 resulted in a gain of
$3.5 million, compared with expenses of $1.9 million in the second quarter of
2008. Third quarter operating expenses included $2.9 million of income from two
previously announced agreements with Intel entered into during the quarter.
Third quarter operating expenses also included $5.9 million of income from the
December 2007 settlement and licensing agreement with Intel, and non-cash stock
compensation charges of $887,000.
In the third quarter, Transmeta recorded interest income of $1.8 million,
including $1.2 million of imputed interest income from the December 2007
settlement and licensing agreement with Intel. Net income was $30.6 million, or
$2.31 per share, compared with $214,000, or $0.02 per share, in the second
quarter of 2008.
Transmeta’s cash, cash equivalents and short term investments at September
30, 2008 totaled $255.2 million. Cash at September 30, 2008 included the $91.5
million payment received from Intel pursuant to the technology licensing and
amended settlement and licensing agreements entered into in September 2008, as
well as the $25 million payment from NVIDIA for the licensing agreement it
entered into in July 2008. Transmeta continues to be debt free.
AMD Patent License
Transmeta also announced today that it has entered into a patent license
agreement with Advanced Micro Devices (“AMD”). The agreement grants a
non-exclusive license under Transmeta’s patents to AMD, and includes FoundryCo,
which AMD recently announced as part of its Asset Smart strategy. Under the
terms of the agreement, AMD will transfer to Transmeta 700,000 shares of
Transmeta’s Series B Preferred Stock held by AMD. The 700,000 shares of Series B
Preferred Stock are convertible into 499,429 shares of Transmeta’s common stock.
"We are pleased to have achieved this license agreement with AMD," said Les
Crudele, president and CEO of Transmeta. "Transmeta and AMD have a long history
of collaboration on promoting industry standards for next-generation
microprocessors, as well as a broader strategic relationship. This licensing
agreement further highlights the value of Transmeta’s intellectual property and
technologies to our industry, and provides Transmeta stockholders with an
immediate return on our intellectual property rights."
Acquisition By Novafora, Inc.
Transmeta also announced in a separate release today that it signed a
definitive agreement to be acquired by Novafora, Inc. for $255.6 million in
cash, subject to certain working capital and other adjustments. Novafora is a
privately held fabless semiconductor company in San Jose, California that
develops a family of digital video processors. Under the terms of the agreement,
and based on current estimates of Transmeta’s future working capital at the
effective time of the merger, stockholders are expected to receive between
$18.70 and $19.00 for each outstanding share of Transmeta’s common stock,
subject to working capital and other adjustments. The merger is expected to
close in the first quarter of 2009.
“As a result of our successful licensing activities, we collected $116.5
million of cash payments for our intellectual property and patents in the third
quarter, bringing our yearly total to $266.5 million,” said Les Crudele,
president and CEO. “We also generated additional value for our stockholders
through the transfer of 700,000 shares of Transmeta Series B Preferred Stock
that was held by AMD. After creating such significant value this year, we are
pleased that we are able to return this value to our stockholders through the
impending acquisition by Novafora.”
Outlook
In the fourth quarter, Transmeta expects to recognize $5.9 million of
operating income from the December 2007 settlement and licensing agreement with
Intel. Transmeta expects to be profitable on a GAAP net income basis in the
fourth quarter of 2008 and continues to expect to be profitable for fiscal year
2008. The definitive agreement with Novafora provides, among other things, that
Transmeta may not enter into any future licensing transaction prior to closing
of the merger without Novafora’s consent.
Conference Call
Transmeta has delayed its third quarter earnings conference call, previously
scheduled for today at 5:00 p.m. Eastern time/2:00 p.m. Pacific time, to
Tuesday, November 18, 2008 at 9:00 a.m. Eastern time/6:00 a.m. Pacific time. The
conference call will be available live over the Internet at the investor
relations section of Transmeta's website at www.transmeta.com. To listen to the
conference call, please dial (785) 830-1997. A recording of the conference call
will be available for one week, starting one hour after the completion of the
call, until 11:59 p.m. Pacific time on November 24, 2008. The phone number to
access the recording is (719) 457-0820, and the passcode is 2156284.
About Transmeta Corporation
Transmeta Corporation develops and licenses innovative computing,
microprocessor and semiconductor technologies and related intellectual property.
Founded in 1995, we first became known for designing, developing and selling our
highly efficient x86-compatible software-based microprocessors, which deliver a
balance of low power consumption, high performance, low cost and small size
suited for diverse computing platforms. We are presently focused on developing
and licensing our advanced power management technologies for controlling leakage
and increasing power efficiency in semiconductor and computing devices, and in
licensing our computing and microprocessor technologies to other companies. To
learn more about Transmeta, visit www.transmeta.com.
Transmeta Corporation
Condensed Consolidated Balance Sheets |
|
|
|
September 30, 2008
|
|
December 31, 2007 |
|
September 30, 2007
|
|
|
|
|
|
|
|
|
ASSETS |
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
205,271 |
|
|
$ |
15,607 |
|
|
$ |
19,629 |
|
Short-term investments |
|
|
49,969 |
|
|
|
2,968 |
|
|
|
8,976 |
|
Accounts receivable |
|
|
2 |
|
|
|
163 |
|
|
|
45 |
|
Other receivables, current |
|
|
- |
|
|
|
149,400 |
|
|
- |
|
Prepaid expenses and other current assets |
|
|
1,963 |
|
|
|
2,476 |
|
|
|
2,332 |
|
Total current assets |
|
|
257,205 |
|
|
|
170,614 |
|
|
|
30,982 |
|
|
|
|
|
|
|
|
|
Other receivables, long-term |
|
|
- |
|
|
|
85,200 |
|
|
|
- |
|
Property and equipment, net |
|
|
194 |
|
|
|
284 |
|
|
|
376 |
|
Patents and patent rights, net |
|
|
- |
|
|
|
2,388 |
|
|
|
4,100 |
|
Other assets |
|
|
200 |
|
|
|
800 |
|
|
|
1,010 |
|
TOTAL ASSETS |
|
$ |
257,599 |
|
|
$ |
259,286 |
|
|
$ |
36,468 |
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
|
|
Current Liabilities: |
|
|
|
|
|
|
|
Accounts payable |
|
$ |
1,029 |
|
|
$ |
341 |
|
|
$ |
2,171 |
|
Accrued compensation |
|
|
774 |
|
|
|
15,351 |
|
|
|
834 |
|
Income taxes payable |
|
|
15 |
|
|
|
3,306 |
|
|
|
4 |
|
Accrued restructuring costs |
|
|
352 |
|
|
|
1,592 |
|
|
|
2,592 |
|
Other accrued liabilities |
|
|
473 |
|
|
|
1,028 |
|
|
|
4,384 |
|
Current portion of deferred income from settlement
and licensing |
|
|
23,460 |
|
|
|
23,460 |
|
|
|
- |
|
Current portion of long-term payable |
|
|
800 |
|
|
|
667 |
|
|
|
600 |
|
Total current liabilities |
|
|
26,903 |
|
|
|
45,745 |
|
|
|
10,585 |
|
|
|
|
|
|
|
|
|
Long-term deferred income from settlement and
licensing, net of current portion |
|
|
193,545 |
|
|
|
211,140 |
|
|
|
- |
|
Long-term payable, net of current portion |
|
|
200 |
|
|
|
800 |
|
|
|
1,000 |
|
Total liabilities |
|
|
220,648 |
|
|
|
257,685 |
|
|
|
11,585 |
|
|
|
|
|
|
|
|
|
Stockholders' equity: |
|
|
|
|
|
|
|
Convertible preferred stock |
|
|
6,966 |
|
|
|
6,966 |
|
|
|
6,966 |
|
Common stock |
|
|
743,641 |
|
|
|
739,268 |
|
|
|
738,625 |
|
Treasury stock |
|
|
(2,439 |
) |
|
|
(2,439 |
) |
|
|
(2,439 |
) |
Accumulated other comprehensive gain (loss) |
|
|
190 |
|
|
|
29 |
|
|
|
29 |
|
Accumulated deficit |
|
|
(711,407 |
) |
|
|
(742,223 |
) |
|
|
(718,298 |
) |
Total stockholders' equity |
|
|
36,951 |
|
|
|
1,601 |
|
|
|
24,883 |
|
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
$ |
257,599 |
|
|
$ |
259,286 |
|
|
$ |
36,468 |
|
Transmeta Corporation
Condensed Consolidated Statements of Operations
(Dollars in thousands, except per share data)
(Unaudited) |
|
|
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
|
|
|
September 30, 2008 |
|
June 30, 2008 |
|
September 30, 2007 |
|
|
September 30, 2008 |
|
September 30, 2007 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
Product |
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
|
$ |
253 |
|
|
$ |
167 |
|
|
License |
|
|
25,299 |
|
|
|
366 |
|
|
|
1 |
|
|
|
|
25,905 |
|
|
|
1 |
|
|
Service |
|
|
- |
|
|
|
- |
|
|
|
43 |
|
|
|
|
168 |
|
|
|
2,186 |
|
|
|
Total revenue |
|
|
25,299 |
|
|
|
366 |
|
|
|
44 |
|
|
|
|
26,326 |
|
|
|
2,354 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue |
|
|
|
|
|
|
|
|
|
|
|
|
Product |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
3 |
|
|
|
80 |
|
|
Service (1) |
|
|
- |
|
|
|
- |
|
|
|
18 |
|
|
|
|
163 |
|
|
|
1,236 |
|
|
Impairment charge on inventories |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
- |
|
|
|
364 |
|
|
|
Total cost of revenue |
|
|
- |
|
|
|
- |
|
|
|
18 |
|
|
|
|
166 |
|
|
|
1,680 |
|
Gross profit (loss) |
|
|
25,299 |
|
|
|
366 |
|
|
|
26 |
|
|
|
|
26,160 |
|
|
|
674 |
|
Gross margin % |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
59.1 |
% |
|
|
|
99.4 |
% |
|
|
28.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Income from settlement and licensing |
|
|
(5,865 |
) |
|
|
(5,865 |
) |
|
|
- |
|
|
|
|
(17,595 |
) |
|
|
- |
|
|
Income from license and receivable |
|
|
(2,855 |
) |
|
|
- |
|
|
|
- |
|
|
|
|
(2,855 |
) |
|
|
- |
|
|
Research and development (1) |
|
|
1,586 |
|
|
|
2,315 |
|
|
|
1,336 |
|
|
|
|
6,751 |
|
|
|
8,809 |
|
|
Selling, general and administrative (1)
|
|
|
3,700 |
|
|
|
4,108 |
|
|
|
6,107 |
|
|
|
|
12,150 |
|
|
|
17,857 |
|
|
Restructuring charges, net |
|
|
(97 |
) |
|
|
455 |
|
|
|
177 |
|
|
|
|
700 |
|
|
|
8,878 |
|
|
Amortization of patents and patent rights
|
|
|
- |
|
|
|
908 |
|
|
|
1,711 |
|
|
|
|
2,388 |
|
|
|
5,134 |
|
|
Impairment charge on long-lived and other
assets |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
|
- |
|
|
|
302 |
|
|
|
Total operating expenses |
|
|
(3,531 |
) |
|
|
1,921 |
|
|
|
9,331 |
|
|
|
|
1,539 |
|
|
|
40,980 |
|
Operating loss |
|
|
28,830 |
|
|
|
(1,555 |
) |
|
|
(9,305 |
) |
|
|
|
24,621 |
|
|
|
(40,306 |
) |
|
Interest income and other, net |
|
|
1,813 |
|
|
|
1,769 |
|
|
|
250 |
|
|
|
|
6,197 |
|
|
|
1,109 |
|
|
Interest (expense) |
|
|
- |
|
|
|
- |
|
|
|
(15 |
) |
|
|
|
(2 |
) |
|
|
(53 |
) |
Income (loss) before income taxes |
|
|
30,643 |
|
|
|
214 |
|
|
|
(9,070 |
) |
|
|
|
30,816 |
|
|
|
(39,250 |
) |
|
Provision for income taxes |
|
|
- |
|
|
|
- |
|
|
|
3 |
|
|
|
|
- |
|
|
|
7 |
|
Net income (loss) |
|
$ |
30,643 |
|
|
$ |
214 |
|
|
$ |
(9,073 |
) |
|
|
$ |
30,816 |
|
|
$ |
(39,257 |
) |
|
Deemed dividend for beneficial conversion
feature of preferred stock |
|
|
- |
|
|
|
- |
|
|
|
(3,630 |
) |
|
|
|
- |
|
|
|
(3,630 |
) |
Net income (loss) attributable to common
shareholders |
|
$ |
30,643 |
|
|
$ |
214 |
|
|
$ |
(12,703 |
) |
|
|
$ |
30,816 |
|
|
$ |
(42,887 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per share attributable to
common shareholders - basic |
|
$ |
2.52 |
|
|
$ |
0.02 |
|
|
$ |
(1.24 |
) |
|
|
$ |
2.54 |
|
|
$ |
(4.26 |
) |
Net income (loss) per share attributable to
common shareholders - fully diluted |
|
$ |
2.31 |
|
|
$ |
0.02 |
|
|
$ |
(1.24 |
) |
|
|
$ |
2.33 |
|
|
$ |
(4.26 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding -
basic |
|
|
12,170 |
|
|
|
12,152 |
|
|
|
10,236 |
|
|
|
|
12,145 |
|
|
|
10,066 |
|
Weighted average shares outstanding -
diluted |
|
|
13,265 |
|
|
|
13,242 |
|
|
|
10,236 |
|
|
|
|
13,220 |
|
|
|
10,066 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Includes stock-based compensation: |
|
|
|
|
|
|
|
|
|
|
|
Cost of service revenue |
|
$ |
- |
|
|
$ |
- |
|
|
$ |
1 |
|
|
|
$ |
82 |
|
|
$ |
18 |
|
Research and development |
|
|
156 |
|
|
|
596 |
|
|
|
(271 |
) |
|
|
|
1,599 |
|
|
|
11 |
|
Selling, general and administrative |
|
|
731 |
|
|
$ |
684 |
|
|
$ |
244 |
|
|
|
|
2,047 |
|
|
|
941 |
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