Media: Frank Parisi (612) 683-7130 Financial: Bill Gacki (612) 683-7372 CRAY RESEARCH REPORTS IMPROVED FOURTH QUARTER AND YEAR-END RESULTS EAGAN, Minn., Jan. 26, 1994 -- Cray Research, Inc. (NYSE: CYR) today reported net earnings of $24,326,000, or $.93 per share, on revenue of $302,615,000 for the fourth quarter ended December 31, 1993 compared to a net loss of $26,537,000, or $1.00 per share, on revenue of $227,323,000 for the 1992 fourth quarter. Results for the 1992 fourth quarter included a one-time restructuring charge of $42.8 million. For the year ended December 31, 1993, the company reported net earnings of $60,855,000, or $2.33 per share, on revenue of $894,857,000 compared to a net loss of $14,876,000, or $.56 per share, on revenue of $797,578,000 for 1992. "We delivered on our 1993 plan, achieving a return to solid profitability while also successfully introducing several major hardware and software products important to growing revenues and earnings," said John F. Carlson, Cray Research chairman and CEO. Carlson said the company's improved performance in 1993 resulted from a combination of increased revenue, higher gross margins and lower operating expenses. He said 1993 profits benefitted from a larger number of C916 system installations in 1993 coupled with higher margins for the C916 supercomputers, the company's top-of-the-line system. In addition, 1993 operating expenses were approximately $26 million less than in 1992. The net contract value of orders signed during 1993 was $711 million compared to $598 million in 1992. Backlog at the end of 1993 was $409 million, compared to $417 million at the end of 1992. Carlson said that product development programs completed in 1993 will enable Cray Research to participate more broadly in the market for high performance computing. Further expanding its offerings for the scientific and technical market in 1993, Cray Research introduced its first massively parallel supercomputer, the CRAY T3D system. The company also expanded its parallel vector processing product line, extending its CRAY C90 supercomputer series to configurations ranging from 2 to 16 processors and adding two new departmental supercomputers, the CRAY EL98 and EL92 systems. Cray Research also introduced a SPARC-based symmetric multiprocessing system, the CS6400, offered in configurations ranging from 4 to 64 processors. With the CS6400, the company is for the first time offering a platform for mainstream commercial data management applications, as well as scientific and technical uses. Carlson said, "In today's marketplace, customers choose systems by determining what combination of platforms offers the best solution for their needs. We enter 1994 with a broader range of products to apply to those needs than we have ever had before. Cray Research is the only company offering products that provide superior price-performance in the three computing architectures preferred in the marketplace -- parallel vector processing, massively parallel processing and symmetric multiprocessing." Carlson said the company is targeting a 1994 revenue increase of 10 percent over 1993, with continued improvement in earnings. "Our 1994 plan is challenging, and certainly not without risk, but realistic." 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.) -------------------------------------------------------------------------------- CRAY RESEARCH, INC. and SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Three Months Ended Year Ended December 31 December 31 ---------------------- ---------------------- 1993 1992 1993 1992 ---------- ---------- ---------- ---------- (In thousands, except per share data) Revenue: Sales $ 248,066 $ 168,469 $ 675,492 $ 543,735 Leased systems 5,071 8,657 23,651 54,066 Service fees 49,478 50,197 195,714 199,777 ---------------------------- --------- --------- --------- --------- Total revenue 302,615 227,323 894,857 797,578 ---------------------------- --------- --------- --------- --------- Cost of revenue: Cost of sales 132,545 112,363 344,052 298,588 Cost of leased systems 2,550 8,018 12,757 38,096 Cost of services 39,573 41,004 146,937 147,451 ---------------------------- --------- --------- --------- --------- Total cost of revenue 174,668 161,385 503,746 484,135 ---------------------------- --------- --------- --------- --------- Gross profit 127,947 65,938 391,111 313,443 ---------------------------- --------- --------- --------- --------- Operating expenses: Development and engineering 42,847 50,280 145,700 161,888 Marketing 42,154 42,899 132,534 140,393 General and administrative 7,544 7,688 25,082 26,594 ---------------------------- --------- --------- --------- --------- Total operating expenses 92,545 100,867 303,316 328,875 ---------------------------- --------- --------- --------- --------- Operating income (loss) 35,402 (34,929) 87,795 (15,432) Other income (expense), net (1,644) 1,625 (3,352) (206) ---------------------------- --------- --------- --------- --------- Earnings (loss) before taxes 33,758 (33,304) 84,443 (15,638) Income tax (expense) benefit (9,432) 6,767 (23,588) 762 ---------------------------- --------- --------- --------- --------- Net earnings (loss) $ 24,326 $ (26,537) $ 60,855 $ (14,876) ---------------------------- ========= ========= ========= ========= Earnings (loss) per common and common equivalent share $ 0.93 $ (1.00) $ 2.33 $ (0.56) ---------------------------- ========= ========= ========= ========= Average number of common and common equivalent shares outstanding 26,200 26,408 26,118 26,493 ---------------------------- ========= ========= ========= ========= ------------------------------------------------------------------------------- CRAY RESEARCH, INC. and SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Unaudited) December 31 December 31 1993 1992 ------------ ------------ Assets (in thousands) ------------------------------------------- Current assets: Cash and equivalents $ 78,373 $ 54,953 Receivables 186,852 155,797 Inventories 315,100 263,284 Other current assets 46,988 31,147 ------------------------------------------- ---------- ---------- Total current assets 627,313 505,181 Long-term receivables 10,593 12,226 Leased systems and spares, net 99,859 96,296 Property, plant and equipment, net 225,649 257,775 Investments and other assets 206,354 149,786 ------------------------------------------- ---------- ---------- $1,169,768 $1,021,264 ========== ========== Liabilities and Stockholders• Equity ------------------------------------------- Current liabilities: Current installments of long-term debt $ 2,216 $ 5,389 Accounts payable 41,679 30,739 Accrued expenses 109,300 85,121 Income taxes payable 30,422 4,023 Deferred income and customer advances 88,346 59,040 ------------------------------------------- ---------- ---------- Total current liabilities 271,963 184,312 ------------------------------------------- ---------- ---------- Long-term debt, excluding current installments 105,478 106,402 Other long-term obligations 12,986 7,489 Stockholders' equity: Common stock 31,511 31,511 Additional paid-in capital 102,489 109,322 Retained earnings 866,864 806,009 Foreign currency translation adjustments (3,024) (429) Treasury stock, at cost (218,499) (223,352) ------------------------------------------- ---------- ---------- Total stockholders' equity 779,341 723,061 ------------------------------------------- ---------- ---------- $1,169,768 $1,021,264 ========== ========== ------------------------------------------------------------------------------- CRAY RESEARCH, INC. CUSTOMER SYSTEMS INSTALLED DURING THE YEAR Year ended December 31 -------------------------------------------------- 1993 1992 1991 1990 1989 --------- -------- -------- -------- -------- PRODUCT LINE: High-end systems: Cray-2 - - 1 3 5 X-MP - 1 13 18 34 Y-MP 37 55 68 43 34 C-90 22 7 - - - T3D 1 - - - - ------- ------ ------ ------ ------ 60 63 82 64 73 ------- ------ ------ ------ ------ Low-end systems: Y-MP EL 28 130 11 - - S-MP/APP 13 7 - - - ------- ------ ------ ------ ------ 41 137 11 - - ------- ------ ------ ------ ------ 101 200 93 64 73 ======= ====== ====== ====== ====== GEOGRAPHIC REGION: (1) United States, Canada and Latin America 31 29 44 37 36 Europe 20 20 28 19 32 Japan 5 8 9 6 5 Asia Pacific 4 6 1 2 - ------- ------ ------ ------ ------ 60 63 82 64 73 ======= ====== ====== ====== ====== MARKET SECTOR: (1) Government 28 26 30 33 28 Commercial 20 27 35 23 30 University 12 10 17 8 15 ------- ------ ------ ------ ------ 60 63 82 64 73 ======= ====== ====== ====== ====== (1) High-end systems only. ------------------------------------------------------------------------------- CRAY RESEARCH, INC. END OF PERIOD CUSTOMER INSTALLED SYSTEMS Year ended December 31 -------------------------------------------------- 1993 1992 1991 1990 1989 --------- -------- -------- -------- -------- PRODUCT LINE: High-end systems: Cray-1/Cray-2 21 27 31 34 42 X-MP 69 95 125 151 160 Y-MP 201 185 142 78 38 C-90 29 8 - - - T3D 1 - - - - ------- ------ ------ ------ ------ 321 315 298 263 240 ------- ------ ------ ------ ------ Low-end systems: Y-MP EL 164 124 11 - - S-MP/APP 20 7 - - - ------- ------ ------ ------ ------ 184 131 11 - - ------- ------ ------ ------ ------ 505 446 309 263 240 ======= ====== ====== ====== ====== GEOGRAPHIC REGION: (1) United States, Canada and Latin America 175 172 169 162 150 Europe 96 95 92 77 70 Japan 35 34 29 21 17 Asia Pacific 15 14 8 3 3 ------- ------ ------ ------ ------ 321 315 298 263 240 ======= ====== ====== ====== ====== MARKET SECTOR: (1) Government 154 147 139 129 113 University 52 52 48 38 34 Commercial 115 116 111 96 93 ------- ------ ------ ------ ------ 321 315 298 263 240 ======= ====== ====== ====== ====== (1) High-end systems only.