Cray Inc. Announces Profitable Second Quarter.Business Editors SEATTLE--(BUSINESS WIRE)--July 30, 2002 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 second quarter ended June June: see month. 30, 2002. Revenues for the quarter totaled $38.6 million, a 31 percent increase over $29.4 million reported in the same quarter last year. Net income for the second quarter was $1.2 million, with 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 $.02 cents, compared to a loss of $9.9 million, or ($.24) 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. , for the second quarter last year. The company reported gross margin for the quarter of 43 percent. The 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. was approximately $35 million as of June 30, 2002, and is expected to grow to $100 million by year-end year-end also year·end n. The end of a year. adj. Occurring or done at the end of the year: a year-end audit. Noun 1. . Year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. , the company reported revenues of $73.8 million, compared to $78.2 million in the first six months of 2001. Net earnings for the six months were $1.9 million, or $.04 cents per share, compared to a loss of $7.1 million, or ($.18) cents per share, in the same period last year. Year-to-date results include a one-time one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. 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 recorded in the first quarter, 2002. In June, Cray received net proceeds Net Proceeds The amount received after all costs are deducted from the sale of a piece of property or security. Notes: In the case of an investor selling a security, net proceeds represent the proceeds from the sale minus any trading costs (i.e. commissions). of $8.9 million, after expenses, from exercises of stock purchase warrants. Holders exercised warrants covering an aggregate of 2,389,890 shares, and warrants for the remaining 2,497,295 shares expired ex·pire v. ex·pired, ex·pir·ing, ex·pires v.intr. 1. To come to an end; terminate: My membership in the club has expired. 2. on June 21, 2002. Including proceeds from the warrants, Cray's cash position was approximately $16.7 million as of June 30. 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 were $30 million at the end of the second quarter. "Our second quarter was exceedingly ex·ceed·ing·ly adv. To an advanced or unusual degree; extremely. exceedingly Adverb very; extremely Adv. 1. productive," 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. . "We posted another profitable quarter, improved our working capital position and made a series of important announcements throughout the quarter. "We remain positive about the outlook for the upcoming third and fourth quarters and anticipate profitability and positive cash flow for the full year, with revenues in the range of $150 to $160 million," he said. Rottsolk added that the company continues to execute well in all aspects of product development and announced that the "Cray SV2" (project code name) for the company's next-generation supercomputer line has now been replaced with an official product name: the Cray X1(TM) series. "The 'X1' designation stands for the first generation of our planned multi-generational series of 'extreme performance' 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. ," he said. "The Cray X1 series is the unified successor to our 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. (TM) and Cray SV1ex(TM) products. "We expect the Cray X1 series to be the world's most powerful supercomputer product. It is also an important milestone en route to our goal of delivering the first sustained petaflop product," Rottsolk said. A petaflop is a computing computing - computer speed of one thousand 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. (million billion) calculations per second. A computer able to calculate at a sustained (actual) speed of one petaflop would need to have a peak (theoretical) speed of multiple petaflops (unit) petaflops - 10^15 flops or 1000 teraflops. No computer has achieved this performance yet. . First shipments of the Cray X1 system are on target to deliver in the fourth quarter of 2002. Recent Highlights -- The company received $19 million in orders from defense agencies for its new Cray X1 supercomputer. -- Cray installed an SX-6 system at the Artic Region Super Computing Center, the first customer installation of an SX-6 in the United States under an OEM agreement completed last year between Cray and NEC. -- Cray sold a Cray SX-6 supercomputer to a Canadian industrial company. -- Cray was the sole contractor selected by Sandia National Laboratories to negotiate a multi-year contract worth approximately $90 million. -- Cray was awarded $10 million in co-development funds from the U.S. Government to assist in the development of the next generation of supercomputer technologies. -- Cray signed a $3.6 million agreement with Defense Advanced Research Projects Agency (DARPA) to provide the Department of Defense with technology advancements for national security. -- Cray was selected to join the Russell 3000 Index. "The accomplishments this quarter are many and we are in a solid position to win new commercial and government contracts. We're we're Contraction of we are. we're we are now at a point where strategy combined with consistent execution is beginning to deliver positive results," Rottsolk said. "Equally important, with the co-development funds from the government and other milestones achieved recently, we've we've Contraction of we have. we've have been able to firmly establish our strategic direction and product plans through to the end of the decade." Investor Conference Call Management will discuss the results and the company's outlook and hold a question-and-answer session for investors today, July July: see month. 30, at 11:00 a.m. Eastern (8:00 a.m. Pacific). To participate, call 888/211-8085 a few minutes ahead of time (no passcode required). International callers dial 706/643-3311. If you are unable to participate, a replay will be available from 2:00 p.m. Eastern Time on July 30, 2002, for 48 hours. To access, dial 800/642-1687, or 706/645-9291 (international), reservation number 4876609. 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, 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, Cray MTA-2, Cray SX-6, and Cray X1 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 Six Months Ended
June 30, June 30,
2001 2002 2001 2002
--------- --------- --------- ---------
REVENUE:
Product $ 8,612 $ 19,098 $ 36,209 $ 34,169
Service 20,811 19,539 41,961 39,668
--------- --------- --------- ---------
Total revenue 29,423 38,637 78,170 73,837
--------- --------- --------- ---------
OPERATING EXPENSES:
Cost of product revenue 4,386 12,247 18,781 16,875
Cost of service revenue 10,604 9,767 18,664 20,692
Research and development 14,148 8,588 27,187 19,139
Marketing and sales 4,882 4,920 9,583 9,777
General and administrative 2,244 1,893 4,383 3,933
Restructuring charge 1,878
Amortization of goodwill 1,774 3,546
--------- --------- --------- ---------
Total operating expenses 38,038 37,415 82,144 72,294
--------- --------- --------- ---------
Income (loss) from
operations (8,615) 1,222 (3,974) 1,543
OTHER INCOME (EXPENSE), NET (936) 1,018 (1,360) 2,402
INTEREST INCOME (EXPENSE), NET (138) (463) (1,281) (1,034)
--------- --------- --------- ---------
Income (loss) before income
taxes (9,689) 1,777 (6,615) 2,911
PROVISION FOR INCOME TAXES 197 590 482 975
--------- --------- --------- ---------
Net income (loss) $ (9,886) $ 1,187 $ (7,097) $ 1,936
========= ========= ========= =========
Net income (loss) per
common share:
Basic $ (0.24) $ 0.03 $ (0.18) $ 0.04
========= ========= ========= =========
Diluted $ (0.24) $ 0.02 $ (0.18) $ 0.04
========= ========= ========= =========
Weighted average shares
outstanding:
Basic 41,385 45,765 39,416 44,696
========= ========= ========= =========
Diluted 41,385 51,562 39,416 48,903
========= ========= ========= =========
CRAY INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
December 31, June 30,
2001 2002
------------ ------------
(unaudited)
ASSETS
Cash and cash equivalents $ 12,730 $ 16,727
Accounts receivable 24,764 30,174
Inventory, net 18,950 20,894
Service spares, net 12,267 10,212
Property and equipment, net 27,668 26,819
Goodwill, net 22,680 22,680
Other assets 8,028 8,946
---------- -------------
TOTAL $ 127,087 $ 136,452
========== =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable $ 11,295 $ 9,593
Accrued payroll and related expenses 12,063 15,081
Deferred revenue 22,762 23,968
Current portion of warranty reserve 6,574 5,191
Term loan payable 6,071 5,000
Investor notes payable 8,173 8,372
Other current liabilities 11,285 6,413
Other non-current liabilities 9,114 4,088
Shareholders' equity 39,750 58,746
---------- -------------
TOTAL $ 127,087 $ 136,452
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