SEATTLE, WA, Aug 02, 2007 (MARKET WIRE via COMTEX News Network) -- Global supercomputer leader Cray Inc. (NASDAQ: CRAY) today announced
financial results for the second quarter ended June 30, 2007.
Revenue for the quarter was $26.6 million compared to $38.5 million
in the prior year period. Net loss for the quarter was ($6.4
million) or ($0.20) per share compared to a net loss of ($7.2
million) or ($0.32) per share in the second quarter of 2006.
Total gross margin for the second quarter of 2007 was 40.3 percent
compared to 32.5 percent in the prior year period. Product margin for
the second quarter was 40.3 percent compared to 26.6 percent in the
second quarter of 2006. The high product margin was driven by
product mix across a small number of transactions and the reduction
of low margin development revenue. Service margin for the second
quarter was also 40.3 percent compared to 43.0 percent in the second
quarter of 2006, in line with the company's target level.
Operating expenses were $17.8 million in the second quarter compared
to $16.7 million in the prior year period, excluding restructuring and
severance. The increase was driven by higher research and
development expenses, partially offset by both lower sales and
marketing and lower general and administrative expenses.
Included in second quarter 2007 results were non-cash items of $3.2
million for depreciation and amortization and $1.0 million related to
stock compensation.
For the first half of 2007, Cray reported total revenue of $73.7
million compared to $87.0 million in the prior year period. Operating
expenses were up modestly year-over-year to $35.2 million compared to
$34.4 million in the first half of 2006, excluding restructuring and
severance. Net loss improved by 42 percent from the prior year to
($7.2 million) or ($0.23) per share in the first half of 2007
compared to a net loss of ($12.5 million) or ($0.56) per share in the
first half of 2006.
Cash and short-term investment balances as of June 30, 2007 were
$124.5 million compared to $140.3 million reported as of December 31,
2006.
"Thus far in 2007 we have improved bottom-line results year-over-year
and, with well over $100 million in new contract announcements, we
have continued to leverage our strong product portfolio and
supercomputing roadmap in the marketplace," said Peter Ungaro,
president and CEO of Cray. "We have also seen a number of product
development challenges surface over the past few months and have
worked aggressively to address them. We are presently on track to
build initial BlackWidow and quad-core Cray XT4(TM) systems late in
the fourth quarter of this year, for revenue in the first half of
2008. We anticipate availability of initial Cray XMT(TM) systems in
the first half of 2008. Clearly, our key priorities for the
remainder of 2007 are to execute on product development initiatives
and to win new business around the world."
Outlook
Quarterly and annual results for 2007 will be affected by many
factors, including the level and timing of government funding, the
timing of customer orders, shipments, acceptances and revenue
recognition and the timing and success of planned product rollouts.
While there continues to be a wide range of potential outcomes for
quarterly and annual results, Cray estimates 2007 revenue will likely
be below $190 million, and consequently does not anticipate
profitability for the year. The company anticipates mixed results
for the third and fourth quarters, as two large revenue transactions
are anticipated to make up a substantial majority of revenue for the
second half of the year, either or both of which could be accepted in
the third or fourth quarter. The company anticipates minimal, if
any, revenue from BlackWidow and quad-core Cray XT4 systems in 2007.
Cray expects an improved gross margin percent and higher operating
expenses for the year compared to 2006. The company anticipates
using cash in the third quarter with positive cash flow in the fourth
quarter.
For 2008, while there is a wide range of potential outcomes, Cray
expects improved revenue over 2007 and anticipates being profitable
for the year.
Recent Highlights
-- In July, Cray announced that two Cray supercomputers, one installed at
Oak Ridge National Laboratory and the other at Sandia National
Laboratories, achieved top-three status on the industry-standard TOP500
benchmark. Each system achieved computational performance of over 100
teraflops (trillion floating point operations per second), a level of
performance achieved by only one other computer in the world.
-- In July, Cray announced that Cray supercomputers played a key role in
the design of Boeing's highly successful 787 Dreamliner. Through the use
of supercomputer-based modeling and simulation, Boeing engineers were able
to build the 787 Dreamliner after physically testing only 11 wing designs,
versus 77 wing designs for the earlier Boeing 767 aircraft.
-- In June, Cray announced a contract with the University of Bergen, in
Norway, for a 50 teraflops Cray XT4 supercomputer to be delivered later
this year at the Bergen Center for Computational Science. The
supercomputer will be used for advanced research in fields including marine
molecular biology, large scale simulation of ocean processes, climate
research, computational chemistry, computational physics, computational
biology, geosciences, and applied mathematics.
-- In April, Cray announced an order that will nearly triple the
capability of the Swiss National Supercomputing Centre's (CSCS) Cray
XT3(TM) system from 8.5 teraflops to 22.8 teraflops. The upgrade was
achieved in two phases: first, the existing Cray XT3 system was upgraded
with dual-core AMD Opteron(TM) processors, followed by the installation of
a fully compatible Cray XT4 supercomputer. The existing Cray XT3 system
began operational weather forecasting in support of MeteoSwiss in February,
2007.
Conference Call Information
Cray will host a conference call today, Thursday, August 2, 2007 at
1:30 p.m. Pacific Time (4:30 p.m. Eastern Time) to discuss second
quarter 2007 financial results. To access the call, please dial into
the conference at least 10 minutes prior to the beginning of the call
at 1-800-257-6566. International callers should dial 303-262-2191. 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 1-800-405-2236 and entering
access code 11094386. International callers can listen to the replay
by dialing 303-590-3000, access code 11094386. The conference call
replay will be available for 72 hours, beginning at 4:30 p.m. Pacific
Time on Thursday, August 2, 2007.
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. There are
certain factors that could cause Cray's execution to differ materially
from those anticipated by the statements above. These factors include
anticipated revenue subject to complex revenue recognition rules;
fluctuating quarterly operating results; lower margins and operating
results due to many variables including pricing pressure; the
technical challenges of developing high performance computing
systems, including potential delays in development projects, such as
the quad-core Cray XT4, Cray XMT, BlackWidow and Baker systems; the
timing and level of government funding for supercomputer system
purchases and research and development activities; the successful
passing of customer acceptance tests; significant reliance on
third-party development service suppliers and parts suppliers
including their competitiveness with other suppliers and potential
delays in the results of their development and in the availability of
qualified parts from suppliers; the successful porting of application
programs to Cray supercomputer systems; Cray's ability to keep up
with rapid technological change; Cray's ability to compete against
larger, more established companies and innovative competitors; and
general economic and market conditions. For a discussion of these and
other risks, see "Risk Factors" in Cray's most recent Quarterly
Report on Form 10-Q filed with the SEC.
Cray is a registered trademark, and Cray XT4, Cray XMT and Cray XT3
are trademarks of Cray Inc. All other trademarks are the property of
their respective owners.
CRAY INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited and in thousands, except share and per share data)
Three Months Ended Six Months Ended
June 30, June 30,
2007 2006 2007 2006
--------- --------- --------- ---------
REVENUE:
Product $ 13,789 $ 24,647 $ 47,449 $ 58,916
Service 12,836 13,866 26,285 28,112
--------- --------- --------- ---------
Total revenue 26,625 38,513 73,734 87,028
--------- --------- --------- ---------
COST OF REVENUE:
Cost of product revenue 8,227 18,099 31,804 44,776
Cost of service revenue 7,660 7,901 15,658 15,594
--------- --------- --------- ---------
Total cost of revenue 15,887 26,000 47,462 60,370
--------- --------- --------- ---------
Gross margin 10,738 12,513 26,272 26,658
--------- --------- --------- ---------
OPERATING EXPENSES:
Research and development, net 8,859 6,371 16,739 13,586
Sales and marketing 5,123 5,682 10,391 10,667
General and administrative 3,822 4,600 8,102 10,194
Restructuring and severance - 549 10 1,287
--------- --------- --------- ---------
Total operating expenses 17,804 17,202 35,242 35,734
--------- --------- --------- ---------
Loss from operations (7,066) (4,689) (8,970) (9,076)
Other income (expense), net 76 (1,831) 471 (1,872)
Interest income (expense), net 966 (441) 1,999 (1,049)
--------- --------- --------- ---------
Loss before income taxes (6,024) (6,961) (6,500) (11,997)
Income tax expense (360) (212) (725) (481)
--------- --------- --------- ---------
Net loss $ (6,384) $ (7,173) $ (7,225) $ (12,478)
========= ========= ========= =========
Diluted net loss per common
share $ (0.20) $ (0.32) $ (0.23) $ (0.56)
========= ========= ========= =========
Diluted weighted average
shares outstanding 31,635 22,451 31,560 22,395
========= ========= ========= =========
CRAY INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited and in thousands)
June 30, December 31,
2007 2006
----------- -----------
ASSETS
Current assets:
Cash and cash equivalents $ 48,335 $ 115,328
Restricted cash 25,000 25,000
Short-term investments, available-for-sale 51,163 -
Accounts receivable, net 24,599 44,790
Inventory 61,950 58,798
Prepaid expenses and other current assets 4,635 2,156
----------- -----------
Total current assets 215,682 246,072
Property and equipment, net 19,697 21,564
Service inventory, net 3,707 4,292
Goodwill 61,503 57,138
Deferred tax asset 770 722
Intangible assets, net 1,309 1,404
Other non-current assets 6,000 6,311
----------- -----------
TOTAL ASSETS $ 308,668 $ 337,503
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 18,686 $ 22,450
Accrued payroll and related expenses 11,944 17,411
Advance research and development payments 8,899 21,518
Other accrued liabilities 5,515 5,121
Deferred revenue 37,808 43,248
----------- -----------
Total current liabilities 82,852 109,748
Long-term deferred revenue 1,589 2,475
Other non-current liabilities 3,526 3,906
Convertible notes payable 80,000 80,000
----------- -----------
TOTAL LIABILITIES 167,967 196,129
Shareholders' equity:
Common stock 511,372 507,356
Accumulated other comprehensive income 9,391 6,855
Accumulated deficit (380,062) (372,837)
----------- -----------
TOTAL SHAREHOLDERS' EQUITY 140,701 141,374
----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $ 308,668 $ 337,503
=========== ===========
Cray Media:
Erin McGhee
206/701-2107
pr@cray.com
Investors:
Victor Chynoweth
206/701-2094
ir@cray.com
SOURCE: Cray Inc.
mailto:pr@cray.com
mailto:ir@cray.com
Investors
