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CRAY RESEARCH REPORTS SECOND QUARTER RESULTS, LOWERS EARNINGS EXPECTATIONS FURTHER

 CRAY RESEARCH REPORTS SECOND QUARTER RESULTS,
 LOWERS EARNINGS EXPECTATIONS FURTHER
 EAGAN, Minn., July 21 /PRNewswire/ -- Cray Research, Inc. (NYSE: CYR) reported revenue of $184,997,000, and net earnings of $1,253,000, or $.05 per share, for the second quarter ended June 30, 1992. This compares with revenue of $197,333,000, net earnings of $20,061,000, or $ .75 per share for the same period a year ago.
 Revenue for the first six months of 1992 was $350,091,000, compared with $340,334,000 for the first half of 1991. Net earnings were $5,138,000 or $ .19 per share, compared with $25,289,000, or $ .95 per share for the same period a year ago.
 John Carlson, president and chief operating officer, said, "The contract value of orders signed in the second quarter was $75 million, compared with $115 million in the second quarter of 1991. Our backlog at the end of the quarter was $301 million, compared with $354 million at the end of the first quarter and $289 million at the end of the second quarter of 1991."
 He said, "Our order rate and backlog in the second quarter reflect the difficult global economic climate faced by Cray Research and its customers. Although our current prospect list still supports the potential for revenue growth in 1992, the majority of our business will occur in the fourth quarter. Given the heavily-weighted fourth quarter and the impact of potential slippage of revenue from 1992 to 1993, it is very difficult to predict year end results with confidence."
 "We have carefully reviewed our business prospects both internally and with our customers and believe third quarter earnings should be comparable to those reported for the first half of 1992. In addition, we have seen our gross profit margins stabilize at about 46 percent and have introduced controls to limit expenses to a four percent increase over 1991. Therefore, even if 1992 revenue only matches that of 1991, we would expect to earn at least half of what we did last year." Carlson said.
 Customers accepted systems and upgrades during the quarter with a net contract value of $128 million. The company installed 56 computer systems at customer sites in the second quarter, 39 of which were CRAY Y-MP EL computer systems. The company now expects to install more than 120 EL systems in 1992, up from previous expectations.
 Cray Research, Inc. creates the most powerful, highest-quality computational tools for solving the world's most challenging scientific and industrial problems.
 CRAY RESEARCH, INC. AND SUBSIDIARIES
 Consolidated Balance Sheets
 (In thousands)
 (Unaudited)
 6/30/92 12/31/91
 Assets
 Current assets:
 Cash and equivalents $43,928 $36,963
 Receivables 131,313 244,242
 Inventories 330,101 244,524
 Other current assets 32,875 32,475
 Total current assets 538,217 558,204
 Long-term receivables 23,775 25,863
 Leased systems and spares, net 101,332 109,868
 Property, plant and equipment, net 258,748 249,080
 Investments and other assets 98,033 136,031
 -- $1,020,105 $1,079,046
 Liabilities and Stockholders' Equity
 Current liabilities:
 Current installments of long-term debt $5,713 $6,043
 Accounts payable 32,633 30,530
 Accrued expenses 60,826 82,842
 Income taxes payable 7,128 32,442
 Deferred income and customer advances 50,290 55,023
 Total current liabilities 156,590 206,880
 Long-term debt, excluding
 current installments 106,440 107,426
 Other long-term obligations 4,864 6,068
 Stockholders' equity:
 Common stock 31,511 31,511
 Additional paid-in capital 109,560 120,135
 Retained earnings 826,021 820,884
 Foreign currency translation adjustments 2,850 2,145
 Treasury stock, at cost (217,731) (216,003)
 Total stockholders' equity 752,211 758,672
 -- $1,020,105 $1,079,046
 CRAY RESEARCH, INC. AND SUBSIDIARIES
 Consolidated Statements of Earnings
 (In thousands, except per share data)
 (Unaudited)
 Three Months Ended Six Months Ended
 6/30/92 6/30/91 6/30/92 6/30/91
 Revenue:
 Sales $118,415 $133,697 $217,280 $211,690
 Leased systems 17,377 19,596 34,590 39,619
 Service fees 49,205 44,040 98,221 89,025
 Total revenue 184,997 197,333 350,091 340,334
 Cost of revenue:
 Cost of sales 61,902 54,612 97,514 80,940
 Cost of leased systems 10,443 10,679 20,705 21,201
 Cost of services 34,157 33,204 69,836 65,243
 Total cost of revenue 106,502 98,495 188,055 167,384
 Gross profit 78,495 98,838 162,036 172,950
 Operating expenses
 Development and engineering 37,087 32,366 74,584 66,117
 Marketing 32,799 29,923 65,233 56,604
 General and administrative 6,737 7,422 13,541 14,232
 Total operating expenses 76,623 69,711 153,358 136,953
 Operating income 1,872 29,127 8,678 35,997
 Other income (expense), net (38) 873 (873) 1,924
 Earnings before income taxes 1,834 30,000 7,805 37,921
 Provision for income taxes (581) (9,939) (2,667) (12,632)
 Net earnings $1,253 $20,061 $5,138 $25,289
 Earnings per common and common
 equivalent share $.05 $.75 $.19 $.95
 Average number of common
 and common equivalent
 shares outstanding 26,607 26,572 26,933 26,630
 -0- 7/21/92
 /CONTACT: (Media) Frank Parisi, 612-683-7130, or (Financial) Laura Merriam, 612-683-7395, both of Cray Research/
 (CYR) CO: Cray Research, Inc. ST: Minnesota IN: CPR SU: ERN


AL -- MN024 -- 1555 07/21/92 17:18 EDT
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Date:Jul 21, 1992
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