UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K
 
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 30, 2015
 
 
CRAY INC.
(Exact name of registrant as specified in its charter)

 
 
 
 
 
 
 
Washington
 
0-26820
 
93-0962605
(State or other Jurisdiction
of Incorporation)
 
(Commission
File Number)
 
(IRS Employer
Identification No.)
 
 
 
 
901 Fifth Avenue, Suite 1000
Seattle, WA
 
98164
(Address of Principal Executive Offices)
 
(Zip Code)
Registrant's telephone number, including area code: (206) 701-2000
None
(Former name or former address if changed since last report.)  
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
o
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
o
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
o
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 
 






Item 2.02 Results of Operations and Financial Condition

On July 30, 2015, Cray Inc. announced its financial results for its second quarter ended June 30, 2015. A copy of the press release issued in connection with the announcement is furnished as Exhibit 99.1 to this Current Report on Form 8-K.

Item 9.01    Financial Statements and Exhibits
 
(d) Exhibits.
99.1
Press Release of Cray Inc., dated July 30, 2015

 
 
The information in Item 2.02 of this Form 8-K and Exhibit 99.1 attached hereto is furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
  
 





SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Date: July 30, 2015
 
                                
 
 
 
Cray Inc.
 
 
By:
 
/s/ MICHAEL C. PIRAINO
 
 
Michael C. Piraino
Senior Vice President Administration, General Counsel and Corporate Secretary






INDEX TO EXHIBITS
Exhibit No.
Description
99.1
Press Release of Cray Inc., dated July 30, 2015







Exhibit 99.1
Cray Media:
Investors:
Nick Davis
Paul Hiemstra
206/701-2123
206/701-2044
pr@cray.com
ir@cray.com


CRAY INC. REPORTS SECOND QUARTER FINANCIAL RESULTS
Company reaffirms annual revenue guidance for 2015
        
Seattle, WA - July 30, 2015 - Global supercomputer leader Cray Inc. (Nasdaq: CRAY) today announced financial results for the second quarter ended June 30, 2015.

All figures in this release are based on U.S. GAAP unless otherwise noted. A reconciliation of GAAP to non-GAAP measures is included in the financial tables in this press release.

Revenue for the second quarter was $186.2 million, which compares with $85.1 million in the second quarter of 2014. Net income for the second quarter was $5.8 million, or $0.14 per diluted share, compared to a net loss of $6.7 million, or $0.18 per diluted share in the second quarter of 2014. Non-GAAP net income was $12.4 million, or $0.30 per diluted share for the second quarter, compared to non-GAAP net loss of $8.6 million, or $0.22 per diluted share for the same period last year.

Overall gross profit margin for the second quarter of 2015 was 27%, compared to 34% for the second quarter of 2014. Total non-GAAP gross profit margin for the second quarter of 2015 was 27%, compared to 35% for the second quarter of 2014.

Operating expenses for the second quarter of 2015 were $40.0 million, compared to $42.8 million for the second quarter of 2014. Non-GAAP operating expenses for the second quarter of 2015 were $37.3 million, compared to $39.9 million for the second quarter of 2014.

Cash, investments and restricted cash was $103 million as of June 30, 2015, compared to $148 million as of March 31, 2015. Working capital increased slightly at the end of the second quarter of 2015 to $355 million compared with $353 million at the end of the first quarter.

“We had a strong second quarter, highlighted by several key customer wins and our new installation at the King Abdullah University of Science and Technology in Saudi Arabia,” said Peter Ungaro, president and CEO of Cray.  “We also expanded our storage and data management team by hiring a number of development and service engineers from Terascala, adding new skills and capabilities to this growing business.  With recent wins at the Bureau of Meteorology in Australia and the Texas Advanced Computing Center, our momentum of new awards has continued and we’re well positioned to deliver strong growth for the year.”

Outlook
We anticipate revenue for 2015 to be in the range of $715 million. Revenue for the third quarter is expected to be approximately $140 million. Non-GAAP gross margin for 2015 is expected to be in the 30-33% range. Total non-GAAP operating expenses for the year are anticipated to be in the range of $180 million. Based on this outlook, we expect to improve our GAAP and non-GAAP operating profit margin significantly for 2015 as compared to 2014.

1



Our 2015 effective non-GAAP tax rate is expected to be in the range of 6-10%.

Actual results for any future period are subject to large fluctuations and a wide range of results remains possible given the nature of our business.

Recent Highlights
•
In July, Cray was selected by the Bureau of Meteorology in Melbourne, Australia to deliver a new Cray XC40 supercomputer and Sonexion 2000 storage solution. Including future options, the contract totals about $53 million, with installations expected to begin in 2016.
•
In July, Cray announced it had been selected by the Texas Advanced Computing Center (TACC) at the University of Texas to deliver a Cray XC40 supercomputer. The new system named “Lonestar5” will have a peak performance of more than one petaflops and will serve as the primary high performance computing resource in the UT Research Cyberinfrastructure initiative.
•
In July, Cray announced it hired the majority of employees of Boston-based storage company, Terascala. The new additions strengthen Cray’s overall storage and data management expertise.
•
In June, Cray announced the establishment of its European, Middle East and Africa (EMEA) headquarters at the Company’s new office in Bristol, United Kingdom. Cray continues to expand its presence in the supercomputing and big data markets across the region, and its new headquarters strengthens the Company’s commitment to the commercial, academic, and government customers in these countries.
•
In May, the Supercomputing Education and Research Center (SERC) at the Indian Institute of Science in Bangalore, India put a new Cray XC40 into production. With more than 1.4 petaflops of compute performance, the Cray supercomputer nicknamed “SahasraT” at SERC is the first petaflop system in India.

Conference Call Information
Cray will host a conference call today, Thursday, July 30, 2015 at 1:30 p.m. PDT (4:30 p.m. EDT) to discuss its second quarter financial results. To access the call, please dial into the conference at least 10 minutes prior to the beginning of the call at (866) 362-9806. International callers should dial (765) 889-6838 and use the conference ID #90966372. To listen to the audio webcast, go to the Investors section of the Cray website at www.cray.com/company/investors.

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. A telephonic replay of the call will also be available by dialing (855) 859-2056, international callers dial (404) 537-3406, and entering the conference ID #90966372. The conference call replay will be available for 72 hours, beginning at 4:45 p.m. PDT on Thursday, July 30, 2015.

Use of Non-GAAP Financial Measures
This press release contains “non-GAAP financial measures” under the rules of the U.S. Securities and Exchange Commission. A reconciliation of U.S. generally accepted accounting principles, or GAAP, to non-GAAP results is included in the financial tables included in this press release. Management believes that the non-GAAP financial measures that we have set forth provide additional insight for analysts and investors and facilitate an evaluation of Cray’s financial and operational performance that is consistent with the manner in which management evaluates Cray’s financial performance. However, these non-GAAP financial measures have limitations as an analytical tool, as they exclude the financial impact of transactions necessary or advisable for the conduct of Cray’s business, such as the granting of equity compensation awards, and are not intended to be an alternative to financial measures prepared in

2


accordance with GAAP. Hence, to compensate for these limitations, management does not review these non-GAAP financial metrics in isolation from its GAAP results, nor should investors. Non-GAAP financial measures are not based on a comprehensive set of accounting rules or principles. This non-GAAP information supplements, and is not intended to represent a measure of performance in accordance with, or disclosures required by GAAP. These measures are adjusted as described in the reconciliation of GAAP to non-GAAP numbers at the end of this release, but these adjustments should not be construed as an inference that all of these adjustments or costs are unusual, infrequent or non-recurring. Non-GAAP financial measures should be considered in addition to, not as a substitute for or superior to, financial measures determined in accordance with GAAP. Investors are advised to carefully review and consider this non-GAAP information as well as the GAAP financial results that are disclosed in Cray’s SEC filings.

Additionally, we have not quantitatively reconciled the non-GAAP guidance measures disclosed under “Outlook” to their corresponding GAAP measures because we do not provide specific guidance for the various reconciling items such as stock-based compensation, adjustments to the provision for income taxes, amortization of intangibles, costs related to acquisitions, purchase accounting adjustments, and gain on significant asset sales, as certain items that impact these measures have not occurred, are out of our control or cannot be reasonably predicted. Accordingly, reconciliations to the non-GAAP guidance measures are not available without unreasonable effort. Please note that the unavailable reconciling items could significantly impact our financial results.
About Cray Inc.
Global supercomputing leader Cray Inc. (Nasdaq: CRAY) provides innovative systems and solutions enabling scientists and engineers in industry, academia and government to meet existing and future simulation and analytics challenges. Leveraging more than 40 years of experience in developing and servicing the world’s most advanced supercomputers, Cray offers a comprehensive portfolio of supercomputers and big data storage and analytics solutions delivering unrivaled performance, efficiency and scalability. 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 meet the market’s continued demand for realized performance. Go to www.cray.com for more information.

Safe Harbor Statement
This press release contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 and Section 27A of the Securities Act of 1933, including, but not limited to, statements related to Cray’s financial guidance and expected operating results and its product development, sales and delivery plans. These statements involve current expectations, forecasts of future events and other statements that are not historical facts. Inaccurate assumptions as well as known and unknown risks and uncertainties can affect the accuracy of forward-looking statements and cause actual results to differ materially from those anticipated by these forward-looking statements. Factors that could affect actual future events or results include, but are not limited to, the risk that Cray does not achieve the operational or financial results that it expects, the risk that the systems ordered by customers are not delivered when expected, do not perform as expected once delivered or have technical issues that must be corrected before acceptance, the risk that the acceptance process for delivered systems is not completed, or customer acceptances are not received, when expected or at all, the risk that Cray’s big data products, including storage, are not as successful as expected, the risk that Cray is not able to successfully complete its planned product development efforts in a timely fashion or at all, the risk that certain customers do not make expected future optional purchases under their current contracts, the risk that Cray is not able to achieve anticipated gross margin or expense levels, the risk that Cray will not be able to secure orders for Cray systems to be delivered and accepted in 2015 when or at the levels expected and such other risks as

3


identified in Cray’s quarterly report on Form 10-Q for the period ended June 30, 2015, and from time to time in other reports filed by Cray with the U.S. Securities and Exchange Commission. You should not rely unduly on these forward-looking statements, which apply only as of the date of this release. Cray undertakes no duty to publicly announce or report revisions to these statements as new information becomes available that may change Cray’s expectations.


###

CRAY, and the stylized CRAY mark and SONEXION are registered trademarks of Cray Inc. in the United States and other countries, and the XC family of supercomputers is a trademark of Cray Inc. Other trademarks used in this report are the property of their respective owners.

4


CRAY INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited and in thousands, except per share data)
 
 
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
 
2015
 
2014
 
2015
 
2014
Revenue:
 
 
 
 
 
 
 
 
Product
 
$
157,937

 
$
61,748

 
$
210,678

 
$
91,763

Service
 
28,224

 
23,399

 
55,127

 
48,494

Total revenue
 
186,161

 
85,147

 
265,805

 
140,257

Cost of revenue:
 
 
 
 
 
 
 
 
Cost of product revenue
 
120,789

 
43,967

 
161,545

 
67,939

Cost of service revenue
 
15,787

 
12,176

 
30,639

 
25,377

Total cost of revenue
 
136,576

 
56,143

 
192,184

 
93,316

Gross profit
 
49,585

 
29,004

 
73,621

 
46,941

Operating expenses:
 
 
 
 
 
 
 
 
Research and development, net
 
20,106

 
24,189

 
42,293

 
46,810

Sales and marketing
 
13,412

 
13,259

 
25,964

 
25,035

General and administrative
 
6,435

 
5,316

 
12,575

 
10,729

Total operating expenses
 
39,953

 
42,764

 
80,832

 
82,574

Income (loss) from operations
 
9,632

 
(13,760
)
 
(7,211
)
 
(35,633
)
 
 
 
 
 
 
 
 
 
Other income (expense), net
 
(258
)
 
(337
)
 
486

 
(983
)
Interest income, net
 
413

 
84

 
777

 
145

Income (loss) before income taxes
 
9,787

 
(14,013
)
 
(5,948
)
 
(36,471
)
Income tax (expense) benefit
 
(4,006
)
 
7,265

 
2,335

 
16,785

Net income (loss)
 
$
5,781

 
$
(6,748
)
 
$
(3,613
)
 
$
(19,686
)
 
 
 
 
 
 
 
 
 
Basic net income (loss) per common share
 
$
0.15

 
$
(0.18
)
 
$
(0.09
)
 
$
(0.51
)
Diluted net income (loss) per common share
 
$
0.14

 
$
(0.18
)
 
$
(0.09
)
 
$
(0.51
)
 
 
 
 
 
 
 
 
 
Basic weighted average shares outstanding
 
39,104

 
38,509

 
39,053

 
38,414

Diluted weighted average shares outstanding
 
40,759

 
38,509

 
39,053

 
38,414




5


CRAY INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited and in thousands, except share amounts)
 
 
June 30,
2015
 
December 31,
2014
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
68,175

 
$
112,633

Restricted cash
16,834

 
16,874

Short-term investments
13,304

 
16,289

Accounts and other receivables, net
136,680

 
165,113

Inventory
221,197

 
143,632

Deferred tax asset
37,403

 
36,073

Prepaid expenses and other current assets
24,199

 
17,948

Total current assets
517,792

 
508,562

 
 
 
 
Long-term investments
4,427

 
—

Long-term investment in sales-type lease, net
26,133

 
31,089

Property and equipment, net
34,677

 
34,793

Service spares, net
2,317

 
1,868

Goodwill
14,182

 
14,182

Intangible assets other than goodwill, net
3,664

 
3,895

Deferred tax assets
42,183

 
41,414

Other non-current assets
14,450

 
15,631

TOTAL ASSETS
$
659,825

 
$
651,434

 
 
 
 
LIABILITIES AND SHAREHOLDERS’ EQUITY
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
77,787

 
$
48,699

Accrued payroll and related expenses
6,721

 
16,054

Other accrued liabilities
4,857

 
16,285

Deferred revenue
73,736

 
65,910

Total current liabilities
163,101

 
146,948

 
 
 
 
Long-term deferred revenue
36,183

 
47,588

Other non-current liabilities
2,843

 
3,044

TOTAL LIABILITIES
202,127

 
197,580

 
 
 
 
Shareholders’ equity:
 
 
 
Preferred stock — Authorized and undesignated, 5,000,000 shares; no shares issued or outstanding
—

 
—

Common stock and additional paid-in capital, par value $.01 per share — Authorized, 75,000,000 shares; issued and outstanding 40,804,481 and 40,822,377 shares, respectively
605,105

 
598,390

Accumulated other comprehensive income
7,636

 
6,503

Accumulated deficit
(155,043
)
 
(151,039
)
TOTAL SHAREHOLDERS’ EQUITY
457,698

 
453,854

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
$
659,825

 
$
651,434



6


CRAY INC. AND SUBSIDIARIES
Reconciliation of Selected U.S. GAAP Measures to non-GAAP Measures
(Unaudited; in millions, except EPS)


 
 
Three Months Ended June 30, 2015
 
 
Net Income
 
Operating Income
 
Diluted EPS
 
Gross Profit
 
Operating Expenses
GAAP
 
$
5.8

 
$
9.6

 
$
0.14

 
$
49.6

 
$
40.0

 
 
 
 
 
 
 
 
 
 
 
Share-based compensation
(1)
2.8

 
2.8

 
 
 
0.2

 
2.6

Purchase accounting adjustments
(2)
0.1

 
0.1

 
 
 
0.1

 
—

Amortization of acquired intangibles
(2)
0.6

 
0.6

 
 
 
0.5

 
0.1

Items impacting tax provision
(3)
3.1

 
 
 
 
 
 
 
 
Total reconciling items
 
$
6.6

 
$
3.5

 
$
0.16

 
$
0.8

 
$
2.7

 
 
 
 
 
 
 
 
 
 
 
Non-GAAP
 
$
12.4

 
$
13.1

 
$
0.30

 
$
50.4

 
$
37.3

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended June 30, 2014
 
 
Net Loss
 
Operating Loss
 
Diluted EPS
 
Gross Profit
 
Operating Expenses
GAAP
 
$
(6.7
)
 
$
(13.8
)
 
$
(0.18
)
 
$
29.0

 
$
42.8

 
 
 
 
 
 
 
 
 
 
 
Share-based compensation
(1)
2.9

 
2.9

 
 
 
0.1

 
2.8

Purchase accounting adjustments
(2)
0.2

 
0.2

 
 
 
0.2

 
—

Amortization of acquired intangibles
(2)
0.6

 
0.6

 
 
 
0.5

 
0.1

Items impacting tax provision
(3)
(5.6
)
 
 
 
 
 
 
 
 
Total reconciling items
 
$
(1.9
)
 
$
3.7

 
$
(0.04
)
 
$
0.8

 
$
2.9

 
 
 
 
 
 
 
 
 
 
 
Non-GAAP
 
$
(8.6
)
 
$
(10.1
)
 
$
(0.22
)
 
$
29.8

 
$
39.9

 
 
 
 
 
 
 
 
 
 
 
Notes
 
 
 
 
 
 
 
 
 
 
(1) Adjustments to exclude non-cash expenses related to share-based compensation
(2) Adjustments to exclude amortization of acquired intangible and other intangible assets and other acquisition-related charges.
(3) Adjustments associated with the tax impact on reconciling items, benefits related to Cray’s net operating loss carryforwards and changes in Cray’s valuation allowance held against deferred tax assets


7


CRAY INC. AND SUBSIDIARIES
Reconciliation of Selected U.S. GAAP Measures to non-GAAP Measures
(Unaudited; in millions, except EPS)


 
 
Six Months Ended June 30, 2015
 
 
Net Income (Loss)
 
Operating Income (Loss)
 
Diluted EPS
 
Gross Profit
 
Operating Expenses
GAAP
 
$
(3.6
)
 
$
(7.2
)
 
$
(0.09
)
 
$
73.6

 
$
80.8

 
 
 
 
 
 
 
 
 
 
 
Share-based compensation
(1)
5.9

 
5.9

 
 
 
0.3

 
5.6

Purchase accounting adjustments
(2)
0.3

 
0.3

 
 
 
0.3

 
—

Amortization of acquired intangibles
(2)
1.2

 
1.2

 
 
 
1.0

 
0.2

Items impacting tax provision
(3)
(2.4
)
 
 
 
 
 
 
 
 
Total reconciling items
 
$
5.0

 
$
7.4

 
$
0.13

 
$
1.6

 
$
5.8

 
 
 
 
 
 
 
 
 
 
 
Non-GAAP
 
$
1.4

 
$
0.2

 
$
0.04

 
$
75.2

 
$
75.0

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Six Months Ended June 30, 2014
 
 
Net Loss
 
Operating Loss
 
Diluted EPS
 
Gross Profit
 
Operating Expenses
GAAP
 
$
(19.7
)
 
$
(35.6
)
 
$
(0.51
)
 
$
46.9

 
$
82.6

 
 
 
 
 
 
 
 
 
 
 
Share-based compensation
(1)
5.4

 
5.4

 
 
 
0.2

 
5.2

Purchase accounting adjustments
(2)
0.3

 
0.3

 
 
 
0.3

 
—

Amortization of acquired intangibles
(2)
1.2

 
1.2

 
 
 
1.0

 
0.2

Items impacting tax provision
(3)
(13.5
)
 
 
 
 
 
 
 
 
Total reconciling items
 
$
(6.6
)
 
$
6.9

 
$
(0.18
)
 
$
1.5

 
$
5.4

 
 
 
 
 
 
 
 
 
 
 
Non-GAAP
 
$
(26.3
)
 
$
(28.7
)
 
$
(0.69
)
 
$
48.4

 
$
77.2

 
 
 
 
 
 
 
 
 
 
 
Notes
 
 
 
 
 
 
 
 
 
 
(1) Adjustments to exclude non-cash expenses related to share-based compensation
(2) Adjustments to exclude amortization of acquired intangible and other intangible assets and other acquisition-related charges.
(3) Adjustments associated with the tax impact on reconciling items, benefits related to Cray’s net operating loss carryforwards and changes in Cray’s valuation allowance held against deferred tax assets


8


CRAY INC. AND SUBSIDIARIES
Reconciliation of Selected U.S. GAAP Measures to non-GAAP Measures
(Unaudited; in millions, except percentages)


 
 
Three Months Ended June 30, 2015
 
 
Product
 
Service
 
Total
 
 
Gross Profit
 
Gross Margin
 
Gross Profit
 
Gross Margin
 
Gross Profit
 
Gross Margin
GAAP
 
$
37.1

 
24
%
 
$
12.5

 
44
%
 
$
49.6

 
27
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Share-based compensation
(1)
0.1

 
 
 
0.1

 
 
 
0.2

 
 
Purchase accounting adjustments
(2)
0.1

 
 
 
 
 
 
 
0.1

 
 
Amortization of acquired intangibles
(2)
0.5

 
 
 
 
 
 
 
0.5

 
 
Total reconciling items
 
$
0.7

 
—
%
 
$
0.1

 
1
%
 
$
0.8

 
—
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-GAAP
 
$
37.8

 
24
%
 
$
12.6

 
45
%
 
$
50.4

 
27
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended June 30, 2014
 
 
Product
 
Service
 
Total
 
 
Gross Profit
 
Gross Margin
 
Gross Profit
 
Gross Margin
 
Gross Profit
 
Gross Margin
GAAP
 
$
17.8

 
29
%
 
$
11.2

 
48
%
 
$
29.0

 
34
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Share-based compensation
(1)
—

 
 
 
0.1

 
 
 
0.1

 
 
Purchase accounting adjustments
(2)
0.2

 
 
 
—

 
 
 
0.2

 
 
Amortization of acquired intangibles
(2)
0.5

 
 
 
—

 
 
 
0.5

 
 
Total reconciling items
 
$
0.7

 
1
%
 
$
0.1

 
—
%
 
$
0.8

 
1
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-GAAP
 
$
18.5

 
30
%
 
$
11.3

 
48
%
 
$
29.8

 
35
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Notes
 
 
 
 
 
 
 
 
 
 
 
 
(1) Adjustments to exclude non-cash expenses related to share-based compensation
(2) Adjustments to exclude amortization of acquired intangible and other intangible assets and other acquisition-related charges.

9


CRAY INC. AND SUBSIDIARIES
Reconciliation of Selected U.S. GAAP Measures to non-GAAP Measures
(Unaudited; in millions, except percentages)

 
 
Six Months Ended June 30, 2015
 
 
Product
 
Service
 
Total
 
 
Gross Profit
 
Gross Margin
 
Gross Profit
 
Gross Margin
 
Gross Profit
 
Gross Margin
GAAP
 
$
49.1

 
23
%
 
$
24.5

 
44
%
 
$
73.6

 
28
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Share-based compensation
(1)
0.2

 
 
 
0.1

 
 
 
0.3

 
 
Purchase accounting adjustments
(2)
0.3

 
 
 
 
 
 
 
0.3

 
 
Amortization of acquired intangibles
(2)
1.0

 
 
 
 
 
 
 
1.0

 
 
Total reconciling items
 
$
1.5

 
1
%
 
$
0.1

 
1
%
 
$
1.6

 
—
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-GAAP
 
$
50.6

 
24
%
 
$
24.6

 
45
%
 
$
75.2

 
28
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Six Months Ended June 30, 2014
 
 
Product
 
Service
 
Total
 
 
Gross Profit
 
Gross Margin
 
Gross Profit
 
Gross Margin
 
Gross Profit
 
Gross Margin
GAAP
 
$
23.8

 
26
%
 
$
23.1

 
48
%
 
$
46.9

 
33
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Share-based compensation
(1)
—

 
 
 
0.2

 
 
 
0.2

 
 
Purchase accounting adjustments
(2)
0.3

 
 
 
—

 
 
 
0.3

 
 
Amortization of acquired intangibles
(2)
1.0

 
 
 
—

 
 
 
1.0

 
 
Total reconciling items
 
$
1.3

 
1
%
 
$
0.2

 
—
%
 
$
1.5

 
2
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-GAAP
 
$
25.1

 
27
%
 
$
23.3

 
48
%
 
$
48.4

 
35
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Notes
 
 
 
 
 
 
 
 
 
 
 
 
(1) Adjustments to exclude non-cash expenses related to share-based compensation
(2) Adjustments to exclude amortization of acquired intangible and other intangible assets and other acquisition-related charges.


10


CRAY INC. AND SUBSIDIARIES
Reconciliation of GAAP to non-GAAP Net Income (Loss)
(Unaudited; in millions except per share amounts and percentages)


 
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
 
2015
 
2014
 
2015
 
2014
GAAP Net Income (Loss)
 
$
5.8

 
$
(6.7
)
 
$
(3.6
)
 
$
(19.7
)
 
 
 
 
 
 
 
 
 
Non-GAAP adjustments impacting gross profit:
 
 
 
 
 
 
 
 
  Share-based compensation
(1)
0.2

 
0.1

 
0.3

 
0.2

  Purchase accounting adjustments
(2)
0.1

 
0.2

 
0.3

 
0.3

  Amortization of acquired and other intangibles
(2)
0.5

 
0.5

 
1.0

 
1.0

Total adjustments impacting gross profit
 
0.8

 
0.8

 
1.6

 
1.5

 
 
 
 
 
 
 
 
 
Non-GAAP gross margin percentage
 
27
%
 
35
%
 
28
%
 
35
%
 
 
 
 
 
 
 
 
 
Non-GAAP adjustments impacting operating expenses:
 
 
 
 
 
 
 
 
  Share-based compensation
(1)
2.6

 
2.8

 
5.6

 
5.2

  Amortization of acquired intangibles
(2)
0.1

 
0.1

 
0.2

 
0.2

Total adjustments impacting operating expenses
 
2.7

 
2.9

 
5.8

 
5.4

 
 
 
 
 
 
 
 
 
Items impacting tax provision
(3)
3.1

 
(5.6
)
 
(2.4
)
 
(13.5
)
Non-GAAP Net Income (Loss)
 
$
12.4

 
$
(8.6
)
 
$
1.4

 
$
(26.3
)
 
 
 
 
 
 
 
 
 
Non-GAAP Diluted Net Income (Loss) per common share
 
$
0.30

 
$
(0.22
)
 
$
0.04

 
$
(0.69
)
 
 
 
 
 
 
 
 
 
Diluted weighted average shares
(4)
40.8

 
38.5

 
40.7

 
38.4

 
 
 
 
 
 
 
 
 
Notes
 
 
 
 
 
 
 
 
(1) Adjustments to exclude non-cash expenses related to share-based compensation
(2) Adjustments to exclude amortization of acquired intangible and other intangible assets and other acquisition-related charges.
(3) Adjustments associated with the tax impact on reconciling items, benefits related to Cray’s net operating loss carryforwards and changes in Cray’s valuation allowance held against deferred tax assets
(4) Cray recorded a GAAP net loss for the six months ended June 30, 2015 and non-GAAP net income for the same period. As such, the diluted weighted average shares number on the Reconciliation of GAAP to non-GAAP Net Income (Loss) differs from the amount on Cray's Condensed Consolidated Statement of Operations by the weighted average number of potential common shares outstanding, including the additional dilution related to conversion of stock options, unvested restricted stock and unvested restricted stock units as computed under the treasury stock method


11
Cray (NASDAQ:CRAY)
Historical Stock Chart
From Mar 2024 to Apr 2024 Click Here for more Cray Charts.
Cray (NASDAQ:CRAY)
Historical Stock Chart
From Apr 2023 to Apr 2024 Click Here for more Cray Charts.