SCIENCE

SGI has announced financial results for its first quarter of fiscal 2011.

"Our Q1 results are a solid start to FY11 as we grew revenues and expanded margins quarter-to-quarter, with strong performance in the government and cloud industries," said Mark J. Barrenechea SGI CEO. "Customers are responding well to our new line of products, including Altix UV and COPAN. We are reaffirming our previously announced guidance."

Business and Financial Highlights

• Shipped Altix UV to 49 customers in the quarter including: University of Tohoku, University of Minnesota (in partnership with NIH), Catalonia Supercomputing Centre, University of Queensland, University of São Paulo, Los Alamos National Laboratory, Agency for Science, Technology and Research.
   
• Altix UV enters pharma and biotech industry with Altix UV sales to Merck and Biogemma and GenomeQuest teams with SGI to create Whole-Genome Analysis Architecture.
   
• Announced support for Oracle 11g for the Altix UV.
   
• Customer successes include: Sandia, Los Alamos National Labs, Amazon, Motorola, Microsoft, Carbonite, Stanford University, Raytheon, Northup Grumman and COSMOS Consortium with Professor Stephen Hawking.
   
• Shipped COPAN 400T during the quarter.
   
• Partnered with DARPA and Intel to help deliver future exascale computing.
   
• First full quarter of LSI channel partnership -- delivered revenue in the quarter.
   
• International business provided 26 percent of non-GAAP revenue.
   
• Channel business provided 28 percent of non-GAAP revenue.
   
• Solid industry performance: intelligence, cloud, Department of Defense, US National Laboratories, education and research, manufacturing, telecommunications and financial services.

SGI ended Q1 FY11 with $98.9 million in cash (includes restricted cash, equivalents and investments), a $41.9 million decrease from the prior quarter. $32.3 million in cash was used to fund customer orders.

Starting in Q1 FY 11, SGI has adopted new revenue recognition accounting standards. These new standards did not impact our non-GAAP results. For our Q1 GAAP results, $12.3 million of revenue and 210 basis points of gross margin were directly attributed to adoption of these new standards.

Fiscal Year 2011 Guidance

For fiscal year 2011, SGI is reaffirming its previously announced 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.

Conference Call Information

SGI will discuss these financial results in a conference call at 2:00 p.m. PT today. The public is invited to listen to a live webcast of the call on the Investor Relations section of the company's website at investors.sgi.com. A replay of the web cast will be available approximately two hours after the conclusion of the call and remain available until the next earnings call. An audio replay of the conference call will also be made available approximately two hours after the conclusion of the call. The audio replay will remain available for five days and can be accessed by dialing 706-645-9291 or 800-642-1687 and entering the confirmation code: 18407965.