Silicon Graphics International (SGI) 8-K Results of Operations and Financial Condition

Fourth Quarter & Fiscal Year 2010

Earnings Slides

August 31, 2010

Exhibit 99.2

2

©

2010 SGI Proprietary

Legal Notice (Part 1 of 2) *

Safe Harbor Cautionary Statement (Abridged)

(Unabridged cautionary language immediately follows this presentation. )

This presentation contains forward-looking statements, including statements regarding management’s expectations

about the markets, business, products, operating plans and financial performance of Silicon Graphics International Corp.

(“SGI”).  Statements in the future tense and expressions using “expect,”

“believe”

or similar words are forward-looking

statements, which may also include any statements that are not statements of historical fact.  Actual outcomes and

results may differ materially from any expectations from these types of statements due to a number of risks, including:

SGI operates in a very competitive market which may cause pricing pressure and impair our market penetration; SGI has

extensive international business activities which create risks from complex international operations, foreign currency

exposure and changing legal, regulatory, political or economic conditions; and uncertainty arising from SGI’s

increased

dependence on business with U.S. Government entities.  Additional information about forward-looking statements and

related risks and uncertainties is contained in Part 2 of 2 of this Legal Notice, also contained in this presentation.

Non-GAAP Reconciliation

All non-GAAP financial measures contained in this presentation are reconciled to GAAP at the end of this presentation.

*See slide 24 for Part 2 of 2 of this Legal Notice. 

3

©

2010 SGI Proprietary

Agenda

Business Update

Financial Overview

FY11 Guidance

FY12 and FY13 Internal Plan

New Fiscal Year, New Focus

FY10

Integration

Investment

Innovation

FY11

Growth

Innovation

Breakeven

4

©

2010 SGI Proprietary

5

©

2010 SGI Proprietary

FY10 Was Transformative

It was a solid first year as the new SGI

Non-GAAP Revenue of $525M, GAAP of $404M

Non-GAAP Gross Margin of 27.3%, GAAP of 22.2%

Generated $8M in cash flow from operations

Rackable Systems and Silicon Graphics integration

complete

COPAN acquired and integrated.  Shipped first products.

Establish company in the Technical Computing market

Refreshed product line

Delivered Altix UV and shipped first products

6

©

2010 SGI Proprietary

Technology Priorities Shaping our Industry

Market trends drive the SGI strategy

Cloud Computing

Tech Refresh Cycle

Energy Efficient

Big Data / Big Memory

RISC migration

Virtualization

Open systems

Scalable I/O

Exa-scale

Overall SGI Themes

1

High Performance,

Large Scale Compute

Open & Scalable Storage

Managed Environments

Optimized Performance

Expert Services

2

3

4

5

Efficient Data Centers

7

©

2010 SGI Proprietary

Technical Computing Industry Needs

Significant opportunity across industries

Frequency trading, Actuarial,

Trading Platforms, Fraud

Prevention, Derivatives

Financial Services

Energy

Reservoir Simulation, Water

Management, Seismic

Processing, Geothermal,

Materials Sciences, Nuclear

Life Sciences

Drug Design and Discovery,

Genomics, Molecular Modeling,

DNA Sequencing, Proteins,

Imaging, Informatics, Proteomics

Cloud

Search, Social Networking,

Commerce, SAAS, Hosted

Compute and Storage

Intelligence / Defense

Complex Event Processing,

Simulation, Signal and Image

Processing, Cyber Security, CNC

Earth Sciences

Weather, Climate, Volcanology,

Earthquake, Oceanography

Entertainment / Media

Manufacturing

Data Analytics

Rendering, Gaming, Broadcast,

Content Distribution Networks

(CDNs)

Data Warehousing, Geo Spatial,

Image Processing, Cyber

Security, Big Data Models

CAD, EDA, Material Sciences,

FEA, CFD

8

©

2010 SGI Proprietary

SGI Has Trusted Answers To Industry Needs

Focused on the major platforms that enable Technical Computing

Leading solutions from cloud computing to big memory

Emerging leadership in cloud and persistent data storage

Integrated best-of-breed compute, storage and networking

Open software platform

Platforms managed with SGI Management Center

Industry-leading custom engineering BTO process

COMPUTE

STORAGE

SOFTWARE

DATACENTER

SERVICES

Scale Out

Scale Up

Block / File

Entry, Mid,

High-

End

Management

Performance

Containers

Infrastructure

9

©

2010 SGI Proprietary

SGI Compute Strategy

Leading solutions from scalable entry to hyper-scale and cloud

Shared Memory

High Performance InfiniBand

Large-scale Datacenter

Scalable Entry

CR

FND

XE

UV 10

UV 100

UV 1000

Cloud Inspired

Hyper-scale

Eco-Logical

Density

BTO

Large Memory

Big Data

Fast I/O

XE

ICE

Capability

Capacity

Cost-Optimized

Multi-Topology

Choice

Office friendly

Self-contained

Scalable

Low IT needs

O3

X2

Origin

400

SGI Storage Strategy

Leading solutions from cost to scalability and performance

RAID Systems

Persistent Data

Cloud Systems

Integrated Storage Servers

IS1000

Short-lived data

Cost optimized

Redundancy

Software RAID

COPAN

Spectra

Logic

Long life data

Disk or Tape

Large Capacity

Eco-logical

High Density

File serving

App Appliance

Cost or Performance

optimized

NAS 50/100

IS3500

Software:  File systems (Lustre, CXFS, XFS), DMF, LiveArc

IS2000

Entry Level (IS220/5000)

Price/Performance Leader

Enterprise RAID (IS4000)

Balanced Price/Performance

HPC RAID (IS6000/15000)

Ultimate Performance/Thruput

10

©

2010 SGI Proprietary

11

©

2010 SGI Proprietary

Services Complete Our Solutions

Delivering customer value and accelerating their time to results

HW Support

Deployment

Onsite

Consulting

Packaged

Offerings

Solutions

Recognition

Data Storage

Containers

Reality Centers

Assessments

In factory (CSP/I)

Benchmarking

Training / Education

Platform Migration

3

rd

Party Product

Global Call Centers

400+ Professionals

26 Countries

24x7x52

12

©

2010 SGI Proprietary

Connecting Customers To SGI Solutions

We are building a focused, scalable multi-path route to market

180+ and growing

200+ Personnel

Expanding our Focus

Direct

Federal SI’s

VAR’s

Tech Partners

SI’s

Financial Overview

Q4 & FY10 Results

**

**

14

©

2010 SGI Proprietary

FY10 Financial Performance

Non-GAAP

Debt Free

$8M cash flow from operations

Grew cash and equivalents to $141M

OPEX of $166M

$25M net loss (see next slide)

Metric

Internal Plan

Result

Revenue

$500M

$525M

Gross Margin

Mid-

to high-

twenties

27.3%

15

©

2010 SGI Proprietary

FY10 Net Loss and Related Charges

Non-GAAP

$25M net loss. $21M in charges.

Description

Charge

Comments

FOREX

$7M

Mainly due to USD to EURO Fluctuation

Silicon Graphics

Integration Costs

$4M

Integration related

E&O

$4M

Integration related

COPAN operations &

integration

$3M

Integration complete, accretive in FY11

EITF Enablement / SOX

$3M

Procedures largely complete

Total:

$21M

16

©

2010 SGI Proprietary

Q4 Income Statement

Metric

GAAP

Non-

GAAP

Comment

Revenue

$102M

$122M

Strong international result

Gross

Margin

19.3%

24.0%

Euro devaluation decreased pricing

power; not expected to be a long-

term effect

OPEX

$44.3M

$43.0M

COPAN adds about $2 million in

increased operating expenses per

quarter

Net Loss

$27.7M

$16.7M

Included a negative foreign currency

exchange effect of $3.7 million in

other income

17

©

2010 SGI Proprietary

Q4 Balance Sheet Highlights

$497.2M in assets

No debt

Cash & Investments of $140.8M

Inventory $89.9M (up $13.7).  Increase

principally due to firm orders in hand for UV

and Rackable products

1,325 Employees

18

©

2010 SGI Proprietary

SNI

$123M

$29M

$107M

Deferred Revenue and SNI

Ending FY10 Balance Sheet

$105M

Type

Unrecognized

SOP 97-2 Deferrals

Description

Inventory carried at cost;

Shipped, but not invoiced;

deliveries that have not yet

been accepted

Extended service contracts

and multi-phase product

shipments (linked

arrangements)

Product shipped and

accepted, but deferred

under software

recognition rules

How its recognized

Carried at inventory cost,

recognized at price of sale

as GAAP & non-GAAP

revenues in future periods

Recognized as GAAP and  

non-GAAP revenues in future

periods

Recognized as GAAP

revenues in future

periods

FY11 Guidance

And

FY12 and FY13 Internal Plan

**

**

20

©

2010 SGI Proprietary

Revenue

$550M to $575M

Gross Margin

27% to 30%

OPEX

$165M to $171M

EPS

Breakeven

FY11 Annual Guidance

Non-GAAP. No Quarterly Guidance.

21

©

2010 SGI Proprietary

FY12 and FY13 Internal Plan

Non-GAAP.  Not Guidance.

Revenue Growth 5% to 10% per year

Gross Margin Expansion 100 bps per year

OPEX Growth 2% to 4% per year

Positive EPS

22

©

2010 SGI Proprietary

Compelling Investment Thesis

Non-GAAP

Attractive $9B technical computing market

Innovative, differentiated products

Strong, high-margin Service business

$497M in assets and no debt

$4.67 per share in Cash & Equivalents

FY11 revenue growth of 5% to 10%

(1)

FY11 gross margin expansion

(1)

FY11 breakeven

(1)

Revenue and gross margin should grow faster than OPEX. 

Profitable in FY12 and FY13.

(2)

Notes: (1) FY11 Guidance. (2) Not Guidance, internal plan.

23

©

2010 SGI Proprietary

Accelerating

Results

24

©

2010 SGI Proprietary

Legal Notice

Part 2 of 2

Safe Harbor Cautionary Statement (Unabridged)

This presentation contains forward-looking statements, including statements regarding management’s expectations about the markets,

business, products, operating plans and financial performance of

Silicon Graphics International Corp. (“SGI”).  Statements containing words

such as "will," "expect," "believe," and "intend," and other statements in the future tense, are forward-looking statements. Any statements

contained in this presentation that are not statements of historical fact may be deemed forward-looking statements. Actual outcomes and

results

may

differ

materially

from

the

expectations

expressed

or

implied

in

these

statements

due

to

a

number

of

risks

and

uncertainties,

including,

but

not

limited

to:

SGI

operates

in

a

very

competitive

market

which

may

cause

pricing

pressure

and

impair

our

market

penetration;

SGI

has

extensive

international

business

activities

which

create

risks

from

complex

international

operations,

foreign

currency

exposure

and

changing

legal,

regulatory,

political

or

economic

conditions;

uncertainty

arising

from

SGI’s

increased

dependence

on

business

with

U.S.

Government

entities;

failure

of

our

customers

to

accept

new

products;

and

economic

conditions

impacting

the

purchasing

decisions

of

SGI’s

customers.

Detailed

information

about

these

and

other

risks

and

uncertainties

that

could

affect

SGI’s

business,

financial

condition

and

results

of

operations

is

set

forth

in

the

Rackable

Systems’

Annual

Report

on

Form

10-K

under

the

caption

“Risks

Factors,”

which

was

filed

with

the

Securities

and

Exchange

Commission

on

March

19,

2009,

as

updated

by

the

subsequent

filings

with

the

SEC

made

by

Rackable

Systems

and/or

SGI,

all

of

which

are

available

at

www.sec.gov.

Accordingly,

you

are

cautioned

not

to

place

undue

reliance

on

forward-looking

statements.

This

presentation

is

as

of

August

31,

2010,

and

the

continued

posting

or

availability

of

this

presentation

does

not

imply

that

forward-looking

statements

continue

to

be

true

as

of

any

later

date.

We

expressly

disclaim

any

obligation

to

update

or

alter

our

forward-looking

statements,

whether,

as

a

result

of

new

information,

future

events

or

otherwise,

except

where

required

by

law.  

The

SGI

logos

and

SGI

product

names

used

or

referenced

herein

are

either

registered

trademarks

or

trademarks

of

Silicon

Graphics

International

Corp

or

one

of

its

subsidiaries.

All

other

trademarks,

trade

names,

service

marks

and

logos

referenced

herein

belong

to

their

respective

holders.

Any

and

all

copyright

or

other

proprietary

notices

that

appear

herein,

together

with

this

Legal

Notice,

must

be

retained

on

this

presentation.

25

©

2010 SGI Proprietary

GAAP / Non-GAAP Reconciliation

Silicon Graphics International Corp.

Q4 FISCAL 2010 FINANCIAL RESULTS

RECONCILIATION OF SELECTED GAAP MEASURES TO NON-GAAP MEASURES (1)

($ in thousands, except per share data)

Three Months Ended June 25,

Three Months Ended March 26,

Three Months Ended June 26,

Year Ended June 25,

2010

2010

2010

2010

2009

2009

2010

2010

GAAP

Adj.

Non-GAAP

GAAP

Adj.

Non-GAAP

GAAP

Adj.

Non-GAAP

GAAP

Adj.

Non-GAAP

TOTAL REVENUES

101,637

$      

20,568

$        

122,205

$      

107,820

$      

21,109

$        

128,929

$      

58,419

$        

2,058

$           

60,477

$        

403,717

$      

121,619

$      

525,336

$      

Included in the above results:

SOP 97-2 (now ASC 985-605) (2)

(20,568)

20,568

-

(21,109)

21,109

-

(2,058)

2,058

-

(121,619)

121,619

-

COST OF REVENUES

82,022

$        

10,867

$        

92,889

$        

78,900

$        

14,567

$        

93,467

$        

53,341

$        

(2,052)

$         

51,289

$        

314,128

$      

68,048

$        

382,176

$      

Included in the above results:

SOP 97-2 (now ASC 985-605) (2)

(11,368)

11,368

-

(15,669)

15,669

-

(1,391)

1,391

-

(79,004)

79,004

-

Amortization of intangible assets (3)

360

(360)

-

322

(322)

-

875

(875)

-

1,313

(1,313)

-

Inventory step up (4)

15

(15)

-

625

(625)

-

2,262

(2,262)

-

2,722

(2,722)

-

Stock-based compensation (5)

126

(126)

-

155

(155)

-

306

(306)

-

691

(691)

-

Excess and obsolete and related (recoveries) (6)

-

-

-

-

-

-

-

-

-

6,230

(6,230)

-

GROSS PROFIT

19,615

$        

9,701

$           

29,316

$        

28,920

$        

6,542

$           

35,462

$        

5,078

$           

4,110

$           

9,188

$           

89,589

$        

53,571

$        

143,160

$      

GROSS MARGIN %

19.3%

24.0%

26.8%

27.5%

8.7%

15.2%

22.2%

27.3%

OPERATING EXPENSES

44,291

$        

(1,267)

$         

43,024

$        

46,165

$        

(2,966)

$         

43,199

$        

9,127

$           

19,546

$        

28,673

$        

176,239

$      

(10,660)

$       

165,579

$      

Included in the above results:

Amortization of intangible assets (3)

1,402

(1,402)

-

526

(526)

-

270

(270)

-

4,986

(4,986)

-

Stock-based compensation (5)

1,011

(1,011)

-

1,006

(1,006)

-

1,225

(1,225)

-

4,136

(4,136)

-

Restructuring (7)

1,561

(1,561)

-

1,434

(1,434)

-

1,270

(1,270)

-

5,213

(5,213)

-

Tradename

impairment (8)

-

-

-

-

-

-

2,520

(2,520)

-

-

-

-

Gain on settlement agreement (9)

-

-

-

-

-

-

(5,000)

5,000

-

-

-

-

Acquisition related (10)

(2,707)

2,707

-

-

-

-

(19,831)

19,831

-

(3,675)

3,675

-

INCOME (LOSS) FROM CONTINUING OPERATIONS

(24,676)

$       

10,968

$        

(13,708)

$       

(17,245)

$       

9,508

$           

(7,737)

$         

(4,049)

$         

(15,436)

$       

(19,485)

$       

(86,650)

$       

64,231

$        

(22,419)

$       

OPERATING MARGIN %

-24.3%

-11.2%

-16.0%

-6.0%

-6.9%

-32.2%

-21.5%

-4.3%

OTHER INCOME, Net

(3,505)

$         

-

$               

(3,505)

(2,461)

$         

-

$               

(2,461)

1,175

$           

-

$               

1,175

(6,652)

$         

-

$               

(6,652)

INCOME TAX EFFECTS: PROVISION/(BENEFIT) (11)

(511)

$             

-

$               

(511)

$             

556

$              

-

$               

556

$              

(2,277)

$         

2,568

$           

291

$              

(4,441)

$         

56

$                 

(4,385)

$         

NET INCOME/(LOSS) FROM CONTINUING OPERATIONS

(27,670)

$       

(16,702)

$       

(20,262)

$       

(10,754)

$       

(597)

$             

(18,601)

$       

(88,861)

$       

(24,686)

$       

NET

INCOME/(LOSS)

PER

SHARE

FROM

CONTINUING

OPERATIONS

(0.91)

$            

(0.55)

$            

(0.67)

$            

(0.36)

$            

(0.02)

$            

(0.62)

$            

(2.95)

$            

(0.82)

$            

SHARES USED IN COMPUTING NET LOSS PER SHARE

30,121

30,121

30,097

30,097

29,794

29,794

30,130

30,130

26

©

2010 SGI Proprietary

GAAP / Non-GAAP Reconciliation

NOTES:

(1)

This

presentation

includes

certain

financial

measures

not

inconformity

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.

(2)

Add

back

of

revenue

and

cost

of

revenue

deferred

under

Software

Revenue

Recognition

rules

previously

referred

to

as

part

of

Statement

of

Position

97-2

(SOP

97-2)

now

codified

as

ASC

985-605

--

$20,568,

$21,109

and

$2,058

for

revenues,

$11,368,

$15,669

and

$1,391

for

cost

of

revenues

for

the

three

months

ending

June

25

and

March

26,

2010

and

June

26,

2009

respectively

and

$121,619

for

revenues,

$79,004

for

cost

of

revenues

for

the

year

ending

June

25,

2010.

(3)

Amortization

expense

related

to

intangible

assets

associated

with

the

asset

purchase

of

Silicon

Graphics,

Inc.

of

$360,

$322

and

$875

under

cost

of

revenues,

$1,402,

$526

and

$270

under

operating

expenses

for

the

three

months

ending

June

25

and

March

26,

2010

and

June

26,

2009

respectively

and

$4,986

for

the

year

ending

June

25,

2010.

Estimated

future

annual

amortization

expense

related

to

intangible

assets

as

of

June

25,

2010

is

as

follows:

Fiscal 2011

5,163

Fiscal 2012

3,402

Fiscal 2013

2,813

Fiscal 2014

2,345

13,723

$        

(4)

Cost

of

revenue

increase

associated

with

an

inventory

step

up

related

to

the

Silicon

Graphics,

Inc.

asset

purchase

in

the

amount

of

$15,

$625

and

$2,262

in

the

periods

ending

June

25

and

March

26,

2010

and

June

26,

2009

respectively

and

$2,722

for

the

year

ending

June

25,

2010.

Under

purchase

accounting,

Silicon

Graphics

International

Corp.

recognized

a

$7,183

inventory

step

up

related

to

the

Silicon

Graphics,

Inc.

asset

purchase

of

which

$2,199

of

this

inventory

step

up

remains

to

flow

through

cost

of

revenue

in

future

periods.

(5)

Stock-based compensation is included in the following GAAP operating expense categories.

Three

Months

Ended

June

25,

2010

Three

Months

Ended

March

26,

2010

Three

Months

Ended

June

26,

2009

Year

Ended

June

25,

2010

GAAP

Adj

Non-GAAP

GAAP

Adj

Non-GAAP

GAAP

Adj

Non-GAAP

GAAP

Adj

Non-GAAP

Cost of Revenues

126

$              

(126)

$             

-

$               

155

$              

(155)

$             

-

$               

306

$              

(306)

$             

-

$               

691

$              

(691)

$             

-

$               

Research & Development

213

(213)

-

169

(169)

-

230

(230)

-

767

(767)

-

Sales & Marketing

181

(181)

-

143

(143)

-

210

(210)

-

445

(445)

-

General & Administrative

617

(617)

-

694

(694)

-

785

(785)

-

2,924

(2,924)

-

Total stock-based compensation

1,137

$           

(1,137)

$         

-

$               

1,161

$           

(1,161)

$         

-

$               

1,531

$           

(1,531)

$         

-

$               

4,827

$           

(4,827)

$         

-

$               

(6)

Excess

and

obsolete

inventory

charges

associated

with

next-generation

technology

shifts

and

new

product

introductions

and

related

(recoveries)

of

these

written

down

inventories

of

$6,230

in

the

year

ending

June

25,

2010.

(7)

Restructuring

expenses

relating

to

personnel

and

facilities

of

$1,561,

$1,434

and

$1,270

in

the

periods

ending

June

25

and

March

26,

2010

and

June

26,

2009

respectively

and

$5,213

for

the

year

ending

June

25,

2010.

(8)

Tradename

write

off

of

$2,520

in

the

period

ending

June

26,

2009.

(9)

Gain

on

settlement

agreement

of

$5,000

in

the

period

ending

June

26,

2009.

(10)

Acquisition

related

benefit

arose

from

the

asset

purchase

of

Silicon

Graphics,

Inc

of

$2,707

and

$19,831

in

the

periods

ending

June

25,

2010

and

June

26,

2009

respectively

and

$3,675

for

the

year

ending

June

25,

2010.

(11)

Estimated

income

tax

effect

related

to

GAAP

to

non-GAAP

adjustments.