SGI Reports Second Quarter Financial Results

Silicon Graphics announced results for its second fiscal quarter, which ended December 24, 2004. Revenue for the quarter was $223 million, compared with $175 million for the first quarter ended September 24, 2004. Gross margin was 37.5% in the second quarter, up from 35.9% in the first quarter. SGI's second-quarter operating loss from continuing operations was $9 million, compared with an operating loss of $26 million in the first quarter. The second-quarter net loss from continuing operations was $11 million or $0.04 per share, compared with a net loss of $28 million or $0.11 per share last quarter. GAAP operating expenses for the second quarter were $93 million, compared with $89 million for the first quarter. Non-GAAP operating expenses for the second quarter were $88 million, excluding $5 million recorded as other operating expense. This compares with prior quarter non-GAAP operating expenses of $86 million excluding $3 million in other operating expense. These other operating expenses consisted of primarily charges associated with facilities consolidation. Management believes that a non-GAAP presentation of operating expenses is useful to investors to facilitate period to period comparisons of SGI's operating results. Bob Bishop, chairman and CEO of SGI, said, "...Silicon Graphics Prism has been successfully launched into the visualization market. Nevertheless, we continue to fall short of our profitability objectives and will take steps to lower expenses accordingly." Unrestricted cash, cash equivalents and marketable investments on December 24, 2004 were $106 million.