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901 Fifth Avenue, Suite 1000 Seattle, WA | 98164 | |
(Address of Principal Executive Offices) | (Zip Code) |
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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)) |
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99.1 | Press Release of Cray Inc., dated November 11, 2013 |
99.2 | Transcript of conference call held on November 11, 2013 |
Cray Inc. | ||
By: | /s/ MICHAEL C. PIRAINO | |
Michael C. Piraino Vice President Administration, General Counsel and Corporate Secretary |
Exhibit No. | Description |
99.1 | Press Release of Cray Inc., dated November 11, 2013 |
99.2 | Transcript of conference call held on November 11, 2013 |
Cray Media: | Investors: |
Nick Davis | Paul Hiemstra |
206/701-2123 | 206/701-2044 |
pr@cray.com | ir@cray.com |
• | In November, Cray introduced its Tiered Adaptive Storage (TAS) offering designed for the big data and HPC storage markets. Through a strategic partnership with Versity Software Inc., Cray TAS enables customers to manage their data in a deployment-ready, flexible tiered archiving solution designed to be easy to use, reduce costs and preserve data indefinitely. |
• | In October, Cray expanded its research and development team in Europe with the addition of the founders and engineering team from Gnodal Limited. As part of this transaction, Cray also purchased certain intellectual property including patents and design copyrights developed by the Gnodal team. |
• | In October, Cray announced it was selected by Mississippi State University to deliver a new Cray® CS300-LC™ supercomputer. The liquid-cooled design uses warm water heat exchangers and is designed for three times the energy savings per-rack over air-cooled systems. |
• | In September, Cray announced that the Railway Technical Research Institute (RTRI) in Japan put a Cray® XC30-AC™ supercomputer, a Cray® CS300™ cluster and a Cray® Sonexion® storage production -- all integrated into a single virtual system performing complex simulations aimed at advancing railway technologies. |
• | In August, Cray appointed John Josephakis to the position of vice president of worldwide sales. With nearly 20 years of sales experience in the high performance computing (HPC) industry, |
• | In November, Kent Winchell joined Cray’s Office of the CTO. Winchell has over 25 years of experience in high performance computing and I/T architecture, previously serving as a Distinguished Engineer and CTO of IBM’s Worldwide Deep Computing (HPC) division. |
• | In October, Cray broadened its support for accelerators and coprocessors by now offering Cray® XC30™ supercomputers with NVIDIA® Tesla® GPU’s and Intel® Xeon® Phi® coprocessors. Cray also announced support of the Intel Xeon processor E5-2600 v2 product family, formerly code named “Ivy Bridge”, in September. |
• | In the third quarter, Cray’s YarcData division announced its latest software release for the Urika® big data analytics appliance that delivers simplified integration with Business Intelligence (BI) and visualization tools, as well as several key performance and productivity optimizations. |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Revenue: | ||||||||||||||||
Product | $ | 31,720 | $ | 18,313 | $ | 153,941 | $ | 182,806 | ||||||||
Service | 22,646 | 17,426 | 64,439 | 49,423 | ||||||||||||
Total revenue | 54,366 | 35,739 | 218,380 | 232,229 | ||||||||||||
Cost of revenue: | ||||||||||||||||
Cost of product revenue | 23,371 | 10,474 | 116,418 | 107,545 | ||||||||||||
Cost of service revenue | 10,569 | 7,933 | 30,586 | 27,701 | ||||||||||||
Total cost of revenue | 33,940 | 18,407 | 147,004 | 135,246 | ||||||||||||
Gross profit | 20,426 | 17,332 | 71,376 | 96,983 | ||||||||||||
Operating expenses: | ||||||||||||||||
Research and development, net | 21,555 | 15,483 | 61,749 | 46,126 | ||||||||||||
Sales and marketing | 11,480 | 6,495 | 34,173 | 24,601 | ||||||||||||
General and administrative | 4,970 | 3,324 | 15,540 | 13,425 | ||||||||||||
Total operating expenses | 38,005 | 25,302 | 111,462 | 84,152 | ||||||||||||
Net gain on sale of interconnect hardware development program | — | — | — | 139,068 | ||||||||||||
Income (loss) from operations | (17,579 | ) | (7,970 | ) | (40,086 | ) | 151,899 | |||||||||
Other income, net | 284 | 108 | 94 | 573 | ||||||||||||
Interest income, net | 214 | 108 | 794 | 144 | ||||||||||||
Income (loss) before income taxes | (17,081 | ) | (7,754 | ) | (39,198 | ) | 152,616 | |||||||||
Income tax (expense) benefit | 6,056 | 2,603 | 20,413 | (5,381 | ) | |||||||||||
Net income (loss) | $ | (11,025 | ) | $ | (5,151 | ) | $ | (18,785 | ) | $ | 147,235 | |||||
Basic net income (loss) per common share | $ | (0.29 | ) | $ | (0.14 | ) | $ | (0.50 | ) | $ | 4.06 | |||||
Diluted net income (loss) per common share | $ | (0.29 | ) | $ | (0.14 | ) | $ | (0.50 | ) | $ | 3.92 | |||||
Basic weighted average shares outstanding | 38,085 | 36,999 | 37,695 | 36,300 | ||||||||||||
Diluted weighted average shares outstanding | 38,085 | 36,999 | 37,695 | 37,516 |
September 30, 2013 | December 31, 2012 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 56,619 | $ | 253,065 | ||||
Short-term investments | 80,844 | 52,563 | ||||||
Accounts and other receivables, net | 45,335 | 13,440 | ||||||
Inventory | 205,906 | 89,796 | ||||||
Prepaid expenses and other current assets | 23,586 | 11,823 | ||||||
Total current assets | 412,290 | 420,687 | ||||||
Long-term investments | 2,994 | 17,577 | ||||||
Property and equipment, net | 26,787 | 25,543 | ||||||
Service inventory, net | 1,487 | 1,490 | ||||||
Goodwill | 14,182 | 14,182 | ||||||
Intangible assets other than goodwill, net | 6,256 | 7,981 | ||||||
Deferred tax assets | 24,626 | 10,041 | ||||||
Other non-current assets | 12,184 | 12,813 | ||||||
TOTAL ASSETS | $ | 500,806 | $ | 510,314 | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 56,799 | $ | 34,732 | ||||
Accrued payroll and related expenses | 11,683 | 25,927 | ||||||
Other accrued liabilities | 8,171 | 8,616 | ||||||
Deferred revenue | 60,203 | 68,060 | ||||||
Total current liabilities | 136,856 | 137,335 | ||||||
Long-term deferred revenue | 34,612 | 29,254 | ||||||
Other non-current liabilities | 6,693 | 3,179 | ||||||
TOTAL LIABILITIES | 178,161 | 169,768 | ||||||
Shareholders’ equity: | ||||||||
Common stock and additional paid-in capital | 583,874 | 577,938 | ||||||
Accumulated other comprehensive income | 1,283 | 5,181 | ||||||
Accumulated deficit | (262,512 | ) | (242,573 | ) | ||||
TOTAL SHAREHOLDERS’ EQUITY | 322,645 | 340,546 | ||||||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 500,806 | $ | 510,314 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
GAAP Net Income (Loss) | $ | (11.0 | ) | $ | (5.2 | ) | $ | (18.8 | ) | $ | 147.2 | |||||
Non-GAAP adjustments impacting gross profit: | ||||||||||||||||
Share-based compensation | (1) | 0.1 | — | 0.3 | 0.2 | |||||||||||
Purchase accounting adjustments | (2) | 0.1 | — | 1.2 | — | |||||||||||
Amortization of acquired and other intangibles | (2) | 0.5 | — | 1.5 | — | |||||||||||
Total adjustments impacting gross profit | 0.7 | — | 3.0 | 0.2 | ||||||||||||
Non-GAAP gross margin percentage | 39 | % | 48 | % | 32 | % | 42 | % | ||||||||
Non-GAAP adjustments impacting operating expenses: | ||||||||||||||||
Share-based compensation | (1) | 1.7 | 1.7 | 4.8 | 4 | |||||||||||
Amortization of acquired intangibles | (2) | 0.1 | — | 0.3 | — | |||||||||||
Total adjustments impacting operating expenses | 1.8 | 1.7 | 5.1 | 4.0 | ||||||||||||
Gain on sale to Intel | (3) | — | — | — | (139.1 | ) | ||||||||||
Non-GAAP adjustments impacting tax provision: | ||||||||||||||||
Income tax on reconciling items | (4) | 0.2 | (0.1 | ) | 0.7 | 4.5 | ||||||||||
Other items impacting tax provision | (5) | (5.2 | ) | (2.1 | ) | (18.9 | ) | (0.7 | ) | |||||||
Total adjustments impacting tax provision | (5.0 | ) | (2.2 | ) | (18.2 | ) | 3.8 | |||||||||
Non-GAAP Net Income (Loss) | $ | (13.5 | ) | $ | (5.7 | ) | $ | (28.9 | ) | $ | 16.1 | |||||
Non-GAAP Net Income (Loss) per common share | $ | (0.35 | ) | $ | (0.15 | ) | $ | (0.77 | ) | $ | 0.43 | |||||
Diluted weighted average shares | 38.1 | 37.0 | 37.7 | 37.5 | ||||||||||||
Notes | ||||||||||||||||
(1) Adjustments to exclude non-cash expenses related to share-based compensation | ||||||||||||||||
(2) Adjustments to exclude amortization of acquired intangible assets and other acquisition-related charges related to the acquisition of Appro International, Inc. | ||||||||||||||||
(3) Adjustment to exclude gain on divestiture of interconnect hardware development program in Q2 2012 | ||||||||||||||||
(4) Tax impact associated with reconciling items at non-GAAP tax rate | ||||||||||||||||
(5) Adjustments to reflect cash tax impact considering benefits principally related to Cray's net operating loss carryforwards and changes in Cray's valuation allowance held against deferred tax assets |
Three Months Ended September 30, 2013 | |||||||||||||||||||||||
Net Loss | Operating Loss | Diluted EPS | Gross Profit | Gross Margin | Operating Expenses | ||||||||||||||||||
GAAP | $ | (11.0 | ) | $ | (17.6 | ) | $ | (0.29 | ) | $ | 20.4 | 38 | % | $ | 38.0 | ||||||||
Share-based compensation | (1) | 1.8 | 1.8 | 0.05 | 0.1 | 1.7 | |||||||||||||||||
Purchase accounting adjustments | (2) | 0.1 | 0.1 | — | 0.1 | ||||||||||||||||||
Amortization of acquired intangibles | (2) | 0.6 | 0.6 | 0.02 | 0.5 | 0.1 | |||||||||||||||||
Income tax on reconciling items | (3) | 0.2 | 0.01 | ||||||||||||||||||||
Other items impacting tax provision | (4) | (5.2 | ) | (0.14 | ) | ||||||||||||||||||
Total reconciling items | $ | (2.5 | ) | $ | 2.5 | $ | (0.06 | ) | $ | 0.7 | 1 | % | $ | 1.8 | |||||||||
Non-GAAP | $ | (13.5 | ) | $ | (15.1 | ) | $ | (0.35 | ) | $ | 21.1 | 39 | % | $ | 36.2 | ||||||||
Three Months Ended September 30, 2012 | |||||||||||||||||||||||
Net Loss | Operating Loss | Diluted EPS | Gross Profit | Gross Margin | Operating Expenses | ||||||||||||||||||
GAAP | $ | (5.2 | ) | $ | (8.0 | ) | $ | (0.14 | ) | $ | 17.3 | 48 | % | $ | 25.3 | ||||||||
Share-based compensation | (1) | 1.7 | 1.7 | 0.05 | — | 1.7 | |||||||||||||||||
Income tax on reconciling items | (3) | (0.1 | ) | — | |||||||||||||||||||
Other items impacting tax provision | (4) | (2.1 | ) | (0.06 | ) | ||||||||||||||||||
Total reconciling items | $ | (0.5 | ) | $ | 1.7 | $ | (0.01 | ) | $ | — | — | % | $ | 1.7 | |||||||||
Non-GAAP | $ | (5.7 | ) | $ | (6.3 | ) | $ | (0.15 | ) | $ | 17.3 | 48 | % | $ | 23.6 | ||||||||
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 related to the acquisition of Appro International, Inc. | |||||||||||||||||||||||
(3) Tax impact associated with reconciling items at non-GAAP tax rate | |||||||||||||||||||||||
(4) Adjustments to reflect cash tax impact considering benefits principally related to Cray's net operating loss carryforwards and changes in Cray's valuation allowance held against deferred tax assets |
Operator: | Good afternoon. My name is Rob and I will be your conference operator today. At this time I would like to welcome everyone to Cray Inc.'s third-quarter 2013 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks there will be a question-and-answer session. If you would like to ask a question during this time, simply press star and the number one on your telephone keypad. If you would like to withdraw your question, please press the pound key. |
Paul Hiemstra: | Good afternoon. I would like to thank everyone for joining us today. Participating from Cray are Peter Ungaro, President and Chief Executive Officer, and Brian Henry, Executive Vice President and Chief Financial Officer. |
Peter Ungaro: | Thanks, Paul and thank you all for joining the call today with a special thanks for any veterans on the call for all you have done for our country. |
Brian Henry: | Thanks, Pete, and good afternoon, everyone. As we begin with our fourth-quarter 2012 release, we are continuing to report certain non-GAAP measures which adjust for our selected non-cash, unusual and infrequent items included in our GAAP results. |
Peter Ungaro: | Thanks, Brian. Let me wrap up by giving you some perspective on what is in store for the remainder of the year and as we head into 2014. |
Operator: | And at this time, I would like to remind everyone, in order to ask a question, please press star then the number one on your telephone keypad. We’ll pause for just one moment to compile a Q&A roster. |
Chad Bennett: | Thanks. Good afternoon. On the acceptance delays, I guess - it sounds like the government shutdown did impact you from an acceptance standpoint. Should we assume that - then that those systems were shipped in at customer sites and you had all the components that you needed for those systems and it was just merely a signoff issue. Is that the way we should interpret it? |
Peter Ungaro: | Just to be clear about that, we don't believe that the government shutdown had an impact in our third quarter. The impact was not due to the government shutdown. There was two systems, particularly, two large systems that didn't get accepted. One passed its acceptance test and was going through approvals and just didn't get through the approval and sign-up process in time to make the quarter. The system was in production but it just didn't get the approvals that it needed. |
Chad Bennett: | OK, but they haven't been accepted yet? |
Peter Ungaro: | They have not been accepted at this time. |
Chad Bennett: | OK. How should we - I guess, maybe a question for Brian. Is there any way to get an update for the inventory at customer sites metric where it is today? |
Brian Henry: | Well, what I said in my comments it was substantially more than it was at the end of September as we speak currently and we are well-positioned to have all the inventory where we need to by the end of the year. It gets down more to working through the acceptance processes. |
Chad Bennett: | Yes, I guess what I am getting at is have we - to reiterate the guidance in the ramp that you have, we have to basically have - unless I don't understand acceptance timelines, we have got to basically have 90 percent of the product shipped by today and basically almost shipped installed at the customer site. |
Brian Henry: | I would say yes. I mean, not everything is shipped and we still have a few to go, but virtually all have - has been shipped now. |
Peter Ungaro: | I would mention one other point, Chad, in that 15 percent of our revenue this year if we get to hitting the $520 million number will come from commercial customers and we have found commercial customers have typically different acceptance process than our more traditional government or higher education customers have. And sometimes we can get through those quicker than we have traditionally gotten through them in, for instance, a large government facility. |
Chad Bennett: | And then on the component side, there's obviously been a lot of press or stories regarding the DRAM and memory situation related to the Hynix plant fire in early September. Can you talk about the relative impact, if any, on you guys and how you are dealing with that? |
Brian Henry: | Well, it certainly caused us to scramble around this quarter when that happened. I think where we ended up is we have gotten the memory that we need to make the shipments that we intended for the quarter. So we feel good about that. Perhaps because there's three vendors and perhaps because of the fire, the firming up of the memory prices occurred in fourth quarter and moved higher than it has been. |
Chad Bennett: | Couple more for me. Pete, have you changed your thoughts on - or Brian, for that matter, on where we end up in terms of the growth segments of the business, the storage biz, the big data biz and Appro at the end of this year? Obviously, you gave a first look on next year and how we should think about the different pieces growing or representing as a percentage of revenue next year. |
Peter Ungaro: | Great question. Maybe one by one. We are really seeing nice momentum I would say across storage and analytic this year. I mentioned on the last call, last quarter's call, that in our Appro acquisition, for clusters we are a little bit behind our track this year because one of the programs really got hit by sequestration. So we expect this year that we will be a little bit behind our plan in our cluster business and really tracking nicely in both our storage and analytics business around the big data site. |
Chad Bennett: | One last one for me. Pete, again as you look into next year, on the supercomputer HPC side of the business, are there a couple - without naming names, are there a couple of large procurements or orders out there that you have good visibility on that gives you the confidence in that business heading into next year? Or is there any way to talk about - I don't know what you cut it off at $80 million or $100 million plus deals where you either won or you figure you are in a good position to win to give you a kind of visibility into it? |
Peter Ungaro: | We don't really see many $100 million deals next year. One of the things that I think really differed in 2013 versus 2012 is that while we grew our business, we also didn't have another $100 million plus deal to get us there. So our business really diversified this year quite a bit over where it had been in the past, which is, I think, a really healthy thing for our business overall. |
Chad Bennett: | Got it. OK, thanks guys. |
Operator: | Your next question comes from the line of Alex Kurtz from Sterne Agee. Your line is open. |
Alex Kurtz: | Yes, thanks, I will go through my 10 minutes of questions here. So, Peter, first on the second push still. Was that political or technical delay in that deal? |
Peter Ungaro: | It was technical. |
Alex Kurtz: | Brian, if we are just going back and thinking about the amount of revenue that the amount of inventory you'd have to ship to book to government business, would you say that if you were to exclude the commercial business that's maybe 90 percent of the government business that you need to close that inventory has been shipped and in place? |
Brian Henry: | I would say on the government business we have shipped virtually all of the inventory that we need for acceptances this year. There may be some of the smaller CCS systems yet to go and we have one medium-sized one that is supposed to ship if it hasn't already shipped that is a CCS system. |
Peter Ungaro: | Our CS300 machine. |
Alex Kurtz: | So the commercial business then is just a matter of transactions right, Peter? And that can happen a lot quicker. |
Peter Ungaro: | But we do have acceptance tests with most of them because they are still relatively large machines, but they tend to be shorter and more focused. |
Alex Kurtz: | So if we just go back to the guidance for the year, given that you have increased compression here at the end of the year, what gives you the confidence about maintaining the guidance? Why not give yourself a little bit of margin for error here and lower the guidance for 2013? I think everyone on the call would be pretty disappointed if when you come back three months from now when you guys missed because you didn't take a little bit more conservatism in the fourth quarter here. |
Peter Ungaro: | That's certainly a discussion that we had, but when we look at each deal - I mean we really look at it system by system. There’s not that many of them. It's a good double digit number, but when we look at them one by one, we really see the ability, if we look at our timelines, we have the ability to hit each one. Because they are all different in size and different in scope, it is very hard to think about where to play that out at. |
Alex Kurtz: | Can you talk about the Urika pipeline, just the number of transactions that you are working on outside of the government vertical? |
Peter Ungaro: | Yes. So we had three commercial customer transactions here in this last quarter that we talked about on the call. So we had another financial services customer, which we are getting some nice traction in that industry now, an electronics company and then, of course, the sports, a major-league sports team. |
Alex Kurtz: | Last question here. Looking into 2014, thinking about where the leverage is, if you were to drive upside from the 600 number, is leverage in the model operating leverage just going to come from better margin mix or are you able to cap the OpEx growth if you were to show revenue upside? I know it is early, but just thinking from a framework perspective how to think about all of that non-GAAP OpEx next year. |
Brian Henry: | I think generally the operating expenses are less variable and so they are likely to, with revenue growth, to be - move less than what gross margins would be and that is the largest part of the leverage. |
Alex Kurtz: | So the 175 is not necessarily a fixed number, but it is pretty close to what your operating model looks like, maybe some incremental sales marketing commission dollars if you were to be above 600? |
Brian Henry: | Yes we are - it is still preliminary, so we are not totally, excuse me, totally locked down, but I would say generally we come up with a plan and the movement and expenses are less significant than they are, than other areas. |
Alex Kurtz: | Thanks. |
Operator: | Your next question comes from the line of Glenn Hanus from Needham. Your line is open. |
Glenn Hanus: | Good afternoon, guys. Following up on Alex's question could you talk a little more about gross margin leverage in the model next year? Just help us understand where that is, how that - where that comes from, how that works. |
Brian Henry: | Well, upside in storage, upside in the big HPC, maintenance, YarcData, those are all positive to margins. The cluster solutions team, the CS300, that is in a cluster space, a much more competitive margin. So to the extent that that grows, that - margins don't grow as fast in dollars and as a percent they are lower. |
Glenn Hanus: | So it is more mix oriented? |
Brian Henry: | So, it is more mix. We do expect and what was considered in our guidance is that the cluster solutions team would have a strong year next year. |
Glenn Hanus: | OK. So could you just rough and tough tell us what federal is like a percent of your business here in this year and what you think it might be next year? And then just talk about what you are seeing out there in terms of federal and visibility as you go into next year and the processes and what has been agreed to in Washington, and how that has impacted your business as you look into next year and or not? Thanks. |
Peter Ungaro: | So, federal should be around probably 50 percent to 60 percent of our year this year, over, I mentioned, 15 percent of our year will be commercial so then of the remainder about 50 percent of the total year federal and then the rest would be international, I would say, government, academia. |
Glenn Hanus: | OK, and let’s see - I spaced on my question here. All right, I'll let you circle back. Thanks. |
Operator: | And as a reminder, if you would like to ask a question, press star then the number one on your keypad. |
Glenn Mattson: | Hi. Good afternoon, everybody. I wonder what gives you the confidence in Appro coming back so strong next year? Maybe it is better attach-rates or is there something more to it than that? |
Peter Ungaro: | I just feel like it is a good business. We are learning how to win in the cluster market around the world. Appro, before we acquired them, was really just predominantly focused in the U.S. So we have had to learn how to scale that business up nicely around the world. We took a pretty major impact with sequestration on their biggest program that they had back the year before, and we feel like we replaced all of that. The first half of the year was really playing out the business that they had and so it has really been the second half of the year where we have gotten our sales teams trained up on the product, got our pipeline moving and really started closing deals. And I see every quarter getting stronger and stronger in that business. |
Glenn Mattson: | That helps. Also, can you talk about the strength in Europe recently? It seems like we have had pretty good order flow from there. Is that just kind of it's their turn to turn up a little bit or is that something? Is there some more to that? |
Peter Ungaro: | No. I really feel Europe has been a real shining star for us. It has been a business that we've struggled in for a few years and it has really taken us a few years to rebuild Europe and push ahead. We should do - for instance we will do over $100 million in Europe this year. So it is kind of our second geography that broke the $100 million category. And we expect it to stay up in that range. |
Glenn Mattson: | Lastly, did you say what commercial would be in 2014? And then, looking out I guess at some point maybe this big data play ramps and maybe that would be more commercial-oriented business, so maybe you could talk about what percent commercial could get to a few years out, perhaps? |
Peter Ungaro: | Sure, it is a little early for us to be giving a percentage of commercial business for 2014. We haven't really given that number. I will tell you our goal is to continue commercial, though. So commercial is a big focus of ours. We see opportunity across all of our business segments in commercial and so I feel that that is going to go good. |
Glenn Mattson: | OK, thanks. |
Operator: | Your next question is a follow-up from Alex Kurtz from Sterne Agee. Your line is again open. |
Alex Kurtz: | Yes, thanks, it’s Sterne Agee. Peter, more importantly, Brian, because the 10-Q is not out yet, can you give us the non-GAAP adjustments for stock-based comp in the three operating lines? |
Brian Henry: | Well, if you look at the press release it does break out the non-comp in the very back or the non-GAAP stuff by elements for both the quarter and year to date. So the large part of it, about $1.8 million was related to stock compensation and then split up between a couple of areas. Then you have some amortization that totals about $600,000 and then you have some purchase adjustments of $100,000. Those were kind of the non-GAAP adjustments above the line. |
Alex Kurtz: | Thanks. |
Operator: | Your next question is a follow-up from Glenn Hanus from Needham. Your line is again open. |
Glenn Hanus: | So, it sounds like you expect the core HPC business ex-Appro to be growing next year. |
Peter Ungaro: | We expect all of our businesses to grow next year, definitely. |
Glenn Hanus: | And the tone on HPC, I mean, worldwide, I usually ask you something about this. It sounds like you are still seeing a lot of strength internationally and you commented on Europe already. So do you want to comment on Asia at all? |
Peter Ungaro: | Yes. We definitely see good opportunities in a higher percentage of our pipeline coming internationally overall. So that is good. We are in a really, I believe, a very strong competitive position with our offerings right now. I think the XC30 is a very, very strong offering in the market. Our CS300, very, very strong offering and we are working on - and as I mentioned on my prepared comments, we are working on taking some of our supercomputing technologies over into the cluster space to really differentiate those products overall. |
Glenn Hanus: | And any comment on competing with IBM there in the high-end and win rates- at all? |
Peter Ungaro: | I don't have - IBM is definitely still our biggest competitor by far overall, especially in the high end. We see them virtually every place we go. We have won probably more than our fair share from IBM over the last few quarters and I hope that that is going to continue. We look at our opportunities that are in front of us for 2014, and even beyond into 2015, and we feel pretty good about our business. We think that the supercomputing market is going to continue to grow and we should grow faster than that market will grow. |
Glenn Hanus: | All right. Thank you. |
Operator: | Your next question comes from the line of Chad Bennett from Craig-Hallum. Your line is again open. |
Chad Bennett: | Great. I have 10 more minutes of questions for you guys if you have time. |
Peter Ungaro: | Whatever you want, Chad. |
Chad Bennett: | Just for the Agee analyst. So can you speak to linearity next year? I know you talked about significant weighting towards the fourth quarter, but can you provide any more color and more importantly what is really driving that, the weighting towards the fourth quarter? I know the last couple of years it has been driven by not only your product kind of roadmap or introduction, but also Intel's and everybody else's. What is really driving the back end weighting? |
Peter Ungaro: | The way we see it playing out right now is we do see quarter-over-quarter growth. So we do see that ramp happening quarter over quarter, similarly to how we saw it this year as we saw it at the start of the year. The back half weighting is really around again another major product introduction by Intel and so we are - it is going to drive a little bit of that back half weighting, especially the fourth quarter, Q4 weighting overall. |
Chad Bennett: | Thanks. |
Operator: | There are no further questions at this time. I will turn the call back over to the presenters. |
Peter Ungaro: | Thank you. We made solid progress on our goals for the year and we are focused on delivering the plans I laid out today. Next week starts the biggest supercomputing conference of the year, SC13, which is in Denver. You have seen some early announcements from us over the past couple of weeks which will continue into next week as the conference kicks off. It should be an exciting show and I hope to see some of you there. |
Brian Henry: | Thank you. |
Operator: | This concludes today's conference call. You may now disconnect. |
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