Silicon Graphics to restructure debt

MANHASSET, N.Y. — High-performance computing solutions supplier Silicon Graphics has reached an agreement with its lenders to reduce its debt by $250 million, as part of its reorganization plan to emerge from Chapter 11 bankruptcy.

Silicon Graphics (Mountain View, Calif.) and its U.S. subsidiaries expect to emerge from Chapter 11 within six months. Under its restructuring plan, the company replaced Robert Bishop with Dennis McKenna as CEO in January. The company has also completed a program to save $100 million in annual costs and improve manufacturing efficiency.

"We want to assure our customers, our employees, and our communities that SGI is operating—business as usual," said McKenna in a statement.

The company also reported earnings for the third 2006 fiscal quarter ended March 31. Silicon Graphics posted a GAAP net loss of $43 million, or 16 cents per share on sales of $108 million, meeting guidance.

Silicon Graphics reported gross margin of 36 percent, down from 42 percent the prior quarter, while operating expenses fell to $82 million from $89 million a quarter earlier.