SGI Announces Fiscal Year 2001 Second-Quarter Results

Company Reports Sequential Revenue and Orders Growth



Jan 18, 2001, 00:00 ET from SGI

    MOUNTAIN VIEW, Calif., Jan. 18 /PRNewswire/ -- SGI (NYSE:   SGI) today
 announced financial results for its second quarter of fiscal 2001 ended
 Dec. 31, 2000. For the quarter, the company posted revenue of $487 million,
 compared with $426 million in the quarter ended Sept. 30, 2000, which
 represents a 14% increase. The company reported a net loss of $71 million for
 the quarter, or $.38 per share, compared with a net loss of $49 million, or
 $.26 per share, in the quarter ended Sept. 30, 2000.
     The company also said orders increased sequentially and backlog grew to
 $386 million at Dec. 31, 2000.
     "We're committed to our previously announced enhanced operating model and
 believe it's beginning to take hold," said Bob Bishop, chairman and CEO of
 SGI. "With more than 10,000 processors delivered in our new-generation SGI
 Origin family systems, we are entering the second half of this fiscal year
 with strong product momentum and expect to be profitable in the fourth
 quarter."
     Order growth for the company's high-end graphics products, particularly
 its unique line of SGI (TM) Reality Center(TM) facilities, has been
 particularly strong. "Customers tell us that our Reality Center facilities
 have become a key decision support tool allowing them to understand, share and
 collaborate visually and find solutions they never dreamed would be possible,"
 said Bishop.
     As of Dec. 31, 2000, cash, cash equivalents and marketable investments
 were $268 million compared with $200 million on Sept. 30, 2000.
     The company will conduct a conference call today at 2 p.m. PST to provide
 additional details. The dial-in number for the call is 888-208-1824, and the
 Webcast site is www.StreetFusion.com. An audio replay of this call will be
 available after 5 p.m. PST today until midnight Jan. 25, 2001 at 888-203-1112
 (passcode:  582234). All links to the archived Webcast and audio replay are
 available through the company's Web site at
 www.sgi.com/company_info/investors.
     This news release contains forward-looking statements regarding our
 business, objectives, financial condition and future performance. These
 forward-looking statements are subject to risks and uncertainties detailed
 from time to time in the company's SEC filings, including the report on Form
 10Q for the quarter that ended Sept. 30, 2000, including the risks of
 continued constraints on availability of components and the company's ability
 to achieve and sustain revenue growth, higher gross margins, and reduced
 operating expenses. These risks and uncertainties could cause actual results
 to differ materially from those expressed or implied in such forward-looking
 statements.
 
     About SGI
     SGI, formerly known as Silicon Graphics, Inc., is a technology solutions
 provider with a broad range of high-performance computing, advanced graphics,
 and consulting services that enable its technical and creative customers to
 maintain a competitive advantage in their core businesses. Whether being used
 to design and build safer cars and airplanes, discover new medicines and oil
 reserves, help us understand and better predict the weather, or entertain us
 with stunning movie special effects, SGI(TM) systems and expertise are
 empowering a world of innovation and discovery. The company, which is located
 on the Web at www.sgi.com, is headquartered in Mountain View, Calif., and has
 offices worldwide.
     NOTE:  Silicon Graphics is a registered trademark and SGI, Origin, Reality
 Center, and the SGI logo are trademarks of Silicon Graphics, Inc. All other
 trademarks mentioned herein are the property of their respective owners.
 
                             SILICON GRAPHICS, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                     (In thousands except per share amounts)
 
                             Three Months Ended        Six Months Ended
                             Dec. 31,  Dec. 31,     Dec. 31,      Dec. 31,
                              2000      1999          2000          1999
                                (unaudited)                (unaudited)
 
     Product and other
      revenue                $326,142  $478,246      $606,141      $903,247
     Service revenue          160,765   169,947       307,102       330,149
        Total revenue         486,907   648,193       913,243     1,233,396
 
     Costs and expenses:
        Cost of product and
         other revenue        213,412   267,161       380,319       579,339
        Cost of service
         revenue              126,451   122,510       242,669       251,595
        Research and
         development           58,111    78,607       115,460       163,957
        Selling, general and
         administrative       182,237   183,487       367,900       411,847
        Other operating
         expense                   --  (16,000)(A)     (6,221)(A)   128,538 (B)
            Total costs and
             expenses         580,211   635,765     1,100,127     1,535,276
 
     Operating (loss) income  (93,304)   12,428      (186,884)     (301,880)
 
     Gain on sale of
      marketable investments   10,756        --        49,561            --
     Interest and other
      income (expense), net    14,770     2,165        24,073        (1,854)
 
     (Loss) income before
      income taxes            (67,778)   14,594      (113,250)     (303,734)
 
     Income tax provision
      (benefit)                 3,338     5,513         6,854       (99,914)
 
     Net (loss) income       $(71,116)   $9,081     $(120,104)    $(203,820)
 
     Net (loss) income per
      common share - basic
      and diluted              $(0.38)    $0.05        $(0.64)       $(1.12)
 
     Common shares
      outstanding - basic     189,808   182,789       188,840       182,357
 
     Common shares
      outstanding - diluted   189,808   183,143       188,840       182,357
 
      (A) Represents a change in previously estimated restructuring costs.
      (B) Represents a net charge for estimated restructuring costs.
 
                              SILICON GRAPHICS, INC.
                       CONDENSED CONSOLIDATED BALANCE SHEETS
                                  (In thousands)
 
                                                 December 31,        June 30,
                                                     2000              2000
     ASSETS
 
     Current assets:
         Cash and cash equivalents                 $214,774          $251,811
         Short-term marketable
          investments                                53,638             6,270
         Accounts receivable, net                   394,538           347,515
         Inventories                                185,498           181,594
         Prepaid expenses and other
          current assets                            124,531           133,119
               Total current assets                 972,979           920,309
 
     Restricted investments                         104,385           126,408
 
     Net property and equipment                     324,374           466,726
 
     Other assets                                   254,300           325,768
 
                                                 $1,656,038        $1,839,211
 
 
     LIABILITIES AND STOCKHOLDERS' EQUITY
 
     Current liabilities:
         Accounts payable                          $166,269          $147,366
         Other current liabilities                  592,952           714,162
              Total current liabilities             759,221           861,528
 
     Long-term debt and other                       452,652           385,133
 
     Total stockholders' equity                     444,165           592,550
 
                                                 $1,656,038        $1,839,211
 
 

SOURCE SGI
    MOUNTAIN VIEW, Calif., Jan. 18 /PRNewswire/ -- SGI (NYSE:   SGI) today
 announced financial results for its second quarter of fiscal 2001 ended
 Dec. 31, 2000. For the quarter, the company posted revenue of $487 million,
 compared with $426 million in the quarter ended Sept. 30, 2000, which
 represents a 14% increase. The company reported a net loss of $71 million for
 the quarter, or $.38 per share, compared with a net loss of $49 million, or
 $.26 per share, in the quarter ended Sept. 30, 2000.
     The company also said orders increased sequentially and backlog grew to
 $386 million at Dec. 31, 2000.
     "We're committed to our previously announced enhanced operating model and
 believe it's beginning to take hold," said Bob Bishop, chairman and CEO of
 SGI. "With more than 10,000 processors delivered in our new-generation SGI
 Origin family systems, we are entering the second half of this fiscal year
 with strong product momentum and expect to be profitable in the fourth
 quarter."
     Order growth for the company's high-end graphics products, particularly
 its unique line of SGI (TM) Reality Center(TM) facilities, has been
 particularly strong. "Customers tell us that our Reality Center facilities
 have become a key decision support tool allowing them to understand, share and
 collaborate visually and find solutions they never dreamed would be possible,"
 said Bishop.
     As of Dec. 31, 2000, cash, cash equivalents and marketable investments
 were $268 million compared with $200 million on Sept. 30, 2000.
     The company will conduct a conference call today at 2 p.m. PST to provide
 additional details. The dial-in number for the call is 888-208-1824, and the
 Webcast site is www.StreetFusion.com. An audio replay of this call will be
 available after 5 p.m. PST today until midnight Jan. 25, 2001 at 888-203-1112
 (passcode:  582234). All links to the archived Webcast and audio replay are
 available through the company's Web site at
 www.sgi.com/company_info/investors.
     This news release contains forward-looking statements regarding our
 business, objectives, financial condition and future performance. These
 forward-looking statements are subject to risks and uncertainties detailed
 from time to time in the company's SEC filings, including the report on Form
 10Q for the quarter that ended Sept. 30, 2000, including the risks of
 continued constraints on availability of components and the company's ability
 to achieve and sustain revenue growth, higher gross margins, and reduced
 operating expenses. These risks and uncertainties could cause actual results
 to differ materially from those expressed or implied in such forward-looking
 statements.
 
     About SGI
     SGI, formerly known as Silicon Graphics, Inc., is a technology solutions
 provider with a broad range of high-performance computing, advanced graphics,
 and consulting services that enable its technical and creative customers to
 maintain a competitive advantage in their core businesses. Whether being used
 to design and build safer cars and airplanes, discover new medicines and oil
 reserves, help us understand and better predict the weather, or entertain us
 with stunning movie special effects, SGI(TM) systems and expertise are
 empowering a world of innovation and discovery. The company, which is located
 on the Web at www.sgi.com, is headquartered in Mountain View, Calif., and has
 offices worldwide.
     NOTE:  Silicon Graphics is a registered trademark and SGI, Origin, Reality
 Center, and the SGI logo are trademarks of Silicon Graphics, Inc. All other
 trademarks mentioned herein are the property of their respective owners.
 
                             SILICON GRAPHICS, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                     (In thousands except per share amounts)
 
                             Three Months Ended        Six Months Ended
                             Dec. 31,  Dec. 31,     Dec. 31,      Dec. 31,
                              2000      1999          2000          1999
                                (unaudited)                (unaudited)
 
     Product and other
      revenue                $326,142  $478,246      $606,141      $903,247
     Service revenue          160,765   169,947       307,102       330,149
        Total revenue         486,907   648,193       913,243     1,233,396
 
     Costs and expenses:
        Cost of product and
         other revenue        213,412   267,161       380,319       579,339
        Cost of service
         revenue              126,451   122,510       242,669       251,595
        Research and
         development           58,111    78,607       115,460       163,957
        Selling, general and
         administrative       182,237   183,487       367,900       411,847
        Other operating
         expense                   --  (16,000)(A)     (6,221)(A)   128,538 (B)
            Total costs and
             expenses         580,211   635,765     1,100,127     1,535,276
 
     Operating (loss) income  (93,304)   12,428      (186,884)     (301,880)
 
     Gain on sale of
      marketable investments   10,756        --        49,561            --
     Interest and other
      income (expense), net    14,770     2,165        24,073        (1,854)
 
     (Loss) income before
      income taxes            (67,778)   14,594      (113,250)     (303,734)
 
     Income tax provision
      (benefit)                 3,338     5,513         6,854       (99,914)
 
     Net (loss) income       $(71,116)   $9,081     $(120,104)    $(203,820)
 
     Net (loss) income per
      common share - basic
      and diluted              $(0.38)    $0.05        $(0.64)       $(1.12)
 
     Common shares
      outstanding - basic     189,808   182,789       188,840       182,357
 
     Common shares
      outstanding - diluted   189,808   183,143       188,840       182,357
 
      (A) Represents a change in previously estimated restructuring costs.
      (B) Represents a net charge for estimated restructuring costs.
 
                              SILICON GRAPHICS, INC.
                       CONDENSED CONSOLIDATED BALANCE SHEETS
                                  (In thousands)
 
                                                 December 31,        June 30,
                                                     2000              2000
     ASSETS
 
     Current assets:
         Cash and cash equivalents                 $214,774          $251,811
         Short-term marketable
          investments                                53,638             6,270
         Accounts receivable, net                   394,538           347,515
         Inventories                                185,498           181,594
         Prepaid expenses and other
          current assets                            124,531           133,119
               Total current assets                 972,979           920,309
 
     Restricted investments                         104,385           126,408
 
     Net property and equipment                     324,374           466,726
 
     Other assets                                   254,300           325,768
 
                                                 $1,656,038        $1,839,211
 
 
     LIABILITIES AND STOCKHOLDERS' EQUITY
 
     Current liabilities:
         Accounts payable                          $166,269          $147,366
         Other current liabilities                  592,952           714,162
              Total current liabilities             759,221           861,528
 
     Long-term debt and other                       452,652           385,133
 
     Total stockholders' equity                     444,165           592,550
 
                                                 $1,656,038        $1,839,211
 
 SOURCE  SGI