SEC Filings

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


Sales and Marketing and General and Administrative Expenses
Our sales and marketing and general and administrative expenses for the three and nine months ended September 30, 2018 and 2017, respectively, were (in thousands, except for percentages):
 
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
 
2018
 
2017
 
2018
 
2017
Sales and marketing
 
$
15,282

 
$
13,392

 
$
46,165

 
$
43,292

Percentage of total revenue
 
16
%
 
17
%
 
16
%
 
19
%
General and administrative
 
$
6,580

 
$
7,022

 
$
17,983

 
$
23,024

Percentage of total revenue
 
7
%
 
9
%
 
6
%
 
10
%
Sales and Marketing. Sales and marketing expense for the three and nine months ended September 30, 2018 increased by $1.9 million and $2.9 million, respectively, compared to the same periods in 2017, primarily driven by an increase in commissions and incentive compensation.
General and Administrative. General and administrative expense for the three and nine months ended September 30, 2018 decreased by $0.4 million and $5.0 million, respectively, compared to the same periods in 2017. The decrease in general and administrative expense for the three and nine months ended September 30, 2018 was primarily attributable to a decrease in legal costs compared to the same periods in 2017, related to our ongoing litigation with Raytheon, which is described in Note 11, “Contingencies” in the Notes to our Condensed Consolidated Financial Statements in this quarterly report on Form 10-Q. Due to our ongoing litigation with Raytheon, legal expenses may vary over the next several quarters.
Restructuring
In the third quarter of 2017, we implemented a restructuring plan to reduce our operating costs and better align our workforce with long-term business strategies. The restructuring plan reduced our workforce by approximately 190 employees, with the vast majority of such terminations effective in July 2017. For the nine months ended September 30, 2018, we recorded $0.5 million in expense in connection with the restructuring plan. For the three and nine months ended September 30, 2017, we recorded $7.7 million in expense in connection with the restructuring plan. The restructuring expenses primarily related to employee severance.
Other Income (Expense), net
For the three and nine months ended September 30, 2018, we recognized net other income of $0.2 million, compared to net other income of $4.2 million and $5.4 million, respectively, for the same periods in 2017. Net other income and expense for the three and nine months ended September 30, 2018 and 2017 included gains and losses from foreign currency transactions, investments and disposals of assets. Net other income for the three and nine months ended September 30, 2017, included a $3.3 million gain from the sale of an investment in a private company.
Interest Income, net
Our interest income and interest expense for the three and nine months ended September 30, 2018 and 2017, respectively, were (in thousands):
 
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
 
2018
 
2017
 
2018
 
2017
Interest income
 
$
910

 
$
941

 
$
2,279

 
$
2,732

Interest expense
 
(2
)
 
(61
)
 
9

 
(77
)
Interest income, net
 
$
908

 
$
880

 
$
2,288

 
$
2,655

Interest income is earned on cash and cash equivalents, investment balances and the investment in sales-type lease.
Gain on Strategic Transaction
In the third quarter of 2017, we completed a strategic transaction with Seagate Cloud Systems Inc. centered around the addition of Seagate’s ClusterStor high-performance storage business. As part of the transaction, we assumed customer support obligations associated with the ClusterStor product line and added more than 125 employees and contractors. For the three and nine months ended September 30, 2017, we recognized a gain of approximately $4.4 million associated with the transaction.

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