Cray Inc. Announces First Quarter 2002 Financial Results.Business Editors & High-Tech high-tech also hi-tech adj. Informal Of, relating to, or resembling high technology. high-tech Adjective same as hi-tech Adj. 1. Writers SEATTLE--(BUSINESS WIRE)--May 1, 2002 Company reports revenue of $35.2 million and net profit of $2.6 million before one-time 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 $1.9 million 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:CRAY) today announced financial results for the first quarter ended March 31, 2002. The company posted a profit before restructuring charges of $2.6 million on revenue of $35.2 million during the quarter, benefiting primarily from unusually high margins on product sales, reduced R&D spending, other operating expense Operating Expense The essential things that a company must purchase in order to maintain business. Notes: For example, the payment of employees wages are an operating expense. Also known as OPEX. reductions and the settlement of a previously reserved cancellation charge. Cray also reiterated 2002 guidance that it expects to be profitable and cash flow positive for the full year, and reported that backlog Backlog The total value of sales orders waiting to be fulfilled. Notes: This figure is used mainly in the manufacturing industry. Increases or decreases in a company's backlog indicate the future direction of sales and earnings. stands at record levels of approximately $38 million. "We are very pleased with the progress we made during the quarter and have been executing consistently well on both financial and operational fronts," 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. . "The majority of the restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). is now behind us, we achieved our short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. profitability target, and we've been hitting the important milestones with product development as well as product shipments," he said. Financial Results Net revenue for first quarter 2002 was $35.2 million, down from $48.7 million reported in the same period last year. Net income for first quarter 2002, before a one-time restructuring charge of $1.9 million, was $2.6 million, or $0.06 cents per share Cents per share The amount of a mutual fund's dividend or capital gains distributions that a shareholder will receive for each share owned. , compared to $2.8 million, or $0.07 cents per share reported in the first quarter last year. Including the $1.9 million restructuring charges, the reported net income for the first quarter 2002 was $749,000, or $0.02 per share. Following implementation of the new accounting treatment under Statement of Financial Accounting Standards No.142, the company determined that there was no impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. related to goodwill and other intangible assets Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. resulting from the acquisition of the Cray business unit from SGI (SGI, Sunnyvale, CA, www.sgi.com) A manufacturer of workstations and servers, founded in 1982 by Jim Clark. The company was founded as Silicon Graphics, Inc., but changed to its acronym in 1999. in April 2000. The company does not anticipate any further amortization of these intangible assets in 2002. Cray reported a backlog of $38 million as of March 31, 2002. While working capital held steady during the quarter, it is expected to continue to improve, based upon anticipated receivables Receivables An asset designation applicable to all debts, unsettled transactions or other monetary obligations owed to a company by its debtors or customers. Receivables are recorded by a company's accountants and reported on the balance sheet, and they and include all debts owed , reduced levels of operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. and current forecasts for product sales. Financial Guidance The company reaffirmed previously announced guidance indicating that it expected to be profitable for the full year 2002. The recently announced $16 million Department of Defense T3E T3E Toxicomanie Europe Echanges Etudes order will now ship in the third quarter. As a result, the company stated that it expects to post a profit for the next six-month period, with financial results in the third quarter anticipated to be stronger than the second quarter. The company also reiterated previously announced guidance that 2002 total revenues would be approximately $160 million with an estimated backlog of approximately $100 million by the end of 2002. Preliminary estimates for full year revenues for 2003 are expected to be in excess of $200 million, 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. company guidance, though the ability to achieve this revenue estimate would be dependent upon the timing of the SV2 production ramp. "Our significant development efforts remain on track," commented Jim Rottsolk. "In April, we reached a significant milestone as the SV2 successfully ran real applications using system software and hardware during a quarterly review conducted by U.S. government agencies and other potential customers. And we recently installed a 40-processor MTA-2 system with 160 gigabytes of memory at the Naval Research Laboratory Noun 1. Naval Research Laboratory - the United States Navy's defense laboratory that conducts basic and applied research for the Navy in a variety of scientific and technical disciplines NRL in Washington D.C., and expect to begin acceptance testing (programming) acceptance testing - Formal testing conducted to determine whether a system satisfies its acceptance criteria and thus whether the customer should accept the system. shortly," he said. Investor Conference Call Management will discuss the results and the company's outlook and hold a question and answer session for investors today, May 1, 2002 at 11:00 a.m. Eastern (8:00 a.m. Pacific). To participate, call 888/443-9985 a few minutes ahead of time (no passcode required). If you are unable to participate, a replay will be available from 2:00 p.m. Eastern Time on May 1, 2002 for 48 hours. To access, dial 800/642-1687, or 706/645-9291 (international), reservation number 3703571. In addition, the replay will be available for 90 days on the company's website at www.cray.com. About Cray Inc. Cray is 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. Among these factors are the technical challenges of developing new high performance computer systems, government support for supercomputer development and sales, sales risks for current and new 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. , expected delivery and acceptance times, the timely availability of necessary components from third parties that meet Cray's specifications, the ability of Cray supercomputer systems to pass individual customer acceptance tests and general economic and market conditions. Cray is a registered trademark, and Cray SV1ex, Cray T3E The Cray T3E was Cray Research's second-generation massively parallel supercomputer architecture, launched in 1995. Like the previous Cray T3D It was a fully distributed memory machine using a 3D torus topology interconnection network. , Cray MTA-2, Cray SX-6 and Cray SV2 are trademarks, of Cray Inc. All other trademarks are the property of their respective owners.
CRAY INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands)
(unaudited)
Three Months Ended
March 31,
2001 2002
--------------------------
REVENUE:
Product $27,597 $15,071
Service 21,150 20,129
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Total revenue 48,747 35,200
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OPERATING EXPENSES:
Cost of product revenue 14,395 4,628
Cost of service revenue 8,060 10,925
Research and development 13,039 10,551
Marketing and sales 4,701 4,857
General and administrative 2,139 2,040
Restructuring charge 1,878
Amortization of goodwill 1,772
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Total operating expenses 44,106 34,879
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Income from operations 4,641 321
OTHER INCOME (EXPENSE), NET (424) 1,384
INTEREST INCOME (EXPENSE), NET (1,143) (571)
--------------------------
Income before income taxes 3,074 1,134
PROVISION FOR INCOME TAXES 285 385
--------------------------
Net income $2,789 $749
==========================
Net income per common share:
Basic $0.07 $0.02
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Diluted $0.07 $0.02
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Weighted average shares outstanding:
Basic 37,435 43,615
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Diluted 37,471 47,812
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CRAY INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(unaudited)
Dec. 31, March 31,
2001 2002
--------------------------
ASSETS
Cash and cash equivalents $12,730 $6,109
Accounts receivable 24,764 33,012
Inventory, net 18,950 22,391
Service spares, net 12,267 11,124
Property and equipment, net 27,668 27,863
Goodwill, net 22,680 22,680
Other assets 8,028 8,215
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TOTAL $127,087 $131,394
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LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable $11,295 $10,439
Accrued payroll and related expenses 12,063 15,730
Deferred revenue 22,762 22,774
Current portion of warranty reserve 6,574 6,719
Term loan payable 6,071 5,535
Line of credit 3,486
Investor notes payable 8,173 8,272
Other current liabilities 11,285 6,831
Other non-current liabilities 9,114 6,161
Shareholders' equity 39,750 45,447
--------------------------
TOTAL $127,087 $131,394
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