Global supercomputer leader Cray Inc. (NASDAQ: CRAY) today announced financial results for the year and fourth quarter ended December 31, 2014.

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.

For 2014, Cray reported total revenue of $561.6 million, which compares with $525.7 million for 2013. Net income for 2014 was $62.3 million, or $1.54 per diluted share, compared to $32.2 million, or $0.81 per diluted share for 2013. Net income results for 2014 benefited from a $52.6 million income tax benefit which resulted from a reduction of substantially all of the valuation allowance held against Cray’s U.S. deferred tax assets. This reduction was determined after considering both past financial results and future expectations for profitability.

Non-GAAP net income, which adjusts for selected unusual and non-cash items, such as the reduction of the valuation allowance, was $24.3 million, or $0.60 per diluted share for 2014, compared to $30.3 million, or $0.76 per diluted share for 2013.

Revenue for the fourth quarter was $261.9 million, compared to $307.4 million in the fourth quarter of 2013. The Company reported net income for the fourth quarter of $74.6 million, or $1.84 per diluted share, compared to net income of $51.0 million, or $1.27 per diluted share in the prior year period. Non-GAAP net income was $40.3 million, or $0.99 per diluted share for the quarter, compared to non-GAAP net income of $59.2 million, or $1.48 per diluted share for the same period last year.

Overall gross profit margin for 2014 was 33%, compared to 35% for 2013. Total non-GAAP gross profit margin for 2014 was 34%, compared to 36% for 2013. The change in gross profit margin in 2014 was driven primarily by product mix.

Operating expenses for 2014 were $175.2 million, compared to $162.7 million for 2013. Non-GAAP operating expenses for 2014 were $163.7 million, compared to $155.5 million for 2013.

As of December 31, 2014, cash, investments and restricted cash totaled $146 million. Working capital increased $27 million to $362 million, compared to $335 million at the end of 2013.

“We had a great year, highlighted by company records in both revenue and new contract awards,” said Peter Ungaro, president and CEO of Cray. “Our global presence continues to expand, with significant wins in the U.K., Korea, Saudi Arabia and the U.S. We refreshed our entire product line in the second half of the year across supercomputing, storage and analytics, further strengthening our competitive position and targeting ways to leverage our expertise and technology into high-growth markets. As we look to the future, I’m excited about our prospects to continue to grow and drive increased profitability in 2015 and beyond.”

For 2015, while a wide range of results remains possible, the Company anticipates revenue for the year to be in the range of $715 million. Revenue is expected to ramp quarterly during 2015, with about $80 million in the first quarter and roughly 40-45% of the total year in the fourth quarter. Non-GAAP gross margin for 2015 is expected to be about 35%. Total non-GAAP operating expenses for the year are anticipated to be about $195 million. Based on this outlook, we expect to improve our GAAP and non-GAAP operating profit margin significantly for 2015.

The Company’s 2015 effective non-GAAP tax rate is expected to be about 10%.

Actual results for any future period are subject to large fluctuations given the nature of Cray’s business.

Recent Highlights

In December, the Department of Defense High Performance Computing Modernization Program awarded Cray an additional contract for $30 million to provide it with two Cray XC40 supercomputers and two Cray Sonexion storage systems. The systems are expected to be installed at the John C. Stennis Space Center in Mississippi in 2015.
In December, Cray announced that the University of Hawaii (UH) had put a Cray CS cluster supercomputer into production. The new Cray system is the University’s first centralized high performance computing system, and is located on the UH Manoa Campus in a new state-of-the-art data center.
In November, Cray was awarded a contract to provide the King Abdullah University of Science and Technology (KAUST) in Saudi Arabia with multiple Cray systems that span the Company’s line of compute, storage and analytics products. The contract with KAUST marks Cray’s return to the Middle East for the first time in nearly 20 years.
In November, Cray announced the pre-integration of Cloudera Enterprise into Cray’s new big data analytics appliance, the Cray Urika-XA system.
In November, Cray launched the Cray Sonexion 2000 system — the latest addition to its line of scale-out storage solutions. The new Sonexion system combines Cray’s expertise in designing, scaling and managing end-to-end Lustre solutions with a unique architecture that allows for maximum scalability. The Sonexion 2000 features 50 percent more performance and capacity than its predecessor in the same storage footprint, and provides more than 45 gigabytes-per-second of performance and two petabytes of useable capacity in a single rack.
In November, at the 2014 Supercomputing Conference in New Orleans Cray won six awards from the readers and editors of HPCwire as part of the publication’s 2014 Readers’ and Editors’ Choice Awards.
In December, Cray named Ryan Waite senior vice president of products. With more than 20 years of experience in big data, supercomputing and software at Amazon Web Services and Microsoft, Waite will be responsible for leading Cray’s products division, which manages the Company’s line of compute, storage and big data analytics solutions.

Conference Call Information
Cray will host a conference call today, Wednesday, February 11, 2015 at 1:30 p.m. PDT (4:30 p.m. EDT) to discuss its fourth quarter and year ended December 31, 2014 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. To listen to the audio webcast, go to the Investors section of the Cray website at

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 access code 78037341. The conference call replay will be available for 72 hours, beginning at 4:45 p.m. PDT on Wednesday, February 11, 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 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 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, generally accepted accounting principles, or 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 for more information.



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