Rackable Systems Completes Acquisition of Silicon Graphics Assets

Rackable Systems, Inc. (NASDAQ:RACK), a leading provider of ecological servers and storage products for medium to large-scale data centers, today announced that it has completed its previously-announced acquisition of the operating assets of the former Silicon Graphics, Inc. With the completion of this acquisition, the company will adopt SGI^® as its global name and brand. Rackable Systems president and CEO, Mark J. Barrenechea, will lead SGI in the same capacity. The Rackable Systems board of directors remains unchanged.

Rackable was granted court approval on April 30, 2009 to proceed with the acquisition for $42.5 million in cash and closed the transaction on May 8, 2009. The company expects to report pro forma financial information within 75 days after the closing.

The company expects customers to benefit from an expanded portfolio of cutting-edge, innovative and high performance products for medium and large-scale data centers and HPC, including trusted enterprise x86 cluster compute offerings, shared memory clustered compute products, scalable data center and storage technologies, modular data centers, data management software, HPC tools and emerging visualization technologies.

"We are committed to solving the world’s most demanding business and technology challenges our customers confront every day, whether powering the Internet, exploring for natural resources, modeling meteorological events, enabling financial markets or assisting government and security agencies,” said Mark J. Barrenechea, president and CEO of SGI. "SGI is ready to support our growing customer base with relevant products, global services and the industry’s best expertise.”

The new SGI will have a customer base of over 5,000 in more than 25 countries and approximately 1,350 employees worldwide. SGI will maintain its corporate headquarters in its current Fremont, California facility, with offices around the world. SGI’s new management team, listed on www.sgi.com/management, is comprised of senior executives from Rackable Systems and the former Silicon Graphics, Inc.

Rackable Systems has created Silicon Graphics International as a subsidiary, which has acquired the assets and liabilities specified in the court-approved, and now completed, Asset Purchase Agreement. Rackable Systems, Inc. will also change its name to a Silicon Graphics International entity, with Rackable Systems surviving as a product line. Silicon Graphics International will be branded as SGI® going forward.

About Rackable Systems

Rackable Systems, Inc. (NASDAQ:RACK) is a leading provider of Eco-Logical™ servers and storage for medium- to large-scale data center deployments. The company’s products, available for purchase or lease, feature leading designs in the areas of density, thermal efficiency, serviceability, power distribution, data center mobility and remote management. Rackable is a founding member of The Green Grid, and Think Eco-Logical, an initiative which blends corporate responsibility for increased sustainability with the need to manage expenses and increase performance. Rackable serves cluster computing and services, enterprise software, federal government, digital media, financial services, oil and gas exploration and HPC customers worldwide, and maintains headquarters in Fremont, California. For more information, please visit www.rackable.com.

Cautionary Statement Regarding Forward Looking Statements

This press release contains forward-looking statements; including statements regarding Rackable Systems' anticipated product performance, general business outlook, with its acquisition of substantially all the assets of Silicon Graphics, Inc., or SGI. Any statements contained herein that are not statements of historical fact may be deemed forward-looking statements. Actual results may differ materially from forward-looking statements due to a number of risks and uncertainties including: liabilities assumed by Rackable Systems in the acquisition of SGI assets may be greater than anticipated; key personnel may not remain with Rackable Systems following the closing of the SGI asset acquisition; the anticipated synergies from the acquisition of the SGI assets and the potential cost reductions may not be achieved; the combined operations may not be successfully integrated in a timely manner, if at all; economic conditions impacting the purchasing decisions of Rackable Systems' customers; Rackable Systems operates in a very competitive market, and increased competition has in the past, and may continue, to cause pricing pressure on Rackable Systems' products, which would negatively affect Rackable Systems' gross and operating margins, as well as other financial measures; a significant portion of the Company's revenues come from a small number of customers, and so the delay in placing an order, or the failure of a significant customer to place additional orders, could have a significant negative effect on Rackable Systems' financial performance; orders for Rackable Systems' products can be received at the end of the quarter, and so a delay in placing an order in the fourth quarter could have a significant negative effect on Rackable Systems' financial performance for the year; Rackable Systems is unable to control component pricing, such as DDR memory pricing as has happened in the past, and as a result component pricing can rise unexpectedly, negatively impacting Rackable Systems' gross margins as well as other financial measures; Rackable Systems may be required to write-off additional significant amounts of excess and obsolete inventory; and new products by competitors may come on the market, which would decrease the demand for Rackable Systems' products. Detailed information about these and other potential factors that could affect Rackable Systems' business, financial condition and results of operations is included in Rackable Systems' annual report on Form 10-K under the caption "Risk Factors," in Part I, Item 1A of that report, filed with the Securities and Exchange Commission ("SEC") on March 19, 2009, as updated by Rackable Systems' subsequent filings with the SEC, all of which are available at the SEC's Web site at www.sec.gov. You are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date of this report. Rackable Systems undertakes no responsibility to update the information in this report.

Rackable Systems and Eco-Logical and are trademarks or registered trademarks of Rackable Systems, Inc. SGI is a registered trademark of Silicon Graphics International. All other trademarks are property of their respective holders.