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CRAY RESEARCH REPORTS STRONG THIRD QUARTER; OUTLOOK FOR YEAR UNCHANGED

 EAGAN, Minn., Oct. 21 /PRNewswire/ -- Cray Research, Inc. (NYSE: CYR) today reported net earnings of $15,264,000, or $.58 per share, on revenue of $201,975,000 for the third quarter ended Sept. 30, 1993, compared to net earnings of $6,524,000, or $.25 per share, on revenue of $220,164,000 for the same period a year ago.
 For the nine months ended September 30, 1993, the company reported net earnings of $36,529,000, or $1.40 per share, on revenue of $592,242,000, compared to net earnings of $11,662,000, or $.44 per share, on revenue of $570,255,000 for the comparable 1992 period.
 John F. Carlson, Cray Research chairman and CEO, said, "the company's stronger than expected third quarter performance resulted primarily from the timing of transactions, with systems and upgrades originally targeted for fourth quarter installation accepted during the third quarter, instead. Third quarter earnings also benefited from a lower effective tax rate."
 "With this strong third quarter, we are more confident of delivering on our plan and meeting our expectations for significantly improved performance over last year," said Carlson.
 Carlson emphasized that the company's outlook for the full year remains unchanged. The benefit for the full year from the lower effective tax rate will be offset by grant expenses related to an increase in University business.
 The value of orders signed in the quarter was $171 million compared with $180 million in the 1992 third quarter. Backlog at the end of the third quarter was a record $460 million, compared with $429 million at the end of the second quarter and $351 million at the end of the 1992 third quarter.
 Carlson said that recent product introductions should contribute to continuing improvement in the company's financial performance. He said, "at the end of the third quarter, we introduced _ on time and as promised _ our first massively parallel supercomputer, the CRAY T3D. Next week, Cray Research Superservers, Inc. will formally introduce our new superserver product, the CS6400."
 "These new products make Cray Research unique in offering customers solutions in the three principal architectures for high performance computing: parallel vector processing (PVP), massively parallel processing (MPP) and symmetric multiprocessing (SMP). As a result, we're now participating more fully in the market and can look forward to increasing levels of revenue and earnings that will deliver an attractive return to our shareholders."
 Addressing 1994, Carlson said the company is targeting a 10 percent increase in revenue over 1993 results. "Our target revenue increase, combined with our commitment to control expenses, should enable us to achieve an improvement in earnings, as well," said Carlson.
 "Among our challenges for 1994 will be effectively managing the manufacturing and marketing of a significantly broader product mix than we have historically had while also controlling manufacturing costs, procuring components on a timely basis and at acceptable prices and improving inventory control," said Carlson.
 Cray Research, Inc. creates the most powerful, highest quality computational tools for solving the world's most challenging scientific and industrial problems.
 Consolidated Statements of Operations
 CRAY RESEARCH, INC. AND SUBSIDIARIES
 (Unaudited)
 Three Months Ended Nine Months Ended
 Sept. 30 Sept. 30
 1993 1992 1993 1992
 (In thousands, except per share data)
 Revenue:
 Sales $147,899 $157,986 $427,426 $375,266
 Leased systems 5,670 10,819 18,580 45,409
 Service fees 48,406 51,359 146,236 149,580
 Total revenue 201,975 220,164 592,242 570,255
 Cost of revenue:
 Cost of sales 75,153 88,510 211,507 186,225
 Cost of leased systems 3,288 9,373 10,207 30,078
 Cost of services 35,695 36,493 107,364 106,447
 Total cost of revenue 114,136 134,376 329,078 322,750
 Gross profit 87,839 85,788 263,164 247,505
 Operating expenses:
 Development and
 engineering 33,610 36,906 102,853 111,608
 Marketing 29,007 32,091 90,380 97,494
 General and administrative 5,649 5,972 17,538 18,906
 Total operating expenses 68,266 74,969 210,771 228,008
 Operating income 19,573 10,819 52,393 19,497
 Other expense, net (96) (958) (1,708) (1,831)
 Earnings before income
 taxes 19,477 9,861 50,685 17,666
 Income tax expense (4,213) (3,337) (14,156) (6,004)
 Net earnings $15,264 $6,524 $36,529 $11,662
 Earnings per common and
 common equivalent share $0.58 $0.25 $1.40 $0.44
 Average number of common and
 common equivalent shares
 outstanding 26,258 26,333 26,094 26,694
 Consolidated Balance Sheets
 CRAY RESEARCH, INC. and SUBSIDIARIES
 (Unaudited)
 September 30 December 31
 1993 1992
 Assets (in thousands)
 Current assets:
 Cash and equivalents $26,448 $54,953
 Receivables 180,067 155,797
 Inventories 335,761 263,284
 Other current assets 39,513 31,147
 Total current assets 581,789 505,181
 Long-term receivables 15,733 12,226
 Leased systems and spares, net 91,830 96,296
 Property, plant and equipment, net 231,485 257,775
 Investments and other assets 224,305 149,786
 -- $1,145,142 $1,021,264
 Liabilities and Stockholders' Equity
 Current liabilities:
 Current installments of
 long-term debt $2,316 $5,389
 Accounts payable 34,287 30,739
 Accrued expenses 102,932 85,121
 Income taxes payable 16,463 4,023
 Deferred income and
 customer advances 112,503 59,040
 Total current liabilities 268,501 184,312
 Long-term debt, excluding
 current installments 105,582 106,402
 Other long-term obligations 7,802 7,489
 Stockholders' equity:
 Common stock 31,511 31,511
 Additional paid-in capital 101,997 109,322
 Retained earnings 842,538 806,009
 Foreign currency
 translation adjustments (2,164) (429)
 Treasury stock, at cost (210,625) (223,352)
 Total stockholders' equity $763,257 $723,061
 -- $1,145,142 $1,021,264
 -0- 10/21/93
 /NOTE TO EDITORS: Contact Cray for additional financial details./
 /CONTACT: Media, Frank Parisi, 612-683-7130, or Financial, Bill Gacki, 612-683-7372, both of Cray Research/
 (CYR)


CO: Cray Research, Inc. ST: Minnesota IN: CPR SU: ERN

AL-CP -- MN034 -- 5458 10/21/93 16:59 EDT
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Date:Oct 21, 1993
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