Reports Record Net Cash of $104 Million
SEATTLE, WA, Apr 29, 2009 (MARKET WIRE via COMTEX) -- Global supercomputer leader Cray Inc. (NASDAQ: CRAY) today announced
financial results for the first quarter ended March 31, 2009.
Revenue for the quarter was $74.5 million compared to $26.1 million
in the prior year period. The company reported a net loss for the
quarter of ($4.9 million) or ($0.15) per share compared to a net loss
of ($12.0 million) or ($0.37) per share in the first quarter of 2008.
Total gross profit margin for the first quarter was 24 percent
compared to 43 percent in the first quarter of 2008. As anticipated,
product margin declined to 22 percent driven by a large, low-margin
contract (on which $36 million was recognized in the first quarter of
2009). The first quarter 2009 service margin of 32 percent was
impacted by a delay in the signing of a contract and revenue
recognition issues relating to a custom engineering project on which
we have been incurring costs.
Operating expenses for the first quarter of 2009 were $21.4 million
compared to $22.8 million in the prior year period. The first
quarter 2009 results included non-cash items of $2.2 million for
gross depreciation and amortization and $2.4 million related to stock
compensation expense, which includes approximately $1.4 million in
accelerated amortization related to the stock option tender offer
completed in the first quarter of 2009. Additionally, interest
expense included $0.5 million of non-cash interest expense related to
the adoption of a new accounting principle.
As of March 31, 2009, cash and short-term investments totaled $131.8
million and net cash was a record $104.1 million (cash and short-term
investments less the face value of outstanding convertible notes of
$27.7 million). Net cash at Dec. 31, 2008 was $52.7 million.
"We had a solid first quarter marked by strong revenue performance
and excellent growth in our cash position," said Peter Ungaro,
president and CEO of Cray. "With the hiring of Skip Richardson to
lead our Custom Engineering business development team and the recent
announcement of the XT5m, our new midrange supercomputer, we now have
the pieces in place to deliver on our long-term strategic vision. We
have more than doubled our addressable market in the last 18 months
and, with the momentum created by the Cray XT5 supercomputer, we will
continue to expand our position in the high performance computing
industry."
Outlook
For the full-year 2009, a wide range of potential outcomes remain
possible. Cray continues to expect revenue in the range of $260
million for the year with a small operating loss. Overall gross
profit margin is expected to be in the low to mid-30 percent range,
much improved from first quarter levels. Core operating expenses are
anticipated to be lower by roughly $2 million from 2008 levels. We
currently anticipate the balance of the annual revenue target to be
weighted relatively evenly by quarter through the remainder of 2009,
though results could fluctuate significantly depending on the timing
of system acceptances.
Recent Highlights
-- During the first quarter, Cray announced the formation of a new
subsidiary in India aimed at strengthening its presence in that country's
growing high performance computing marketplace. Also during the quarter,
the Saha Institute of Nuclear Physics (SINP) in Calcutta, India selected
the Cray XT5 supercomputer for its Theory Division. SINP is the first
customer in Cray's Asia Pacific region to acquire a Cray XT5 system.
-- During the first quarter, Cray was awarded a contract with a U.S.
government agency for a new Cray XT5 system and services totaling
approximately $31 million. The first phase of the new system is scheduled
for delivery in the second half of 2009.
-- In March, the company launched its new line of Cray XT5m midrange
supercomputers. The Cray XT5m system builds on the success of the Cray XT5
system to deliver performance, efficiency and manageability unrivaled in
its price range with capabilities that previously were only available to
the world's largest research facilities. The High Performance Computing
Center Stuttgart (HLRS) at the University of Stuttgart, Germany is the
first Cray XT5m customer.
-- In April, Cray announced continued momentum in the establishment of a
worldwide reseller network for the Cray CX1 deskside supercomputer. Cray
has signed contracts with a dozen resellers around the world, including
several in the U.S. and others in Italy, Spain, Korea and Japan. These
resellers provide broad, global access to the high performance computing
industry, including the scientific research and commercial market segments.
-- In April, Cray announced the appointment of Skip Richardson to the
position of vice president of business development for the company's custom
engineering team. Richardson, who has more than 20 years of business
development experience in the technology and aerospace industries, will be
responsible for promoting Cray's custom engineering solutions to government
agencies, commercial customers and systems integrators.
Conference Call Information
Cray will host a conference call today, Wednesday, April 29, 2009 at
1:30 p.m. Pacific Time (4:30 p.m. Eastern Time) to discuss 2009 first
quarter financial results. To access the call, please dial into the
conference at least 10 minutes prior to the beginning of the call at
1-877-941-1469. International callers should dial 1-480-629-9674. 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 4063244. International callers can listen to the replay
by dialing 1-303-590-3030, access code 4063244. The conference call
replay will be available for 72 hours, beginning at 4:30 p.m. Pacific
Time on Wednesday, April 29, 2009.
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 significantly fluctuating quarterly operating results;
significant reliance on third-party development service and parts
suppliers; the timing and successful passing of customer acceptance
tests; the level, timing and continuation of government funding for
supercomputer purchases and research and development activities,
including the large DARPA HPCS contract; lower margin and operating
results due to many variables; the technical challenges of developing
high performance computing systems, including potential delays or
changes in development programs that can result in lost revenue and
delayed payment milestones; the possible adverse effects of the
current economic uncertainty on government budgets; the successful
porting of application programs to Cray supercomputer systems; winning
and timing of new Custom Engineering contracts for 2009 performance;
successful rate of customer adoption of the Cray CX1 system;
anticipated revenue subject to complex revenue recognition rules;
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 Annual Report on Form 10-K filed with
the SEC.
Cray is a registered trademark, and Cray XT5m, Cray XT5 and Cray CX1
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 per share data)
Quarter Ended
March 31,
2009 2008
--------- ---------
(as
Adjusted) (1)
REVENUE:
Product $ 59,462 $ 10,690
Service 15,019 15,438
--------- ---------
Total revenue 74,481 26,128
--------- ---------
COST OF REVENUE:
Cost of product revenue 46,334 6,412
Cost of service revenue 10,276 8,359
--------- ---------
Total cost of revenue 56,610 14,771
Gross profit 17,871 11,357
--------- ---------
OPERATING EXPENSES:
Research and development, net 11,215 13,719
Sales and marketing 6,063 5,382
General and administrative 4,146 3,696
--------- ---------
Total operating expenses 21,424 22,797
--------- ---------
Loss from operations (3,553) (11,440)
Other (expense) income, net (754) 253
Interest expense, net (533) (496) (2)
--------- ---------
Loss before income taxes (4,840) (11,683)
Income tax expense (48) (282)
--------- ---------
Net loss $ (4,888) $ (11,965) (2)
========= =========
Diluted net loss per common share $ (0.15) $ (0.37) (3)
========= =========
Diluted weighted average shares
outstanding 33,197 32,371
========= =========
(1) March 31, 2008 results have been adjusted for the adoption of FASB
Staff Position No. APB 14-1, Accounting for Convertible Debt Instruments
That May Be Settled in Cash upon Conversion (Including Partial Cash
Settlement) ("FSP APB 14-1").
(2) Summary of adjustments due to retrospective application of FSP APB 14-1
to Previously Reported March 31, 2008 balances:
As
Previously As
Reported Adjustment Adjusted
----------- ----------- -----------
Interest income (expense), net $ 837 $ (1,333) $ (496)
Net loss (10,632) (1,333) (11,965)
(3) Previously reported net loss per common share for the three months
period ended March 31, 2008 was $(0.33) per share
CRAY INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited and in thousands)
December
March 31, 31,
2009 2008
--------- ---------
(As
Adjusted) (1)
ASSETS
Current assets:
Cash and cash equivalents $ 123,428 $ 72,373
Restricted cash 2,691 2,691
Short-term investments,
available-for-sale 5,641 5,350
Accounts receivable, net 23,756 95,667
Inventory 53,726 80,437
Prepaid expenses and other current
assets 23,630 29,993 (2)
--------- ---------
Total current assets 232,872 286,511
Property and equipment, net 18,246 18,396
Service inventory, net 1,734 1,917
Deferred tax asset 1,716 1,200
Other non-current assets 6,533 5,837
--------- ---------
TOTAL ASSETS $ 261,101 $ 313,861
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 20,012 $ 16,730
Accrued payroll and related expenses 10,267 23,672
Advance research and development
payments 1,432 13,887
Convertible notes 26,218 25,681 (2)
Other accrued liabilities 6,173 24,670
Deferred revenue 56,847 67,692
--------- ---------
Total current liabilities 120,949 172,332
Long-term deferred revenue 17,782 18,154
Other non-current liabilities 3,070 3,170
--------- ---------
TOTAL LIABILITIES 141,801 193,656
Shareholders' equity:
Common stock and additional paid-in
capital 546,431 543,442 (2)
Accumulated other comprehensive income 10,358 9,364
Accumulated deficit (437,489) (432,601)(2)
--------- ---------
TOTAL SHAREHOLDERS' EQUITY 119,300 120,205
--------- ---------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 261,101 $ 313,861
========= =========
(1) December 31, 2008 balances have been adjusted for the adoption of FASB
Staff Position No. APB 14-1, Accounting for
Convertible Debt Instruments That May Be Settled in Cash upon Conversion
(Including Partial Cash Settlement) ("FSP APB 14-1").
(2) Summary of adjustments due to retrospective application of FSP APB 14-1
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)
Cray Media:
Nick Davis
206/701-2123
pr@cray.com
Investors:
Paul Hiemstra
206/701-2044
ir@cray.com
SOURCE: Cray Inc.
mailto:pr@cray.com
mailto:ir@cray.com
Investors
