Silicon Graphics Cooperating With Commerce Department Regarding Sale of Computers to Russian Laboratory

February 18, 1997

MOUNTAIN VIEW, Calif. (February 18, 1997) -- Silicon Graphics, Inc. (NYSE:SGI) today announced that it has been working over the past month with the Department of Commerce to investigate whether high-powered computers shipped to a Russian laboratory are being used for nuclear weapons testing.

"I am very concerned with this situation. Our reputation for integrity as a company is extremely important to us," said Edward R. McCracken, chairman and chief executive officer of Silicon Graphics. "These systems were shipped on the understanding that they would be used for environmental research. It would be a major concern to us if Silicon Graphics systems have been diverted to end-uses that differ from the representations we received at the time of the shipment."

"In our review of the situation it is apparent that errors in judgment were made by not asking the right questions prior to the sale and by not raising the issue to the top of our organization for consideration," continued McCracken. "I take full responsibility for this situation."

The systems were purchased by the Russian Scientific Research Institute for Technical Physics in 1996, which stated that the computers were to be used specifically for modeling of earth-water pollution caused by extension of radioactive substances, for modeling of the Earth's atmosphere and for the research of atomic power plant safety. Based on these representations, Silicon Graphics believed that this transaction did not require a license from the Commerce Department.

Silicon Graphics, Inc. is cooperating with the Commerce Department to determine if the systems have been diverted to an inappropriate use.

"We take our obligations under the export laws seriously and believe that all our exports to end-users in Russia were made in compliance with applicable requirements," said McCracken. "We are vigorously revising our entire procedure for exports to Russia in order to assure that all Silicon Graphics exports fully comply with all government regulations."

Silicon Graphics, Inc is a leading supplier of high-performance interactive computing systems. The company offers the broadest range of products in the industry -- from low-end desktop workstations to servers and high-end Cray® supercomputers. Silicon Graphics also markets MIPS® microprocessor designs, Alias|WavefrontTM entertainment and design software and other software products. The company's key markets include the manufacturing, government, science and industries, telecommunications and entertainment sectors. Silicon Graphics and its subsidiaries have offices throughout the world and headquarters in Mountain View, California.

Silicon Graphics and the Silicon Graphics logo are registered trademarks of Silicon Graphics, Inc. MIPS is a registered trademark of MIPS Technologies, Inc. Cray is a registered trademark of Cray Research, Inc., a wholly-owned subsidiary of Silicon Graphics, Inc. Alias|Wavefront is a trademark of Alias|Wavefront, a division of Silicon Graphics, Limited.