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SGI Reports Third Quarter Fiscal Year 2013 Financial Results

Stocks in this article: SGI

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:

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

Ben Liao +1-510-933-8430 bliao@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 Nine Months Ended
  March 29, March 30, March 29, March 30,
  2013 2012 2013 2012
         
Revenue  $ 232,588  $ 199,390  $ 596,695  $ 573,499
Cost of revenue  180,096  147,880  454,429  417,168
         
Gross profit  52,492  51,510  142,266  156,331
         
Operating expenses:        
Research and development   15,518  14,982  45,017  47,427
Sales and marketing   19,824  21,824  59,059  66,722
General and administrative  14,924  16,176  41,496  47,860
Restructuring   740  19  5,081  129
Total operating expenses  51,006  53,001  150,653  162,138
         
Income (loss) from operations  1,486  (1,491)  (8,387)  (5,807)
         
Interest income (expense), net  (11)  (126)  (278)  (150)
Other income (expense), net  (359)  913  (1,253)  (230)
Total other income (expense), net  (370)  787  (1,531)  (380)
Income (loss) before income taxes  1,116  (704)  (9,918)  (6,187)
Income tax (benefit) provision  (8,108)  458  (11,563)  (112)
         
Net income (loss)  $ 9,224  $ (1,162)  $ 1,645  $ (6,075)
         
Basic net income (loss) per share  $ 0.28  $ (0.04)  $ 0.05  $ (0.19)
Diluted net income (loss) per share  $ 0.27  $ (0.04)  $ 0.05  $ (0.19)
         
Shares used in computing basic net income (loss) per share  33,201  31,783  32,593  31,557
Shares used in computing diluted net income (loss) per share  34,467  31,783  33,295  31,557
         
Share-based compensation by category is as follows:       
Cost of revenue   $ 391  $ 368  $ 1,262  $ 1,035
Research and development   619  526  1,746  1,548
Sales and marketing   473  458  1,282  1,258
General and administrative   1,326  2,264  3,526  4,084
Total   $ 2,809  $ 3,616  $ 7,816  $ 7,925
 
 
Silicon Graphics International Corp.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
     
  March 29, June 29, 
  2013 2012
ASSETS    
Current assets:    
Cash and cash equivalents  $ 149,394  $ 104,851
Current portion of restricted cash  670  980
Accounts receivable, net   98,577  98,293
Inventories  76,338  123,391
Deferred cost of revenue  30,081  49,407
Prepaid expenses and other current assets  22,502  18,443
Total current assets  377,562  395,365
Non-current portion of restricted cash   2,935  3,088
Property and equipment, net  26,027  27,404
Intangible assets, net  5,534  8,675
Non-current portion of deferred cost of revenue  9,719  17,466
Other assets  44,491  44,882
Total assets  $ 466,268  $ 496,880
     
LIABILITIES AND STOCKHOLDERS' EQUITY    
Current liabilities:    
Accounts payable  $ 55,305  $ 69,448
Credit facility  --   15,200
Accrued compensation  26,485  24,246
Other current liabilities  54,543  48,587
Current portion of deferred revenue  112,465  124,924
Total current liabilities  248,798  282,405
Non-current portion of deferred revenue  55,496  64,717
Long-term income taxes payable  11,602  20,568
Retirement benefit obligations  11,353  11,484
Other non-current liabilities  4,604  6,814
Total liabilities  331,853  385,988
     
Stockholders' equity  134,415  110,892
Total liabilities and stockholders' equity  $ 466,268  $ 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   Nine Months Ended
    March 29, 2013   March 29, 2013
    Net Income EPS Gross Profit Gross Margin Operating Expenses   Net Income EPS Gross Profit Gross Margin Operating Expenses
GAAP    $ 9,224  $ 0.27  $ 52,492 23%  $ 51,006    $ 1,645  $ 0.05  $ 142,266 24%  $ 150,653
                         
Share-based compensation in cost of revenue (1)  391  0.01  391 0%  --     1,262  0.03  1,262 0%  -- 
Share-based compensation in operating expenses (1)  2,418  0.07  --   --   (2,418)    6,554  0.20  --   --   (6,554)
Amortization of intangibles in cost of revenue (1)  255  0.01  255 0%  --     778  0.02  778 0%  -- 
Amortization of intangibles in operating expenses (1)  668  0.02  --   --   (668)    2,061  0.06  --   --   (2,061)
Restructuring and severance in cost of revenue (2)  98  --   98 0%  --     993  0.03  993 0%  -- 
Restructuring and severance in operating expenses (2)  1,646  0.05  --   --   (1,646)    6,164  0.19  --   --   (6,164)
Other non-recurring items in operating expenses (2)  --   --   --  0%  --     (438)  (0.01)  --   --   438
Canada tax benefits (2)  (8,447)  (0.25)  --   --   --     (12,736)  (0.38)  --   --   -- 
Non-GAAP    $ 6,253  $ 0.18  $ 53,236 23%  $ 46,274    $ 6,283  $ 0.19  $ 145,299 24%  $ 136,312
                         
Weighted average shares used in computing:                        
Basic net income (loss) per share       33,201            32,593      
Dilutive net income (loss) per share      34,467            33,295      
                         
 
    Three Months Ended   Nine Months Ended
    March 30, 2012   March 30, 2012
    Net Income /(Loss) EPS Gross Profit Gross Margin Operating Expenses   Net Income /(Loss) EPS Gross Profit Gross Margin Operating Expenses
GAAP    $ (1,162)  $ (0.04)  $ 51,510 26%  $ 53,001    $ (6,075)  $ (0.19)  $ 156,331 27%  $ 162,138
                         
Share-based compensation in cost of revenue (1)  368  0.01  368 0%  --  (1)  1,035  0.04  1,035 0%  -- 
Share-based compensation in operating expenses (1)  3,248  0.11  --   --   (3,248) (1)  6,890  0.21  --   --   (6,890)
Amortization of intangibles in cost of revenue (1)  447  0.01  447 0%  --  (1)  1,365  0.04  1,365 1%  -- 
Amortization of intangibles in operating expenses (1)  759  0.02  --   --   (759) (1)  2,758  0.09  --   --   (2,758)
Restructuring and severance in operating expenses (2)  --   --   --   --   --  (2)  133  --   --   --   (133)
Other non-recurring costs in operating expenses (2)  --   --   --   --   --  (2)  1,000  0.03  --   --   (1,000)
Non-GAAP     $ 3,660  $ 0.11  $ 52,325 26%  $ 48,994    $ 7,106  $ 0.22  $ 158,731 28%  $ 151,357
                         
Weighted average shares used in computing:                        
Basic net income (loss) per share      31,783            31,557      
Dilutive net income (loss) per share      32,504            32,625      
                         
                         
    Three Months Ended    
    December 28, 2012    
    Net Income EPS Gross Profit Gross Margin Operating Expenses            
GAAP    $ 1,101  $ 0.03  $ 47,564 28%  $ 50,444            
                         
Share-based compensation in cost of revenue (1)  371  0.01  371 0%  --             
Share-based compensation in operating expenses (1)  2,125  0.06  --     (2,125)            
Amortization of intangibles in cost of revenue (1)  255  0.01  255 0%  --             
Amortization of intangibles in operating expenses (1)  689  0.02  --   --   (689)            
Restructuring and severance in cost of revenue (2)  667  0.02  667 1%  --             
Restructuring and severance in operating expenses (2)  2,862  0.09  --   --   (2,862)            
Other non-recurring items in operating expenses (2)  (438)  (0.01)  --   --   438            
Canada tax benefits (2)  (4,289)  (0.13)  --   --   --             
Non-GAAP     $ 3,343  $ 0.10  $ 48,857 29%  $ 45,206            
                         
Weighted average shares used in computing:                        
Basic net income (loss) per share      32,410                  
Dilutive net income (loss) per share      32,778                  
 
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
 
 
 
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
  March 29, 2013
   
GAAP - Income before income taxes  $ 1,116
   
Adjustments of GAAP to Non-GAAP earnings before income taxes (*)  5,476
   
Non - GAAP Income before income taxes  6,592
Depreciation  2,666
Interest income  (66)
Interest expense  77
Non-GAAP EBITDA  $ 9,269
   
   
  Three Months Ended
  March 30, 2012
   
GAAP - Loss before income taxes  $ (704)
   
Adjustments of GAAP to Non-GAAP earnings before income taxes (*)  4,822
   
Non - GAAP Income before income taxes  4,118
Depreciation  2,299
Interest income  (51)
Interest expense  177
Non-GAAP EBITDA  $ 6,543
   
   
  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
   
(*) 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 Q3 FY13
               
Revenue              
Product Revenue  $ 128,952  $ 143,043  $ 150,239  $ 134,499  $ 146,315  $ 128,040  $ 187,140
Service Revenue  49,943  52,171  49,151  44,989  46,566  43,186  45,448
Total revenue   $ 178,895  $ 195,214  $ 199,390  $ 179,488  $ 192,881  $ 171,226  $ 232,588
Cost of revenue              
Product  $ 99,767  $ 112,316  $ 121,263  $ 113,800  $ 122,597  $ 97,350  $ 152,523
Service  26,489  30,715  26,617  28,202  28,074  26,312  27,573
Total cost of revenue  $ 126,257  $ 143,031  $ 147,880  $ 142,002  $ 150,671  $ 123,662  $ 180,096
Gross margin by Product and Service              
Product Gross Margin 22.6% 21.5% 19.3% 15.4% 16.2% 24.0% 18.5%
Service Gross Margin 47.0% 41.1% 45.8% 37.3% 39.7% 39.1% 39.3%
Total gross margin 29.4% 26.7% 25.8% 20.9% 21.9% 27.8% 22.6%
               
Total operating expenses  $ 55,006  $ 54,131  $ 53,001  $ 53,122  $ 49,203  $ 50,444  $ 51,006
               
Net income (loss)  $ (2,657)  $ (2,256)  $ (1,162)  $ (18,386)  $ (8,680)  $ 1,101  $ 9,224
               
Earnings per share              
Basic net income (loss) per share  $ (0.08)  $ (0.07)  $ (0.04)  $ (0.58)  $ (0.27)  $ 0.03  $ 0.28
Diluted net income (loss) per share  $ (0.08)  $ (0.07)  $ (0.04)  $ (0.58)  $ (0.27)  $ 0.03  $ 0.27
Shares used in computing net income (loss) per share            
Basic  31,303  31,604  31,783  31,947  32,166  32,410  33,201
Diluted  31,303  31,604  31,783  31,947  32,166  32,778  34,467
 
 
SILICON GRAPHICS INTERNATIONAL CORP. AND SUBSIDIARIES
TRENDED FINANCIAL DATA
(In thousands)
(Unaudited)
               
  Q1 FY12 Q2 FY12 Q3 FY12 Q4 FY12 Q1 FY13 Q2 FY13 Q3 FY13
               
Total Revenue              
Americas  $ 112,392  $ 109,721  $ 128,321  $ 123,311  $ 123,385  $ 112,358  $ 142,215
APJ  40,106  56,873  44,660  28,753  44,434  27,735  36,314
EMEA  26,397  28,620  26,409  27,424  25,062  31,133  54,059
Total revenue   $ 178,895  $ 195,214  $ 199,390  $ 179,488  $ 192,881  $ 171,226  $ 232,588
Product Revenue              
Americas  $ 89,056  $ 88,429  $ 107,580  $ 102,100  $ 101,642  $ 91,698  $ 119,341
APJ  21,801  34,090  25,253  13,350  26,821  12,605  19,854
EMEA  18,095  20,524  17,406  19,049  17,852  23,737  47,945
Total product revenue  $ 128,952  $ 143,043  $ 150,239  $ 134,499  $ 146,315  $ 128,040  $ 187,140
Service Revenue              
Americas  $ 23,336  $ 21,292  $ 20,741  $ 21,212  $ 21,743  $ 20,660  $ 22,874
APJ  18,305  22,783  19,407  15,403  17,613  15,130  16,460
EMEA  8,302  8,096  9,003  8,374  7,210  7,396  6,114
Total service revenue  $ 49,943  $ 52,171  $ 49,151  $ 44,989  $ 46,566  $ 43,186  $ 45,448
Operating profit (loss) - GAAP              
Americas  $ (133)  $ 1,868  $ (2,083)  $ (10,346)  $ 1,576  $ 3,055  $ 8,374
APJ  78  1,883  1,749  (332)  (1,411)  (1,265)  3,018
EMEA  (2,313)  (5,699)  (1,157)  (4,958)  (7,158)  (4,670)  (9,906)
Total operating profit (loss)  $ (2,368)  $ (1,948)  $ (1,491)  $ (15,636)  $ (6,993)  $ (2,880)  $ 1,486

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