BIG DATA

SGI has announced financial results for the fourth quarter and fiscal year 2008 ended June 27, 2008. The Company achieved its stated objectives for the fiscal year of strong growth in bookings, a strengthened leadership team, an array of new products and services, and penetration into new customer accounts. Fiscal Year 2008 Highlights In fiscal 2008, SGI:

• Grew bookings 25 percent year-over-year to $356 million through a mix of high performance compute, storage and visualization solutions and services.
• Saw backlog more than double year-over-year, putting the Company in a stronger position heading into fiscal 2009 with beginning backlog of $147 million compared to $66 million at the end of the prior year.
• Strengthened its leadership team with the appointment of key executives including Barb Stinnett to lead the global services organization; Irene Qualters to head the software and storage organization; Douglas Britt to direct worldwide sales; Bob Pette to form a new group focused on leveraging the Company's extensive intellectual property to deliver visualization solutions; and Shahin Khan to drive marketing.
• Launched and shipped new products and services including: SGI Altix ICE, an ultra-dense blade platform that began shipping in volume in the first quarter of the fiscal year; SGI Virtu VN200 to power the performance visualization needs of HPC and business users; SGI InfiniteStorage 4600, a new flagship RAID product; the SGI InfiniteStorage NEXIS NAS family of high-performance storage systems; Solutions Support Plus, a new multi-vendor support service; and new cluster nodes and processors aimed at increasing the performance of SGI Altix XE clusters and SGI Altix systems.
• Accelerated its Industrial Strength Linux Environment software strategy by acquiring key IP assets formerly owned by Linux Networx.
• Delivered and gained acceptance on several significant orders including: a major online trading community, multiple Hollywood and international film and television production companies, the National Basketball Association, Chrysler, Honda Racing, Sikorsky Aircraft, Total Exploration and Production, GENCI (Grand Equipement National de Calcul Intensif), North German Supercomputing Alliance (HLRN), New Mexico Computing Applications Center, NASA , Merck, and Sanofi-Aventis.

"We're very encouraged by the progress we've made over the past fiscal year," said SGI CEO Robert "Bo" Ewald. "We've achieved significant bookings and backlog growth which positions us well as we enter fiscal 2009 to execute on the second year of our three-year plan to achieve a profitable operating structure. With our new products and services, we've seen acceptance of our solutions across all targeted technical and commercial environments." Fiscal 2008 and Fourth Quarter GAAP Results Revenue for the fourth quarter was $93.9 million, compared to $79.1 million in the third quarter and $122.3 million in the fourth quarter of the prior year, representing an increase of 19 percent and a decline of 23 percent, respectively. Revenue for fiscal 2008 was $354.1 million, a decline of 24 percent from the prior fiscal year. The fiscal 2008 operating loss was $127.2 million, compared to a loss of $101.2 million for the prior fiscal year. The fourth quarter operating loss was $28.6 million, compared to $40.6 million in the third quarter and $24.8 million in the fourth quarter of the prior year. Operating expenses for fiscal 2008 were $230.7 million, a decrease of $4.6 million, or 2 percent year-over-year. Operating expenses were $58.1 million for the fourth quarter of fiscal 2008, compared to $59.2 million for the third quarter and $56.9 million in the fourth quarter of the prior year. For purposes of comparison, fiscal year 2007 figures comprise three months of results, ended September 29, 2006, for the Company existing before the Company's reorganization and emergence, and 9 months of results, ended June 29, 2007, for the Company existing after the reorganization. Pro Forma Results Pro forma results comprise non-GAAP financial measures that facilitate comparison of the Company's results of operations in previous fiscal years. Pro forma revenue was $121.5 million in the fourth quarter of fiscal 2008, compared to $80.9 million in the third quarter of fiscal 2008. Pro forma revenue excludes the impact of fresh start accounting and the deferral of the Company's recognition of revenues for certain of the Company's transactions where software is more than incidental to the overall solution. Pro forma gross margin for the fourth quarter of fiscal 2008, which is adjusted for similar items and also for amortization of intangibles and stock-based compensation, was 37 percent, compared with 27 percent in the third quarter of fiscal 2008. Pro forma operating expenses, which exclude restructuring, stock-based compensation expense, amortization of intangibles, the non-cash impact of Linux Networx asset acquisition, and the impact of fresh start accounting, were $53.2 million in the fourth quarter of fiscal 2008 and $52.7 million in the third quarter of fiscal 2008. Adjusted pro forma earnings before interest, taxes, depreciation, amortization, and restructuring (EBITDAR) for the fourth quarter of fiscal 2008 was a loss of $3.0 million, compared with a loss of $25.7 million for the third quarter of fiscal 2008. "We are pleased with bookings performance year-over-year as a leading indicator of the market's acceptance of our solutions," said Kathy Lanterman, SGI's Chief Financial Officer. "Our fiscal 2008 financial goals were to generate double-digit bookings growth, stabilize revenue and manage cash and expenses. We largely achieved these goals, particularly through the growth in our core products bookings, although the timing of customer acceptances did impact revenue for the year." Ewald added that new server, storage and visualization products helped drive bookings growth by giving SGI the winning edge in several competitive sales situations, including a contract to supply NASA with its next major supercomputer. "These new products have allowed us to capture some of the world's most coveted HPC wins, while placing us in new accounts like a major online trading community," said Ewald. "Developments like these give us great confidence about the validity of our strategy and direction." Anthony Grillo Named Chairman of SGI Board of Directors As it embarks on the second phase of its growth strategy, SGI also announced today that Anthony Grillo has been named the Chairman of its Board of Directors. Grillo has served on the SGI Board of Directors since October of 2006. "I look forward to continuing to work closely with management and my fellow Board members," said Grillo, who is founder and CEO of American Securities Advisors, LLC. The company also announced that Kevin Katari and Chun Won Yi have resigned from its Board of Directors. Both have been members of the Board since October of 2006, with Katari serving as Chairman since joining the Board. "I am pleased to have worked with the Company during this transition, and I have confidence in Bo and Tony in leading SGI forward," said Katari. Yi added, "I have enjoyed being on the Board and assisting SGI since its successful reorganization, and the Company continues to have my full support." "I would like to express SGI's appreciation and thanks to both Kevin and Chun," said SGI CEO Bo Ewald. "They have worked closely with the Company and we look forward to continuing our relationship with them as significant investors."