SGI Strengthens Balance Sheet

SGI today announced that it has agreed to sell 18,181,818 shares of its common stock to institutional investors for $2.75 per share in cash in a private placement transaction. The per share price represents a discount of 19% from the fifteen-day volume-weighted average public trading price for SGI common stock. The gross proceeds will be $50 million and are expected to be used for general working capital purposes. These investors have also agreed to convert up to $40 million of SGI's 6.50% Senior Secured Convertible Notes due 2009 into common stock. These notes are otherwise not redeemable by the company until December 2005. In connection with the conversion, SGI will issue up to 33.6 million shares of common stock. The private placement is expected to close within the next several days. Bear, Stearns & Co. Inc. acted as the sole placement agent for the securities sold in this transaction.