ACADEMIA

SGI has announced financial results for its fourth quarter and fiscal 2010.

FY10 GAAP revenue was $403.7 million and non-GAAP revenue was $525.3 million. FY10 GAAP gross margin was 22.2 percent and non-GAAP gross margin was 27.3 percent. FY10 GAAP net loss from continuing operations was $2.95 per share and non-GAAP net loss was $0.82 per share. SGI generated $8.2 million in cash flow generated from operations in FY10 and grew cash during FY10, ending the year at $140.8 million.

"Fiscal 2010 was a transformative year for SGI with many successes," said SGI CEO Mark J. Barrenechea. "We focused on completing the integration, delivering innovative products to market and making investments in key areas that will serve as a foundation for future growth. Further, we have strategically focused the company on the $9 billion technical computing market, where we have begun to emerge as a trusted partner. These successes translated into strong financials - full-year non-GAAP revenues of $525 million, exceeding our original plan of $500 million. As we enter fiscal year 2011, we are projecting up to 10 percent revenue growth and EPS breakeven, both on a non-GAAP basis."

Q4 GAAP revenue was $101.6 million, compared to $107.8 million in the prior quarter and $58.4 million in the comparable year ago quarter. Non-GAAP revenue was $122.2 million, compared to $128.9 million in the prior quarter and $60.5 million in the comparable year ago quarter.

Q4 GAAP gross margin was 19.3 percent, compared to 26.8 percent in the prior quarter and 8.7 percent in the comparable year ago quarter. Non-GAAP gross margin was 24.0 percent, compared to 27.5 percent in the prior quarter and 15.2 percent in the comparable year ago quarter.

Q4 GAAP net loss from continuing operations was $0.91 per share, compared to a GAAP net loss of $0.02 per share for the comparable year ago quarter. Q4 non-GAAP net loss was $0.55 per share, compared to a non-GAAP net loss of $0.62 per share for the comparable year ago quarter.

Recent Business and Financial Highlights

• Resumes $40 million stock repurchase program.
• SGI Altix UV shipped to first fourteen customers.
• COPAN systems shipped to first customers.
• Altix ICE at NASA Pleiades named sixth fastest computer by Top500.org.
• ExaScale Project "Mojo" announced, delivering a petaflop in a cabinet.
• Intel and SGI partner for next generation DARPA ExaScale computing.
• Customer successes include: Los Alamos National Labs, Sikorsky, NASA, Honeywell, Genomequest, Institute of Cancer Research, Oxford, Novo Nordisk, Ifremer, Merck, A*STAR, Honeywell, Sikorsky, University of Manitoba, and COSMOS at Cambridge University (team led by Stephen Hawking).

Fiscal Year 2011 Guidance

For fiscal year 2011, SGI is providing the following non-GAAP guidance:

• Revenue between $550 million and $575 million.
• Gross margin between 27 percent and 30 percent.
• Operating expenses between $165 million and $171 million.
• EPS breakeven.