SUNNYVALE, Calif., Feb. 5 /PRNewswire-FirstCall/ -- Silicon
Graphics, Inc. (NASDAQ:SGIC) today announced financial results for
its second fiscal quarter ended December 26, 2008. Revenue for the
second quarter was $82.8 million, compared to $92.8 million in the
previous quarter and $90.1 million in the second quarter of the
prior year. The company's net loss for the quarter was $49.2
million, or $4.24 per share, versus a net loss of $33.7 million or
$2.91 per share last quarter and $42.2 million or $3.78 per share
in the second quarter of the prior year. Excluding charges for
restructuring and impairment of investments, earnings before
interest, taxes, depreciation, and amortization (EBITDA) for the
second quarter was a loss of $17.3 million, compared to a loss of
$13.2 million for the previous quarter and a loss of $22.1 million
in the second quarter of the prior year. Pro forma revenue, a
non-GAAP measure, for the second quarter was $89.3 million,
compared to $117.5 million in the previous quarter and $109.1
million in the second quarter of the prior year. Pro forma revenue
excludes the effect of Statement of Accounting Position 97-2, which
requires the deferral of revenue in certain circumstances under
software revenue recognition rules and is useful when considered in
connection with revenue as calculated under GAAP. Bookings for the
second quarter were $68 million, compared to $58 million in the
first quarter and $100 million in the second quarter of the prior
year. Bookings are calculated as the sum of all committed purchase
orders for products and professional services deliverable within 12
months. The company achieved key milestones and furthered its
product and operational strategy during the quarter: -- NASA Ames
Research Center in Mountain View, California launched the world's
third fastest supercomputer, a SGI Altix ICE 8200EX system
featuring 51,200-core Intel processors. This system was placed into
operation much more quickly than other comparable systems. --
Bookings increased about 17 percent compared to the first quarter
and were strongest in the company's government business,
particularly defense applications. -- The company unveiled Silicon
Graphics(R) VUE, a suite of software solutions that combine visual
information from any source application or platform, fuse it into
an intuitive 3D viewing experience, and securely deliver that
experience anywhere in the world using any device. -- Silicon
Graphics won multiple awards at the major industry conference
Supercomputing 2008, and at GEOINT, the company held the first
public demonstrations of its new visualization software family.
"With our strong foundation of government customers and our
long-term strategy, our leading products and services continue to
gain traction in a difficult economic situation," said Silicon
Graphics CEO Robert "Bo" Ewald. "We'll remain focused on our core
strengths and strategy of helping customers solve large data,
compute and visually intensive problems, while we work inside the
company to improve our operations and financial footing." "Given
the economic environment, we are very focused on managing our
expenses and working capital. We continue to implement the cost
reduction measures we announced in December," said Silicon Graphics
CFO Greg Wood. "The benefit of these measures should begin to be
seen in the second half of our fiscal year as we take aggressive
action to return to profitability." "As we move into 2009, we have
received very positive feedback from customers about our current
and upcoming products, which include the recently announced VUE
visualization tools and our ISLE software family," added Ewald.
"Meanwhile, governments around the world are beginning to take
actions that should increase investments in IT spending in core
government R&D programs. Many of our existing customers should
see additional budgets and we are hopeful that we can serve their
increasing needs." Conference Call SGI will conduct a conference
call today at 2:00 p.m. Pacific Standard Time (PST) to provide
additional details. The Webcast is available at
http://www.sgi.com/company_info/investors/webcast.html. The
conference call can be accessed by dialing (866) 616-5665 or (816)
650-0772 for participants outside of North America, conference ID:
81349573. An audio replay of this call will be available after 5:00
p.m. PST today at (800) 642-1687 or (706) 645-9291 for individuals
outside of North America, conference ID: 81349573 and will be
available until February 12, 2009. After February 12, 2009, the
call will be available as an archived Webcast. All links to the
archived Webcast and audio replay will be available through the SGI
Web site at http://www.sgi.com/company_info/investors/. Silicon
Graphics, Inc. Silicon Graphics, Inc. (SGI) (NASDAQ:SGIC), is a
leader in high- performance computing. SGI delivers a complete
range of high-performance server and storage solutions along with
industry-leading professional services and support that enable its
customers to overcome the challenges of complex data-intensive
workflows and accelerate breakthrough discoveries, innovation and
information transformation. SGI solutions help customers solve
their computing challenges whether it's enhancing the quality of
life through drug research, designing and manufacturing safer and
more efficient cars and airplanes, studying global climate,
providing technologies for homeland security and defense, or
helping enterprises manage large data. With offices worldwide, the
company is headquartered in Sunnyvale, California, and can be found
on the Web at http://www.sgi.com/. Note: The main number for SGI
corporate headquarters is 408-524-1980. (C) 2009 SGI. All rights
reserved. SGI, the SGI cube, Silicon Graphics VUE and the SGI logo
are registered trademarks of SGI in the United States and/or other
countries worldwide. All other trademarks mentioned herein are the
property of their respective owners. This press release contains
forward-looking statements, including statements relating to
expense controls, cash management and new products that are subject
to risks and uncertainties that could cause actual results to
differ materially from those set forth herein, including the risks
and uncertainties discussed under the caption "Risk Factors" and
elsewhere in SGI's Form 10-K or Form 10-Q most recently filed with
the Securities and Exchange Commission. These forward-looking
statements speak only as of the date hereof. SGI disclaims any
intent or obligation to update these forward- looking statements.
SILICON GRAPHICS, INC. CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS (In thousands, except per share amounts, unaudited)
Three Months Ended Dec. 26, Sept. 26, Dec. 28, 2008 2008 2007
Product and other revenue $38,619 $44,531 $40,460 Product revenue
from related party (1) 1,114 684 2,953 Services revenue 43,043
47,544 46,698 Total revenue 82,776 92,759 90,111 Costs and
expenses: Cost of product and other revenue 32,308 34,849 34,938
Cost of services revenue 28,606 28,664 27,310 Research and
development 14,297 15,096 14,464 Selling, general and
administrative 35,065 36,862 44,163 Restructuring expenses 10,734
3,809 20 Total costs and expenses 121,010 119,280 120,895 Operating
loss (38,234) (26,521) (30,784) Interest expense (1,781) (1,019)
(1,017) Interest expense from related parties (3,457) (3,124)
(1,973) Interest and other income (expense), net (5,303) (381)
(6,970) Loss before income taxes (48,775) (31,045) (40,744) Income
tax provision 425 2,652 1,432 Net loss $(49,200) $(33,697)
$(42,176) Net loss per share: Basic $(4.24) $(2.91) $(3.78) Diluted
$(4.24) $(2.91) $(3.78) Weighted-average shares used to compute net
loss per share: Basic 11,614 11,597 11,147 Diluted 11,614 11,597
11,147 (1) Represents product sales to SGI Japan, a related party
of which we own a 10% interest SILICON GRAPHICS, INC. CONDENSED
CONSOLIDATED BALANCE SHEETS (In thousands) Dec. 26, 2008 Sept. 26,
2008 (Unaudited) (Unaudited) ASSETS Current assets: Cash and cash
equivalents $34,995 $36,186 Short-term marketable investments 1,098
179 Short-term restricted investments 3,783 2,330 Accounts
receivable, net 48,633 68,819 Inventories 49,546 51,370 Prepaid
expenses 6,808 7,098 Other current assets 74,234 82,139 Total
current assets 219,097 248,121 Restricted investments 2,087 1,846
Property and equipment, net 33,296 36,363 Other intangibles, net
46,818 50,481 Other non-current assets, net 89,164 93,621 Total
assets $390,462 $430,432 LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities: Accounts payable $17,311 $31,917 Accrued
compensation 22,339 25,737 Income taxes payable 2,161 3,549 Other
current liabilities 45,648 44,260 Current portion of long-term debt
--- 17,000 Current portion of deferred revenue 171,040 163,819
Total current liabilities 258,499 286,282 Long-term debt 157,378
116,407 Non-current portion of deferred revenue 75,869 80,105
Long-term income taxes payable 20,926 23,124 Other non-current
liabilities 13,876 13,184 Total liabilities 526,548 519,102 Total
stockholders' deficit (136,086) (88,670) Total liabilities and
stockholders' deficit $390,462 $430,432 EBITDA (excluding charges
for restructuring and impairment of investments) Three Months
Ended: 26-Dec-08 26-Sep-08 28-Dec-07 (in thousands) Net Loss
$(49,200) $(33,697) $(42,176) Interest expense 5,238 4,144 2,990
Income taxes 425 2,652 1,432 Depreciation and amortization 8,888
9,845 9,453 EBITDA (1) (34,649) (17,056) (28,301) Restructuring
charges 10,734 3,809 20 Impairment charges 6,573 - 6,149 EBITDA,
excluding charges for restructuring and impairment of investments
(2) (3) $(17,342) $(13,247) $(22,132) Rider A (1) The Company
believes EBITDA is useful in understanding its financial
performance as a supplement to net income/ (loss) and other
performance measures calculated in conformity with accounting
principles generally accepted in the United States ("GAAP"). The
Company believes that EBITDA is useful to investors in evaluating
its operating performance because it provides a measure of
operating results unaffected by differences in capital structures,
capital investment cycles and ages of related assets among
otherwise comparable companies in the Company's industry. EBITDA
has limitations as an analytical tool, and should not be considered
in isolation or as a substitute for any measure reported under
GAAP. EBITDA's usefulness as a performance measure as compared to
net income is limited by the fact that EBITDA excludes the impact
of interest expense, depreciation and amortization expense and
taxes. The Company borrows money in order to finance operations;
therefore, interest expense is a necessary element of its costs and
ability to generate revenue. Similarly, the Company's use of
capital assets makes depreciation and amortization expense a
necessary element of its costs and ability to generate income. The
Company believes EBITDA is useful to both management and investors
as a measure of performance, but this measure should be viewed in
conjunction with GAAP measures of performance, such as net
income/(loss) and revenue. (2) The Company believes EBITDA,
excluding changes for restructuring and impairment of investments
("Adjusted EBITDA"), is useful to both management and investors in
comparing its financial results across previous periods,
particularly when viewed in connection with GAAP measures of
performance, such as net income/(loss). (3) In the quarters
following emergence from bankruptcy beginning with the second
fiscal quarter of 2007 and continuing to the first quarter of
fiscal 2009, the Company reported an Adjusted EBITDA which excluded
the impact of fresh start accounting under SOP 90-7, revenue
deferrals under SOP 97-2, amortization of intangible assets,
stock-based compensation under statement of financial accounting
standard 123-R, non-cash items relating to the acquisition of Linux
Networks, impairment of assets, gains or losses on foreign exchange
and other income and expense. The previously reported Adjusted
EBITDA was developed to facilitate a comparison of the Company's
financial results to previous periods given significant
non-operating charges following emergence from bankruptcy. The
Company believes that this measure served an important transition
purpose and is now no longer necessary to facilitate understanding
of the Company's financial statements. However, the Company will
continue to supplement its disclosure with EBITDA, and Adjusted
EBITDA measures (discussed in Notes 1 and 2). MEDIA CONTACT Marla
Robinson 256.773.2371 SGI PR HOTLINE 408-524- 2810 DATASOURCE:
Silicon Graphics, Inc. CONTACT: Media, Marla Robinson of Silicon
Graphics, Inc., +1-256-773-2371, , or SGI PR HOTLINE,
+1-408-524-2810 Web site: http://www.sgi.com/
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