SGI Takes Action to Reduce Debt

SGI Announces Pre-Negotiated Reorganization

MOUNTAIN VIEW, Calif., (May 8, 2006)--Silicon Graphics (OTC: SGID) today announced that it has reached an agreement with all of its Senior Secured bank lenders and with holders of a significant amount of its Senior Secured debt on the terms of a reorganization plan that will reduce its debt by approximately $250 million, greatly simplifying its capital structure.

As part of this agreement with many of its major stakeholders, and as the next step in its previously announced plan to reorganize its businesses, the Company and its U.S. subsidiaries have filed voluntary petitions under chapter 11 of the U.S. Bankruptcy Code. SGI's non-U.S. subsidiaries, including European, Canadian, Mexican, South American and Asia Pacific subsidiaries were not included in the filing; will continue their business operations without supervision from the U.S. courts; and will not be subject to the requirements of chapter 11. The Company expects to file its Plan of Reorganization reflecting the agreement shortly, and to emerge from Chapter 11 within six months.

Read more at http://www.sgi.com/company_info/newsroom/press_rel eases/2006/may/sgi_reorg.html