MIPS Technologies Reports Third Quarter Fiscal 2008 Financial Results

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 equity-based compensation, amortization of intangible assets, acquired in-process research and development, integration and acquisition expenses in connection with the acquisition of Chipidea 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 equity-based compensation expense related
        to the Company's adoption of SFAS No. 123 revised (SFAS 123R)
        beginning July 1, 2005. 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 second
        fiscal quarter ending December 31, 2007, $2.1 million of equity-based
        compensation expense was allocated as follows:  $825,000 to research
        and development, $636,000 to sales and marketing and $621,000 to
        general and administrative.  For the third quarter of fiscal 2007
        ending March 31, 2007, $2.3 million equity-based compensation expense
        was allocated as follows:  $871,000 to research and development,
        $720,000 to sales and marketing and $660,000 to general and
        administrative.  Management believes that it is useful to investors to
        understand how the expenses associated with the adoption of SFAS 123R
        are reflected in net income.

    (b) This adjustment reflects the expense related to the amortization of
        intangibles acquired in connection with the acquisition of Chipidea.
        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. For the second fiscal
        quarter ending December 31, 2007, $2.2 million of amortization expense
        related to these intangible assets was allocated as follows:
        $2.2 million to cost of sales, $9,000 to research and development and
        $29,000 to sales and marketing. Management believes that excluding
        this charge facilitates comparisons to MIPS' ongoing operating results
        because the expense for the amortization of intangibles is not
        indicative of operational performance and the amount of such charges
        varies significantly based on the size and timing of our acquisitions
        and the maturity of the business being acquired.

    (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 amount is being
        recorded in the statement of operations instead of part of the
        purchase price of Chipidea since the amount is contingent upon
        continued employment of the founders. This adjustment also reflects
        legal fees incurred in association with certain financing activities
        and the amortization of loan origination fees.  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 $686,000
        was expensed related to the amortization of loan origination fees.
        For the second fiscal quarter ending December 31, 2007, $1.7 million
        was expensed related to the escrow amount payable to the founders of
        Chipidea, and $464,000 was expensed related to the amortization of
        loan origination fees.    Management believes that excluding the
        unique charges related to the payment to the founders of Chipidea and
        the fees associated with financing activities necessitated by the
        acquisition facilitates comparisons to MIPS' ongoing operating results
        during periods when there was no amortization of expenses related to
        the acquisition of Chipidea or financing activities and also
        facilitates investors' understanding of ongoing operating performance.

    (d) This adjustment reflects integration expense related to the
        acquisition of Chipidea recorded in accounting and legal expense.
        Management believes that the integration charges associated with the
        acquisition are elements of the acquisition process and that excluding
        this charge facilitates comparisons to MIPS' ongoing operating results
        during periods when there were no acquisitions and also facilitates
        investors' understanding of ongoing operating performance.

    (e) This adjustment reflects acquired in-process research and development
        expense related to the acquisition of Chipidea.  Management believes
        that excluding this acquisition related charge facilitates comparisons
        to MIPS' ongoing operating results during periods when there were no
        acquisitions involving in-process research and development and also
        facilitates investors' understanding of ongoing operating performance.

    (f) This adjustment reflects restructuring expense related to reduction in
        workforce and facilities exit costs.  Management believes that
        excluding this charge facilitates comparisons to MIPS' ongoing
        operating results during periods when there were no restructuring
        charges and also facilitates investors' understanding of ongoing
        operating performance.

    (g) This adjustment reflects the non-GAAP tax adjustment due to the
        adjustments described above.



                           MIPS TECHNOLOGIES, INC.
    RECONCILIATION OF GAAP TO NON-GAAP NET INCOME and NET INCOME PER SHARE
                    (In thousands, except per share data)
                                 (unaudited)

                                                      Nine Months  Nine Months
                                                                                                    Ended                Ended
                                                                                                                March  31,        March  31,
                                                                                                                    2008                  2007
                GAAP  net  income  (loss)                                                  $(23,373)            $6,148
                Net  income  (loss)  per  basic  share                                $(0.53)              $0.14
                Net  income  (loss)  per  diluted  share                            $(0.53)              $0.13
        (h)  Equity-based  compensation  expense
                under  SFAS  123R                                                                    $6,272              $6,082
        (i)  Amortization  of  intangibles                                              5,640                        -
        (j)  Acquisition  related  cost                                                    5,837                        -
        (k)  Integration  cost                                                                    2,239                        -
        (l)  Acquired  in-process  research  and
                  development                                                                            6,350                        -
        (m)  Restructuring                                                                          1,279
        (n)  Tax  adjustment                                                                      (1,390)                      -
                Non-GAAP  net  income                                                            $2,854            $12,230
                Non-GAAP  net  income  per  basic  share                              $0.07                $0.28
                Non-GAAP  net  income  per  diluted  share                          $0.06                $0.27
                Common  shares  outstanding  -  basic                                43,887              43,510
                Common  shares  outstanding  -  diluted                            45,680              45,729

 


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