http://www.sgi.com/Headlines/annual-report/highlights.html (Einblicke ins Internet, 10/1995)
1992 includes merger-related expenses and restructuring charge of $133 million.
1992 includes merger-related Assumes $100 investment on 10/29/86 to expenses and restructuring charge 6/30/94. Compound annual growth rate of $133 million. SGI (yellow): 29% S&P 500 Index (blue): 7%
Revenues for fiscal 1994 rose to an all-time high of $1.5 billion, a 36% increase compared to 1993's $1.1 billion. Silicon Graphics net income was $141 million, or $0.91 per share, compared to the previous years $88 million, or $0.60 per share. Research and development spending increased to $177 million, or 12% of revenue, up from $137 million in fiscal 1993. As of June 30, 1994, Silicon Graphics cash and cash equivalents, short-term investments and long-term financial instruments totaled $588 million, up from $197 million at the end of the previous year, which included net proceeds of $195 million from the sale of 20-year zero coupon convertible subordinated debentures.
One of the principal reasons underlying Silicon Graphics' financial performance during the last year was the outstanding sales growth achieved by the desktop product line, which accounted for just over 60% of the Company's product revenues. The majority of these sales are attributed to our Indigo2 and Indy desktop work-stations, which are excellent examples of Silicon Graphics value-added products that provide significant price/performance advantages to customers worldwide. In fact, most of Silicon Graphics new product introductions during fiscal 1994 centered around our desktop product line. Early in the year we introduced the Indy, a low cost digital media desktop workstation that combines video and audio with 2D and 3D graphics to set a new price/performance standard for RISC-based desktop computers. The new Indigo2 XL and Indigo2 XZ systems, introduced shortly after Indy, enhance the high-performance desktop product line by offering Indigo2 advanced functionality at breakthrough prices starting at less than $18,000. As these and other new products become even more affordable, we continue to extend our technology to a wider base of users in our target markets.
High-end products such as the Onyx graphics workstation family and the CHALLENGE line of server solutions posted significant sales results. The new POWER CHALLENGE supercomputer systems made their debut at the end of the year and are expected to contribute significantly in fiscal 1995.
North American business was very strong throughout the year, growing by over 40% from fiscal 1993. After a year of slower growth, our Japanese business grew approximately 33% despite continued economic weakness in that country. This growth reflects the strength of our new products, our continuing ability to penetrate large strategic accounts, an increase in application software for our computers and a general broadening of our distribution channels.
In addition to introducing new computers, Silicon Graphics was also active on the software front during fiscal 1994. Concurrent with the Indy introduction, we unveiled the Indigo Magic user environment a revolutionary media user interface that simplifies the UNIX operating system without sacrificing power, enabling users to easily manipulate graphics, video and audio. Our new InPerson desktop conferencing software opens exciting possibilities for interactive collaborative computing. And, new application development software such as CASEVision/WorkShop and Indy DevStation expand programmer productivity by bringing unparalleled visualization capabilities to users of our computing platforms.
On a final product note, Silicon Graphics wholly-owned subsidiary, MIPS Technologies, Inc., introduced a number of important new RISC microprocessors during the year, including the powerful R8000. These new processors are the engines that power Silicon Graphics computers, enabling us to maintain and enhance our position as the world's leading supplier of visual computing solutions.
One of the keys to Silicon Graphic's future lies in its expanding network of strategic industry alliances. Along with new distribution partnerships forged with EDS and Tandem Computers, we were particularly active in the interactive technology arena, entering into agreements with Nintendo, Disney and AT&T that follow closely on the heels of our alliance with Time Warner at the end of fiscal 1993.
The AT&T's agreement resulted in the founding of Interactive Digital Solutions - a joint venture company created to provide Silicon Graphics and AT&T with a vehicle to deliver complete interactive video solutions based on Silicon Graphics video and graphics technology and AT&Ts networking and integration expertise to telephone companies and cable TV systems. The company will be run by James Barton, an eight-year veteran of Silicon Graphics, who most recently served as the vice president and general manager of our Media Systems Division.
Our early involvement in this emerging interactive marketplace allows us to build yet another core competency for the Company. We believe that Silicon Graphics has a bright future in the interactive marketplace, one that builds logically on the position we've carved out over the last decade as the worldwide leader in visual computing. That leadership position continues to grow rapidly, based on our commitment to serving an ever-widening customer base through the introduction of new generations of products and technologies.
A number of important management changes occurred at Silicon Graphics in fiscal 1994. Dr. James Clark, the Company's founder and chairman, resigned his position with the Company in order to pursue opportunities in developing applications software for the emerging interactive broadband network market. Jim's leadership and vision have helped us become one of the worlds fastest growing companies. We wish him the best and extend our heartfelt thanks for his many contributions. As a result, Edward McCracken moved from the position of president to the post of chairman of the board, while retaining his duties as chief executive officer. Thomas Jermoluk then became Silicon Graphics president, and remained chief operating officer. Dr. Forest Baskett, our senior vice president of research and development-who in the past year was selected for induction to the prestigious National Academy of Engineers-was named chief technology officer.
We also had several additions to the management team. Tom Whiteside, formerly director of RISC processor development at IBM, joined MIPS Technologies as president. Kirk Loevner, formerly VP of Apple Computer's Applesoft Products Group, joined Silicon Graphics as vice president and general manager of applications and markets. And, William Kelly, formerly a partner at Shearman & Sterling, joined Silicon Graphics as vice president of business development, general counsel and secretary.
We also would like to pay our respects to Glenn Mueller, who died in April. Glenn was an influential founding member of Silicon Graphics Board of Directors. He and his partners at Mayfield Fund provided seed capital for founding the Company and seeing it through its early years of development and growth. Glenn gave generously of his time, experience and wisdom in counseling and supporting Silicon Graphics through the many challenges that weve met and surmounted. Glenns contributions will continue to influence the growth and success of the Company for many years to come.
Finally, we would like to thank all of Silicon Graphics stockholders, customers, partners, suppliers and employees for their continued support. Fiscal 1994 was, by any measure, a banner year for the Company. We look forward to building on this hard-earned success as we continue to develop our unique strengths and expand the reach of our technology in the years ahead.
Edward R. McCracken Thomas A. Jermoluk Chairman of the Board and President and Chief Executive Officer Chief Operating Officer
