Media: Frank Parisi 612-683-7130 Financial: Bill Gacki 612-683-7372 CRAY RESEARCH REPORTS STRONG THIRD QUARTER; OUTLOOK FOR FULL YEAR UNCHANGED EAGAN, Minn., Oct. 21, 1993 -- Cray Research, Inc. (NYSE: CYR) today reported net earnings of $15,264,000, or $ .58 per share, on revenue of $201,975,000 for the third quarter ended September 30, 1993, compared to net earnings of $6,524,000, or $ .25 per share, on revenue of $220,164,000 for the same period a year ago. For the nine months ended September 30, 1993, the company reported net earnings of $36,529,000, or $1.40 per share, on revenue of $592,242,000, compared to net earnings of $11,662,000, or $ .44 per share, on revenue of $570,255,000 for the comparable 1992 period. John F. Carlson, Cray Research chairman and CEO, said, "the company•s stronger than expected third quarter performance resulted primarily from the timing of transactions, with systems and upgrades originally targeted for fourth quarter installation accepted during the third quarter, instead. Third quarter earnings also benefited from a lower effective tax rate." "With this strong third quarter, we are more confident of delivering on our plan and meeting our expectations for significantly improved performance over last year," said Carlson. Carlson emphasized that the company•s outlook for the full year remains unchanged. The benefit for the full year from the lower effective tax rate will be offset by grant expenses related to an increase in University business. The value of orders signed in the quarter was $171 million compared with $180 million in the 1992 third quarter. Backlog at the end of the third quarter was a record $460 million, compared with $429 million at the end of the second quarter and $351 million at the end of the 1992 third quarter. Carlson said that recent product introductions should contribute to continuing improvement in the company•s financial performance. He said, "at the end of the third quarter, we introduced ö on time and as promised ö our first massively parallel supercomputer, the CRAY T3D. Next week, Cray Research Superservers, Inc. will formally introduce our new superserver product, the CS6400." "These new products make Cray Research unique in offering customers solutions in the three principal architectures for high performance computing: parallel vector processing (PVP), massively parallel processing (MPP) and symmetric multiprocessing (SMP). As a result, we•re now participating more fully in the market and can look forward to increasing levels of revenue and earnings that will deliver an attractive return to our shareholders." Addressing 1994, Carlson said the company is targeting a 10 percent increase in revenue over 1993 results. "Our target revenue increase, combined with our commitment to control expenses, should enable us to achieve an improvement in earnings, as well," said Carlson. "Among our challenges for 1994 will be effectively managing the manufacturing and marketing of a significantly broader product mix than we have historically had while also controlling manufacturing costs, procuring components on a timely basis and at acceptable prices and improving inventory control," said Carlson. Cray Research, Inc. creates the most powerful, highest quality computational tools for solving the world's most challenging scientific and industrial problems. (Summarized financial data follows.) Consolidated Statements of Operations CRAY RESEARCH, INC. AND SUBSIDIARIES (Unaudited) Three Months Ended Nine Months Ended September 30 September 30 ---------------------- ---------------------- 1993 1992 1993 1992 ---------- ---------- ---------- ---------- (In thousands, except per share data) Revenue: Sales $ 147,899 $ 157,986 $ 427,426 $ 375,266 Leased systems 5,670 10,819 18,580 45,409 Service fees 48,406 51,359 146,236 149,580 ----------------------- --------- --------- --------- --------- Total revenue 201,975 220,164 592,242 570,255 ----------------------- --------- --------- --------- --------- Cost of revenue: Cost of sales 75,153 88,510 211,507 186,225 Cost of leased systems 3,288 9,373 10,207 30,078 Cost of services 35,695 36,493 107,364 106,447 ------------------------- --------- --------- --------- --------- Total cost of revenue 114,136 134,376 329,078 322,750 ------------------------- --------- --------- --------- --------- Gross profit 87,839 85,788 263,164 247,505 ---------------------------- --------- --------- --------- --------- Operating expenses: Development and engineering 33,610 36,906 102,853 111,608 Marketing 29,007 32,091 90,380 97,494 General and administrative 5,649 5,972 17,538 18,906 ---------------------------- --------- --------- --------- --------- Total operating expenses 68,266 74,969 210,771 228,008 ---------------------------- --------- --------- --------- --------- Operating income 19,573 10,819 52,393 19,497 Other expense, net (96) (958) (1,708) (1,831) ---------------------------- --------- --------- --------- --------- Earnings before income taxes 19,477 9,861 50,685 17,666 Income tax expense (4,213) (3,337) (14,156) (6,004) ---------------------------- --------- --------- --------- --------- Net earnings $ 15,264 $ 6,524 $ 36,529 $ 11,662 ---------------------------- ========= ========= ========= ========= Earnings per common and common equivalent share $ 0.58 $ 0.25 $ 1.40 $ 0.44 ---------------------------- ========= ========= ========= ========= Average number of common and common equivalent shares outstanding 26,258 26,333 26,094 26,694 ---------------------------- ========= ========= ========= ========= Consolidated Balance Sheets CRAY RESEARCH, INC. and SUBSIDIARIES (Unaudited) September 30 December 31 1993 1992 ------------ ------------ Assets (in thousands) ------------------------------------------- Current assets: Cash and equivalents $ 26,448 $ 54,953 Receivables 180,067 155,797 Inventories 335,761 263,284 Other current assets 39,513 31,147 ------------------------------------------- ---------- ---------- Total current assets 581,789 505,181 Long-term receivables 15,733 12,226 Leased systems and spares, net 91,830 96,296 Property, plant and equipment, net 231,485 257,775 Investments and other assets 224,305 149,786 ------------------------------------------- ---------- ---------- $1,145,142 $1,021,264 ========== ========== Liabilities and Stockholders• Equity ------------------------------------------- Current liabilities: Current installments of long-term debt $ 2,316 $ 5,389 Accounts payable 34,287 30,739 Accrued expenses 102,932 85,121 Income taxes payable 16,463 4,023 Deferred income and customer advances 112,503 59,040 ------------------------------------------- ---------- ---------- Total current liabilities 268,501 184,312 ------------------------------------------- ---------- ---------- Long-term debt, excluding current installments 105,582 106,402 Other long-term obligations 7,802 7,489 Stockholders' equity: Common stock 31,511 31,511 Additional paid-in capital 101,997 109,322 Retained earnings 842,538 806,009 Foreign currency translation adjustments (2,164) (429) Treasury stock, at cost (210,625) (223,352) ------------------------------------------- ---------- ---------- Total stockholders' equity $ 763,257 $ 723,061 ------------------------------------------- ---------- ---------- $1,145,142 $1,021,264 ========== ========== CRAY RESEARCH, INC. SYSTEMS INSTALLED DURING THE YEAR YTD Year ended December 31 Sept 30 -------------------------------------- 1993 1992 1991 1990 1989 --------- -------- -------- -------- -------- PRODUCT LINE: High-end systems: Cray-2 - - 1 3 5 X-MP - 1 13 18 34 Y-MP 26 55 68 43 34 C-90 12 7 - - - T3D 1 - - - - ------- ------ ------ ------ ------ 39 63 82 64 73 Low-end systems: Y-MP EL 13 123 9 - - S-MP/APP 5 7 - - - ------- ------ ------ ------ ------ 57 193 91 64 73 ======= ====== ====== ====== ====== GEOGRAPHIC REGION: (1) United States, Canada and Latin America 23 29 44 37 36 Europe 10 20 28 19 32 Japan 3 8 9 6 5 Asia Pacific 3 6 1 2 - ------- ------ ------ ------ ------ 39 63 82 64 73 ======= ====== ====== ====== ====== MARKET SECTOR: (1) Government 24 26 30 33 28 Commercial 11 27 35 23 30 University 4 10 17 8 15 ------- ------ ------ ------ ------ 39 63 82 64 73 ======= ====== ====== ====== ====== (1) High-end systems only. CRAY RESEARCH, INC. END OF PERIOD INSTALLED SYSTEMS YTD Year ended December 31 Sept 30 -------------------------------------- 1993 1992 1991 1990 1989 --------- -------- -------- -------- -------- PRODUCT LINE: High-end systems: Cray-1 and Cray-2 26 27 31 34 42 X-MP 76 95 125 151 160 Y-MP 204 185 142 78 38 C-90 15 8 - - - T3D 1 - - - - ------- ------ ------ ------ ------ 322 315 298 263 240 Low-end systems: Y-MP EL 152 124 11 - - S-MP/APP 12 7 - - - ------- ------ ------ ------ ------ 486 446 309 263 240 ======= ====== ====== ====== ====== GEOGRAPHIC REGION (1) United States, Canada and Latin America 173 172 169 162 150 Europe 100 95 92 77 70 Japan 35 34 29 21 17 Asia Pacific 14 14 8 3 3 ------- ------ ------ ------ ------ 322 315 298 263 240 ======= ====== ====== ====== ====== MARKET SECTOR (1) Government 160 147 139 129 113 University 53 52 48 38 34 Commercial 109 116 111 96 93 ------- ------ ------ ------ ------ 322 315 298 263 240 ======= ====== ====== ====== ====== (1) High-end systems only. ######