SGI Reports Financial Results for Third Quarter of Fiscal 2014

SGI Reports Financial Results for Third Quarter of Fiscal 2014 
MILPITAS, CA -- (Marketwired) -- 04/30/14 --  SGI (NASDAQ: SGI), the
trusted leader in high performance computing and Big Data, today
reported financial results for its fiscal third quarter ended Mar.
28, 2014. Total revenue for the fiscal third quarter was $124
million, which compares with $116 million in the previous quarter and
$233 million in the third fiscal quarter of 2013.  
GAAP net loss for the third quarter was $22 million, or $(0.64) per
share, which compares with a GAAP net loss of $14 million, or $(0.40)
per share, in the prior quarter, and GAAP net income of $9 million,
or $0.27 per diluted share, in the third quarter of fiscal 2013.
Non-GAAP net loss for the quarter was $7 million, or $(0.22) per
share, which compares with non-GAAP net loss of $7 million, or
$(0.20) per share, in the prior quarter and non-GAAP net income of $6
million, or $0.18 per diluted share, in the year-ago period.  


 
--  Core revenue, which includes HPC, Big Data, storage, and services, but
    excludes revenue related to legacy cloud infrastructure and
    "low-margin deals" in prior periods, was $122 million, which compares
    with $107 million in the prior quarter and $152 million in the same
    quarter a year ago.
--  Core revenue in the company's Federal business, which includes U.S.
    government customers, system integrators, and higher education
    institutions, was $45 million, up from $44 million in the prior
    quarter and down from $82 million in the same quarter one year ago.
--  Outside of the Federal business (commercial and non-U.S. public
    sector), core revenue was $77 million, up 24% from $62 million in the
    prior quarter and up 11% from $69 million in the same quarter a year
    ago.
--  Revenue related to the legacy cloud, which is generally commodity
    servers for public cloud infrastructure, was $2 million, which
    compares with $9 million in the prior quarter and $32 million in the
    fiscal third quarter of 2013.

  
"Results for the quarter were consistent with our expectations and
reflected solid core revenue growth in international public sector
and commercial accounts, coupled with continued softness in the
spending of certain Federal defense-related customers," said Jorge
Titinger, president and CEO of SGI. "Our core international and
commercial business is on track to grow approximately 35% in the
fiscal second half; however, in our Federal business we have yet to
see the return of historical spending patterns or incremental new
program wins to drive immediate growth. As a result, we currently
expect total revenue for the fiscal second half to be within the
lower end of our previously forecasted range. Looking beyond the
current fiscal year, we are confident that we are making the right
investments in people and products to drive market share gains and
improved ranking among the top providers of supercomputers globally,
and to achieve profitable growth in the enterprise through our highly
differentiated core offerings for high-performance shared memory
analytics."  
Recent Highlights 


 
--  On Apr. 30, SGI announced that Massachusetts General Hospital and
    Harvard Medical School's Center for Advanced Medical Imaging Sciences
    (CAMIS) Radiology Department has selected SGI to enhance research
    capabilities for diagnostic medical imaging. CAMIS chose SGI(R)
    UV(TM) 2000 and SGI(R) UV(TM) 20 large shared-memory systems
    and SGI(R) InfiniteStorage(TM) 5000 due to its proven ability to
    solve large-scale, data-intensive problems with industry-standard
    components while providing ease-of-use benefits.
    
    
--  On Apr. 16, SGI announced a partnership with NVIDIA and GIS Federal, a
    supplier of high performing innovative solutions for big data, cloud
    computing and intuitive tools across all intelligence disciplines, to
    power geospatial database that can scale several orders of magnitude
    higher than other compute databases. The database runs on a 10
    terabyte (TB) SGI(R) UV(TM) 2000 system, with 16 NVIDIA(R)
    Tesla(R) K20x graphics processing unit (GPU) accelerators.
    
    
--  On Apr. 8, 3M and SGI announced the implementation of a fully
    functional supercomputer developed in collaboration with Intel, using
    a revolutionary two-phase immersion cooling technology pioneered by 3M
    that reduces water consumption and energy use -- while increasing
    supercomputer efficiency. The proof-of-concept includes the fifth
    generation SGI(R) ICE(TM) X distributed memory supercomputer with
    the Intel(R) Xeon(R) processor E5-2600 placed directly into the
    3M(TM) Novec(TM) Engineered Fluid, showcasing this technology as
    the "Data Center of the Future."
    
    
--  On Mar. 3, SGI announced that the Japan Agency for Marine-Earth
    Science and Technology (JAMSTEC) has selected SGI UV 2000 powered by
    Intel(R) Xeon(R) processor E5-4600 v2 series for pre and
    post-processing offline grid simulations for its Earth Simulator
    supercomputer. JAMSTEC's SGI UV 2000 solution is one of the largest
    shared memory systems powered by 2,560 cores of Intel(R) Xeon(R)
    processor E5-4600 v2 series and provides 49.152 Tflops of computing
    capacity with 32TB shared memory for a Single System Instance,
    propelling JAMSTEC to the next level of large scale, fine-grained
    simulations that were otherwise unthinkable due to memory
    constraints.
    
    
--  On Feb. 6, SGI announced a partnership with Cognilytics, combining
    SGI's HPC technology for Big Data analytics with Cognilytics'
    expertise in implementing technologies such as Hadoop and SAP Platform
    and Analytics solutions -- bringing customers a more robust Big Data
    and HPC offering. Infrastructure solutions delivered through the new
    SGI and Cognilytics partnership include SGI(R) InfiniteData
    Cluster(TM) and SGI(R) UV(TM).

  
Outlook 
 SGI provides high-performance computing and data management
solutions to large government, higher education, and commercial
customers. Any given customer deal can include a varying mix of
compute and storage hardware, software, and services, and generally
will carry terms that result in most of the product revenue
associated with the deal being recognized upon final shipment or
acceptance of the system. The timing of booking, installation, and
acceptance of large deals is difficult to predict and can cause
significant swings in quarterly revenue. The company derives a
significant portion of its revenue from the U.S. government and from
third parties and educational institutions that receive funding from
the U.S. government. Government shutdowns, protracted Federal budget
deliberations, and other disruptions in the timely funding or
acceptance of government-related programs can impact the award,
deployment, and final acceptance of systems. Management provides
guidance on revenue and other items based on its current expectations
of the timing of revenue and associated costs; however, there can be
no assurance that revenues and associated costs will be recognized
according to expected schedules and management assumes no obligation
to update its guidance if the timing of revenues or other
circumstances in the business differ from current expectations.  
The company is providing the following guidance for the fiscal fourth
quarter and fiscal half ending Jun. 27, 2014: 


 
--  Total revenue for the fiscal second half is expected to be in the
    range of $260 to $270 million. Total revenue for the fiscal fourth
    quarter is expected to be in the range of $135 to $145 million.
    
    
--  Excluding Federal, core revenue for the second half of fiscal 2014 is
    expected to be in the range of $170 to $175 million, up approximately
    35% from the second half of fiscal 2013, including expected
    year-over-year growth of at least 60% in the fiscal fourth quarter.
    
    
--  GAAP net loss for the fiscal fourth quarter is expected to be in the
    range of $8 - $11 million, or $(0.23) to $(0.30) per share. Non-GAAP
    net loss for the fiscal fourth quarter is expected to be in the range
    of $3 - $6 million, or $(0.08) to $(0.15) per share. Non-GAAP net loss
    is expected to exclude approximately $5 million of adjustments,
    including stock-based compensation expense, restructuring and
    severance costs, intangibles amortization and other items. Both EPS
    calculations assume 34.8 million weighted average shares outstanding.

  
Webcast and Conference Call Information
 A live webcast of the earnings
conference call will be available on the Investor Relations section
of the Company's website at investors.sgi.com beginning at 2:00 p.m.
PT (5:00 p.m. ET). A replay of the webcast will be available
approximately two hours after the conclusion of the call and will
remain available until the next earnings call.  
The public can also listen to the earnings conference call by dialing
(888) 463-5422 (toll-free) or (970) 315-0484 (international). 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 (855) 859-2056 (toll-free) or (404) 537-3406 (international)
and entering the confirmation code: 29326971. 
About SGI
 SGI, the trusted leader in high performance computing
(HPC) and Big Data, is focused on helping customers solve their most
demanding business and technology challenges by delivering technical
computing, Big Data analytics, cloud computing, and petascale storage
solutions that accelerate time to discovery, innovation, and
profitability. Visit sgi.com (sgi.com/) for more information. 
Connect with SGI on Twitter (@sgi_corp), YouTube
(youtube.com/sgicorp), Facebook (facebook.com/sgiglobal) and LinkedIn
(linkedin.com/company/sgi). 
Cautionary Statement Regarding Forward Looking Statements 
 The
statements made in this press release regarding projected financial
results, including SGI's anticipated growth and profitability,
guidance for the fourth quarter and second half of fiscal 2014 and
certain statements made in the earnings conference call, are
forward-looking statements within the meaning of the safe harbor
provisions of Section 21E of the Securities Exchange Act of 1934 and
Section 27A of the Securities Act of 1933. Actual results could
differ materially from those described by these statements due to a
number of uncertainties, including, but not limited to:  


 
--  Substantial sales to U.S. government entities, which are subject to
    the government's budgetary constraints;
--  Customer concentration risks;
--  Fluctuations in the buying patterns and sizes of customer orders from
    one quarter to the next;
--  Increased competition causing SGI to sell products or services at
    lower margins than expected;
--  Lengthy acceptance cycles of SGI's products by certain customers,
    development or product delivery delays, and delays in obtaining
    necessary components from suppliers;
--  The addition of new customers or loss of existing customers;
--  Unexpected changes in the price for, and the availability of,
    components from SGI's suppliers;
--  SGI's ability to enhance its products with new and better designs and
    functionality;
--  Actions taken by competitors, such as new product announcements or
    introductions or changes in pricing;
--  Market acceptance of newer products; and
--  SGI's increased reliance on contract manufacturing and its anticipated
    benefits.

  
In addition, SGI's actual revenue and profitability for the fiscal year
ending June 27, 2014 could differ materially from expectations for a
number of reasons, including, but not limited to, changes driven by
new accounting, regulations, interpretations or guidance and other
risks as detailed in SGI's filings with the Securities and Exchange
Commission ("SEC"), including those described under the caption "Risk
Factors" in SGI's Annual Report on Form 10-K filed with the SEC on
Sept. 9, 2013 and SGI's Quarterly Report on Form 10-Q filed with the
SEC on Feb. 3, 2014, which are available at the SEC's web site at
http://www.sec.gov. You are cautioned not to place undue reliance on
forward-looking statements, which speak only as of the date of this
announcement. SGI undertakes no obligation to update the information
in this earnings release or the related earnings conference call,
whether as a result of new information, future events or otherwise,
unless otherwise required by law. 
Use of Non-GAAP Financial Measures 
 This press release and the
related earnings conference call include financial measures that are
not determined in accordance with U.S. generally accepted accounting
principles ("GAAP"), including non-GAAP gross margin, non-GAAP net
income (loss) and non-GAAP basic and diluted net income (loss) per
share. These non-GAAP measures are not based on any comprehensive set
of accounting rules or principles and management exercises judgment
in determining which items should be excluded in the calculation of
non-GAAP measures. In addition, these non-GAAP measures may be
different from non-GAAP measures used by other companies. While we
believe that non-GAAP measures have limitations in that they do not
reflect all of the amounts associated with our results of operations
as determined in accordance with GAAP, we believe that non-GAAP
measures are valuable in evaluating the company's operating
performance and analyzing our business operations. Management may
exclude the following items from one or more of non-GAAP measures:
(1) share-based compensation; (2) amortization of intangible assets;
(3) restructuring and severance charges; (4) excess and obsolete
inventory write-off; (5) manufacturing transition costs; (6) gains or
losses on investments; and (7) other non-recurring costs, including
settlements and other items. Such measures are adjusted as described
in the reconciliation of GAAP and non-GAAP numbers included in this
release, if applicable; but these adjustments should not be construed
as an inference that all of these adjustments or costs are unusual,
infrequent or non-recurring.  
In addition, management uses these non-GAAP financial measures to
facilitate its review of the comparability of SGI's core operating
performance on a period to period basis as well as to better
understand the fundamental economics of a specific period's
operational and financial performance. Management uses this view of
SGI's operating performance for purposes of comparison with its
business plan and individual operating budgets and allocations of
resources.  
Management also believes that the non-GAAP financial measures provide
additional insight for analysts and investors in evaluating SGI's
financial and operational performance in the same way that management
evaluates the company's financial performance. However, these
non-GAAP financial measures have limitations as an analytical tool,
as they exclude the financial impact of transactions necessary or
advisable for the conduct of SGI's business, such as the granting of
equity compensation awards and are not intended to be an alternative
to financial measures prepared in accordance with GAAP. Hence, to
compensate for these limitations, management does not review these
non-GAAP financial metrics in isolation from its GAAP results, nor
should investors. Pursuant to the requirements of SEC Regulation G, a
detailed reconciliation between SGI's GAAP and non-GAAP financial
results is provided in this press release. Investors are advised to
carefully review and consider this information as well as the GAAP
financial results that are disclosed in this release and SGI's SEC
filings. 
For a full reconciliation of historical non-GAAP measures referenced
in this press release or today's presentation to the comparable
measures under GAAP, please refer to the company's press releases on
its website at www.sgi.com. 
Copyright 2014 Silicon Graphics International Corp. All rights
reserved. SGI and the SGI logo are trademarks or registered
trademarks of Silicon Graphics International Corp. or its
subsidiaries in the United States and/or other countries. All other
trademarks are property of their respective holders.  


 
                                                                            
                    Silicon Graphics International Corp.                    
         UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS          
                  (In thousands, except per share amounts)                  
                                                                            
                                  Three Months Ended     Nine Months Ended  
                                 --------------------  -------------------- 
                                 March 28,  March 29,  March 28,  March 29, 
                                    2014       2013       2014       2013   
                                 ---------  ---------  ---------  --------- 
                                                                            
Revenue                          $ 124,283  $ 232,588  $ 387,862  $ 596,695 
Cost of revenue                     93,213    180,096    285,061    454,429 
                                 ---------  ---------  ---------  --------- 
                                                                            
Gross profit                        31,070     52,492    102,801    142,266 
                                 ---------  ---------  ---------  --------- 
                                                                            
Operating expenses:                                                         
  Research and development          17,327     15,518     47,063     45,017 
  Sales and marketing               19,105     19,824     55,516     59,059 
  General and administrative        16,431     14,924     43,460     41,496 
  Restructuring                          9        740        646      5,081 
                                 ---------  ---------  ---------  --------- 
    Total operating expenses        52,872     51,006    146,685    150,653 
                                 ---------  ---------  ---------  --------- 
(Loss) income from operations      (21,802)     1,486    (43,884)    (8,387)
                                 ---------  ---------  ---------  --------- 
  Interest income (expense), net       (41)       (11)       (94)      (278)
  Other income (expense), net          533       (359)     2,521     (1,253)
                                 ---------  ---------  ---------  --------- 
    Total other income                                                      
     (expense), net                    492       (370)     2,427     (1,531)
                                 ---------  ---------  ---------  --------- 
(Loss) income before income                                                 
 taxes                             (21,310)     1,116    (41,457)    (9,918)
Income tax (benefit) provision         548     (8,108)       908    (11,563)
                                 ---------  ---------  ---------  --------- 
Net (loss) income                $ (21,858) $   9,224  $ (42,365) $   1,645 
                                 =========  =========  =========  ========= 
                                                                            
Basic net (loss) income per                                                 
 share                           $   (0.64) $    0.28  $   (1.24) $    0.05 
                                 =========  =========  =========  ========= 
Diluted net (loss) income per                                               
 share                           $   (0.64) $    0.27  $   (1.24) $    0.05 
                                 =========  =========  =========  ========= 
                                                                            
Shares used in computing basic                                              
 net (loss) income per share        34,325     33,201     34,199     32,593 
                                 =========  =========  =========  ========= 
Shares used in computing diluted                                            
 net (loss) income per share        34,325     34,467     34,199     33,295 
                                 =========  =========  =========  ========= 
                                                                            
                                                                            
                                                                            
                    Silicon Graphics International Corp.                    
               UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS              
                               (In thousands)                               
                                                                            
                                                         March 28,  June 28,
                                                            2014      2013  
                                                         --------- ---------
                         ASSETS                                             
Current assets:                                                             
  Cash and cash equivalents                              $  76,105 $ 175,181
  Current portion of restricted cash                         2,276       531
  Accounts receivable, net                                 102,960    59,842
  Inventories                                               71,731    61,770
  Current portion of deferred cost of revenue               10,167    21,204
  Prepaid expenses and other current assets                 18,411    14,094
                                                         --------- ---------
    Total current assets                                   281,650   332,622
Non-current portion of restricted cash                       2,078     2,853
Property and equipment, net                                 28,618    26,170
Goodwill and intangible assets, net                         17,119     6,174
Non-current portion of deferred cost of revenue              6,392     7,281
Other assets                                                34,002    32,753
                                                         --------- ---------
    Total assets                                         $ 369,859 $ 407,853
                                                         ========= =========
                                                                            
          LIABILITIES AND STOCKHOLDERS' EQUITY                              
Current liabilities:                                                        
  Accounts payable                       
                $  48,631 $  51,531
  Accrued compensation                                      20,656    28,504
  Current portion of deferred revenue                       93,641    86,357
  Other current liabilities                                 35,671    35,364
                                                         --------- ---------
    Total current liabilities                              198,599   201,756
Non-current portion of deferred revenue                     46,884    50,362
Long-term income taxes payable                               9,997    10,149
Retirement benefit obligations                              12,006    11,542
Other non-current liabilities                                8,621     3,790
                                                         --------- ---------
    Total liabilities                                      276,107   277,599
Stockholders' equity                                        93,752   130,254
                                                         --------- ---------
      Total liabilities and stockholders' equity         $ 369,859 $ 407,853
                                                         ========= =========
                                                                            
                                                                            
                                                                            
                    Silicon Graphics International Corp.                    
       RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES        
                   (In thousands, except per share data)                    
                                (Unaudited)                                 
                                                                            
                                             Three Months Ended             
                                 ------------------------------------------ 
                                               March 28, 2014               
                                                                            
                                    Net                  Gross    Operating 
                                    Loss       EPS       Profit    Expenses 
                                 ---------  ---------  ---------  --------- 
GAAP                             $ (21,858) $   (0.64) $  31,070  $  52,872 
                                                                            
  Share-based compensation   (1)     3,268       0.10        431     (2,837)
  Amortization of                                                           
   intangibles               (1)     1,047       0.03        441       (606)
  Restructuring and                                                         
   severance                 (2)     7,145       0.21      1,451     (5,694)
  Excess and obsolete                                                       
   inventory                 (2)     2,182       0.06      2,182          - 
  Other non-recurring items  (2)       819       0.02          2       (817)
                                 ---------  ---------  ---------  --------- 
Non-GAAP                         $  (7,397) $   (0.22) $  35,577  $  42,918 
                                 =========  =========  =========  ========= 
                                                                            
Gross Margin                                                                
  Gross margin on a GAAP                                                    
   basis                                                      25%           
  Gross margin on a Non-GAAP                                                
   basis                                                      29%           
                                                                            
Weighted average shares used in computing:                                  
  Basic and dilutive net loss                                               
   per share                                   34,325                       
                                                                            
                                                                            
                                             Three Months Ended             
                                 ------------------------------------------ 
                                               March 29, 2013               
                                                                            
                                    Net                  Gross    Operating 
                                   Income      EPS       Profit    Expenses 
                                 ---------  ---------  ---------  --------- 
GAAP                             $   9,224  $    0.27  $  52,492  $  51,006 
                                                                            
  Share-based compensation   (1)     2,809       0.08        391     (2,418)
  Amortization of                                                           
   intangibles               (1)       923       0.03        255       (668)
  Restructuring and                                                         
   severance                 (2)     1,744       0.05         98     (1,646)
  Income tax abatement       (2)    (8,447)     (0.25)         -          - 
                                 ---------  ---------  ---------  --------- 
Non-GAAP                         $   6,253  $    0.18  $  53,236  $  46,274 
                                 =========  =========  =========  ========= 
                                                                            
Gross Margin                                                                
  Gross margin on a GAAP                                                    
   basis                                                      23%           
  Gross margin on a Non-GAAP                                                
   basis                                                      23%           
                                                                            
Weighted average shares used in computing:                                  
  Basic net income per share                   33,201                       
  Dilutive net income per                                                   
   share                                       34,467                       
                                                                            
                                                                            
                                             Three Months Ended             
                                 ------------------------------------------ 
                                              December 27, 2013             
                                                                            
                                    Net                  Gross    Operating 
                                    Loss       EPS       Profit    Expenses 
                                 ---------  ---------  ---------  --------- 
GAAP                             $ (13,684) $   (0.40) $  33,483  $  48,375 
                                                                            
  Share-based compensation   (1)     3,517       0.10        459     (3,058)
  Amortization of                                                           
   intangibles               (1)     1,051       0.03        442       (609)
  Restructuring and                                                         
   severance                 (2)     1,921       0.06      1,171       (750)
  Other non-recurring items  (2)     2,094       0.06        104     (1,990)
  Gain on investment         (2)    (1,717)     (0.05)         -          - 
                                 ---------  ---------  ---------  --------- 
Non-GAAP                         $  (6,818) $   (0.20) $  35,659  $  41,968 
                                 ========= 
 =========  =========  ========= 
                                                                            
                                                                            
Gross Margin                                                                
  Gross margin on a GAAP                                                    
   basis                                                      29%           
  Gross margin on a Non-GAAP                                                
   basis                                                      31%           
                                                                            
Weighted average shares used in computing:                                  
  Basic and dilutive net loss                                               
   per share                                   34,176                       
                                                                            
                                                                            
                                                                            
                    Silicon Graphics International Corp.                    
       RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES        
                   (In thousands, except per share data)                    
                                (Unaudited)                                 
                                                                            
                                              Nine Months Ended             
                                 ------------------------------------------ 
                                               March 28, 2014               
                                                                            
                                    Net                  Gross    Operating 
                                    Loss       EPS       Profit    Expenses 
                                 ---------  ---------  ---------  --------- 
GAAP                             $ (42,365) $   (1.24) $ 102,801  $ 146,685 
                                                                            
  Share-based compensation   (1)     9,761       0.28      1,332     (8,429)
  Amortization of                                                           
   intangibles               (1)     2,933       0.09      1,138     (1,795)
  Restructuring and                                                         
   severance                 (2)     9,995       0.29      2,655     (7,340)
  Excess and obsolete                                                       
   inventory                 (2)     5,424       0.16      5,424          - 
  Other non-recurring items  (2)     3,649       0.11        106     (3,543)
  Gain on investment         (2)    (1,717)     (0.05)         -          - 
  Canada tax benefits        (2)      (611)     (0.02)         -          - 
                                 ---------  ---------  ---------  --------- 
Non-GAAP                           (12,931) $   (0.38)   113,456    125,578 
                                 =========  =========  =========  ========= 
                                                                            
Gross Margin                                                                
  Gross margin on a GAAP                                                    
   basis                                                      27%           
  Gross margin on a Non-GAAP                                                
   basis                                                      29%           
                                                                            
Weighted average shares used                                                
 in computing:                                                              
  Basic and dilutive net                                                    
   loss per share                              34,199                       
                                                                            
                                              Nine Months Ended             
                                 ------------------------------------------ 
                                               March 29, 2013               
                                                                            
                                    Net                  Gross    Operating 
                                   Income      EPS       Profit    Expenses 
                                 ---------  ---------  ---------  --------- 
GAAP                             $   1,645  $    0.05  $ 142,266  $ 150,653 
                                                                            
  Share-based compensation   (1)     7,816       0.23      1,262     (6,554)
  Amortization of                                                           
   intangibles               (1)     2,839       0.08        778     (2,061)
  Restructuring and                                                         
   severance                 (2)     7,157       0.22        993     (6,164)
  Other non-recurring items  (2)      (438)     (0.01)         -        438 
  Income tax abatement       (2)   (12,736)     (0.38)         -          - 
                                 ---------  ---------  ---------  --------- 
Non-GAAP                         $   6,283  $    0.19  $ 145,299  $ 136,312 
                                 =========  =========  =========  ========= 
                                                                            
Gross Margin                                                                
  Gross margin on a GAAP basis                                24%           
  Gross margin on a Non-GAAP                                                
   basis                                                      24%           
                                                                            
Weighted average shares used                                                
 in computing:                                                              
  Basic net income per share                   32,593                       
  Dilutive net income per                                                   
   share                                       33,295                       
                                                                            
                                                                            
NOTE: This presentation includes certain financial measures not in          
conformity with Generally Accepted Accounting Principles in the United      
States (non-GAAP measures). Our non-GAAP measures are not meant to be       
considered in isolation or as a substitute for comparable GAAP measures, and
should be read only in conjunction with our consolidated financial          
statements prepared in accordance with GAAP.                                
(1)  Adjustments to exclude certain non-cash expenses such as share-based   
     compensation and amortization of intangible assets.                    
(2)  Adjustments to exclude the items discussed below because such items are
     either operating expenses which would not otherwise have been incurred 
     by the company in the normal course of the company's business          
     operations or are not reflective of the company's core results over    
     time. These items may include recurring as well as non-recurring items.
                                                                            
     (a)  Restructuring Charges and severance - Restructuring charges       
          consist primarily of severance expense, facility closure and      
          relocation costs                                                  
     (b)  Other non-recurring items include settlements and other items     
     (c)  Excess and obsolete charges related to our strategic withdrawal   
          from legacy cloud infrastructure                                  
                                                                            
                                                                            
                                                                            
                    Silicon Graphics International Corp.                    
                           TRENDED FINANCIAL DATA                           
                               (In thousands)                               
                                (Unaudited)                                 
                                                                            
              Q1 FY13  Q2 FY13  Q3 FY13  Q4 FY13  Q1 FY14  Q2 FY14  Q3 FY14 
             -------- -------- -------- -------- -------- -------- -------- 
                                                                            
Total                                                                       
 Revenue                                               
                     
  Americas   $123,385 $112,358 $142,215 $118,550 $102,212 $ 62,648 $ 56,554 
  APJ          44,434   27,735   36,314   28,084   24,266   24,383   52,508 
  EMEA         25,062   31,133   54,059   23,898   21,041   29,029   15,221 
             -------- -------- -------- -------- -------- -------- -------- 
    Total                                                                   
     revenue $192,881 $171,226 $232,588 $170,532 $147,519 $116,060 $124,283 
             ======== ======== ======== ======== ======== ======== ======== 
Revenue                                                                     
  Compute    $130,800 $109,129 $160,367 $ 97,870 $ 88,842 $ 60,418 $ 72,805 
  Storage      15,515   18,911   26,773   31,324   19,978   16,916   13,122 
             -------- -------- -------- -------- -------- -------- -------- 
    Product                                                                 
     Revenue  146,315  128,040  187,140  129,194  108,820   77,334   85,927 
  Service                                                                   
   Revenue     46,566   43,186   45,448   41,338   38,699   38,726   38,356 
             -------- -------- -------- -------- -------- -------- -------- 
    Total                                                                   
     revenue $192,881 $171,226 $232,588 $170,532 $147,519 $116,060 $124,283 
             ======== ======== ======== ======== ======== ======== ======== 
Cost of                                                                     
 revenue                                                                    
  Product    $122,597 $ 97,350 $152,523 $ 99,469 $ 88,692 $ 61,343 $ 70,759 
  Service      28,074   26,312   27,573   24,277   20,579   21,234   22,454 
             -------- -------- -------- -------- -------- -------- -------- 
    Total                                                                   
     cost of                                                                
     revenue $150,671 $123,662 $180,096 $123,746 $109,271 $ 82,577 $ 93,213 
             ======== ======== ======== ======== ======== ======== ======== 
Gross margin                                                                
 by Product                                                                 
 and Service                                                                
  Product                                                                   
   Gross                                                                    
   Margin        16.2%    24.0%    18.5%    23.0%    18.5%    20.7%    17.7%
  Service                                                                   
   Gross                                                                    
   Margin        39.7%    39.1%    39.3%    41.3%    46.8%    45.2%    41.5%
    Total                                                                   
     gross                                                                  
     margin      21.9%    27.8%    22.6%    27.4%    25.9%    28.8%    25.0%
             ======== ======== ======== ======== ======== ======== ======== 
                                                                            
                                                                            
                                                                            
                    Silicon Graphics International Corp.                    
                             CORE REVENUE TREND                             
                               (In thousands)                               
                                 (Unaudited)                                
                                                                            
               Q1 FY13  Q2 FY13  Q3 FY13  Q4 FY13  Q1 FY14  Q2 FY14  Q3 FY14
              -------- -------- -------- -------- -------- -------- -------- 
                                                                            
Core Federal                                                                
  Federal     $ 68,156 $ 64,803 $100,809 $ 66,857 $ 76,374 $ 44,402 $ 45,013
  Low-Margin                                                                
   Deals             -        -  (18,555)       -        -        -        -
              -------- -------- -------- -------- -------- -------- --------
    Total                                                                   
     Core                                                                   
     Federal                                                                
     (*)        68,156   64,803   82,254   66,857   76,374   44,402   45,013
              -------- -------- -------- -------- -------- -------- --------
Core                                                                        
 International
 /Commercial                                                                 
  International 
 /Commercial    79,347   68,200   99,627   58,074   55,259   62,482   77,215
  Low-Margin                                                                
   Deals       (15,334)       -  (30,194)       -        -        -        -
              -------- -------- -------- -------- -------- -------- --------
    Total                                                                   
     Core                                                                   
     International 
 /Commercial 
   (**)         64,013   68,200   69,433   58,074   55,259   62,482   77,215
              -------- -------- -------- -------- -------- -------- --------
                                                                            
      Total                                                                 
       Core                                                                 
       Revenue 132,169  133,003  151,687  124,931  131,633  106,884  122,228
              -------- -------- -------- -------- -------- -------- --------
                                                                            
                                                                            
Legacy Cloud    45,378   38,223   32,152   45,601   15,886    9,176    2,055
Low-Margin                                                                  
 Deals          15,334        -   48,749        -        -        -        -
              -------- -------- -------- -------- -------- -------- --------
                                                                            
      Total                                                                 
      Revenue $192,881 $171,226 $232,588 $170,532 $147,519 $116,060 $124,283
              ======== ======== ======== ======== ======== ======== ========
                                                                            
(*) Core Federal revenue includes U.S. government customers, system         
 integrators, and higher education institutions but excludes low-margin     
 deals                                                                      
(**) Core International / Commercial revenue includes HPC, Big Data,        
 storage, and services, excludes revenue related to legacy cloud            
 infrastructure and low-margin deals                                        

  
Contact Information:  
SGI Investor Relations
John Swenson
+1-669-900-8129
jswenson@sgi.com 
 
 
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