GOVERNMENT

MOUNTAIN VIEW, CA -- SGI today announced that NEC and NEC's publicly-held affiliate, NEC Soft, have completed the purchase of a 60% interest in SGI Japan, Ltd. for $95 million. SGI expects its net proceeds to be approximately $70 million after settlement of inter-company accounts, deal expenses and customary closing adjustments. SGI has entered into a long-term exclusive distribution agreement with SGI Japan to supply SGI equipment, services and solutions in Japan. The business, jointly owned by SGI, NEC and NEC Soft, will be known as SGI Japan. Effective immediately, SGI will no longer consolidate SGI Japan in its financial statements but will instead record its proportionate share of SGI Japan's earnings as non-operating income.