GOVERNMENT

MOUNTAIN VIEW, CA -- SGI (NYSE: SGI) today announced results for its first fiscal quarter which ended September 28, 2001. Revenue for the first quarter was $379 million. The operating loss for the first quarter was $2 million, excluding additional charges of $44 million related to restructuring and other special charges. Overall, the company posted a net loss of $69 million or $0.36 per share, including interest and other non-operating expenses. This compares with a net loss of $232 million or $1.20 per share for the quarter ended June 30, 2001. ``We are turning our business around, in the face of difficult economic conditions,'' said Bob Bishop, Chairman and CEO. ``We have the right solutions, for the right markets, at the right time. In particular, we believe US Federal government spending will be an engine for growth in this quarter. We are making steady progress toward our goal of profitability.'' SGI also announced today an agreement with Microsoft Corporation that involves a patent cross-license and the transfer of certain additional non-core intellectual property rights to Microsoft. The agreement generated $62.5 million in revenue for SGI and closed in September 2001. Further terms of the agreement were not disclosed. ``SGI has a rich portfolio of technical intellectual property,'' said Bishop. ``This agreement allows us to tap into the value of that IP without compromising in any way our core R&D or the future of our business.'' As of September 28, 2001, unrestricted cash, cash equivalents and marketable investments were $122 million compared with $126 million for the previous quarter. For more information visit www.sgi.com/company_info/investors