SEC Filings

10-Q
CRAY INC filed this Form 10-Q on 10/30/2018
Entire Document
 


The following data presents the Company's operating segment revenues disaggregated by primary geographic market, which is determined based on a customer's geographic location (in thousands). Regions represent Europe, the Middle East, and Africa (EMEA); Asia-Pacific and Japan; and the United States, Canada, and Latin America (Americas). Revenues were increased by $0.5 million for the three months ended September 30, 2018 and reduced by $0.6 million for the nine months ended September 30, 2018 related to hedging gains and losses which do not represent revenues recognized from contracts with customers.
 
 
Americas
 
EMEA
 
Asia Pacific & Japan
 
Total
Three Months Ended September 30, 2018
 
 
 
 
 
 
 
 
Supercomputing
 
$
45,263

 
$
16,251

 
$
11,101

 
$
72,615

Storage and Data Management
 
8,897

 
2,368

 
998

 
12,263

Maintenance and Support
 
20,567

 
7,329

 
5,453

 
33,349

Engineering Services and Other
 
3,832

 
494

 
3,592

 
7,918

Elimination of inter-segment revenue
 
(20,567
)
 
(7,329
)
 
(5,453
)
 
(33,349
)
Total revenue
 
$
57,992

 
$
19,113

 
$
15,691

 
$
92,796

 
 
 
 
 
 
 
 
 
 
 
Americas
 
EMEA
 
Asia Pacific & Japan
 
Total
Nine Months Ended September 30, 2018
 
 
 
 
 
 
 

Supercomputing
 
$
110,189

 
$
39,057

 
$
81,006

 
$
230,252

Storage and Data Management
 
23,810

 
9,813

 
12,354

 
45,977

Maintenance and Support
 
62,229

 
22,571

 
15,677

 
100,477

Engineering Services and Other
 
11,742

 
612

 
4,010

 
16,364

Elimination of inter-segment revenue
 
(62,229
)
 
(22,571
)
 
(15,677
)
 
(100,477
)
Total revenue
 
$
145,741

 
$
49,482

 
$
97,370

 
$
292,593

The Company’s remaining performance obligations reflect the deliverables within contracts with customers that will have revenue recognized in a future period (this may also be referred to as backlog). Due to the nature of the Company’s business and the size of individual transactions, forecasting the timing and total amount of revenue recognition is subject to significant uncertainties. As of September 30, 2018, the Company has an aggregate of $615 million in remaining performance obligations stemming from a mixture of system contracts with their related service obligations and other service obligations. Included in this balance are $0.6 million in losses resulting from hedged foreign currency transactions, which offset the related increase in revenue from currency fluctuations. These gains will be reclassified from accumulated other comprehensive income to revenue in the period the related transactions are recognized as revenue. These obligations are anticipated to be recognized as revenue over approximately the next six years. The Company estimates that about 60% of these obligations are expected to be recognized as revenue in the next 18 months, with the remainder thereafter.
Note 2— New Accounting Pronouncements
In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers: Topic 606 (ASU 2014-09) to supersede nearly all existing revenue recognition guidance under GAAP. The core principle of ASU 2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. ASU 2014-09 defines a five step process to achieve this core principle and, in doing so, it is possible more judgment and estimates may be required within the revenue recognition process than required under prior GAAP, including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. The new guidance also requires additional disclosures and several terminology changes, such as amounts previously referred to as deferred revenue now being referred to as customer contract liabilities. The Company adopted ASU 2014-09 at the beginning of the first quarter of 2018 using the modified retrospective method. No cumulative effect adjustment was required to be recorded for this change in accounting as the Company determined the impact of the change to not be material. The comparative information for the three and nine months ended September 30, 2017, and as of December 31, 2017 has not been restated and continues to be reported under the accounting standards in effect for those periods. The effect of initially applying the new revenue standard had an immaterial effect on the Company’s financial statements. Adoption of the new standard did not have a material impact on the Company’s net loss during the first nine months of 2018. The Company expects the impact of the adoption of the new standard to be immaterial to its net income on an ongoing basis.

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