<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                    FORM 10-Q



(MARK ONE)
          [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
                        SECURITIES EXCHANGE ACTS OF 1934.

                  FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1999

                                       OR

          [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
    SECURITIES EXCHANGE ACT OF 1934. FOR THE TRANSITION PERIOD FROM   TO   .


                        COMMISSION FILE NUMBER 000-24487


                             MIPS TECHNOLOGIES, INC.
             (Exact name of registrant as specified in its charter)

       DELAWARE                                                77-0322161
(State or other jurisdiction of                             (I.R.S. Employer
 Incorporation or organization)                           Identification Number)


               1225 CHARLESTON ROAD, MOUNTAIN VIEW, CA 94043-1353
                    (Address of principal executive offices)


       Registrants' telephone number, including area code: (650) 567-5000
   --------------------------------------------------------------------------


         Indicate by check mark whether the registrant (1) has filed all 
reports required to be filed by Section 13 or 15(d) of the Securities 
Exchange Act of 1934 during the preceding 12 months (or for such shorter 
period that the registrant was required to file such reports), and (2) has 
been subject to such filing requirements for the past 90 days. Yes [X] No[ ]

         The number of outstanding shares of the Registrant's Common Stock, 
$.001 par value, was 37,292,286 as of April 30,1999.

<PAGE>

                         PART 1 - FINANCIAL INFORMATION

<TABLE>
<CAPTION>

Item 1.  Financial Statements (Unaudited):
                                                                             Page
                                                                             ----
<S>                                                                          <C>
         Condensed Consolidated Balance Sheets .............................  3
         Condensed Consolidated Statements of Operations ...................  4
         Condensed Consolidated Statements of Cash Flows ...................  5
         Notes to Condensed Consolidated Financial Statements ..............  6

Item 2.  Management's Discussion and Analysis of Results of
            Operations and Financial Condition ............................. 10

Item 3.  Quantitative and Qualitative Disclosures About Market Risk ........ 19

                           PART II - OTHER INFORMATION

Item 1.  Legal Proceedings ................................................. 20

Item 2.  Changes in Securities ............................................. 20

Item 4.  Submission of Matters to a Vote of Security Holders ............... 21

Item 6.  Exhibits and Reports on Form 8-K .................................. 21

Signatures ................................................................. 23

Index to Exhibits .......................................................... 24

</TABLE>

                                      2

<PAGE>

                         PART I - FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS.

                             MIPS TECHNOLOGIES, INC.
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                   MARCH  31,    JUNE 30,
                                                                      1999         1998
                                                                   ----------   ---------
                            ASSETS                                 (unaudited)
<S>                                                                <C>           <C>
Current assets:
     Cash and cash equivalents ................................    $  40,532    $      45
     Accounts receivable ......................................        3,123          250
     Prepaid expenses and other current assets ................        1,009          618
                                                                   ----------   ---------
          Total current assets ................................       44,664          913
Equipment and furniture, net ..................................        3,260        2,787
Other assets ..................................................        1,099          996
                                                                   ----------   ---------
                                                                   $  49,023    $   4,696
                                                                   ----------   ---------
                                                                   ----------   ---------


              LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

Current liabilities:

     Accounts payable .........................................    $   8,434    $   3,087
     Accrued liabilities ......................................        6,477        2,356
                                                                   ----------   ---------
          Total current liabilities............................       14,911        5,443
Deferred revenue, less current portion.........................          375           --
Stockholders' equity (deficit):
     Common stock .............................................           37           36
     Additional paid-in capital ...............................      136,440      120,041
     Accumulated deficit ......................................     (102,740)    (120,824)
                                                                   ----------   ---------
          Total stockholders' equity (deficit) ................       33,737         (747)
                                                                   ----------   ---------
                                                                   $  49,023    $   4,696
                                                                   ----------   ---------
                                                                   ----------   ---------


</TABLE>


                             See accompanying notes.

                                      3

<PAGE>

                             MIPS TECHNOLOGIES, INC.
           CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
                      (IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
                                                         THREE MONTHS ENDED             NINE MONTHS ENDED
                                                              MARCH 31,                      MARCH 31,
                                                      ------------------------       -----------------------
                                                          1999            1998           1999           1998
                                                          ----            ----           ----           ----
<S>                                                   <C>             <C>            <C>            <C> 
Revenue:
         Royalties                                    $ 23,274        $ 18,231       $ 48,127       $ 44,990
         Contract revenue                                3,400              --          5,800            827
                                                      --------        --------       --------       --------
                Total revenue                           26,674          18,231         53,927         45,817
Costs and expenses:
         Cost of contract revenue                           --              --            125            375
         Research and development                        5,824           4,446         15,047         39,573
         Sales and marketing                             1,801           1,274          4,820          4,184
         General and administrative                      1,718             986          4,673          3,281
         Restructuring charge                               --              --             --          2,614
                                                      --------        --------       --------       --------
                Total costs and expenses                 9,343           6,706         24,665         50,027
                                                      --------        --------       --------       --------
Operating income (loss)                                 17,331          11,525         29,262         (4,210)
Interest income (expense), net                             469              (2)           908            (13)
                                                      --------        --------       --------       --------
Income (loss) before income taxes                       17,800          11,523         30,170         (4,223)
Provision for income taxes                               7,120              --         12,068           --
                                                      --------        --------       --------       --------
Net income (loss)                                     $ 10,680        $ 11,523       $ 18,102       $ (4,223)
                                                      --------        --------       --------       --------
                                                      --------        --------       --------       --------
Net income (loss) per share - basic                   $   0.29        $   0.32       $   0.49       $  (0.12)
                                                      --------        --------       --------       --------
                                                      --------        --------       --------       --------
Net income (loss) per share - diluted                 $   0.27        $   0.32       $   0.47       $  (0.12)
                                                      --------        --------       --------       --------
                                                      --------        --------       --------       --------

Common shares outstanding - basic                       37,277          36,000         37,242         36,000
                                                      --------        --------       --------       --------
                                                      --------        --------       --------       --------
Common shares outstanding - diluted                     39,275          36,000         38,584         36,000
                                                      --------        --------       --------       --------
                                                      --------        --------       --------       --------
</TABLE>


                             See accompanying notes.

                                      4

<PAGE>

                             MIPS TECHNOLOGIES, INC.
           CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                              NINE MONTHS
                                                                                             ENDED MARCH 31,
                                                                                       ---------------------------
                                                                                         1999               1998
                                                                                       --------           --------
<S>                                                                                    <C>                <C>
Operating activities:
     Net income (loss) ......................................................          $ 18,102           $ (4,223)
     Adjustments to reconcile net income (loss) to cash provided by (used
           in) operations:
           Depreciation .....................................................             1,393              4,594
           Other non-cash charges ...........................................               385                315
           Restructuring charge .............................................                --              2,614
           Changes in operating assets and liabilities:
           Accounts receivable ..............................................            (2,873)                58
           Accounts payable .................................................             5,347             (3,664)
           Other assets and liabilities, net ................................             3,867             (1,916)
                                                                                       --------           --------
                    Net cash flow provided by (used in) operating activities,
                          excluding Silicon Graphics financing ..............            26,221             (2,222)
Investing activities - capital expenditures .................................            (1,866)              (645)
Financing activities:
     Net proceeds from issuance of common stock .............................            16,150                 --
     Payments on capital lease obligations ..................................                --               (331)
     Financing provided from Silicon Graphics ...............................                --              3,198
                                                                                       --------           --------
                    Net cash provided by financing activities ...............            16,150              2,867
Effect of exchange rate changes on cash .....................................               (18)                --
                                                                                       --------           --------
Net increase (decrease) in cash .............................................            40,487                 --
Cash and cash equivalents, beginning of period ..............................                45                 --
                                                                                       --------           --------
Cash and cash equivalents, end of period ....................................          $ 40,532           $     --
                                                                                       --------           --------
                                                                                       --------           --------
Supplemental disclosures of cash flow information:
     Interest paid ..........................................................          $     --           $     13
                                                                                       --------           --------
                                                                                       --------           --------
     Equipment transferred to Silicon Graphics ..............................                --              7,714
                                                                                       --------           --------
                                                                                       --------           --------
</TABLE>

                             See accompanying notes.

                                      5

<PAGE>

                             MIPS TECHNOLOGIES, INC.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1.   FORMATION AND DESCRIPTION OF BUSINESS

     FORMATION OF MIPS TECHNOLOGIES, INC. (THE "COMPANY"). MIPS Technologies' 
predecessor, MIPS Computer Systems, Inc., was founded in 1984 and was engaged 
in the design and development of RISC processors for the computer systems and 
embedded markets. Silicon Graphics, Inc. ("Silicon Graphics") adopted the 
MIPS architecture for its computer systems in 1988 and acquired MIPS Computer 
Systems, Inc. in 1992. Following the acquisition, Silicon Graphics continued 
the MIPS processor business through its MIPS Group (a division of Silicon 
Graphics), which focused primarily on the development of high-performance 
processors for Silicon Graphics' workstations and servers. Until the last few 
years, cost considerations limited the broader use of these processors. 
However, as the cost to design and manufacture processors based on the MIPS 
technology decreased, the MIPS Group sought to penetrate the consumer market, 
both through supporting and coordinating the efforts of the MIPS 
semiconductor partners and most notably, by partnering with Nintendo in its 
design of the Nintendo 64 video game player and related cartridges. Revenues 
related to sales of Nintendo 64 game players and related cartridges currently 
account for the substantial majority of the Company's revenue. In order to 
increase the focus of the MIPS Group on the design and development of 
processor applications dedicated to the embedded market, in December 1997, 
Silicon Graphics initiated a plan to separate the business of the MIPS Group 
from its other operations.

     In April 1998, the Board of Directors of the Company approved a 
transaction, pursuant to which, Silicon Graphics transferred to the Company 
the assets and liabilities related to the design and development of processor 
intellectual property for embedded market applications (the "Separation"). In 
connection with the Separation, the Company and Silicon Graphics entered into 
a Corporate Agreement that provides for certain pre-emptive rights of Silicon 
Graphics to purchase shares of the Company's capital stock, registration 
rights related to shares of the Company's capital stock owned by Silicon 
Graphics and covenants against certain actions by the Company for as long as 
Silicon Graphics owns a majority of the Company's outstanding common stock. 
Furthermore, the Company and Silicon Graphics entered into a Management 
Services Agreement pursuant to which Silicon Graphics provides certain 
services to the Company following the Separation on an interim or 
transitional basis.

     Since the closing of the Company's initial public offering (the 
"Offering") on July 6, 1998, the Company has been a majority owned subsidiary 
of Silicon Graphics.

     MIPS Technologies International A.G., a wholly owned Swiss subsidiary, 
was incorporated on November 20, 1998. MIPS Denmark Development Center, 
located in Copenhagen, Denmark, and a branch of the Swiss subsidiary, was 
opened on December 1, 1998. This development center is engaged in product 
design and development as well as support activities for the Company's 
European-based customers.

     BASIS OF PRESENTATION. The accompanying financial statements, through 
June 30, 1998, reflect the operations of the Company's predecessor, the MIPS 
Group. The balance sheet as of June 30, 1998 has been prepared using the 
historical basis of accounting and includes all of the assets and liabilities 
specifically identifiable to the Company and, for certain liabilities that 
are not specifically identifiable, estimates have been used to allocate a 
portion of Silicon Graphics' liabilities to the Company. Through June 30, 
1998, cash management for the Company had been done by Silicon Graphics on a 
centralized basis and all cash provided by Silicon Graphics has been recorded 
as interest-free

                                      6

<PAGE>

                             MIPS TECHNOLOGIES, INC.

        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

financing from Silicon Graphics. The statement of operations for the nine 
months ended March 31, 1998 includes all revenue and costs attributable to 
the Company, including a corporate allocation from Silicon Graphics of the 
costs of facilities and employee benefits. Additionally, incremental 
corporate administration, finance and management costs have been allocated to 
the Company based on certain methodologies that management believes are 
reasonable under the circumstances. Subsequent to June 30, 1998, the Company 
operated as a stand-alone company, MIPS Technologies, Inc. The consolidated 
financial statements includes the accounts of the Company and its wholly 
owned Swiss subsidiary, MIPS Technologies International A.G., after 
elimination of significant intercompany transactions and balances.

     The unaudited results of operations for the interim periods shown herein 
are not necessarily indicative of operating results for the entire fiscal 
year. In the opinion of management, the condensed consolidated financial 
statements include all adjustments (consisting only of normal recurring 
accruals) necessary to present fairly the financial position, results of 
operations and cash flows for each interim period shown.

     The condensed consolidated financial statements have been prepared in 
accordance with the rules and regulations of the Securities and Exchange 
Commission ("SEC") applicable to interim financial information. Certain 
information and footnote disclosures included in financial statements 
prepared in accordance with generally accepted accounting principles have 
been omitted in these interim statements pursuant to such SEC rules and 
regulations. The balance sheet at June 30, 1998 has been derived from audited 
financial statements, but does not include all disclosures required by 
generally accepted accounting principles. However, the Company believes that 
the disclosures are adequate to make the information presented not 
misleading. The unaudited condensed consolidated financial statements 
included in this Form 10-Q should be read in conjunction with the audited 
financial statements and notes thereto, for the fiscal year ended June 30, 
1998, included in the Company's 1998 Annual Report on Form 10-K.

NOTE 2.  COMPUTATION OF EARNINGS PER SHARE

     The following table sets forth the computation of basic and diluted
earnings per share (in thousands, except per share amounts):


<TABLE>
<CAPTION>
                                                                        Three Months Ended            Nine Months Ended
                                                                             March 31,                    March 31,
                                                                     -----------------------       ----------------------
                                                                        1999          1998           1999          1998
                                                                     --------       --------       --------      --------
<S>                                                                  <C>            <C>            <C>           <C>
Net income (loss) ...............................................    $ 10,680       $ 11,523       $ 18,102      $ (4,223)
                                                                     --------       --------       --------      --------
                                                                     --------       --------       --------      --------
Weighted - average shares outstanding - basic ...................      37,277        36,000         37,242        36,000
Effect of dilutive securities-employee stock options ............       1,998          --            1,342          --
                                                                     --------       --------       --------      --------
Weighted - average shares outstanding - diluted .................      39,275        36,000         38,584        36,000
                                                                     --------       --------       --------      --------
                                                                     --------       --------       --------      --------

Net income (loss) per share - basic .............................    $   0.29       $  0.32       $   0.49      $  (0.12)
                                                                     --------       --------       --------      --------
                                                                     --------       --------       --------      --------
Net income (loss) per share - diluted ...........................    $   0.27       $  0.32       $   0.47      $  (0.12)
                                                                     --------       --------       --------      --------
                                                                     --------       --------       --------      --------
</TABLE>

                                      7

<PAGE>

                             MIPS TECHNOLOGIES, INC.

        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 3.   NEW ACCOUNTING PRONOUNCEMENTS

     During fiscal 1999, the Company adopted Statement of Financial 
Accounting Standards No. 130 "Reporting Comprehensive Income" ("SFAS 130"). 
There was no impact to the Company as a result of the adoption of SFAS 130, 
as there is no material difference between the Company's reported net income 
(loss) and the comprehensive net income (loss) under SFAS 130 for the periods 
presented.

     In June 1997, the Financial Accounting and Standards Board issued 
Statement of Financial Accounting Standards No. 131 "Disclosures about 
Segments of an Enterprise and Related Information" ("SFAS 131"). SFAS 131 is 
effective for the fiscal year ending June 30, 1999 and establishes standards 
for disclosure about products, geography and major customers. The adoption of 
SFAS 131 will have no impact on the Company's results of operation and 
financial condition. The Company expects that implementation of this standard 
will not have material effect on its annual financial statement disclosures.

NOTE 4.   CONTINGENCIES

     From time to time, the Company receives communications from third parties
asserting patent or other rights covering the Company's products and
technologies. Based upon the Company's evaluation, it may take no action or it
may seek to obtain a license. There can be no assurance in any given case that a
license will be available on terms the Company considers reasonable, or that
litigation will not ensue. In addition, from time to time, the Company evaluates
possible patent infringement claims against third parties and may assert such
claims, if appropriate.

     Management is not aware of any pending disputes that would be likely to
have a material adverse effect on the Company's business, results of operations
or financial condition.

NOTE 5.  RELATED PARTY TRANSACTIONS

     At March 31, 1999, accounts payable includes approximately $157,000 payable
to Silicon Graphics related to certain administrative and corporate support
services provided by Silicon Graphics on behalf of the Company and approximately
$7.5 million payable to Silicon Graphics in accordance with the terms of a tax
sharing agreement pursuant to which the Company and Silicon Graphics will make
payments to each other such that, with respect to any period, the amount of
taxes to be paid by the Company, subject to certain adjustments, will be
determined as though the Company were to file separate federal, state and local
income tax returns.

     During the nine months ended March 31, 1998, the Company was operating as a
division of Silicon Graphics and was utilizing its centralized cash management
services and processes relating to accounts payable and accrued liabilities. The
Company's net cash requirements during that period were funded by Silicon
Graphics.

                                      8

<PAGE>

                             MIPS TECHNOLOGIES, INC.

        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 6.  SUBSEQUENT EVENTS

     On April 5, 1999, the Company effected a recapitalization of its 
authorized capital stock pursuant to which (i) each issued and outstanding 
share of the Company's common stock, par value $0.001 per share, was 
redesignated as one share of newly created and issued Class A Common Stock, 
par value $0.001 per share, of the Company and (ii) Silicon Graphics, Inc. 
exchanged each share of Class A Common Stock it owned for one share of newly 
created and issued Class B Common Stock, par value $0.001 per share, of the 
Company. The recapitalization was designed to permit an orderly, multi-step 
increase in the number of shares of MIPS Technologies common stock that are 
publicly traded while preserving Silicon Graphics' ability to divest of its 
interest in MIPS Technologies in a transaction intended to qualify generally 
as a tax-free distribution under the Internal Revenue Code.

                                      9

<PAGE>

ITEM  2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND 
FINANCIAL CONDITION

     YOU SHOULD READ THE FOLLOWING DISCUSSION AND ANALYSIS TOGETHER WITH THE
UNAUDITED FINANCIAL STATEMENTS AND THE NOTES TO THOSE STATEMENTS INCLUDED
ELSEWHERE IN THIS REPORT. Except for the historical information contained in
this Quarterly Report on Form 10-Q, this discussion contains forward-looking
statements that involve risks and uncertainties. Our actual results could differ
materially from those indicated in these forward-looking statements as a result
of certain factors, as more fully described in the "Factors That May Affect Our
Business" section, and other risks included from time to time in our other
Securities and Exchange Commission ("SEC") reports and press releases, copies of
which are available from us upon request. The forward-looking statements within
this Quarterly Report on Form 10-Q are identified by words such as "believes,"
"anticipates," "expects," "intends," "may" and other similar expressions.
However, these words are not the exclusive means of identifying such statements.
We undertake no obligation to update any forward-looking statements included in
this discussion.

RESULTS OF OPERATIONS

     REVENUE. Our revenue consists of royalties and contract revenue earned 
under contracts with our licensees. We generate royalties from the sale by 
semiconductor manufacturers of products incorporating our technology. We also 
receive royalties from Nintendo relating to sales of Nintendo 64 video game 
players and related cartridges. Royalties may be calculated as a percentage 
of the revenue received by the seller on sales of such products or on a per 
unit basis. Contract revenue includes technology license fees and engineering 
service fees earned primarily under contracts with our semiconductor 
manufacturing partners. We receive license fees for the use of technology 
that we have developed internally and, in some cases, that we have licensed 
from third parties. Fees related to engineering services, which are performed 
on a best efforts basis, are recognized as revenue when the defined 
milestones are achieved and collectibility of the milestone payment is 
probable. In most instances, the technology we develop, including under 
engineering services contracts, can be licensed to multiple customers.

     Total revenue for the third quarter and first nine months of fiscal 1999 
increased by $8.4 million and $8.1 million, respectively, to $26.7 million 
and $53.9 million, compared with $18.2 million and $45.8 million for the 
comparable periods in fiscal 1998. Royalties for the third quarter and first 
nine months of fiscal 1999 increased by $5.0 million and $3.1 million, 
respectively, to $23.3 million and $48.1 million, compared with $18.2 million 
and $45.0 million for the same periods in fiscal 1998. The increase in 
royalties for these periods was due primarily to higher royalties derived 
from sales of video game products. Contract revenue for the third quarter and 
first nine months of fiscal 1999 increased by $3.4 million and $5.0 million, 
respectively, compared with the same periods in fiscal 1998. The increase in 
both of these periods was the result of fees generated primarily from new 
agreements, and included engineering service fees of $4.9 million earned in 
the second and third fiscal quarters of 1999 upon our achievement of defined 
milestones.

     COST OF CONTRACT REVENUE. Our cost of contract revenue consists mainly of
sublicense fees. We incur an obligation to pay these fees when we sublicense
technology to our customers that we have licensed from third parties. Sublicense
fees are recognized as cost of contract revenue when the obligation is incurred,
which is typically the same period in which the related revenue is recognized.

     Cost of contract revenue was zero for the third quarter of each of 
fiscal 1999 and fiscal 1998. Cost of contract revenue decreased $250,000 to 
$125,000 for the first nine months of fiscal 1999 compared with the same 
period in fiscal 1998. This decrease was attributable to a decrease in our 
sublicensing activities which resulted in a decrease in our obligation to pay 
sublicense fees to our licensor. We believe that future cost of contract 
revenue will be minimal.

     RESEARCH AND DEVELOPMENT. Costs incurred with respect to internally
developed technology and engineering services are included in research and
development expense as they are incurred and are not directly related to any
particular licensee, license agreement or license fee.

     Research and development expenses for the third quarter and first nine
months of fiscal 1999 were $5.8 million and 

                                     10

<PAGE>

$15.1 million, respectively, compared with research and development expenses 
of $4.4 million and $39.6 million for the comparable periods in fiscal 1998. 
The $1.4 million increase in the third quarter of fiscal 1999 compared with 
the same period in the prior year was due to the addition of resources to 
support various project development activities. The $24.5 million decrease in 
research and development expenses for the nine-month period reflects the 
separation of the our business from that of Silicon Graphics as well as the 
change in our strategic direction in the second half of fiscal 1998. Research 
and development expenses for the first half of fiscal 1998 reflect the 
operations of the MIPS Group, a division of Silicon Graphics, which had a 
staff of 221 persons at December 31, 1997. Because the markets we have 
targeted allow us to use small design teams and to rely largely on industry 
standard third-party design tools, we reduced our research and development 
staff in the third quarter of fiscal 1998 by approximately 185 persons in 
connection with the separation and our change in strategic direction. During 
the first nine months of fiscal 1999, we increased our research and 
development staff to 86 persons reflecting the increasing staffing 
requirements to support our project development activities, including the 
addition of 24 employees to staff our development center in Copenhagen, 
Denmark which opened on December 1, 1998. The development center will work on 
product development as well as provide support and design expertise for the 
our European-based customers. We expect research and development staff and 
expenses to increase as we develop new designs for the digital consumer 
products and business equipment markets.

     SALES AND MARKETING, GENERAL AND ADMINISTRATIVE. Sales and marketing and
general and administrative expenses for the third quarter and first nine months
of fiscal 1999 increased by $1.3 million and $2.0 million, respectively, to $3.5
million and $9.5 million, compared to sales and marketing and general and
administrative expenses of $2.3 million and $7.5 million for the comparable
periods in fiscal 1998. The increase in both the quarter and year-to-date
periods was due to an increase in our licensing and marketing activities and the
existence of legal and administrative costs related to our status as a publicly
traded company that we did not incur in the comparable prior periods. During 
the first nine months of fiscal 1999, we increased our sales and marketing 
staff to 24 persons from 16 persons and our general and administrative staff 
to 15 persons from 7 persons.

     RESTRUCTURING CHARGE. The restructuring charge taken in the first nine
months of fiscal 1998 included $500,000 in severance related costs and $2.1
million in asset writedowns related to the shift in our strategic direction.

     INTEREST INCOME (EXPENSE). For the third quarter and first nine months 
of fiscal 1999, interest income was $469,000 and $908,000, respectively, 
compared to interest expense of $2,000 and $13,000 for the comparable periods 
in fiscal 1998. The increase in both the quarter and year-to-date periods was 
primarily due to interest income earned from the investment of the net cash 
proceeds of approximately $16.0 million from our July 1998 initial public 
offering and the cash generated from our operating activities during fiscal 
1999.

     INCOME TAXES. While we are a part of Silicon Graphics' consolidated 
group for federal income tax purposes, we are responsible for our income 
taxes through a tax sharing agreement with Silicon Graphics. Therefore, to 
the extent the we produce taxable income, losses or credits, we make or 
receive payments as though we filed separate federal, state and local income 
tax returns. We will be included in Silicon Graphics' consolidated group for 
federal income tax purposes for so long as Silicon Graphics beneficially owns 
at least 80% of the total voting power and value of our outstanding common 
stock.

     We recorded a provision for income taxes of $7.1 million and $12.1 
million for the third quarter and first nine months of fiscal 1999. The 
provision for the third quarter and the first nine months of fiscal 1999 was 
based on an estimated federal and state combined rate of 40% on income before 
taxes. In light of both our historical losses incurred, as well as the fact 
that, by operation of a tax sharing agreement, we will not receive any 
benefit for losses incurred or have any tax liability for any income earned 
up to the closing of our initial public offering in July 1998, no income tax 
provision or benefit was reflected for the third quarter and the first nine 
months of fiscal 1998.

                                     11

<PAGE>

FINANCIAL CONDITION

     At March 31, 1999, we had cash and cash equivalents of $40.5 million and 
total working capital of $29.8 million, including a short-term component of 
deferred revenue of $167,000.

     Our operating activities provided net cash of $26.2 million for the nine 
months ended March 31, 1999 compared to net cash used in operating activities 
of $2.2 million for the comparable period in 1998. In the nine months ended 
March 31, 1999, net cash provided by operating activities consisted mainly of 
net income and increases in accounts payable and accrued liabilities, 
partially offset by an increase in accounts receivable. The increases in 
accounts payable and accrued liabilities were the result of accrued income 
taxes and accrued compensation related to increased staffing levels, along 
with accumulated performance bonuses and accrued administrative costs 
associated with being a public company. The increase in accounts receivable 
was due to amounts owed to us under new license agreements entered into 
during the period. In the nine months ended March 31, 1998, net cash used in 
operating activities consisted mainly of net loss of $4.2 million and a 
decrease in accounts payable and accrued liabilities of $5.5 million 
partially offset by approximately $7.2 million of non-cash charges of 
depreciation and restructuring charges.

     Net cash used in investing activities was $1.9 million and $645,000 for 
the nine months ended March 31, 1999 and 1998, respectively. Net cash used in 
investing activities in both periods presented consisted of equipment 
purchases and licensing of computer aided design tools used in development. 
Capital expenditures have been, and future expenditures are anticipated to 
be, primarily for facilities and equipment to support expansion of our 
operations and licensing of computer aided design tools used in development. 
We expect that our capital expenditures will increase as our employee base 
grows.

     Net cash provided by financing activities was $16.2 million for the nine 
months ended March 31, 1999 compared to $2.9 million for the comparable 
period in 1998. Net cash provided by financing activities for the nine months 
ended March 31, 1999 consisted primarily of cash received in connection with 
the issuance of common stock through our initial public offering, which was 
completed in July 1998. Financing activities for the nine months ended March 
31, 1998 consisted primarily of net funds provided by Silicon Graphics.

     Our future liquidity and capital requirements are expected to vary 
greatly from quarter to quarter, depending on numerous factors, including, 
among others:

     -    the cost, timing and success of product development efforts,
     -    the cost and timing of sales and marketing activities,
     -    the extent to which our existing and new technologies gain market
          acceptance,
     -    the level and timing of contract revenues and royalties,
     -    competing technological and market developments and
     -    the costs of maintaining and enforcing patent claims and other
          intellectual property rights.

     We believe that cash generated by our operations, together with our 
current cash balance, will be sufficient to meet our projected operating and 
capital requirements for the foreseeable future. However, we may in the 
future be required to raise additional funds through public or private 
financing, strategic relationships or other arrangements. We cannot be 
certain that any such financing will be available on acceptable terms, or at 
all, and our failure to raise capital when needed could have a material 
adverse effect on our business, operating results and financial condition. 
Additional equity financing may be dilutive to holders of our common stock, 
and debt financing, if available, may involve restrictive covenants. 
Moreover, strategic relationships, if necessary to raise additional funds, 
may require that we relinquish our rights to certain technology. In the event 
that Silicon Graphics effects a tax-free distribution of its interest in us, 
our ability to issue shares of our common stock in connection with an 
acquisition or in a public or private offering during the 30 months following 
such distribution will be limited under the terms of a distribution tax 
indemnification agreement which we have agreed to enter into with Silicon 
Graphics prior to a tax-free distribution. We have had no direct third-party 
indebtedness.

                                     12

<PAGE>

FACTORS THAT MAY AFFECT OUR BUSINESS

     FACTORS NEGATIVELY AFFECTING SALES OF NINTENDO 64 VIDEO GAME PLAYERS AND 
RELATED CARTRIDGES COULD MATERIALLY AND ADVERSELY AFFECT US. Contract revenue 
and royalties from Nintendo and NEC relating to Nintendo 64 video game 
players and related cartridges accounted for 81% and 78% of our total revenue 
for the three months ended March 31, 1999 and the first nine months of fiscal 
1999, respectively, compared to 86% and 80% for the comparable periods in 
1998. We anticipate that royalties related to sales of Nintendo 64 video game 
cartridges will continue to represent a substantial portion of our total 
revenue for the next several years. Accordingly, factors negatively affecting 
sales of Nintendo 64 video game cartridges could have a material adverse 
effect on our results of operations and financial condition. The market for 
home entertainment products is competitive and the introduction of new 
products or technologies, as well as shifting consumer preferences, could 
negatively impact the amount and timing of sales of Nintendo 64 video game 
players and related cartridges.

     WE EXPECT THAT REVENUE WE DERIVE FROM THE SALE OF NINTENDO VIDEO GAME 
PRODUCTS WILL DECLINE WITH THE EVENTUAL INTRODUCTION OF THE NEXT GENERATION 
NINTENDO VIDEO GAME SYSTEM. The eventual introduction of the next generation 
Nintendo video game system is likely to result in declining sales of Nintendo 
64 video game players and related cartridges, although sales of video game 
cartridges, which account for a significant portion of our royalties, will 
continue, albeit at a declining rate, for a period of time after the 
introduction. We developed key elements of the Nintendo 64 system in 
conjunction with Silicon Graphics. These elements included certain software 
and graphics technologies which, as a result of our separation from Silicon 
Graphics and our shift in strategic direction in early 1998, we no longer 
offer. We understand that the next generation Nintendo video game system will 
not incorporate any of our technology. We value our relationship with 
Nintendo; however, there can be no assurance that this relationship will 
result in any revenues for us other than those generated by the sale of 
Nintendo 64 video game players and related cartridges.

     WE MUST DIVERSIFY OUR SOURCES OF REVENUE TO OFFSET THE EVENTUAL DECLINE 
IN REVENUE WE DERIVE FROM SALES OF NINTENDO VIDEO GAME PRODUCTS. Our ability 
to diversify our sources of revenue is still uncertain and will depend on 
whether our processors and related designs are selected for design ("design 
wins") into a broader range of digital consumer products and business 
equipment. Our ability to achieve design wins is subject to several risks and 
uncertainties, including:

     -    the potentially limited opportunities for design wins with respect to
          certain digital consumer products, such as video game products, due to
          a limited number of product manufacturers and the length of product
          life cycles;

     -    the risk that the performance, functionality, price and power
          characteristics of our designs may not satisfy those that are critical
          to specific digital consumer product applications; and

     -    our limited research and development and sales and marketing
          experience in our target markets due to our previous focus on the
          development of high performance processors for Silicon Graphics'
          workstations and servers.

     Even if our technology is incorporated into new products, we cannot be 
certain that any such products will ultimately be brought to market, achieve 
commercial acceptance or generate meaningful royalties for us.

     FACTORS THAT NEGATIVELY AFFECT OUR SEMICONDUCTOR COMPANY LICENSEES COULD 
ADVERSELY AFFECT OUR BUSINESS. Because our strategy has been to license our 
technology to a relatively limited number of semiconductor companies, a 
significant portion of our total revenue has been derived from a limited 
number of semiconductor companies. Accordingly, factors negatively affecting 
a particular licensee could adversely effect our results of operations and 
financial condition if such licensee accounts for a significant portion of 
our revenue at the time. We are subject to many risks beyond our control that 
influence the success of our licensees, including, for example, the highly 
competitive environment in which they operate, the market for their products, 
their engineering capabilities and their financial and other resources.

     Revenue from our top two semiconductor company licensees represented an 
aggregate of 11% and 14% for the three months ended March 31, 1999 and the 
first nine months of fiscal 1999, respectively, compared to 14% and 18% for 
the

                                     13

<PAGE>

comparable period in fiscal 1998. We expect that this revenue concentration 
will continue in the future, although the identity of the particular 
licensees that will account for this revenue concentration may vary from 
period to period depending on the addition or expiration of contracts, the 
nature and timing of payments due under our contracts and the volumes and 
prices at which our licensees sell products incorporating our technology.

     WE DEPEND ON SEMICONDUCTOR COMPANIES AND DIGITAL CONSUMER PRODUCT 
MANUFACTURERS TO ADOPT OUR TECHNOLOGY AND USE IT IN THE PRODUCTS THEY SELL. 
The adoption and continued use of our technology by semiconductor companies 
and digital consumer product manufacturers is important to our continued 
success. We face numerous risks in obtaining agreements with semiconductor 
companies and digital consumer product manufacturers on terms consistent with 
our business model, including:

     -    the lengthy and expensive process of building a relationship with a
          potential licensee;

     -    the fact that we may compete with the internal design teams of
          semiconductor companies and digital consumer product manufacturers;

     -    the potential difficulties in persuading large semiconductor 
          companies and digital consumer product manufacturers to work with 
          us, to rely on us for critical technology, and to disclose to us 
          proprietary manufacturing technology; and

     -    the potential difficulties in persuading potential licensees to bear
          certain development costs associated with our technology and to
          produce embedded processors using our technology.

     We cannot assure you that we will be able to maintain our current 
relationships or establish new relationships with additional licensees, and 
any failure by us to do so could have a material adverse effect on our 
business. Moreover, we are subject to risks beyond our control that influence 
the success or failure of a particular semiconductor company or digital 
consumer product manufacturer, including:

     -    the competition it faces and the market acceptance of its products;

     -    its engineering, marketing and management capabilities and the
          technical challenges unrelated to our technology that it faces in
          developing its products; and

     -    its financial and other resources.

     None of our current licensees are obligated to license new or future 
generations of our processor designs. In addition, because we do not control 
the business practices of our licenses, we do not influence the degree to 
which our licensees promote our technology or set the prices at which the 
products incorporating our technology are sold to digital consumer product 
manufacturers.

     Our separation from Silicon Graphics may negatively affect certain of 
our existing licensee relationships, insofar as Silicon Graphics was a factor 
in establishing and maintaining the relationship or in negotiating the 
financial and other terms of our contracts with such licensees (due to, for 
example, Silicon Graphics' status as a customer of such licensees).

     OUR QUARTERLY FINANCIAL RESULTS ARE SUBJECT TO SIGNIFICANT FLUCTUATIONS 
WHICH COULD ADVERSELY AFFECT OUR STOCK PRICE. Our quarterly financial results 
may vary significantly due to a number of factors, many of which are outside 
of our control. In addition, our revenue components are difficult to predict 
and may fluctuate significantly from period to period. Because our expenses 
are largely independent of our revenue in any particular period, it is 
difficult to accurately forecast our operating results. Our operating 
expenses are based, in part, on anticipated future revenue and a high 
percentage of our expenses are fixed in the short term. As a result, if our 
revenue is below expectations in any quarter, the adverse effect may be 
magnified by our inability to adjust spending in a timely manner to 
compensate for the revenue shortfall.

     In light of the foregoing, we believe that quarter-to-quarter 
comparisons of our revenue and operating results may not be a good indication 
of our future performance. In addition, it is possible that in some future 
periods our results of operations may be below the expectations of public 
market analysts and investors. In this event, the price of our Class A common 
stock may fall.

                                     14

<PAGE>

     Factors that could cause our revenue and operating results to vary from 
quarter to quarter include:

     -    the demand for and average selling prices of semiconductor products
          that incorporate our technology;

     -    the financial terms of our contractual arrangements with our
          semiconductor licensees, which may provide for significant up-front
          payments or payments based on the achievement of certain milestones;

     -    the relative mix of contract revenue and royalties;

     -    competitive pressures resulting in lower contract revenue or royalty
          rates;

     -    our ability to develop, introduce and market new processor
          intellectual property;

     -    the establishment or loss of licensing relationships with
          semiconductor companies or digital consumer product manufacturers;

     -    the timing of new products and product enhancements by us and our
          competitors;

     -    changes in development schedules, research and development expenditure
          levels and product support by us and digital consumer product
          manufacturers;

     -    seasonal fluctuations; and

     -    general economic and market conditions.

     WE ARE DEPENDENT ON THE EMERGING MARKET FOR DIGITAL CONSUMER PRODUCTS 
AND CONSUMER ACCEPTANCE OF THE PRODUCTS THAT INCORPORATE OUR TECHNOLOGY. The 
digital consumer products industry is presently the primary market for our 
processor, core and related designs. The market for digital consumer products 
is relatively new and emerging, and our success will depend largely on the 
level of consumer interest in digital consumer products, many of which have 
only recently been introduced to the market. In addition, the timing and 
amount of royalties we receive will depend on consumer acceptance of the 
products that incorporate our technology. We cannot assure you that any 
products that incorporate our technology will achieve commercial acceptance 
or generate meaningful royalties for us.

     Our dependence on the digital consumer products industry involves 
several risks and uncertainties, including:

     -    changes in consumer requirements and preferences;

     -    the introduction of products by our competitors embodying new
          technologies or features; and

     -    the current lack of open industry standards for hardware and software
          in the digital consumer products industry.

     IF WE ARE UNABLE TO DEVELOP ENHANCEMENTS AND NEW GENERATIONS OF OUR 
INTELLECTUAL PROPERTY, OUR ABILITY TO ACHIEVE DESIGN WINS MAY BE ADVERSELY 
AFFECTED. Our future success will depend on our ability to develop 
enhancements and new generations of our processors, cores and other 
intellectual property that satisfy the requirements of specific product 
applications and introduce these new technologies to the marketplace in a 
timely manner. If our development efforts are not successful or are 
significantly delayed, or if the characteristics of our processor and related 
designs are not compatible with the requirements of specific product 
applications, our ability to achieve design wins may be limited. Our failure 
to achieve a sufficient number of design wins could have a material adverse 
effect on our business, results of operations and financial condition.

     Technical innovations of the type critical to our success are inherently 
complex and involve several risks, including:

     -    our ability to anticipate and timely respond to changes in the
          requirements of digital consumer product and business equipment
          manufacturers;

     -    our ability to anticipate and timely respond to changes in
          semiconductor manufacturing processes;

     -    changing consumer preferences in the digital consumer products market;

                                     15

<PAGE>

     -    the emergence of new standards in the semiconductor, digital consumer
          product or business equipment industries;

     -    the significant investment that is often required before commercial
          viability is determined; and

     -    the introduction by our competitors of products embodying new
          technologies or features.

     Any failure by us to adequately address these risks could render our 
existing processor, core and related designs obsolete and could have a 
material adverse effect on our business, results of operations and financial 
condition. In addition, we cannot assure you that we will have the financial 
and other resources necessary to develop processor, core and related designs 
in the future, or that any enhancements or new generations of the technology 
that we develop will generate revenue in excess of the costs of development.

     OUR INTELLECTUAL PROPERTY MAY BE MISAPPROPRIATED OR SUBJECT TO CLAIMS OF 
INFRINGEMENT. We attempt to protect our intellectual property rights through 
a combination of patent, trademark, copyright and trade secret laws, as well 
as licensing agreements and employee and third-party nondisclosure and 
assignment agreements. Our failure to obtain or maintain adequate protection 
of our intellectual property rights for any reason could have a material 
adverse effect on our business, results of operations and financial condition.

     Policing the unauthorized use of our intellectual property is difficult, 
and we cannot be certain that the steps we have taken will prevent the 
misappropriation or unauthorized use of our technologies, particularly in 
foreign countries where the laws may not protect our proprietary rights as 
fully as in the United States. In addition, we cannot be certain that we will 
be able to prevent other parties from designing and marketing unauthorized 
MIPS-based products or that others will not independently develop or 
otherwise acquire the same or substantially equivalent technologies as ours. 
Moreover, our cross licensing arrangements, in which we license certain of 
our patents but do not generally transfer know-how or other proprietary 
information, may facilitate the ability of our cross-licensees, either alone 
or in conjunction with others, to develop competitive products and designs.

     We cannot assure you that any of our patent applications will be 
approved or that any of the patents that we own will not be challenged, 
invalidated or circumvented by others or be of sufficient scope or strength 
to provide us with any meaningful protection or commercial advantage. 
Significant litigation regarding intellectual property rights exists in our 
industry. We cannot be certain that third parties will not make a claim of 
infringement against us or against our semiconductor company licensees or 
digital consumer product manufacturers in connection with their use of our 
technology. Any claims, even those without merit, could be time consuming to 
defend, result in costly litigation and/or require us to enter into royalty 
or licensing agreements. These royalty or licensing agreements, if required, 
may not be available to us on acceptable terms or at all. A successful claim 
of infringement against us or one of our semiconductor manufacturing 
licensees in connection with its use of our technology could adversely affect 
our business.

     WE NEED TO CONTINUE TO DEVELOP OUR ADMINISTRATIVE INFRASTRUCTURE TO 
SUPPORT OUR BUSINESS AS A STAND-ALONE COMPANY. Prior to the separation of our 
business from that of Silicon Graphics in June 1998, we operated as a 
division of Silicon Graphics and not as a separate stand-alone company. 
Although we continue to be a majority owned subsidiary of Silicon Graphics, 
Silicon Graphics has no obligation to assist us except as provided in the 
management services agreement between the companies. If we fail to implement 
the financial, operational, administrative and other systems and 
infrastructure necessary to support our business as a stand-alone company, 
our business, results of operations and financial condition could be 
adversely affected.

     IF WE FAIL TO COMPETE EFFECTIVELY IN THE MARKET FOR EMBEDDED PROCESSORS, 
OUR BUSINESS WILL BE ADVERSELY AFFECTED. Competition in the market for 
embedded processors is intense. We believe that the principal competitive 
factors in our industry are performance, functionality, price, 
customizability and power consumption. We cannot assure you that we will be 
able to compete successfully or that competitive pressures will not 
materially and adversely affect our business, results of operations and 
financial condition. We compete with other designers and developers of 
processors and cores, as well as semiconductor manufacturers whose product 
lines include processors for embedded and non-embedded applications. In 
addition, we may face competition from the producers of unauthorized 
MIPS-based clones and non-RISC based technology designs.

                                     16

<PAGE>

     To remain competitive, we must also differentiate our processors, cores 
and related designs from those available or under development by the internal 
design groups of semiconductor manufacturers, including some of our current 
and prospective manufacturing licensees. Many of these internal design groups 
have substantial programming and design resources and are part of larger 
organizations with substantial financial and marketing resources. These 
internal design groups may develop products that compete directly with ours 
or may actively seek to license their own technology to third-party 
semiconductor manufacturers.

     Many of our existing competitors, as well as a number of potential new 
competitors, have longer operating histories, greater brand recognition, 
larger customer bases as well as greater financial and marketing resources 
than we do. This may allow them to respond more quickly than we can to new or 
emerging technologies and changes in customer requirements. It may also allow 
them to devote greater resources than we can to the development and promotion 
of their technologies and products. In addition, we may face competition from 
non-RISC based technology designs.

     WE MAY NOT BE ABLE TO RECRUIT AND RETAIN THE PERSONNEL TO SUCCEED. Our 
future success depends to a significant extent on the continued contributions 
of our key management, technical, sales and marketing personnel, many of whom 
are highly skilled and difficult to replace. We do not have employment 
agreements with any of our officers or key employees. We intend to hire 
additional highly skilled personnel, particularly technical personnel, for 
our anticipated research and development activities. Competition for 
qualified personnel, particularly those with significant experience in the 
semiconductor and processor design industries, is intense. The loss of the 
services of any of our key personnel or our inability to attract and retain 
qualified personnel in the future could have a material adverse effect on our 
business, results of operations and financial condition. In particular, our 
ability to hire and retain qualified engineering personnel is essential to 
meet our business goals.

     OUR SEPARATION FROM SILICON GRAPHICS MAY AFFECT US IN NEGOTIATING FUTURE 
LICENSING ARRANGEMENTS AND RESOLVING FUTURE INTELLECTUAL PROPERTY DISPUTES. 
We have entered into licensing arrangements with Silicon Graphics with 
respect to certain of its intellectual property that we use in our business. 
As a result of the separation, however, we no longer have full access to 
Silicon Graphics' patents and other intellectual property. In the past, the 
MIPS Group benefited from its status as a division of Silicon Graphics in its 
access to the intellectual property of third parties through licensing 
arrangements or otherwise, and in the negotiation of the financial and other 
terms of such arrangements. The separation of our business from that of 
Silicon Graphics could adversely affect our ability to negotiate commercially 
attractive intellectual property licensing arrangements with third parties in 
the future. Moreover, in connection with future intellectual property 
infringement claims, we will not have the benefit of asserting counterclaims 
based on Silicon Graphics' intellectual property portfolio, nor will we be 
able to provide licenses to Silicon Graphics' intellectual property in order 
to resolve such claims.

     OUR REVENUE IS SUBJECT TO FLUCTUATIONS IN CURRENCY EXCHANGE RATES. A 
substantial portion of our revenue has been, and is expected to continue to 
be, derived from customers outside the United States, primarily in Japan. To 
date, substantially all of our revenue from international customers has been 
denominated in U.S. dollars. However, to the extent that the sales by our 
manufacturing licensees to their customers are denominated in foreign 
currencies, the royalties we receive on such sales could be subject to 
fluctuations in currency exchange rates. In addition, if the effective price 
of the technology we sell to our licensees were to increase due to 
fluctuations in foreign currency exchange rates, demand for our technology 
could fall which would, in turn, reduce our royalties. Because we cannot 
predict the amount of non-U.S. dollar denominated revenue earned by our 
licensees, we have not historically attempted to mitigate the effect that 
currency fluctuations may have on our revenue, and we do not presently intend 
to do so in the future.

     WE HAVE GROWN RAPIDLY, AND IF WE ARE UNABLE TO MANAGE THIS GROWTH, OUR 
BUSINESS WILL BE ADVERSELY AFFECTED. Our ability to continue to grow 
successfully requires an effective planning and management process. Since 
June 30, 1998, we have increased our headcount substantially, from 63 
employees at that date to 125 employees at March 31, 1998. This increase 
includes the addition of 24 employees in December 1998 at our new development 
center in Denmark, as well as additional employees in our sales and marketing 
staff.

     Our growth has placed, and the recruitment and integration of additional 
employees will continue to place, a strain on our resources. Digital consumer 
product manufacturers and our semiconductor manufacturing licensees typically 
require significant engineering support in the design, testing and 
manufacture of products incorporating our technology.

                                     17

<PAGE>

Accordingly, increases in the adoption of our technology can be expected to 
increase the strain on our personnel, particularly our engineers.

     YEAR 2000 PROBLEMS WITH THE PRODUCTS OR INTERNAL SYSTEMS OF OUR CRITICAL 
SUPPLIERS OR THIRD PARTIES WHOSE PRODUCTS INCORPORATE OUR TECHNOLOGY COULD 
ADVERSELY AFFECT OUR BUSINESS. Many computer programs and embedded 
date-reliant systems use two digits rather than four to define the applicable 
year. Programs and systems that record only the last two digits of the 
calendar year may not be able to distinguish whether "00" means 1900 or 2000. 
If not corrected, date-related information and data could cause such programs 
or systems to fail or to generate erroneous information.

     Although our processor and related designs have no inherent time or date 
function, we initiated a comprehensive assessment of our Year 2000 readiness 
in September 1998. We have recently completed this assessment and have begun 
to implement programs to make our information technology (IT) and related 
non-IT and processes Year 2000 compliant. In addition, we recently replaced 
our internal computer systems and operating and applications software. Each 
of the suppliers of these systems and software has indicated to us that it 
believes its products are Year 2000 compliant. We expect to complete changes 
to critical systems by the third quarter of calendar year 1999. We believe 
that we have allocated sufficient resources for our Year 2000 compliance 
efforts, and we expect that our expenses in these efforts will be less than 
$200,000, exclusive of ordinary costs to upgrade and maintain our equipment.

     We intend to cooperate with our licensees and others with whom we do 
business to coordinate Year 2000 compliance with operational processes and 
marketed products. However, we are unable to directly assess the Year 2000 
compliance of products and technologies developed by others and incorporating 
our technology. To the extent that any such third-party product or technology 
is not Year 2000 compliant, we may be adversely affected due to our 
association with such product or technology. In addition, our revenue and 
operating results could become subject to unexpected fluctuations and could 
be adversely effected if our licensees or system original equipment 
manufacturers encounter year 2000 compliance problems that affect their 
ability to distribute products that incorporate our technology.

     We will also be contacting critical suppliers to determine whether the 
products and services they provide to us are Year 2000 compliant. We will 
develop contingency plans should the need arise. A delay or failure by our 
critical suppliers to be Year 2000 compliant could, in a worst case, 
interrupt our business and have an adverse effect on our business, financial 
condition and results of operations.

                                      18

<PAGE>

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.


         NOT APPLICABLE.

                                     19

<PAGE>

PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

     From time to time, the Company receives communications from third 
parties asserting patent or other rights covering the Company's products and 
technologies. Based upon the Company's evaluation, it may take no action or 
it may seek to obtain a license. There can be no assurance in any given case 
that a license will be available on terms the Company considers reasonable, 
or that litigation will not ensue. In addition, from time to time, the 
Company evaluates possible patent infringement claims against third parties 
and may assert such claims, if appropriate.

ITEM 2.   CHANGES IN SECURITIES

         (a) On April 5, 1999, MIPS Technologies, Inc. effected a 
recapitalization of its authorized capital stock pursuant to which each 
previously issued and outstanding share of its common stock, par value $0.001 
per share, was redesignated as one share of its Class A common stock, par 
value $0.001 per share. Under the terms of an exchange agreement between 
Silicon Graphics, Inc. and the Company, Silicon Graphics exchanged each share 
of Class A common stock it owned immediately after the recapitalization for 
one share of Class B common stock, par value $0.001 per share, of the 
Company. The recapitalization, including (1) the adoption of the amended and 
restated certificate of incorporation and the amended and restated by-laws of 
the Company and (2) the exchange by Silicon Graphics of its shares of Class A 
common stock for Class B common stock, was approved on March 31, 1999 by 
Silicon Graphics and the holders of a majority of the shares of the Company's 
common stock other than Silicon Graphics. Silicon Graphics currently 
beneficially owns all of the outstanding shares of Class B common stock and 
no shares of Class A common stock.

         The holders of the Class A common stock, voting separately as a 
class, are entitled to elect 20% of the members of the Company's board of 
directors, and in no event less than one director. The holders of the Class B 
common stock, voting separately as a class, are entitled to elect the 
remaining members of the board of directors. After a distribution by Silicon 
Graphics of its interest in the Company in a transaction intended to 
generally qualify as a tax-free distribution under the Internal Revenue Code 
(a "Tax-Free Distribution"), a person or group of persons acting in concert 
holding 10% or more of the outstanding shares of Class B common stock must 
own at least an equal percentage of the Class A common stock in order to 
exercise its or their Class B common stock voting rights in the election of 
directors. In all other matters submitted to a vote of stockholders, each 
share of Class A and Class B common stock is entitled to one vote, and the 
holders of the Class A and Class B common stock vote together as a single 
class. Prior to the recapitalization, each share of common stock was entitled 
to one vote in all matters submitted to a vote of stockholders, including the 
election of directors, and all shares of common stock voted together as a 
single class.

         The Class A common stock and the Class B common stock have 
substantially identical rights and preferences in all other respects, 
including with respect to dividends and upon liquidation. The Company's 
certificate of incorporation, as amended and restated in connection with the 
recapitalization, contains provisions pursuant to which, under certain 
circumstances, all outstanding shares of Class B common stock may be 
exchanged for, or will be automatically converted into, shares of Class A 
common stock on a one-for-one basis. Prior to the recapitalization, shares of 
the Company's common stock were not convertible or exchangeable. For a 
description of these and certain other provisions of the Company's 
certificate of incorporation regarding the rights of holders of the Class A 
and Class B common stock, see "Description of Capital Stock" on pages 61 
through 63 of Amendment No. 4 to Form S-1 (File No. 333-73071) filed by the 
Company on May 13, 1999 with the Securities and Exchange Commission, which 
description is hereby incorporated by reference herein.

         (b) Not applicable.

                                     20

<PAGE>

         (c) Pursuant to an Exchange Agreement between Silicon Graphics, Inc. 
and the Company and in connection with the recapitalization of the authorized 
capital stock of the Company, on April 5, 1999, Silicon Graphics exchanged 
all of the 31,750,000 shares of Class A common stock it owned for 31,750,000 
shares of Class B common stock. The shares of Class B common stock received 
by Silicon Graphics in exchange for the shares of Class A common stock it 
owned following the recapitalization were securities exempt from registration 
pursuant to Section 3(a)(9) of the Securities Act of 1933.

         (d) Not applicable.


ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         A special meeting of the stockholders of the Company was held on 
March 31, 1999 to consider and vote upon a proposal to recapitalize the 
authorized capital stock of the Company (the "Recapitalization"), including 
(a) the approval and adoption of the Company's proposed amended and restated 
certificate of incorporation and the proposed amended and restated by-laws, 
pursuant to which each issued and outstanding share of the Company's existing 
common stock would be redesignated as one share of newly created and issued 
Class A common stock, and (b) the exchange by Silicon Graphics, upon 
consummation of the recapitalization and pursuant to an Exchange Agreement 
between Silicon Graphics and the Company, of each share of Class A common 
stock owned by Silicon Graphics for one share of newly created and issued 
Class B common stock.

         The following reflects the votes cast for and against the 
Recapitalization, as well as the number of abstentions and broker non-votes 
with respect to the Recapitalization:

<TABLE>
              <S>                                                  <C>
              ----------------------------------------------------------------
              Votes Cast For The Recapitalization:                 36,434,802
              ----------------------------------------------------------------

              Votes Cast Against The Recapitalization:                 35,180
              ----------------------------------------------------------------

              Abstentions:                                              2,218
              ----------------------------------------------------------------

              Broker Non-Votes                                              -
              ----------------------------------------------------------------
</TABLE>


ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K

(A)      EXHIBITS

         3.1 Amended and Restated Certificate of Incorporation of the 
         Registrant.

         3.2 Amended and Restated By-Laws of the Registrant.

         27.1 Financial Data Schedule.

         99.1 "Description of Capital Stock," as contained on pages 61 
through 63 of Amendment No. 4 to Form S-1 (File No. 333-73071) filed by the 
Company on May 13, 1999 with the Securities and Exchange Commission.

(B)      REPORTS ON FORM 8-K.

         A current report on Form 8-K dated February 26, 1999 was filed with the
         Securities and Exchange Commission (the "SEC") to report under Item 5
         of that form in order to update certain disclosures contained in the
         Company's Quarterly Report on Form 10-Q for the quarter ended December
         31, 1998 under the caption 

                                     21

<PAGE>

         "Factors that May Affect our Business."

 ITEMS 3 AND 5 ARE NOT APPLICABLE AND HAVE BEEN OMITTED.

                                     22

<PAGE>

                                   SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the 
registrant has duly caused this report to be signed on its behalf by the 
undersigned, thereunto duly authorized.

                               MIPS Technologies, Inc.
                               a Delaware corporation

                               By:         /s/ KEVIN C. EICHLER
                                  -------------------------------------------
                                               Kevin C. Eichler
                                   Vice President and Chief Financial Officer
                                   (Principal Financial and Accounting Officer)

Dated:  May 13, 1999

<PAGE>

                             INDEX TO EXHIBITS
<TABLE>
<CAPTION>
       EXHIBIT     DESCRIPTION
        NUMBER  
<S>                <C>
         3.1       Amended and Restated Certificate of Incorporation of the Registrant.

         3.2       Amended and Restated By-Laws of the Registrant.

        27.1       Financial Data Schedule.

        99.1       "Description of Capital Stock," as contained on pages 61 through 63 
                   of Amendment No. 4 to Form S-1 (File No. 333-73071) filed by the 
                   Company on May 13, 1999 with the Securities and Exchange Commission.
</TABLE>

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