Science & Technology
Science and Technology
Science and Technology
Fri, October 30, 2009
Thu, October 29, 2009 Cray Inc. Reports Third Quarter 2009 Financial Results
SEATTLE, WA--(Marketwire - October 29, 2009) - Global supercomputer leader Cray Inc. (
Total gross profit margin for the third quarter of 2009 was 39 percent compared to 51 percent in the third quarter of 2008. Product margin for the third quarter of 2009 was 23 percent and was negatively impacted by a $4.5 million write down (a 14 percent product margin impact) for inventory purchased in 2008 as part of a last-time buy. Service margin was 59 percent in the third quarter of 2009 and benefited from the execution of a contract that allowed us to recognize approximately $3.9 million of revenue for work performed in the prior quarter.
Operating expenses for the third quarter were $27.1 million compared to $22.3 million in the prior year period. As previously anticipated, third quarter 2009 operating expenses increased due to a delayed milestone on a co-funded development contract. Also included in third quarter 2009 results were non-cash items of $1.8 million for gross depreciation and amortization and $1.2 million related to stock compensation expense.
For the nine month period ended September 30, 2009, Cray reported total revenue of $195.8 million compared to $127.5 million in the prior year period, an increase of 54 percent. Net loss was ($3.6 million) or ($0.11) per share for the nine months ended September 30, 2009 compared to a net loss of ($14.8 million) or ($0.45) per share for the nine month period ended September 30, 2008. The 2009 year-to-date net income results include $4.6 million of stock compensation and $1.7 million of non-cash items related to recent changes in accounting guidelines applicable to our convertible notes.
As of September 30, 2009, cash and short-term investments totaled $67.8 million.
"We are building a strong base for our future, targeting profitable operations in 2009 following a major growth year in 2008. This has been driven by the performance of our XT5 supercomputers and custom engineering initiative," said Peter Ungaro, president and CEO of Cray. "We've made significant strides in expanding our addressable market by bringing out several new products and services to complement our high-end supercomputers -- with more planned over the coming months. All of this has put us in an excellent position to continue to be the technology leader in high performance computing and drive strong revenue growth into the future."
Outlook
For 2009, Cray now expects revenue in the range of $285 million, including about $90 million in service revenue. Overall gross profit margin for the year is expected to be approximately 36 percent. Operating expenses for 2009, assuming completion of a co-funded development milestone in the fourth quarter, are anticipated to be in the range of $98 million. Based on achieving this outlook, we anticipate a modest operating income for 2009. Results for the year include approximately $6 million of stock-based compensation.
For 2010, Cray expects its revenue to continue to grow, perhaps modestly, and expects to be profitable. Revenue is expected to be heavily weighted to late in the year, driven by the timing of new product introductions.
Actual results for any future period are subject to large fluctuations given the nature of Cray's business.
Recent Highlights
-- In September, Cray signed a multi-year, multi-phase contract to provide the Korea Meteorological Administration with a next-generation supercomputer. Valued at more than $40 million, the award is one of the largest in the area of operational numerical weather prediction in the world. Revenue from this contract is expected to be recognized in the second half of 2010. -- In September, Cray's custom engineering group signed a contract for over $9 million with the U.S. government which includes the research and development of hardware and software technologies for a next generation compute system. Revenue for this contract is expected to be recognized over the next 12 months. -- In August, Cray announced it had acquired the PathScale Compiler Suite assets from SiCortex. Cray plans to leverage some of the PathScale intellectual property to enhance Cray's own compiler offerings over time and will contribute other parts of the compiler to the open source community. -- In October, Cray announced the appointment of Michael Piraino to the position of vice president, general counsel and corporate secretary. With 15 years of general counsel, executive, management and legal experience, as well as a background in engineering, Piraino will be responsible for directing Cray's legal affairs and providing advice on legal and policy issues to the company and its Board of Directors.
Conference Call Information
Cray will host a conference call today, Thursday, October 29 at 1:30 p.m. Pacific Time (4:30 p.m. Eastern Time) to discuss 2009 third quarter financial results. To access the call, please dial into the conference at least 10 minutes prior to the beginning of the call at 1-877-941-1465. International callers should dial 1-480-629-9678. To listen to the live audio webcast, go to the Investors section of the Cray website at [ http://investors.cray.com ].
If you are unable to attend the live conference call, an audio webcast replay will be available in the Investors section of the Cray website for 180 days. If you do not have Internet access, a replay of the call will be available by dialing 1-800-406-7325 and entering access code 4178009. International callers can listen to the replay by dialing 1-303-590-3030, access code 4178009. The conference call replay will be available for 72 hours, beginning at 4:30 p.m. Pacific Time on Thursday, October 29, 2009.
Upcoming Event
Cray will be attending the 2009 TechAmerica AeA Classic Financial Conference. Brian Henry, Executive Vice President and CFO will be presenting on November 2, 2009 at 9:40 a.m. Pacific Time. The presentation will be broadcast live on the internet. To listen to the webcast, go to the Investors section of the Cray website at [ http://investors.cray.com ]. An archived version of the webcast will be available approximately one hour after the presentation ends and will be available on the Cray website for 90 days.
About Cray Inc.
As a global leader in supercomputing, Cray provides highly advanced supercomputers and world-class services and support to government, industry and academia. Cray technology enables scientists and engineers to achieve remarkable breakthroughs by accelerating performance, improving efficiency and extending the capabilities of their most demanding applications. Cray's Adaptive Supercomputing vision will result in innovative next-generation products that integrate diverse processing technologies into a unified architecture, allowing customers to surpass today's limitations and meeting the market's continued demand for realized performance. Go to [ www.cray.com ] for more information.
Safe Harbor Statement
This press release contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 and Section 27A of the Securities Act of 1933, including, but not limited to, statements related to Cray's financial guidance and expected future operating results, its product development plans and its ability to expand and penetrate its addressable market. These statements involve current expectations, forecasts of future events and other statements that are not historical facts. Inaccurate assumptions and known and unknown risks and uncertainties can affect the accuracy of forward-looking statements and cause actual results to differ materially from those anticipated by these forward- looking statements. Factors that could affect actual future events or results include, but are not limited to, the risk that Cray does not achieve the financial results that it expects, the risk that customer acceptances are not received when expected or at all, the risk that Cray is not able to successfully complete its planned product development efforts in a timely fashion or at all, the risk that Cray is not able to negotiate, achieve and obtain acceptance of co-funded development milestones when or as expected or at all, the risk that Cray will not be able to expand and penetrate its addressable market as expected or at all and such other risks as identified in the Company's quarterly report on Form 10-Q for the period ended June 30, 2009, and from time to time in other reports filed by Cray with the U.S. Securities and Exchange Commission. You should not rely unduly on these forward-looking statements, which apply only as of the date of this release. Cray undertakes no duty to publicly announce or report revisions to these statements as new information becomes available that may change the Company's expectations.
Cray is a registered trademark and Cray XT5 is a trademark of Cray Inc.
CRAY INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited and in thousands, except per share data) Three Months Ended Nine Months Ended September 30, September 30, 2009 2008 2009 2008 --------- --------- --------- --------- (As (As Adjusted) (1) Adjusted) (1) REVENUE: Product $ 32,374 $ 38,065 $ 133,937 $ 81,606 Service 26,201 16,528 61,863 45,848 --------- --------- --------- --------- Total revenue 58,575 54,593 195,800 127,454 --------- --------- --------- --------- COST OF REVENUE: Cost of product revenue 24,784 17,266 93,381 45,681 Cost of service revenue 10,867 9,362 33,095 26,962 --------- --------- --------- --------- Total cost of revenue 35,651 26,628 126,476 72,643 --------- --------- --------- --------- Gross profit 22,924 27,965 69,324 54,811 --------- --------- --------- --------- OPERATING EXPENSES: Research and development, net 17,321 12,364 42,246 37,973 Sales and marketing 6,279 6,135 18,683 17,365 General and administrative 3,476 3,775 11,523 10,936 --------- --------- --------- --------- Total operating expenses 27,076 22,274 72,452 66,274 --------- --------- --------- --------- Income (loss) from operations (4,152) 5,691 (3,128) (11,463) Other income (expense), net 916 (432) (575) 361 Interest income (expense), net 35 (1,763) (1) (849) (3,382) (1) --------- --------- --------- --------- Income (loss) before income taxes (3,201) 3,496 (4,552) (14,484) Income tax benefit (expense) 1,094 87 977 (302) --------- --------- --------- --------- Net income (loss) $ (2,107) $ 3,583 (1) $ (3,575) $ (14,786) (1) ========= ========= ========= ========= Diluted net income (loss) per common share $ (0.06) $ 0.11 (1) $ (0.11) $ (0.45) (1) ========= ========= ========= ========= Diluted weighted average shares outstanding 33,689 32,661 33,491 32,507 ========= ========= ========= ========= (1) September 30, 2008 results have been adjusted for new guidance included in Accounting Standards Codification Topic 470, Debt, related to convertible debt instruments that may be settled in cash upon conversion A summary of adjustments due to retrospective application to previously reported results for the three and nine months ended September 30, 2008: For the three months ended September 30, 2008: As Previously As Reported Adjustment Adjusted --------- --------- --------- Interest expense, net $ (341) $ (1,422) $ (1,763) Net income 5,005 (1,422) 3,583 Diluted net income per common share 0.15 (0.04) 0.11 For the nine months ended September 30, 2008: As Previously As Reported Adjustment Adjusted --------- --------- --------- Interest income (expense), net $ 750 $ (4,132) $ (3,382) Net loss (10,654) (4,132) (14,786) Diluted net loss per common share (0.33) (0.13) (0.45) CRAY INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited and in thousands) September December 30, 31, 2009 2008 --------- --------- (As Adjusted)(1) ASSETS Current assets: Cash and cash equivalents $ 61,334 $ 72,373 Restricted cash 3,500 2,691 Short term investments, available-for-sale 2,997 5,350 Accounts and other receivables, net 43,792 95,667 Inventory 51,696 80,437 Prepaid expenses and other current assets 8,105 29,993 (1) --------- --------- Total current assets 171,424 286,511 Property and equipment, net 19,403 18,396 Service inventory, net 1,646 1,917 Deferred tax asset 3,647 1,200 Other non-current assets 14,688 5,837 --------- --------- TOTAL ASSETS $ 210,808 $ 313,861 ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 22,546 $ 16,730 Accrued payroll and related expenses 10,640 23,672 Advance research and development payments - 13,887 Short-term convertible notes 162 25,681 (1) Other accrued liabilities 10,625 24,670 Deferred revenue 34,056 67,692 --------- --------- Total current liabilities 78,029 172,332 Long-term deferred revenue 9,616 18,154 Other non-current liabilities 3,379 3,170 --------- --------- TOTAL LIABILITIES 91,024 193,656 Shareholders' equity: Common stock 549,618 543,442 (1) Accumulated other comprehensive income 6,342 9,364 Accumulated deficit (436,176) (432,601) (1) --------- --------- TOTAL SHAREHOLDERS' EQUITY 119,784 120,205 --------- --------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 210,808 $ 313,861 ========= ========= (1) December 31, 2008 results have been adjusted for new guidance included in Accounting Standards Codification Topic 470, Debt, related to convertible debt instruments that may be settled in cash upon conversion A summary of adjustments due to retrospective application to previously reported December 31, 2008 balances: As Previously As Reported Adjustment Adjusted --------- --------- --------- Prepaid expenses and other current assets $ 30,023 $ (30) $ 29,993 Convertible notes 27,727 (2,046) 25,681 Common stock and additional paid-in capital 518,727 24,715 543,442 Accumulated deficit (409,902) (22,699) (432,601)
