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SGI Reports Second Quarter Fiscal Year 2013 Financial Results

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 at the end of this press release. Investors are advised to carefully review and consider this information as well as the GAAP financial results that are disclosed in SGI's SEC filings. 

Contact Information:

John Swenson SGI Investor Relations +1-510-933-8370 jswenson@sgi.com

© 2013 SGI. SGI and its product names and logos 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 Six Months Ended
  December 28, 2012 December 30, 2011 December 28, 2012 December 30, 2011
         
Revenue  $ 171,226  $ 195,214  $ 364,107  $ 374,109
Cost of revenue  123,662  143,031  274,333  269,288
         
Gross profit  47,564  52,183  89,774  104,821
         
Operating expenses:        
Research and development   15,530  16,255  29,499  32,445
Sales and marketing   19,664  23,100  39,235  44,898
General and administrative  12,383  14,799  26,572  31,684
Restructuring   2,867  (23)  4,341  110
Total operating expenses  50,444  54,131  99,647  109,137
         
Loss from operations  (2,880)  (1,948)  (9,873)  (4,316)
         
Interest income (expense), net  (112)  74  (267)  (24)
Other income (expense), net  213  (285)  (894)  (1,143)
Total other income (expense), net  101  (211)  (1,161)  (1,167)
Loss before income taxes  (2,779)  (2,159)  (11,034)  (5,483)
Income tax (benefit) provision  (3,880)  97  (3,455)  (570)
         
Net income (loss)  $ 1,101  $ (2,256)  $ (7,579)  $ (4,913)
         
Basic net income (loss) per share  $ 0.03  $ (0.07)  $ (0.23)  $ (0.16)
Diluted net income (loss) per share  $ 0.03  $ (0.07)  $ (0.23)  $ (0.16)
         
Shares used in computing basic net income (loss) per share  32,410  31,604  32,289  31,448
Shares used in computing diluted net income (loss) per share  32,778  31,604  32,289  31,448
         
 Share-based compensation by category is as follows:         
 Cost of revenue   $ 371  $ 385  $ 871  $ 667
 Research and development   588  507  1,127  1,022
 Sales and marketing   423  439  809  800
 General and administrative   1,114  909  2,200  1,820
 Total   $ 2,496  $ 2,240  $ 5,007  $ 4,309
     
     
Silicon Graphics International Corp.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
     
  December 28, 2012 June 29, 2012
ASSETS    
Current assets:    
Cash and cash equivalents  $ 124,145  $ 104,851
Current portion of restricted cash  1,290  980
Accounts receivable, net   88,636  98,293
Inventories  146,897  123,391
Deferred cost of revenue  35,301  49,407
Prepaid expenses and other current assets  15,228  18,443
 Total current assets  411,497  395,365
Non-current portion of restricted cash   2,957  3,088
Property and equipment, net  27,217  27,404
Intangible assets, net  6,344  8,675
Non-current portion of deferred cost of revenue  10,743  17,466
Other assets  45,729  44,882
 Total assets  $ 504,487  $ 496,880
     
LIABILITIES AND STOCKHOLDERS' EQUITY    
Current liabilities:    
Accounts payable  $ 58,398  $ 69,448
Credit facility  --   15,200
Accrued compensation  23,490  24,246
Other current liabilities  52,982  48,587
Current portion of deferred revenue  170,816  124,924
 Total current liabilities  305,686  282,405
Non-current portion of deferred revenue  53,508  64,717
Long-term income taxes payable  17,734  20,568
Retirement benefit obligations  11,815  11,484
Other non-current liabilities  5,447  6,814
 Total liabilities  394,190  385,988
     
Stockholders' equity  110,297  110,892
 Total liabilities and stockholders' equity  $ 504,487  $ 496,880
                         
Silicon Graphics International Corp.
RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES
(In thousands, except per share data)
(Unaudited)
                         
    Three Months Ended   Six Months Ended
    December 28, 2012   December 28, 2012
    Net Income EPS Gross Profit Gross Margin Operating Expenses   Net (Loss)/ Income EPS Gross Profit Gross Margin Operating Expenses
GAAP    $ 1,101  $ 0.03  $ 47,564 28%  $ 50,444    $ (7,579)  $ (0.23)  $ 89,774 25%  $ 99,647
                         
Share-based compensation in cost of revenue (1)  371  0.01  371 0%  --     871  0.02  871 0%  -- 
Share-based compensation in operating expenses (1)  2,125  0.06  --   --   (2,125)    4,136  0.13  --   --   (4,136)
Amortization of intangibles in cost of revenue (1)  255  0.01  255 0%  --     523  0.02  523 0%  -- 
Amortization of intangibles in operating expenses (1)  689  0.02  --   --   (689)    1,393  0.04  --   --   (1,393)
Restructuring and severance charges in cost of revenue (2)  667  0.02  667 1%  --     895  0.02  895 0%  -- 
Restructuring and severance charges in operating expenses (2)  2,862  0.09  --   --   (2,862)    4,518  0.14  --   --   (4,518)
Other non-recurring costs in operating expenses (2)  (438)  (0.01)  --  0%  438    (438)  (0.01)  --   --   438
Income tax abatement (2)  (4,289)  (0.13)  --   --   --     (4,289)  (0.13)  --   --   -- 
Non-GAAP    $ 3,343  $ 0.10  $ 48,857 29%  $ 45,206    $ 30  $ --   $ 92,063 25%  $ 90,038
                         
Weighted average shares used in computing:                        
Basic net income (loss) per share       32,410            32,289      
Dilutive net income (loss) per share      32,778            32,289      
                         
    Three Months Ended   Six Months Ended
    December 30, 2011   December 30, 2011
    Net (Loss)/ Income EPS Gross Profit Gross Margin Operating Expenses   Net (Loss)/ Income EPS Gross Profit Gross Margin Operating Expenses
GAAP    $ (2,256)  $ (0.07)  $ 52,183 27%  $ 54,131    $ (4,913)  $ (0.16)  $ 104,821 28%  $ 109,137
                         
Share-based compensation in cost of revenue (1)  385  0.01  385 0%  --  (1)  667  0.02  667 0%  -- 
Share-based compensation in operating expenses (1)  1,855  0.06  --   --   (1,855) (1)  3,642  0.12  --   --   (3,642)
Amortization of intangibles in cost of revenue (1)  459  0.01  459 0%  --  (1)  918  0.03  918 0%  -- 
Amortization of intangibles in operating expenses (1)  810  0.03  --   --   (810) (1)  1,999  0.06  --   --   (1,999)
Restructuring and severance charges in operating expenses (2)  --   --   --   --   --  (2)  133  --   --   --   (133)
Other non-recurring costs in operating expenses (2)  --   --   --   --   --  (2)  1,000  0.04  --   --   (1,000)
Non-GAAP     $ 1,253  $ 0.04  $ 53,027 27%  $ 51,466    $ 3,446  $ 0.11  $ 106,406 28%  $ 102,363
                         
Weighted average shares used in computing:                        
Basic net income (loss) per share      31,604            31,448      
Dilutive net income (loss) per share      32,674            32,695      
                         
                         
    Three Months Ended            
    September 28, 2012            
    Net Loss EPS Gross Profit Gross Margin Operating Expenses            
GAAP    $ (8,680)  $ (0.27)  $ 42,210 22%  $ 49,203            
                         
Share-based compensation in cost of revenue (1)  500  0.02  500 0%  --             
Share-based compensation in operating expenses (1)  2,011  0.06  --     (2,011)            
Amortization of intangibles in cost of revenue (1)  268  0.01  268 0%  --             
Amortization of intangibles in operating expenses (1)  704  0.02  --   --   (704)            
Restructuring and severance charges in cost of revenue (2)  228  0.01  228 0%  --             
Restructuring and severance charges in operating expenses (2)  1,656  0.05  --   --   (1,656)            
Non-GAAP     $ (3,313)  $ (0.10)  $ 43,206 22%  $ 44,832            
                         
Weighted average shares used in computing:                        
Basic and diluted net loss per share      32,166                  
                         
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 and severance charges — These charges consist primarily of severance expense, facility closure and relocation costs. 
(b) Other non-recurring costs include settlements and other items.
   
   
Silicon Graphics International Corp.
RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES
GAAP to NON-GAAP EARNINGS BEFORE INTEREST, TAXES, AND AMORTIZATION & DEPRECIATION
(In thousands)
(Unaudited)
   
  Three Months Ended
  December 28, 2012
   
GAAP - Loss before income taxes  $ (2,779)
   
Adjustments of GAAP to Non-GAAP earnings before income taxes (*)  6,531
   
Non - GAAP Income before income taxes  3,752
Depreciation  2,649
Interest income  (54)
Interest expense  166
Non-GAAP EBITDA  $ 6,513
   
   
  Three Months Ended
  December 30, 2011
   
GAAP - Loss before income taxes  $ (2,159)
   
Adjustments of GAAP to Non-GAAP earnings before income taxes (*)  3,509
   
Non - GAAP Income before income taxes  1,350
Depreciation  2,376
Interest income  (98)
Interest expense  24
Non-GAAP EBITDA  $ 3,652
   
   
  Three Months Ended
  September 28, 2012
   
GAAP - Loss before income taxes  $ (8,255)
   
Adjustments of GAAP to Non-GAAP earnings before income taxes (*)  5,367
   
Non - GAAP Loss before income taxes  (2,888)
Depreciation  2,527
Interest income  (44)
Interest expense  199
Non-GAAP EBITDA  $ (206)
   
(*) Refer to the Reconciliation of GAAP to Non-GAAP net income (loss) for further details
             
             
SILICON GRAPHICS INTERNATIONAL CORP. AND SUBSIDIARIES
TRENDED FINANCIAL DATA
(In thousands, except per share amounts)
(Unaudited)
             
  Q1 FY12 Q2 FY12 Q3 FY12 Q4 FY12 Q1 FY13 Q2 FY13
             
Revenue            
Product Revenue  $ 128,952  $ 143,043  $ 150,239  $ 134,499  $ 146,315  $ 128,040
Service Revenue  49,943  52,171  49,151  44,989  46,566  43,186
Total revenue   $ 178,895  $ 195,214  $ 199,390  $ 179,488  $ 192,881  $ 171,226
Cost of revenue            
Product  $ 99,767  $ 112,316  $ 121,263  $ 113,800  $ 122,597  $ 97,350
Service  26,489  30,715  26,617  28,202  28,074  26,312
Total cost of revenue  $ 126,257  $ 143,031  $ 147,880  $ 142,002  $ 150,671  $ 123,662
Gross margin by Product and Service            
Product Gross Margin 22.6% 21.5% 19.3% 15.4% 16.2% 24.0%
Service Gross Margin 47.0% 41.1% 45.8% 37.3% 39.7% 39.1%
Total gross margin 29.4% 26.7% 25.8% 20.9% 21.9% 27.8%
             
Total operating expenses  $ 55,006  $ 54,131  $ 53,001  $ 53,122  $ 49,203  $ 50,444
             
Net income (loss)  $ (2,657)  $ (2,256)  $ (1,162)  $ (18,386)  $ (8,680)  $ 1,101
             
Earnings per share            
Basic net income (loss) per share  $ (0.08)  $ (0.07)  $ (0.04)  $ (0.58)  $ (0.27)  $ 0.03
Diluted net income (loss) per share  $ (0.08)  $ (0.07)  $ (0.04)  $ (0.58)  $ (0.27)  $ 0.03
Shares used in computing net income (loss) per share            
Basic  31,303  31,604  31,783  31,947  32,166  32,410
Diluted  31,303  31,604  31,783  31,947  32,166  32,778
             
SILICON GRAPHICS INTERNATIONAL CORP. AND SUBSIDIARIES
TRENDED FINANCIAL DATA
(In thousands)
(Unaudited)
             
  Q1 FY12 Q2 FY12 Q3 FY12 Q4 FY12 Q1 FY13 Q2 FY13
             
Total Revenue            
Americas  $ 112,392  $ 109,721  $ 128,321  $ 123,311  $ 123,385  $ 112,358
APJ  40,106  56,873  44,660  28,753  44,434  27,735
EMEA  26,397  28,620  26,409  27,424  25,062  31,133
Total revenue   $ 178,895  $ 195,214  $ 199,390  $ 179,488  $ 192,881  $ 171,226
Product Revenue            
Americas  $ 89,056  $ 88,429  $ 107,580  $ 102,100  $ 101,642  $ 91,698
APJ  21,801  34,090  25,253  13,350  26,821  12,605
EMEA  18,095  20,524  17,406  19,049  17,852  23,737
Total product revenue  $ 128,952  $ 143,043  $ 150,239  $ 134,499  $ 146,315  $ 128,040
Service Revenue            
Americas  $ 23,336  $ 21,292  $ 20,741  $ 21,212  $ 21,743  $ 20,660
APJ  18,305  22,783  19,407  15,403  17,613  15,130
EMEA  8,302  8,096  9,003  8,374  7,210  7,396
Total service revenue  $ 49,943  $ 52,171  $ 49,151  $ 44,989  $ 46,566  $ 43,186
Operating profit (loss) - GAAP            
Americas  $ (133)  $ 1,868  $ (2,083)  $ (10,346)  $ 1,576  $ 3,055
APJ  78  1,883  1,749  (332)  (1,411)  (1,265)
EMEA  (2,313)  (5,699)  (1,157)  (4,958)  (7,158)  (4,670)
Total operating profit (loss)  $ (2,368)  $ (1,948)  $ (1,491)  $ (15,636)  $ (6,993)  $ (2,880)

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