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SGI Reports Second Quarter Financial Results
MOUNTAIN VIEW, Calif., Jan. 31 /PRNewswire-FirstCall/ -- Silicon Graphics (OTC: SGID) today announced results for its second fiscal quarter which ended December 30, 2005. Revenue for the second quarter fiscal year 2006 was $144 million, gross margin was 41.7% and the operating loss was $28 million. For comparison, in the first quarter FY06, revenue was $170 million, gross margin was 37.8% and the operating loss was $26 million. The second quarter fiscal year 2006 net loss was $30 million or $0.11 per share, compared with a net loss of $32 million or $0.12 per share in the previous quarter. GAAP operating expenses for the second fiscal quarter were $88 million compared with $90 million in the first fiscal quarter 2006. Non-GAAP operating expenses were $78 million in the second quarter compared with $83 million in the first fiscal quarter excluding restructuring charges of $10 million and $7 million, respectively. "Our Q2 performance was consistent with our operating income guidance and within our EBITDA targets with strong margins offsetting lower than expected billings," said Jeff Zellmer, chief financial officer. "Looking forward, we will take a number of actions to improve our top-line results and continue to lower our cost structure." Unrestricted cash, cash equivalents and marketable investments on December 30, 2005 were $66 million as compared with $77 million at September 30, 2005. Separately, SGI today announced that Dennis McKenna has been named as chairman, CEO and president, replacing Robert Bishop, who will remain as vice chairman. SGI will host a conference call today at 2 p.m. PT to provide additional details. A live webcast is available at http://www.sgi.com/investors/events.html. The dial-in number is 877-704-5381 or 913-312-1295. An audio replay of this call will be available after 5 p.m. PT today at 888-203-1112 or 719-457-0820 (passcode: 9146935). All links to the archived Webcast and audio replay are available through SGI's Web site at http://www.sgi.com/investors/events.html. This release contains non-GAAP financial measures. Management believes that a non-GAAP presentation of operating expenses is useful to investors to facilitate period to period comparisons of SGI's operating results. The Investor Relations section on our web site at http://www.sgi.com/company_info/investors provides comparable GAAP financial measures and the related reconciliation. Forward-Looking Statements This news release contains forward-looking statements relating to future events or expected financial performance that involve risks and uncertainties. The company's future results could differ materially from the expectations discussed herein. Factors that might cause such a difference include risks associated with the timely development, production and acceptance of new products and services; increased competition; dependence on third party partners and suppliers; the failure to achieve expected product mix and revenue levels; failure to manage costs and generate improved operating results and cash flows; failure to maintain compliance with debt covenants; and failure to maintain adequate cash resources for the operation of the business. These and other risks are detailed from time to time in SGI's periodic reports that are filed with the Securities and Exchange Commission, including SGI's quarterly report on Form 10-Q for the quarter ended September 30, 2005. Silicon Graphics is under no obligation to publicly update or revise any forward-looking statements, whether changes occur as a result of new information, future events or otherwise. SILICON GRAPHICS | The Source of Innovation and Discovery(TM) SGI, also known as Silicon Graphics, Inc., is a leader in high-performance computing, visualization and storage. SGI's vision is to provide technology that enables the most significant scientific and creative breakthroughs of the 21st century. Whether it's sharing images to aid in brain surgery, finding oil more efficiently, studying global climate, providing technologies for homeland security and defense or enabling the transition from analog to digital broadcasting, SGI is dedicated to addressing the next class of challenges for scientific, engineering and creative users. With offices worldwide, the company is headquartered in Mountain View, Calif., and can be found on the Web at http://www.sgi.com/. Silicon Graphics, SGI, the SGI cube and the SGI logo are registered trademarks and The Source of Innovation and Discovery is a trademark of Silicon Graphics, Inc., in the United States and/or other countries worldwide. All other trademarks mentioned herein are the property of their respective owners. MEDIA CONTACT
Caroline Japic
caroline@sgi.com
650.933.7210
INVESTOR CONTACT
Beth Howe
bhowe@sgi.com
650.933.8279
SGI PR HOTLINE
650.933.7777
SGI PR FACSIMILE
650.933.0283
SILICON GRAPHICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands except per share amounts)
Three Months Ended Six Months Ended
Dec. 30, Dec. 24, Dec. 30, Dec. 24,
2005 2004 2005 2004
(unaudited) (unaudited)
Product and other revenue $69,111 $117,456 $151,053 $209,591
Product revenue from related
party (1) 4,839 27,823 21,665 33,674
Service revenue 70,443 77,823 141,352 155,244
Total revenue 144,393 223,102 314,070 398,509
Costs and expenses:
Cost of product and other
revenue 46,817 89,780 114,177 155,565
Cost of service revenue 37,351 49,578 75,523 96,270
Research and development 20,767 24,823 44,132 48,129
Selling, general and
administrative 57,297 62,870 117,163 125,587
Other operating expense,
net (2) 10,114 5,199 17,299 8,365
Total costs and expenses 172,346 232,250 368,294 433,916
Operating loss (27,953) (9,148) (54,224) (35,407)
Interest expense (4,028) (3,856) (7,503) (8,992)
Interest and other income
(expense), net 1,803 132 (25) (134)
Loss from continuing operations
before income taxes (30,178) (12,872) (61,752) (44,533)
Income tax provision (benefit) 287 (1,723) 784 (5,455)
Net loss from continuing
operations (30,465) (11,149) (62,536) (39,078)
Discontinued operations:
Net loss from discontinued
operations, net of tax -- -- -- (276)
Net loss $(30,465) $(11,149) $(62,536) $(39,354)
Net loss per common share -
basic and diluted:
Continuing operations $(0.11) $(0.04) $(0.23) $(0.15)
Discontinued operations -- -- -- (0.00)
Net loss per common share -
basic and diluted $(0.11) $(0.04) $(0.23) $(0.15)
Shares used in the calculation
of net loss per common
share - basic and diluted 268,383 262,487 267,572 262,263
(1) Represents product sales to SGI Japan, a related party for which we
own a 24% equity interest at December 30, 2005 and owned a 40% equity
interest at December 24, 2004.
(2) Represents charges for estimated restructuring costs, related
accretion expense, and asset impairments in each of the three- and
six-month periods ended December 30, 2005 and December 24, 2004.
SILICON GRAPHICS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
Dec. 30, June 24,
2005 2005 (1)
ASSETS (unaudited)
Current assets:
Cash and cash equivalents $65,960 $64,247
Short-term marketable investments 216 39
Short-term restricted investments 46,709 39,757
Accounts receivable, net 70,468 93,335
Inventories 62,155 75,662
Prepaid expenses and other current assets 37,289 43,431
Total current assets 282,797 316,471
Restricted investments 412 413
Net property and equipment 41,651 56,257
Other assets 73,077 79,004
$397,937 $452,145
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable $51,479 $58,075
Accrued compensation 24,554 34,062
Income taxes payable 2,954 2,689
Other current liabilities 65,865 72,530
Current portion of long-term debt 4,456 1,820
Current portion of deferred revenue 85,612 98,305
Total current liabilities 234,920 267,481
Long-term debt 293,287 261,992
Long-term deferred revenue 49,088 36,188
Other liabilities 73,586 77,672
Total liabilities 650,881 643,333
Total stockholders' deficit (252,944) (191,188)
$397,937 $452,145
(1) The condensed consolidated balance sheet at June 24, 2005 has been
derived from the audited consolidated financial statements at that
date.
First Call Analyst: FCMN Contact: pistacchio@sgi.com Website: http://www.sgi.com/ |
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