CLOUD

MOUNTAIN VIEW, CA -- SGI (NYSE: SGI) today announced results for its second fiscal quarter which ended December 28, 2001. Revenue for the second quarter was $364 million. This represents 15% sequential growth in product and service revenue from the first quarter. Excluding restructuring and other special charges of $15 million, SGI generated an operating profit of $0.4 million or $0.00 earnings per share, compared with a proforma operating loss of $65 million or $0.36 earnings per share in the first quarter. SGI's second quarter net income was $33 million or $0.17 earnings per share. This includes a gain from the sale of a majority interest in our Japanese subsidiary. "Not only did we reach our goal of breaking even in Q2, we beat consensus estimates. I'm pleased that we demonstrated the stability and viability of our business. The company executed well this quarter, even in the most challenging of economic environments," said Bob Bishop, chief executive officer of SGI. "We are gaining strength and credibility with our customers." Operating expenses, excluding restructuring and other special charges, were $146 million, compared with $176 million for the previous quarter. Gross margin for the second quarter was 40%. This is compared with 35% for the first quarter, excluding a one-time payment from an intellectual property agreement. As of December 28, 2001, unrestricted cash, cash equivalents and marketable investments were $120 million compared with $122 million for the previous quarter. During the quarter, the Company retired a loan in connection with the closure of its Swiss manufacturing facility, and reduced and restructured its Japanese yen loan. Additional information is available at www.sgi.com