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) |
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 5.02 | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
Cray Inc. | ||
By: | /s/ MICHAEL C. PIRAINO | |
Michael C. Piraino Senior Vice President Administration, General Counsel and Corporate Secretary |
Cray Media: | Investors: |
Nick Davis | Paul Hiemstra |
206/701-2123 | 206/701-2044 |
pr@cray.com | ir@cray.com |
• | In October, Cray announced that it is partnering with Microsoft to offer dedicated Cray supercomputing systems in the Microsoft Azure cloud, enabling customers to run AI, advanced analytics, and modeling and simulation workloads at unprecedented scale. |
• | In September, Cray announced it had completed the previously announced transaction and strategic partnership with Seagate centered around the addition of the ClusterStor high-performance storage business. |
• | In September, Cray announced that the Korea Institute of Science and Technology Information had awarded it with a contract valued at more than $48 million for a Cray CS500 cluster supercomputer. The new system, which includes Intel Xeon Scalable processors and Intel Xeon Phi processors, will be the largest supercomputer in South Korea, providing support for universities, research institutes, and industries. |
• | In September, Cray announced that Yokohama City University in Japan installed a Cray XC50-AC supercomputer. Located in the University’s Advanced Medical Research Center, the new Cray supercomputer will power various research including computational drug-discovery research used in the design of new medicines. |
• | In September, Cray announced that Japan Advanced Institute for Science and Technology put a Cray XC40 supercomputer into production to serve as the Institute's primary supercomputing resource. |
• | In September, Cray announced that it signed a solutions provider agreement with Vanguard Infrastructures in order for Vanguard to develop, market, and sell on premise and cloud-as-a-service cybersecurity solutions that fuse supercomputing technologies with an open, enterprise-ready software framework for big data analytics. |
• | In August, Cray announced it delivered a Cray CS400 cluster supercomputer to Embry-Riddle Aeronautical University in Florida. The system will power collaborative applied research with industry partners at the University's new research facility. |
• | In October, Cray announced that Martin Homlish is stepping down from the Cray Board of Directors, effective October 31st, 2017, due to the growing demand for his time at his new company. |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Revenue: | ||||||||||||||||
Product | $ | 45,280 | $ | 47,685 | $ | 117,939 | $ | 188,024 | ||||||||
Service | 34,420 | 29,766 | 107,927 | 95,211 | ||||||||||||
Total revenue | 79,700 | 77,451 | 225,866 | 283,235 | ||||||||||||
Cost of revenue: | ||||||||||||||||
Cost of product revenue | 35,090 | 33,552 | 89,356 | 125,189 | ||||||||||||
Cost of service revenue | 16,118 | 20,298 | 55,866 | 58,322 | ||||||||||||
Total cost of revenue | 51,208 | 53,850 | 145,222 | 183,511 | ||||||||||||
Gross profit | 28,492 | 23,601 | 80,644 | 99,724 | ||||||||||||
Operating expenses: | ||||||||||||||||
Research and development, net | 26,626 | 29,084 | 76,591 | 82,323 | ||||||||||||
Sales and marketing | 13,392 | 15,010 | 43,292 | 46,391 | ||||||||||||
General and administrative | 7,022 | 7,968 | 23,024 | 24,325 | ||||||||||||
Restructuring | 7,653 | — | 7,653 | — | ||||||||||||
Total operating expenses | 54,693 | 52,062 | 150,560 | 153,039 | ||||||||||||
Loss from operations | (26,201 | ) | (28,461 | ) | (69,916 | ) | (53,315 | ) | ||||||||
Other income (expense), net | 4,161 | (312 | ) | 5,358 | (1,169 | ) | ||||||||||
Interest income, net | 880 | 544 | 2,655 | 1,654 | ||||||||||||
Gain on strategic transaction | 4,389 | — | 4,389 | — | ||||||||||||
Loss before income taxes | (16,771 | ) | (28,229 | ) | (57,514 | ) | (52,830 | ) | ||||||||
Income tax benefit | 6,539 | 5,208 | 21,227 | 11,670 | ||||||||||||
Net loss | $ | (10,232 | ) | $ | (23,021 | ) | $ | (36,287 | ) | $ | (41,160 | ) | ||||
Basic net loss per common share | $ | (0.25 | ) | $ | (0.58 | ) | $ | (0.91 | ) | $ | (1.03 | ) | ||||
Diluted net loss per common share | $ | (0.25 | ) | $ | (0.58 | ) | $ | (0.91 | ) | $ | (1.03 | ) | ||||
Basic weighted average shares outstanding | 40,199 | 39,936 | 40,082 | 39,786 | ||||||||||||
Diluted weighted average shares outstanding | 40,199 | 39,936 | 40,082 | 39,786 |
September 30, 2017 | December 31, 2016 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 151,886 | $ | 222,962 | |||
Restricted cash | 1,900 | — | |||||
Short-term investments | 27,926 | — | |||||
Accounts and other receivables, net | 63,187 | 197,941 | |||||
Inventory | 198,069 | 88,254 | |||||
Prepaid expenses and other current assets | 20,256 | 20,006 | |||||
Total current assets | 463,224 | 529,163 | |||||
Long-term restricted cash | 1,030 | 1,655 | |||||
Long-term investment in sales-type lease, net | 26,384 | 31,050 | |||||
Property and equipment, net | 37,967 | 30,620 | |||||
Service spares, net | 2,395 | 3,023 | |||||
Goodwill | 14,182 | 14,182 | |||||
Intangible assets other than goodwill, net | 4,634 | 1,637 | |||||
Deferred tax assets | 105,132 | 85,613 | |||||
Other non-current assets | 12,117 | 17,629 | |||||
TOTAL ASSETS | $ | 667,065 | $ | 714,572 | |||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 41,640 | $ | 45,504 | |||
Accrued payroll and related expenses | 10,623 | 17,199 | |||||
Other accrued liabilities | 6,085 | 10,303 | |||||
Deferred revenue | 68,034 | 83,129 | |||||
Total current liabilities | 126,382 | 156,135 | |||||
Long-term deferred revenue | 31,409 | 27,258 | |||||
Other non-current liabilities | 15,020 | 5,703 | |||||
TOTAL LIABILITIES | 172,811 | 189,096 | |||||
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 40,421,143 and 40,757,458 shares, respectively | 629,671 | 622,604 | |||||
Accumulated other comprehensive income | 1,016 | 2,782 | |||||
Accumulated deficit | (136,433 | ) | (99,910 | ) | |||
TOTAL SHAREHOLDERS’ EQUITY | 494,254 | 525,476 | |||||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 667,065 | $ | 714,572 |
Three Months Ended September 30, 2017 | ||||||||||||||||||||
Net Loss | Diluted EPS | Operating Loss | Gross Profit | Operating Expenses | ||||||||||||||||
GAAP | $ | (10.2 | ) | $ | (0.25 | ) | $ | (26.2 | ) | $ | 28.5 | $ | 54.7 | |||||||
Share-based compensation | (1) | 2.6 | 2.6 | 0.1 | 2.5 | |||||||||||||||
Amortization of acquired and other intangibles | (2) | 0.1 | 0.1 | 0.1 | ||||||||||||||||
Restructuring | (3) | 7.7 | 7.7 | 7.7 | ||||||||||||||||
Strategic transaction-related costs | (4) | 0.5 | 0.5 | 0.5 | ||||||||||||||||
Gain on strategic transaction | (5) | (4.4 | ) | |||||||||||||||||
Gain on sale of investment | (6) | (3.3 | ) | |||||||||||||||||
Income tax on reconciling items | (7) | (2.9 | ) | |||||||||||||||||
Other items impacting tax provision | (8) | (3.4 | ) | |||||||||||||||||
Total reconciling items | (3.1 | ) | (0.08 | ) | 10.9 | 0.1 | 10.8 | |||||||||||||
Non-GAAP | $ | (13.3 | ) | $ | (0.33 | ) | $ | (15.3 | ) | $ | 28.6 | $ | 43.9 | |||||||
Three Months Ended September 30, 2016 | ||||||||||||||||||||
Net Loss | Diluted EPS | Operating Loss | Gross Profit | Operating Expenses | ||||||||||||||||
GAAP | $ | (23.0 | ) | $ | (0.58 | ) | $ | (28.5 | ) | $ | 23.6 | $ | 52.1 | |||||||
Share-based compensation | (1) | 2.7 | 2.7 | 0.1 | 2.6 | |||||||||||||||
Amortization of acquired and other intangibles | (2) | 0.2 | 0.2 | 0.2 | ||||||||||||||||
Income tax on reconciling items | (7) | (1.1 | ) | |||||||||||||||||
Other items impacting tax provision | (8) | 1.7 | ||||||||||||||||||
Total reconciling items | 3.5 | 0.09 | 2.9 | 0.1 | 2.8 | |||||||||||||||
Non-GAAP | $ | (19.5 | ) | $ | (0.49 | ) | $ | (25.6 | ) | $ | 23.7 | $ | 49.3 | |||||||
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 | ||||||||||||||||||||
(3) Adjustments to exclude restructuring costs | ||||||||||||||||||||
(4) Adjustments to exclude strategic transaction-related costs | ||||||||||||||||||||
(5) Adjustments to exclude gain on strategic transaction with Seagate | ||||||||||||||||||||
(6) Adjustments to exclude gain on sale of investment | ||||||||||||||||||||
(7) Adjustments associated with the estimated tax impact on non-GAAP reconciling items at our marginal U.S. tax rate of approximately 38% | ||||||||||||||||||||
(8) As part of an alternative non-GAAP income measure, we have adjusted GAAP taxes as reported including the impact to the GAAP tax provision of the non-GAAP reconciling items (adjusted for note (7) above), related to the utilization or increase of our net operating loss carryforwards. And when applicable, we also adjust for changes in our valuation allowance held against deferred tax assets |
Nine Months Ended September 30, 2017 | ||||||||||||||||||||
Net Loss | Diluted EPS | Operating Loss | Gross Profit | Operating Expenses | ||||||||||||||||
GAAP | $ | (36.3 | ) | $ | (0.91 | ) | $ | (69.9 | ) | $ | 80.6 | $ | 150.6 | |||||||
Share-based compensation | (1) | 7.7 | 7.7 | 0.4 | 7.3 | |||||||||||||||
Amortization of acquired and other intangibles | (2) | 0.4 | 0.4 | 0.4 | ||||||||||||||||
Restructuring | (3) | 7.7 | 7.7 | 7.7 | ||||||||||||||||
Strategic transaction-related costs | (4) | 0.5 | 0.5 | 0.5 | ||||||||||||||||
Gain on strategic transaction | (5) | (4.4 | ) | |||||||||||||||||
Gain on sale of investment | (6) | (3.3 | ) | |||||||||||||||||
Income tax on reconciling items | (7) | (4.9 | ) | |||||||||||||||||
Other items impacting tax provision | (8) | (17.1 | ) | |||||||||||||||||
Total reconciling items | (13.4 | ) | (0.33 | ) | 16.3 | 0.4 | 15.9 | |||||||||||||
Non-GAAP | $ | (49.7 | ) | $ | (1.24 | ) | $ | (53.6 | ) | $ | 81.0 | $ | 134.7 | |||||||
Nine Months Ended September 30, 2016 | ||||||||||||||||||||
Net Loss | Diluted EPS | Operating Loss | Gross Profit | Operating Expenses | ||||||||||||||||
GAAP | $ | (41.2 | ) | $ | (1.03 | ) | $ | (53.3 | ) | $ | 99.7 | $ | 153.0 | |||||||
Share-based compensation | (1) | 8.4 | 8.4 | 0.4 | 8.0 | |||||||||||||||
Purchase accounting adjustments | (2) | 0.1 | 0.1 | 0.1 | ||||||||||||||||
Amortization of acquired and other intangibles | (2) | 0.5 | 0.5 | 0.5 | ||||||||||||||||
Income tax on reconciling items | (7) | (3.4 | ) | |||||||||||||||||
Other items impacting tax provision | (8) | (0.8 | ) | |||||||||||||||||
Total reconciling items | 4.8 | 0.12 | 9.0 | 0.5 | 8.5 | |||||||||||||||
Non-GAAP | $ | (36.4 | ) | $ | (0.91 | ) | $ | (44.3 | ) | $ | 100.2 | $ | 144.5 | |||||||
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 to exclude restructuring costs | ||||||||||||||||||||
(4) Adjustments to exclude strategic transaction-related costs | ||||||||||||||||||||
(5) Adjustments to exclude gain on strategic transaction with Seagate | ||||||||||||||||||||
(6) Adjustments to exclude gain on sale of investment | ||||||||||||||||||||
(7) Adjustments associated with the estimated tax impact on non-GAAP reconciling items at our marginal U.S. tax rate of approximately 38% | ||||||||||||||||||||
(8) As part of an alternative non-GAAP income measure, we have adjusted GAAP taxes as reported including the impact to the GAAP tax provision of the non-GAAP reconciling items (adjusted for note (7) above), related to the utilization or increase of our net operating loss carryforwards. And when applicable, we also adjust for changes in our valuation allowance held against deferred tax assets |
Three Months Ended September 30, 2017 | |||||||||||||||||||||
Product | Service | Total | |||||||||||||||||||
Gross Profit | Gross Margin | Gross Profit | Gross Margin | Gross Profit | Gross Margin | ||||||||||||||||
GAAP | $ | 10.2 | 23 | % | $ | 18.3 | 53 | % | $ | 28.5 | 36 | % | |||||||||
Share-based compensation | (1) | 0.1 | — | 0.1 | |||||||||||||||||
Total reconciling items | 0.1 | — | % | — | — | % | 0.1 | — | % | ||||||||||||
Non-GAAP | $ | 10.3 | 23 | % | $ | 18.3 | 53 | % | $ | 28.6 | 36 | % | |||||||||
Three Months Ended September 30, 2016 | |||||||||||||||||||||
Product | Service | Total | |||||||||||||||||||
Gross Profit | Gross Margin | Gross Profit | Gross Margin | Gross Profit | Gross Margin | ||||||||||||||||
GAAP | $ | 14.1 | 30 | % | $ | 9.5 | 32 | % | $ | 23.6 | 30 | % | |||||||||
Share-based compensation | (1) | 0.1 | — | 0.1 | |||||||||||||||||
Total reconciling items | 0.1 | — | % | — | — | % | 0.1 | 1 | % | ||||||||||||
Non-GAAP | $ | 14.2 | 30 | % | $ | 9.5 | 32 | % | $ | 23.7 | 31 | % | |||||||||
Notes | |||||||||||||||||||||
(1) Adjustments to exclude non-cash expenses related to share-based compensation |
Nine Months Ended September 30, 2017 | |||||||||||||||||||||
Product | Service | Total | |||||||||||||||||||
Gross Profit | Gross Margin | Gross Profit | Gross Margin | Gross Profit | Gross Margin | ||||||||||||||||
GAAP | $ | 28.6 | 24 | % | $ | 52.0 | 48 | % | $ | 80.6 | 36 | % | |||||||||
Share-based compensation | (1) | 0.2 | 0.2 | 0.4 | |||||||||||||||||
Total reconciling items | 0.2 | — | % | 0.2 | — | % | 0.4 | — | % | ||||||||||||
Non-GAAP | $ | 28.8 | 24 | % | $ | 52.2 | 48 | % | $ | 81.0 | 36 | % | |||||||||
Nine Months Ended September 30, 2016 | |||||||||||||||||||||
Product | Service | Total | |||||||||||||||||||
Gross Profit | Gross Margin | Gross Profit | Gross Margin | Gross Profit | Gross Margin | ||||||||||||||||
GAAP | $ | 62.8 | 33 | % | $ | 36.9 | 39 | % | $ | 99.7 | 35 | % | |||||||||
Share-based compensation | (1) | 0.2 | 0.2 | 0.4 | |||||||||||||||||
Purchase accounting adjustments | (2) | 0.1 | 0.1 | ||||||||||||||||||
Total reconciling items | 0.3 | 1 | % | 0.2 | — | % | 0.5 | — | % | ||||||||||||
Non-GAAP | $ | 63.1 | 34 | % | $ | 37.1 | 39 | % | $ | 100.2 | 35 | % | |||||||||
Notes | |||||||||||||||||||||
(1) Adjustments to exclude non-cash expenses related to share-based compensation | |||||||||||||||||||||
(2) Adjustments to exclude acquisition-related charges |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
GAAP Net Loss | $ | (10.2 | ) | $ | (23.0 | ) | $ | (36.3 | ) | $ | (41.2 | ) | ||||
Non-GAAP adjustments impacting gross profit: | ||||||||||||||||
Share-based compensation | (1) | 0.1 | 0.1 | 0.4 | 0.4 | |||||||||||
Purchase accounting adjustments | (2) | — | — | — | 0.1 | |||||||||||
Total adjustments impacting gross profit | 0.1 | 0.1 | 0.4 | 0.5 | ||||||||||||
Non-GAAP gross margin percentage | 36 | % | 31 | % | 36 | % | 35 | % | ||||||||
Non-GAAP adjustments impacting operating expenses: | ||||||||||||||||
Share-based compensation | (1) | 2.5 | 2.6 | 7.3 | 8.0 | |||||||||||
Amortization of acquired and other intangibles | (2) | 0.1 | 0.2 | 0.4 | 0.5 | |||||||||||
Restructuring | (3) | 7.7 | — | 7.7 | — | |||||||||||
Strategic transaction-related costs | (4) | 0.5 | — | 0.5 | — | |||||||||||
Total adjustments impacting operating expenses | 10.8 | 2.8 | 15.9 | 8.5 | ||||||||||||
Gain on strategic transaction | (5) | (4.4 | ) | — | (4.4 | ) | — | |||||||||
Gain on sale of investment | (6) | (3.3 | ) | — | (3.3 | ) | — | |||||||||
Non-GAAP adjustments impacting tax provision: | ||||||||||||||||
Income tax on reconciling items | (7) | (2.9 | ) | (1.1 | ) | (4.9 | ) | (3.4 | ) | |||||||
Other items impacting tax provision | (8) | (3.4 | ) | 1.7 | (17.1 | ) | (0.8 | ) | ||||||||
(6.3 | ) | 0.6 | (22.0 | ) | (4.2 | ) | ||||||||||
Non-GAAP Net Loss | $ | (13.3 | ) | $ | (19.5 | ) | $ | (49.7 | ) | $ | (36.4 | ) | ||||
Non-GAAP Diluted Net Loss per common share | $ | (0.33 | ) | $ | (0.49 | ) | $ | (1.24 | ) | $ | (0.91 | ) | ||||
Diluted weighted average shares | 40.2 | 39.9 | 40.1 | 39.8 | ||||||||||||
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 to exclude restructuring costs | ||||||||||||||||
(4) Adjustments to exclude strategic transaction-related costs | ||||||||||||||||
(5) Adjustments to exclude gain on strategic transaction with Seagate | ||||||||||||||||
(6) Adjustments to exclude gain on sale of investment | ||||||||||||||||
(7) Adjustments associated with the estimated tax impact on non-GAAP reconciling items at our marginal U.S. tax rate of approximately 38% | ||||||||||||||||
(8) As part of an alternative non-GAAP income measure, we have adjusted GAAP taxes as reported including the impact to the GAAP tax provision of the non-GAAP reconciling items (adjusted for note (7) above), related to the utilization or increase of our net operating loss carryforwards. And when applicable, we also adjust for changes in our valuation allowance held against deferred tax assets |