MIPS Technologies Inc. and Silicon Graphics Inc. Announce Recapitalization Plan; Transition Planned to Broaden Ownership of MIPS Technologies Inc.

MOUNTAIN VIEW, Calif.--(BUSINESS WIRE)--Jan. 14, 1999--MIPS Technologies Inc. (Nasdaq:MIPS) and Silicon Graphics Inc. (NYSE:SGI) announced today that MIPS Technologies Inc. will undertake a recapitalization of the company.

The recapitalization plan creates a structure to manage an orderly multistep divestiture of Silicon Graphics' ownership of MIPS Technologies, with the divestiture expected to be complete by September 30, 2000. The reduction in Silicon Graphics' equity position in MIPS Technologies is expected to occur through secondary market sales and other transactions.

Ultimately, the recapitalization is intended to preserve Silicon Graphics' ability to divest the remainder of its interest in MIPS Technologies in a tax-free transaction.

A special committee of the independent directors of MIPS Technologies Inc., as well as the full board of directors approved the recapitalization plan. MIPS Technologies plans to file a proxy statement for a special stockholders meeting to seek the approval of its public stockholders.

John Bourgoin, chairman and chief executive officer of MIPS Technologies Inc. stated, "The recapitalization establishes a path for MIPS Technologies to achieve full business independence. This plan will also provide public stockholders the ability to elect at least one director and lead to greater liquidity for MIPS Technologies common stock."

"The recapitalization of MIPS Technologies is designed to allow Silicon Graphics to continue to unlock the value inherent in its MIPS Technologies asset for the benefit of Silicon Graphics' stockholders in a manner that is both tax and market efficient," said Richard Belluzzo, chairman and chief executive officer of Silicon Graphics, Inc. "The multistep divestiture approach gives Silicon Graphics flexibility, which we believe should yield a favorable result for all parties."

Silicon Graphics owns approximately 85% of MIPS Technologies' shares of common stock. In order to maintain Silicon Graphics' ability to effect a tax-free distribution, each share of MIPS Technologies' common stock, including such shares held by Silicon Graphics, will be redesignated as one share of newly created and issued Class A common stock of MIPS Technologies.

Silicon Graphics will then exchange each share of Class A common stock it owns for one share of newly created and issued Class B common stock of MIPS Technologies. The Class A common stock will be entitled to elect 20 percent of MIPS Technologies' Board of Directors, but in no case less than one director. The remaining directors will be elected by the holders of the Class B stock which will initially be Silicon Graphics.

The two classes of common stock will have substantially identical rights and preferences in all other respects. Any distribution by Silicon Graphics to its stockholders of its interest in MIPS Technologies would be subject to market and other conditions, including receipt of a ruling from the Internal Revenue Service confirming the tax-free status of the distribution.

About MIPS Technologies Inc.

MIPS Technologies Inc. is the world's primary architect of embedded 32- and 64-bit RISC processors. The company drives the broadest architectural alliance that is delivering 32- and 64-bit embedded RISC solutions. It offers the only embedded 64-bit RISC architecture for emerging digital consumer, network systems, and information management applications.

The company licenses its intellectual property to semiconductor manufacturing companies, ASIC developers, and system OEMs. MIPS Technologies Inc. and its licensees offer the widest range of robust, scalable processors in standard, custom, semi-custom and application-specific products.

Developers can choose from a broad menu of price/performance options that include execution units, clock speeds, instruction widths (16-, 32- or 64-bit), cache sizes, memory bandwidths, memory protection schemes, system interfaces, and on-chip system logic.

Licensees currently include: Broadcom Corporation; CommQuest (IBM); Integrated Device Technology Inc. (IDT); LSI Logic Corporation; Macronix; NEC Corporation; NKK Corporation; Philips Semiconductors; Quantum Effect Design Inc. (QED); Sony Corporation; Synova; and Toshiba Corporation. Numerous companies utilize MIPS intellectual property. MIPS Technologies, Inc. is based in Mountain View, California, and can be reached at 650-567-5000 or http://www.mips.com.

About Silicon Graphics Inc.

Silicon Graphics Inc. is a leading supplier of visual computing and high-performance systems. The company offers the broadest range of products in the industry -- from low-end desktop workstations to servers and high-end supercomputers. Key industries include communications, energy, entertainment, government, manufacturing and sciences. Silicon Graphics and its subsidiaries have offices throughout the world and corporate headquarters in Mountain View, Calif.

Certain statements contained herein, including statements regarding markets and other statements regarding matters that are not historical facts, are forward-looking statements (as defined in the Private Securities Litigation Reform Act of 1995). Such forward-looking statements are based upon assumptions about risks and uncertainties; consequently, actual results may differ materially from those expressed or implied thereby. Factors that could cause actual events to differ materially include, but are not limited to, fluctuations in the operating results of MIPS Technologies or Silicon Graphics or significant changes in their respective businesses, prevailing market conditions for the capital stock of MIPS Technologies and Silicon Graphics, any shift in MIPS Technologies' or Silicon Graphic's strategic directions and changes in tax or other laws relevant to the recapitalization. While the parties intend to proceed toward the transactions described above, there can be no assurance that all uncertainties will be resolved and that the transaction will be consummated. The transactions are also subject to IRS approval and approval by MIPS Technologies' stockholders. Forward-looking statements included herein speak only as of the date hereof and the companies undertake no obligation to revise or update such statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events or circumstances.

MIPS is a registered trademark of MIPS Technologies Inc. All other trademarks are the property of their respective companies. All press materials are available on the World Wide Web via: http://www.mips.com/