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April 26, 2012
SEATTLE, WA, April 26 -- Global supercomputer leader Cray Inc. today announced financial results for the first quarter ended March 31, 2012. Revenue for the quarter was $112.3 million compared to $39.9 million in the prior year period. The Company reported net income for the quarter of $5.0 million or $0.13 per share compared to a net loss of $1.5 million or ($0.04) per share in the first quarter of 2011.
Total gross profit margin for the first quarter of 2012 was 40% compared to 43% for the first quarter of 2011. For the first quarter of 2012, product margin was 40% and service margin was 41%.
Operating expenses for the first quarter of 2012 were $36.8 million compared to $18.1 million in the prior year period. First quarter 2011 operating expenses benefited from a $12 million R&D co-funding credit related to the Company’s DARPA contract. First quarter 2012 operating expenses were also higher than in 2011 due to increased investments in the Company’s new initiatives and higher incentive compensation. The first quarter of 2012 results included non-cash items of $2.0 million for depreciation and amortization and $1.2 million for stock compensation expense.
As of March 31, 2012, cash balances totaled $112.3 million compared to $54.2 million as of December 31, 2011.
“We had a strong first quarter led by a large acceptance at Oak Ridge National Laboratory,” said Peter Ungaro, president and CEO of Cray. “This week we also announced a significant agreement with Intel which substantially improves our growth and financial options. Our interconnect hardware program has been a strong part of our business for some time but as we look to the future we see more opportunities in other areas of differentiation — areas we also focus on currently. This transaction allows us to increase our focus on these technologies and to further expand on our commitment to drive growth from our core supercomputing business and our new initiatives in mid-range supercomputing, storage and big data. I’m also pleased to be increasing our revenue and profit outlook as we are off to a fast start to what I believe will be a banner year for the Company.”
While a wide range of results remains possible, the Company expects 2012 revenue to be in the range of $430-$450 million. For 2012, second quarter revenue is expected to be about $85 million and roughly 50% of the total revenue for the year is expected in the fourth quarter. Overall gross margins for the year are anticipated to be in the 35 percent range. With $22 million in expected co-funding credits for research and development and the anticipated incremental savings from the announced asset sale, total operating expenses are expected to be about $120 million. Based on this outlook, we expect to be solidly profitable for 2012.
The pending $140 million transaction with Intel does not impact the Company’s revenue and gross margin outlook.
The accounting treatment of our pending asset sale is being evaluated and will not be finalized until we release our second quarter 2012 financial results. Assuming the transaction closes as expected, we currently anticipate reporting a pre-tax gain of approximately $138 million in the second quarter of 2012 for this transaction. While the tax implications of the transaction are still being assessed, we expect cash taxes on the $140 million will ultimately be in the range of $10 million.
Given the Company’s accumulated net loss carryforwards, the anticipated cash taxes for the year on the Company’s total pre-tax income will ultimately be in the range of 5-8%.
Actual results for any future period are subject to large fluctuations given the nature of Cray’s business.
· In April 2012, Cray entered into a definitive agreement to sell its interconnect hardware development program and related intellectual property to Intel Corporation for $140 million.
· In April 2012, Cray announced the appointment of William C. Blake to the position of chief technology officer and senior vice president.
· During the first quarter, Cray was selected to deliver a large supercomputer and Sonexion storage subsystem to a commercial customer. The system is expected to be put into production during the second quarter of 2012.
· During the first quarter, Cray received acceptance on the first phase of the upgrade to the Jaguar system at Oak Ridge National Laboratory.
· During the first quarter, the University of Bergen in Norway installed one of Cray’s latest midrange supercomputing systems (also announced in the first quarter), upgrading a Cray XT4 supercomputer into a 200 teraflop Cray XE6m system.
Conference Call Information
Cray will host a conference call today, Thursday, April 26, 2012 at 1:30 p.m. PDT (4:30 p.m. EDT) to discuss its first quarter 2012 financial results. To access the call, please dial into the conference at least 10 minutes prior to the beginning of the call at 1- 877-941-0844. International callers should dial 1- 480-629-9692. To listen to the audio webcast, go to the Investors section of the Cray website at http://investors.cray.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 180 days. If you do not have Internet access, a replay of the call will be available by dialing 1-800-406-7325, international callers dial 1-303-590-3030, and entering the access code 4534729. The conference call replay will be available for 72 hours, beginning at 4:30 p.m. PDT on Thursday, April 26, 2012.
About Cray Inc.
As a global leader in supercomputing, Cray provides highly advanced supercomputers and world-class services and support to government, industry and academia. Cray technology is designed to enable scientists and engineers to achieve remarkable breakthroughs by accelerating performance, improving efficiency and extending the capabilities of their most demanding applications. Cray's Adaptive Supercomputing vision is focused on delivering innovative next-generation products that integrate diverse processing technologies into a unified architecture, allowing customers to surpass today's limitations and meeting the market's continued demand for realized performance. Go to www.cray.com for more information.
Source: Cray Inc.
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