INDUSTRY

MOUNTAIN VIEW, CA -- In its recently completed third fiscal year 2002 quarter, SGI (NYSE: SGI) posted several key sales wins, and the company saw the first implementations of its Visual Area Networking vision for universal access to advanced visualization. Growing to 30% of the company's total business, SGI's government and defense sector achieved gains through providing technology for both homeland and global security. SGI credits its strong sales in this sector to the close working relationships the company has had with U.S. defense labs and systems integrators over its entire 20-year history; its real-time visualization technology that is giving today's military forces an unprecedented level of decision superiority in battle; and the SGI® real-time operating system, IRIX®, a derivative of UNIX®, is trusted and secure and allows multiple levels of security to operate simultaneously-a feature not available in any other commercial off-the-shelf operating system on the market today. The third quarter also marked the launch and first implementations of SGI's Visual Area Networking concept-the architecture that enables SGI customers to access and control centralized graphics supercomputers from remote locations and to work collaboratively in doing so. Customers in higher education, manufacturing, the sciences, and oil and gas research have been successfully enlisted. "IDC recently released its post 9/11 forecast for both technical servers and workstations," said Debra Goldfarb, group vice president, WW Systems and Life Sciences Research, IDC. "Technical servers will represent approximately $10 billion by 2005, and workstations nearly $8.5 billion. This combined $18+ billion market opportunity is driven by complex and demanding workloads in the life sciences, engineering, government and defense, the petroleum industry, and in what we call the creative user community-those focused on the creation of digital content. SGI's strategy, since inception 20 years ago, has been to focus on this community and the company therefore understands the underlying dynamics and requirements of this particular market segment." "These customers are the ones who are doing nuclear simulation, satellite imaging and military training. They don't want to cut corners," said Sarang Ghatpande, analyst, D.H. Brown Associates. "They demand the best solutions." "SGI is well positioned to weather the current economic storm," said Bob Bishop, chairman and CEO, SGI. "We have already made the tough restructuring and management decisions that have refocused our company on technical and creative users. We have made great progress with customers in strengthening our product portfolio across the board." SGI posted several significant sales where its technologies are being used in this new era of digital defense: -- Lockheed Martin Aeronautics Co. purchased additional SGI systems in connection with the Joint Strike Fighter (JSF) project, including SGI(R) Onyx(R) 3000 series visualization systems, SGI(R) Origin(R) servers, and Silicon Graphics(R) Octane2(TM) visual workstations and Silicon Graphics(R) 750 systems. Two multipipe SGI(R) Onyx(R) 3800 systems for the flight simulation research laboratory in Fort Worth, Texas were part of the initial JSF order in the December quarter. The U.S. Department of Defense on October 26, 2001, awarded Lockheed Martin a contract to build about 3,000 JSF aircraft for the U.S. Air Force, Navy and Marine Corps and the United Kingdom's Royal Air Force and Royal Navy. -- Eurofighter Simulation Systems GmbH (ESS GmbH) selected SGI to supply SGI high-performance servers to the Simulator Specific System, part of the Eurofighter "Typhoon" Aircrew Synthetic Training Aids (EF ASTA) program. EF ASTA is the largest and most advanced fast-jet training program in Europe. The purchase agreement signed in October 2001 between ESS GmbH and SGI calls for the delivery of SGI(R) Origin(R) 3000 series servers and related services for pilot training devices, which will be deployed in Germany, Italy, Spain and the United Kingdom over the next eight years. -- Thales Training & Simulation (TT&S) Pty Limited has selected an SGI Onyx 3800 high-performance graphics system with three InfiniteReality3(TM) graphics pipes to serve as the image generator for the Royal Australian Air Force (RAAF) F-111 mission simulator at RAAF Base Amberley in Queensland. This system will help train aircrews from the RAAF's Strike Reconnaissance Group. The three SGI graphics subsystems are dedicated to providing an out-the-window scene for the pilot and navigator. InfiniteReality3 is the latest version of the world-leading graphics subsystem from SGI and is the high-performance engine for the SGI Onyx 3000 series. For more information visit www.sgi.com