Cray Inc. Reports First Quarter 2005 Financial Results; Twelve Month Product Backlog Grows to $127 Million.SEATTLE Seattle (sēăt`əl), city (1990 pop. 516,259), seat of King co., W Wash., built on seven hills, between Elliott Bay of Puget Sound and Lake Washington; inc. 1869. -- 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 reported financial results for the first quarter ended March 31, 2005. Total revenue for the quarter was $37.6 million, compared to $42.1 million in the same period a year ago. Net loss for the quarter was ($21.0) million, or a loss of ($.24) per share, compared to a net loss of ($3.8) million or loss of ($.05) per share in the first quarter last year. Revenue for the first quarter did not include several systems that were shipped and installed for which the Company did not recognize revenue due to pending customer acceptances. The Company expects that the revenue for those systems will be recognized over the second and third quarters. "We began the year with a weak quarter. Operationally, we met a number of our milestones including shipments and bookings. However, financial results were impacted by large manufacturing variances and abnormally high research and development costs. And, on a positive note, our twelve month product 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. grew to $127 million, up $44 million from December December: see month. 31, 2004," commented Jim Rottsolk, 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. . "Bookings continue to grow and demonstrate that our three new products, the Cray X1E, XT3 and XD1 systems, are beginning to gain traction Traction Definition Traction is the use of a pulling force to treat muscle and skeleton disorders. Purpose Traction is usually applied to the arms and legs, the neck, the backbone, or the pelvis. in their respective markets," said Rottsolk. Gross margin was negatively impacted by approximately $5.0 million of manufacturing variances, which includes a $2.2 million charge related to the absorption of manufacturing overhead, a $1.0 million non-recurring charge related to termination of a manufacturing agreement with IBM (International Business Machines Corporation, Armonk, NY, www.ibm.com) The world's largest computer company. IBM's product lines include the S/390 mainframes (zSeries), AS/400 midrange business systems (iSeries), RS/6000 workstations and servers (pSeries), Intel-based servers (xSeries) , a $290,000 non-cash charge Non-Cash Charge A charge off, made by a company against earnings, that does not require an initial outlay of cash. Notes: Non-cash charges are typically against the depreciation, amortization, and depletion accounts on a company's balance sheet. related to the recognition of an unfunded pension liability in one of our European European emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. subsidiaries and $144,000 of inventory write-offs. In addition, 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. were $23.7 million in the first quarter, primarily due to sharply higher than planned net research and development costs related to a deployment of engineering resources during the quarter from funded projects to the Sandia Sandia may refer to: Places
relating to relate prep → bezüglich +gen, mit Bezug auf +acc deferred compensation expenses. In addition, general and administrative expenses continued to be impacted by increased auditing fees and ongoing costs related to Sarbanes-Oxley compliance initiatives. Inventory increased from $71.5 million to $103.2 million as the result of ramp up Ramp Up To increase a company's operations in anticipation of increased demand. Notes: A company might 'ramp up' operations if they just signed a contract creating substantially more demand for their product. See also: Demand, Economies of Scale of all three new Cray products during the quarter. At the end of the quarter, approximately $37.3 million of the inventory value was installed at customer sites awaiting acceptance and revenue recognition. Cash and 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. investments at the end of the quarter were $43.1 million, down from $87.4 million as of December 31, 2004. At the end of last year, the Company raised capital to fund anticipated costs of inventory ramp and losses early in 2005. The Company expects cash and inventory levels will return to more normal levels by the end of the year as systems are accepted and paid for. In the meantime Adv. 1. in the meantime - during the intervening time; "meanwhile I will not think about the problem"; "meantime he was attentive to his other interests"; "in the meantime the police were notified" meantime, meanwhile , the Company is focused on expense controls and working capital efficiencies to maintain adequate levels of cash, and is working to improve flexibility under its banking relationships. Recent Highlights --Cray promoted Peter Ungaro Ungaro is a family name and may refer to:
This page or section lists people with the surname Ungaro. to the position of President from his previous position as Senior Vice President responsible for worldwide sales, marketing and service. Peter now oversees operations, including engineering, worldwide sales and marketing, manufacturing and service. --Margaret (Peg) Williams was named Senior Vice President and will be responsible for all of Cray engineering. She joins Cray from IBM where she served as Vice President of Database Technology. --The first customer acceptance of the new Cray XT3 system was by the Japan Advanced Institute of Science and Technology, one of Japan's premier academic research centers. --Cray installed a Cray XT3 system at the Swiss National Supercomputing Center, the first such installation in Europe, and continued major installations at Oak Ridge National Laboratory Oak Ridge National Laboratory (ORNL) is a multiprogram science and technology national laboratory managed for the United States Department of Energy by UT-Battelle, LLC. ORNL is located in Oak Ridge, Tennessee, near Knoxville. and Pittsburg Supercomputer Center. --The Army High Performance Computing Research Center Noun 1. Army High Performance Computing Research Center - a United States defense laboratory to conduct research in high-performance computing for defense technology applications; a partnership of government and university and industry AHPCRC U. S. acquired and installed a Cray X1E upgrade vector supercomputer that will nearly triple the performance of the previously installed Cray X1. This system was accepted in the second quarter. --Cray announced multiple orders for its Cray XD1 supercomputer, including installations at CINECA CINECA Consorzio Interuniversitario del Nord est Italiano Per il Calcolo Automatico (Interuniversity Consortium High Performance Systems) in Italy; Air Force's Maui Center; National Institutes of Health; CERFACS CERFACS Centre Européen de Recherche et de Formation Avancée en Calcul Scientifique in France; Ashton University in England and international consulting and software firm, CD-adapco. Outlook "With a solid product backlog at $127 million over the next 12 months and all three products in full production, we expect improved results for the next six months, but do not yet have a clear picture of the full year," said Rottsolk. "In the meantime, we will appeal the Nasdaq delisting Delisting When the stock of a company is removed from a stock exchange. Notes: Reasons for delisting include violating regulations and/or failure to meet financial specifications set out by the stock exchange. notice that we discussed in a separate press release, and continue to work on our selection process to replace Cray's independent auditor Independent Auditor An external auditor with a certified public accounting designation that qualifies him or her to provide an auditor's report. Notes: These auditors aren't affiliated with the company being audited. and recruit a new chief financial officer," he said. "We take our Sarbanes Oxley efforts seriously and will continue our efforts to achieve full compliance." Conference Call Information Management will discuss first quarter financial results and the Company's outlook, followed by a question and answer session for investors today, Monday, May 9, at 2:00 p.m. Pacific Time. To access the call, please dial into the conference at least 10 minutes prior to the beginning of the call at 1-800-257-3401. International callers should dial 303-262-2006. To listen to the live audio webcast, go to in the Investors section of the Cray website at http://investors.cray.com or to www.streetevents.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 365 days. If you do not have Internet access See how to access the Internet. , a replay of the call will be available by dialing 1-800-405-2236 and entering access code 11028847#. International callers can listen to the replay by dialing 303-590-3000, access code 11028847#. The conference call replay will be available for 48 hours, beginning at 5:00 p.m. Pacific Time, May 9, 2005. 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, fluctuating fluc·tu·ate v. fluc·tu·at·ed, fluc·tu·at·ing, fluc·tu·ates v.intr. 1. To vary irregularly. See Synonyms at swing. 2. To rise and fall in or as if in waves; undulate. v. quarterly operating results, lower margins and earnings due to significant pricing pressure and new product introduction expenses, government support and timing of supercomputer system purchases, the successful porting of application programs to Cray computer The Colorado Springs-based supercomputer company founded in 1989 by Seymour Cray after he left Cray Research. Cray developed the Cray-3, an incredibly fast gallium arsenide-based computer that ran at a 1 GHz clock rate. 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 Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. filed with the SEC. About Cray As the global leader in high performance computing (HPC (Handheld PC) A palmtop computer that weighs less than one pound and runs specialized versions of popular applications. Microsoft coined the term for its Windows CE operating system, which is an abbreviated version of Windows. See Pocket PC. ), Cray provides innovative supercomputing systems that enable scientists and engineers in government, industry and academia to meet both existing and future computational Having to do with calculations. Something that is "highly computational" requires a large number of calculations. challenges. Building on years of experience in designing, developing, marketing and servicing the world's most advanced supercomputers, Cray offers a comprehensive portfolio of HPC systems that deliver unrivaled sustained performance on a wide range of applications. Go to www.cray.com for more information. Cray is a registered trademark of Cray Inc. All other trademarks are the property of their respective owners.
CRAY INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
Three Months Ended
March 31,
2004 2005
------------ -------------
REVENUE:
Product $ 28,368 $ 26,310
Service 13,767 11,324
------------ -------------
Total revenue 42,135 37,634
------------ -------------
OPERATING EXPENSES:
Cost of product revenue 19,755 26,352
Cost of service revenue 8,581 7,575
Research and development 9,042 13,032
Marketing and sales 7,646 6,599
General and administrative 2,873 4,267
Restructuring credit - (215)
------------ -------------
Total operating expenses 47,897 57,610
------------ -------------
Loss from operations (5,762) (19,976)
OTHER EXPENSE, NET (386) (502)
INTEREST INCOME (EXPENSE), NET 143 (437)
------------ -------------
Loss before income taxes (6,005) (20,915)
PROVISION (BENEFIT) FOR INCOME TAXES (2,162) 120
------------ -------------
Net loss $ (3,843) $(21,035)
============ =============
Net loss per common share:
Basic $ (0.05) $ (0.24)
============ =============
Diluted $ (0.05) $ (0.24)
============ =============
Weighted average shares outstanding:
Basic 72,977 88,114
============ =============
Diluted 72,977 88,114
============ =============
CRAY INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
ASSETS
December 31, March 31,
2004 2005
-------------- --------------
(unaudited)
Current assets:
Cash and cash equivalents $ 41,732 $ 3,939
Restricted cash 11,437 11,434
Short-term investments, available for
sale 34,253 27,740
Accounts receivable, net of allowance
of $1,439 and $1,359, respectively 33,185 41,978
Inventory 71,521 103,159
Prepaid expenses and other current
assets 5,225 7,119
-------------- --------------
Total current assets 197,353 195,369
Property and equipment, net 36,875 38,865
Service spares, net 3,590 3,439
Goodwill 55,644 55,103
Intangible assets, net 6,197 5,774
Other non-current assets 9,130 10,439
-------------- --------------
TOTAL $ 308,789 $ 308,989
============== ==============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 23,875 $ 45,134
Accrued payroll and related expenses 14,970 11,283
Other accrued liabilities 8,214 7,606
Deferred revenue 54,246 55,514
-------------- --------------
Total current liabilities 101,305 119,537
Deferred tax liability 1,662 1,507
Other non-current liabilities 522 2,181
Notes payable 80,000 80,000
Commitments and Contingencies
Shareholders' equity:
Common stock and additional paid in
capital , par $.01 - Authorized,
150,000,000 shares; issued and
outstanding, 87,348,641 and
87,849,354 shares, respectively 413,911 415,734
Exchangeable shares, no par value,
unlimited shares authorized; issued
and outstanding, 570,963 and 506,017
shares, respectively 4,173 3,698
Deferred compensation (4,220) (2,974)
Accumulated other comprehensive income 4,560 3,465
Accumulated deficit (293,124) (314,159)
-------------- --------------
125,300 105,764
-------------- --------------
TOTAL $ 308,789 308,989
============== ==============
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