MIPS Technologies Reports Second Quarter Fiscal 2009 Financial Results Highlighting GAAP Profit and Positive Cash Flow

MOUNTAIN VIEW, Calif., Jan. 29 /PRNewswire-FirstCall/ -- MIPS Technologies, Inc. (NASDAQ: MIPS), a leading provider of industry-standard architectures, processors and analog IP for digital consumer, home networking, wireless, communications and business applications, today reported consolidated financial results for its second quarter fiscal 2009 ended December 31, 2008. All financial results are reported in U.S. GAAP unless otherwise noted.

Revenue for the second quarter was $26.4 million, essentially flat compared with both the prior quarter revenue of $26.2 million and to the $26.5 million reported in the second fiscal quarter a year ago. The Q2 sequential revenue increase was driven by increased revenues from royalties offset by slightly lower license revenue.

Revenue from royalties was $13.0 million, an increase of $1.1 million or 9 percent from the prior quarter and $0.4 million or 3 percent from the $12.5 million reported in the second quarter a year ago. The sequential increase in royalty revenue was a result of higher licensee unit volumes compared with the prior quarter. Licensee units grew 13 percent sequentially to 126 million units and 18 percent on a year to year basis. Contract and license revenue was $13.4 million, a decrease of 7 percent from the $14.4 million reported in the prior quarter and a 4 percent decrease from the $13.9 million reported in the second quarter a year ago.

Total operating expense, excluding restructuring charges, declined $4.2 million to $15.1 million from $19.3 million in the previous quarter, mainly reflecting the cost control measures implemented earlier in the year.

The Company's fiscal Q2 2009 GAAP net income was $5.0 million or $0.11 per share on a diluted basis. This compares with a net loss of $7.0 million or $0.16 per basic and diluted share in the prior quarter and a net loss of $12.1 million or $0.28 per share in the second quarter a year ago. This marks the Company's first GAAP profitable quarter since the fourth quarter fiscal 2007.

Non-GAAP net income in the second quarter of fiscal 2009, which excludes the effect of equity based compensation expense, restructuring costs, and certain costs related to the acquisition of Chipidea, was $8.5 million or $0.19 per diluted share. This represents a significant improvement when compared to the non-GAAP net income of $1.5 million or $0.03 per diluted share in the prior quarter and a net loss of $2.9 million or $0.07 per diluted share in the second quarter a year ago. The tables below provide a reconciliation of non-GAAP measures reported in this release to the corresponding GAAP results.

The Company's Q2 2009 ending cash balance was $20.5 million, an improvement of $4.3 million from the previous quarter including approximately a $0.6 million outflow related to the restructuring. Total outstanding debt was also reduced by $1.6 million to $16.5 million during the quarter.

"I am pleased with the results of our Processor Business; our cost controls, GAAP net income and positive cash flow, all of which contributed to the strengthening of our balance sheet during Q2," said John Bourgoin, president and CEO. "We are actively managing our costs worldwide to ensure the overall financial health of MIPS during these challenging economic times," added Bourgoin.

MIPS Technologies invites you to listen in a live conference call to management's discussion of Q2 fiscal 2009 results, as well as guidance for Q3 fiscal 2009. The conference call number is 210-839-8502 and the replay number is 203-369-0984. The password for both calls is MIPS. The replay will be available for 30 days shortly following the end of the conference call. An audio replay of the conference call will also be posted on the company's website at: http://www.mips.com/company/investor-relations/.

About MIPS Technologies, Inc.

MIPS Technologies, Inc. (NasdaqGS: MIPS) is the world's second largest semiconductor design IP company and the number one analog IP company worldwide. With more than 250 customers around the globe, MIPS Technologies is the only company that provides a combined portfolio of processors, analog IP and software tools for the embedded market. The company powers some of the world's most popular products for the digital entertainment, home networking, wireless, and portable media markets -- including broadband devices from Linksys, DTVs and digital consumer devices from Sony, DVD recordable devices from Pioneer, digital set-top boxes from Motorola, network routers from Cisco, 32-bit microcontrollers from Microchip Technology and laser printers from Hewlett-Packard. Founded in 1998, MIPS Technologies is headquartered in Mountain View, California, with offices worldwide. For more information, contact (650) 567-5000 or visit http://www.mips.com.

Forward Looking Statements

This press release contains forward-looking statements; such statements are indicated by forward-looking language such as "plans", "anticipates", "expects", "will", and other words or phrases contemplating future activities including statements regarding MIPS Technologies' expectations regarding customers' use of MIPS' products. These forward-looking statements include MIPS' expectation regarding improvements in financial results. Actual events or results may differ materially from those anticipated in these forward- looking statements as a result of a number of different risks and uncertainties, including but not limited to: the fact that there can be no assurance that our products will achieve market acceptance, difficulties that may be encountered in the integration of the Chipidea business, changes in our research and development expenses, the anticipated benefits of our partnering relationships may be more difficult to achieve than expected, the timing of or delays in customer orders, delays in the design process, the length of MIPS Technologies' sales cycle, MIPS Technologies' ability to develop, introduce and market new products and product enhancements, and the level of demand for semiconductors and end-user products that incorporate semiconductors. For a further discussion of risk factors affecting our business, we refer you to the risk factors section in the documents we file from time to time with the Securities and Exchange Commission.

                           MIPS TECHNOLOGIES, INC.
                                (In thousands)

                                              December 31, 2008  June 30, 2008
    Current assets:
        Cash and cash equivalents                       $20,503      $13,938
        Accounts receivable, net                          9,808       14,462
        Prepaid expenses and other current
         assets                                          21,685       24,803
           Total current assets                          51,996       53,203
    Equipment, furniture and property, net                  12,707              16,307
        Goodwill                                                                                          30,852              40,624
        Other  assets                                                                                  32,855              42,610
                                                                                                              $128,410          $152,744
                        Liabilities  and  Stockholders'  Equity
        Current  liabilities:
                Accounts  payable                                                                  $1,919              $3,441
                Accrued  liabilities                                                            37,853              51,963
                Debt  -  short  term                                                                  6,770              18,641
                Deferred  revenue                                                                    3,807                4,283
                      Total  current  liabilities                                          50,349              78,328
        Long-term  liabilities
                Debt  -  long  term                                                                    9,688                        -
                Other  long  term  liabilities                                            25,590              29,496
                      Total  long  term  liabilities                                      35,278              29,496

        Stockholders'  equity                                                                  42,783              44,920
                                                                                                              $128,410          $152,744

                                                      MIPS  TECHNOLOGIES,  INC.
                                        (In  thousands,  except  per  share  data)

                                                                              Three  Months  Ended      Six  Months  Ended
                                                                                      December  31,              December  31,
                                                                                    2008          2007            2008            2007
                Royalties                                              $12,953    $12,515      $24,785      $23,035
                Contract  Revenue                                  13,446      13,935        27,831        25,568
                        Total  revenue                                26,399      26,450        52,616        48,603
        Cost  of  Sales                                                  5,792        9,379        13,436        12,703
        Gross  Margin                                                  20,607      17,071        39,180        35,900
        Operating  expenses:
                Research  and  development                    6,797        9,493        14,146        18,506
                Sales  and  marketing                              4,354        6,153          9,399        11,739
                General  and  administrative                3,993        7,869        10,949        14,878
                Acquired  in-process
                  research  and  development                          -            910                  -          6,350
                Restructuring                                              548                -          5,479                  -
                        Total  operating  expenses          15,692      24,425        39,973        51,473
        Operating  income  (loss)                              4,915      (7,354)          (793)    (15,573)
        Other  income  (expense),  net                        (875)    (1,220)      (2,312)          (727)
        Income  (loss)  before  income  taxes          4,040      (8,574)      (3,105)    (16,300)
        Provision  for  (benefit  from)
          income  taxes                                                    (937)      3,511        (1,115)        2,816
        Net  income  (loss)                                        $4,977  $(12,085)    $(1,990)  $(19,116)
        Net  income  (loss)  per  basic  share          $0.11      $(0.28)      $(0.04)      $(0.44)
        Net  income  (loss)  per  diluted  share      $0.11      $(0.28)      $(0.04)      $(0.44)
        Common  shares  outstanding-basic            44,586      43,902        44,460        43,834
        Common  shares  outstanding-diluted        44,588      43,902        44,460        43,834

                                                      MIPS  TECHNOLOGIES,  INC.
                                        (In  thousands,  except  per  share  data)

                                                                          Three  Months      Three  Months    Three  Months
                                                                                Ended                  Ended                  Ended
                                                                          December  31,    September  30,    December  31,
                                                                                2008                      2008                    2007
                  GAAP  net  income  (loss)                $4,977                $(6,967)            $(12,085)

                  Net  income  (loss)    per
                    basic  share                                      $0.11                  $(0.16)                $(0.28)
                  Net  income  (loss)  per
                    diluted  share                                  $0.11                  $(0.16)                $(0.28)
        (a)    Equity-based  compensation
                    expense  under  SFAS  123R            $1,312                  $1,161                  $2,082
        (b)    Amortization  of  intangibles            855                    1,515                    2,232
        (c)    Acquisition  related  cost                  979                    1,545                    2,138
        (d)    Integration  cost                                      -                            -                    1,280
        (e)    Acquired  in-process  research
                    and  development                                      -                            -                        910
        (f)    Restructuring                                        548                    4,931                            -
        (g)    Tax  adjustment                                    (157)                    (662)                      551
                  Non-GAAP  net  income  (loss)        $8,514                  $1,523                $(2,892)
                  Non-GAAP  net  income  (loss)
                    per  basic  share                              $0.19                    $0.03                  $(0.07)
                  Non-GAAP  net  income  (loss)
                    per  diluted  share                          $0.19                    $0.03                  $(0.07)
                  Common  shares  outstanding
                    -  basic                                            44,586                  44,334                  43,903
                  Common  shares  outstanding
                    -  diluted                                        44,588                  44,952                  43,903


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