|Cray Announces Selected Preliminary 2009 Results|
Based on preliminary results, total revenue for 2009 is now expected to be about $284 million and earnings are expected to be in the range of about break-even to a small loss from operations. Cash and short-term investments as of December 31, 2009 are expected to be above $110 million. Cray retired all remaining convertible notes during the fourth quarter of 2009.
During the fourth quarter, a contract modification was not finalized and consequently a milestone was delayed in the agreement covering Phase III of the Defense Advanced Research Projects Agency's ("DARPA") High Productivity Computing Systems program. This contract delay will have an approximately $7 million negative impact to net research and development expenses in the fourth quarter of 2009. Substantive talks regarding this contract are ongoing and the company expects to complete a contract modification and milestone in the first quarter of 2010. As with the previous contract, the balance of the modified contract is expected to be received through achievement of a series of pre-defined milestones culminating in the delivery of a prototype system in 2012. Consistent with this change, certain deliverables will be eliminated from the contract, reducing the overall scope and cost of the project. After the anticipated contract modification, the remaining amount of the contract is expected to be reduced by $60 million, to $92.5 million. As a result of the reduction in overall scope, we expect future research and development expenses related to this program, net of reimbursement, to be lower than previously anticipated.
While a wide range of results remains possible, we expect revenue growth and profitability for 2010. Based on current opportunities and previously announced 2010 contracts, we believe we could have a strong year. Many variables may impact this outlook, but one significant item is the timing of the availability and release of our next generation supercomputer, code named "Baker," including the completion of development and testing of the Baker interconnect chipset, known as "Gemini," and associated system software. We currently expect Baker development to be completed in the third quarter 2010. As a result, we expect a significant majority of 2010 revenue to be recognized in the fourth quarter.
Cray will be attending the 12th Annual Needham Growth Stock Conference at the New York Palace Hotel in New York City. The Cray presentation will be held on Wednesday, January 13, at 10:00 a.m. EST.
The Cray presentation is expected to be available to the public via live audio webcast. 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 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 is designed to enable 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 is focused on delivering 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, its ability to complete a modification of the DARPA HPCS co-funding agreement and associated milestones and its ability to complete and recognize revenue on existing and expected sales opportunities. 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, for example the significant acceptances anticipated in the fourth quarter of 2010 to reach our anticipated results, the risk that Cray is not able to successfully complete its planned product development efforts in a timely fashion or at all, in particular the new "Baker" supercomputer and associated "Gemini" interconnect, 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 such as with the DARPA HPCS co-funding agreement, the risk that Cray will not be able to expand and penetrate its addressable market as expected or at all, the risk that changes to these preliminary results will be required as a result of completing the financial reporting closing process and financial audit and such other risks as identified in the Company's quarterly report on Form 10-Q for the period ended September 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.
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SOURCE: Cray Inc.