Cray Inc. Announces 2003 Financial Results; Company Reports Revenue of $237.0 Million, EPS of $.81 Including Non-Recurring Items.Business Editors/High-Tech Writers SEATTLE--(BUSINESS WIRE)--Jan. 29, 2004 Global supercomputer supercomputer, a state-of-the-art, extremely powerful computer capable of manipulating massive amounts of data in a relatively short time. Supercomputers are very expensive and are employed for specialized scientific and engineering applications that must handle very leader Cray (Cray, Inc., Seattle, WA, www.cray.com) A supercomputer manufacturer founded in 1972 as Cray Research, Inc., by Seymour Cray, a leading designer of large-scale computers at Control Data. In 1976, it shipped its first computer to Los Alamos National Laboratory. Inc. (Nasdaq NM: CRAY) today reported financial results for the fourth quarter and full year 2003 ended December December: see month. 31, 2003. Fourth quarter 2003 revenue was a record $67.2 million, up 71 percent from $39.2 million in the same period last year. Fourth quarter net income was $45.4 million, or $.56 per fully diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share compared to $1.3 million or $.02 per fully diluted share in the fourth quarter 2002. Non-recurring items for the fourth quarter 2003 included a write-up Write-Up An increase made to the book value of an asset because it is undervalued compared to market values. Notes: A write-up will increase a company's accounting book value without any expenditures. of a deferred tax asset of $42.2 million and a restructuring charge restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. of $4.0 million related primarily to severance The act of dividing, or the state of being divided. The term severance has unique meanings in different branches of the law. Courts use the term in both civil and criminal litigation in two ways: first, when dividing a lawsuit into two or more parts, and second, when . Non-recurring items improved earnings by $38.2 million, or $.47 per fully diluted share. "Fourth quarter revenue, our best yet, capped a great 2003 for Cray and the results were in line with our expectations," commented Jim Rottsolk, Cray Chairman and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. . "Notably during the quarter, we obtained all expected acceptances, including the two most powerful systems ever installed by Cray," Rottsolk said. For the twelve months ended December 31, 2003, Cray reported revenue of $237.0 million compared to $155.1 million last year, an increase of 53 percent. Including non-recurring items, net income for 2003 was $62.9 million, or $.81 per fully diluted share, up from net income of $5.4 million and fully diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of of $.10 per share in the same period last year. For the full-year 2003, non-recurring items improved earnings by $38.2 million or $.47 per fully diluted share. "Cray delivered record financial results in 2003 and throughout the year we successfully delivered on our overall strategy," Rottsolk said. "In addition to growing the company, we accomplished many additional objectives. We strengthened our capital structure with a successful public offering and the retirement of all outstanding bank debt; gained significant market share in a highly competitive environment; and demonstrated our ability to build and bring to market products customers need," he said. Recent Highlights -- In October October: see month. , Cray won an order from the Boeing (language) BOEING - An early system on the IBM 1130. [Listed in CACM 2(5):16, May 1959]. Company for a Cray X1(TM) system to support Boeing's research and development efforts. The Boeing order represented the first commercial order for the Cray X1. -- In October, Cray received an order from Warsaw Warsaw (wôr`sô), Pol. Warszawa, city (1993 est. pop. 1,655,700), capital of Poland and of Mazowieckie prov., central Poland, on both banks of the Vistula River. University's Interdisciplinary Center The Interdisciplinary Center (IDC) (Hebrew: המרכז הבינתחומי) is a private college located in Herzlia, Israel. for Mathematical and Computational Having to do with calculations. Something that is "highly computational" requires a large number of calculations. Modeling (ICM ICM Intercom ICM Integrated Crop Management ICM International Congress of Mathematicians ICM Information Classification and Management ICM Intelligent Contact Management (Cisco) ICM International Creative Management ), Warsaw, Poland Poland, Pol. Polska, officially Republic of Poland, republic (2005 est. pop. 38,635,000), 120,725 sq mi (312,677 sq km), central Europe. It borders on Germany in the west, on the Baltic Sea and the Kaliningrad region of Russia in the north, on Lithuania, . The order included an upgrade to the successor system, the Cray X1E(TM). -- In October, Cray unveiled plans to deliver a new product based on the "Red Storm" 40-TeraOp (40 trillion One thousand times one billion, which is 1, followed by 12 zeros, or 10 to the 12th power. See space/time. (mathematics) trillion - In Britain, France, and Germany, 10^18 or a million cubed. In the USA and Canada, 10^12. calculations per second) supercomputer it is developing for Sandia Sandia may refer to: Places
Laboratories. The Red Storm product is due out in 2004. -- In November, Cray reported that its Cray X1 supercomputer had the most powerful processors, according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. the "World's Top500 Supercomputers," which is published annually by the universities of Tennessee Tennessee, state, United States Tennessee (tĕn`əsē', tĕn'əsē`), state in the south-central United States. and Mannheim (Germany), and NERSC/Lawrence Berkeley National Laboratory. -- In December, Cray announced another international order for a Cray X1 system. Outlook "The outlook for 2004 and 2005 for Cray is promising and we are confident in our long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. growth prospects as well as our ability to execute," said Rottsolk. "We've set a high bar for ourselves in 2004, planning to grow revenue to about $300 million while achieving operating profit Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. in the range of eight to twelve percent of revenue. Our plan depends primarily on the timely and successful introduction of two new products, the Cray X1E and commercialized Red Storm systems, both of which we plan to launch in the second half of 2004." "Our outlook also relies on maintaining momentum with our current customer base, including the U.S. government," Rottsolk added. "While the fiscal 2004 U.S. federal budget process was recently completed, it remains difficult to forecast the outcome of individual budget allocations and the resulting impact on Cray." Investor Conference Call Management will discuss results and the company's outlook followed by a question and answer session for investors today, January 29 at 9 a.m. Pacific Time (noon Eastern Time). The call in number is (888) 211-8103 (no passcode required). International callers dial (706) 643-3311. If you are unable to participate, a replay will be available from 2 p.m. Pacific Time on January 29, 2003 for 48 hours. To access, dial (800) 642-1687, or (706) 645-9291 (international) -- reservation number 4979420. The conference call will be webcast live and will be archived for 90 days. It will be available in the Investor Relations Investor relations The process by which the corporation communicates with its investors. section of the Cray website at http://www.cray.com/invest. About Cray Inc. Cray's mission is to be the premier provider of supercomputing solutions for its customers' most challenging scientific and engineering problems. Go to www.cray.com for more information about the company. Safe Harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. Statement This press release contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. . There are certain factors that could cause Cray's execution plans to differ materially from those anticipated by the statements above. These include the technical challenges of developing high performance computing computing - computer systems, government support of supercomputer systems Three firms have held, simultaneously, the name Supercomputer Systems or Supercomputing Systems. The first was founded by Steve Chen, architect of the Cray X-MP and Cray Y-MP. The second was based in San Diego, California, USA. research and purchases, Cray's ability to scale Cray X1 systems to larger configurations, the successful porting of application programs to Cray systems, reliance on third-party suppliers, 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 "Factors That Could Affect Future Results" in Cray's most recent Quarterly Report on Form 10-Q Form 10-Q See 10-Q. . Cray is a registered trademark of Cray Inc. All other trademarks are the property of their respective owners. TABLES TO FOLLOW
CRAY INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
ASSETS
December December
31, 31,
2002 2003
------------------
Current assets:
Cash and cash equivalents $23,916 $39,773
Short term investments, available for sale 34,570
Accounts receivable, net of allowance of $1,098
in 2002 and $1,125 in 2003 31,017 47,986
Inventory, net 24,033 43,022
Prepaid expenses and other assets 5,805 18,932
------------------
Total current assets 84,771 184,283
Property and equipment, net 24,799 26,157
Service spares, net 9,279 4,925
Goodwill 22,680 13,344
Deferred tax asset 263 59,831
Other assets 3,453 3,797
------------------
TOTAL $145,245 $292,337
==================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $13,173 $12,553
Accrued payroll and related expenses 15,573 19,035
Other accrued liabilities 4,396 4,416
Deferred revenue 18,406 33,233
Notes payable 215
Current portion of warranty reserves 3,273 655
Current portion of obligations under capital
leases 241 152
Current portion of term loan 2,143
------------------
Total current liabilities 57,420 70,044
Warranty reserves 2,326
Obligations under capital leases 152
Term loan payable 1,786
Shareholders' equity:
Series A Convertible Preferred Stock, par $.01 -
Authorized, issued and outstanding, 3,125 and
zero shares, respectively 24,946
Common Stock, par $.01 - Authorized, 120,000
shares; issued and outstanding, 56,039 and
72,611 shares, respectively 211,255 306,320
Deferred compensation (105)
Tax benefit related to exercised stock options 6,388
Accumulated other comprehensive loss (291) (884)
Accumulated deficit (152,349) (89,426)
------------------
83,561 222,293
------------------
TOTAL $145,245 $292,337
==================
CRAY INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
Three Months Ended Twelve Months Ended
December 31, December 31,
2002 2003 2002 2003
-----------------------------------------
REVENUE:
Product $21,028 $52,754 $76,519 $175,004
Service 18,153 14,474 78,550 61,958
-----------------------------------------
Total revenue 39,181 67,228 155,069 236,962
-----------------------------------------
OPERATING EXPENSES:
Cost of product revenue 11,945 29,647 41,187 97,354
Cost of service revenue 9,826 10,005 42,581 40,780
Research and development 6,421 9,391 32,861 37,762
Marketing and sales 5,397 8,605 20,332 27,038
General and administrative 2,882 3,206 8,923 10,908
Restructuring charge 4,019 1,878 4,019
-----------------------------------------
Total operating expenses 36,471 64,873 147,762 217,861
-----------------------------------------
Income from operations 2,710 2,355 7,307 19,101
OTHER INCOME (EXPENSE), NET 640 465 3,104 1,496
INTEREST INCOME (EXPENSE), NET (1,295) 175 (2,832) 444
-----------------------------------------
Income before income taxes 2,055 2,995 7,579 21,041
PROVISION FOR INCOME TAXES 727 (42,410) 2,176 (41,882)
-----------------------------------------
Net income $1,328 $45,405 $5,403 $62,923
=========================================
Net income per common
share:
Basic $0.03 $0.63 $0.11 $0.94
=========================================
Diluted $0.02 $0.56 $0.10 $0.81
=========================================
Weighted average shares outstanding:
Basic 51,696 72,098 47,969 67,098
=========================================
Diluted 62,696 81,754 54,417 77,861
=========================================
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