Media: Chris Malecek (612) 832-5000x381 Financial: Bill Gacki (612) 683-7372 CRAY RESEARCH REPORTS 46 PERCENT INCREASE IN FIRST QUARTER NET EARNINGS ON 23 PERCENT REVENUE GAIN New Products Drive Revenue and Earnings Growth EAGAN, Minn., April 25,1994 -- Cray Research, Inc. (NYSE: CYR) today reported net earnings of $21,953,000, or $.84 per share, on revenue of $248,866,000 for the first quarter ended March 31, 1994 compared to net earnings of $15,024,000, or $.58 per share, on revenue of $202,597,000 for the 1993 first quarter. John F. Carlson, Cray Research chairman and chief executive officer, said new products and an increase in low-end system acceptances resulted in the strong first quarter performance. "Our first quarter results demonstrate the value of our broadening participation in the market for high performance computing," said Carlson. "Customer acceptances of CRAY T3D massively parallel systems, mid-range CRAY C90 Series parallel vector systems and new CRAY SUPERSERVER 6400 symmetric multiprocessing systems contributed significantly to revenue and earnings growth in the quarter." Carlson noted that a total of 53 systems was accepted during the first quarter of 1994, including 34 low-end systems. The total included 18 new-to-Cray customers. In the first quarter of 1993, 20 systems were accepted, including 9 low-end systems. The net contract value of orders signed during the quarter was $59 million compared to $124 million in the 1993 first quarter. Backlog at quarter end totaled $271 million compared to $381 million at March 31, 1993. Carlson said that first quarter orders were below expectations and disappointing, reflecting a difficult market environment. "While customers' decision cycles have lengthened, we anticipate a recovery in the current quarter and a continued improvement in orders in the second half of the year," said Carlson. Carlson said, "We are pleased with the strong financial performance in the first quarter. The company continues to anticipate revenue growth in 1994, along with an improvement in earnings. However, with the low first quarter order rate, our 1994 plan is more of a challenge than before and certainly not without risk. We will need to see a continuous improvement in orders in the balance of the year to achieve our targets." Cray Research, Inc. provides leading supercomputing tools to help solve customers' most challenging problems. (Summarized financial data follows) ------------------------------------------------------------------------------ CRAY RESEARCH, INC. and SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Three Months Ended March 31 ---------------------- 1994 1993 ---------- ---------- (In thousands, except per share data) Revenue: Sales $ 198,253 $ 148,708 Leased systems 5,066 5,066 Service fees 45,547 48,823 ---------------------------- --------- --------- Total revenue 248,866 202,597 ---------------------------- --------- --------- Cost of revenue: Cost of sales 101,679 72,341 Cost of leased systems 2,619 3,442 Cost of services 36,448 35,063 ---------------------------- --------- --------- Total cost of revenue 140,746 110,846 ---------------------------- --------- --------- Gross profit 108,120 91,751 ---------------------------- --------- --------- Operating expenses: Development and engineering 36,950 34,383 Marketing 32,341 27,957 General and administrative 5,967 6,611 ---------------------------- --------- --------- Total operating expenses 75,258 68,951 ---------------------------- --------- --------- Operating income 32,862 22,800 Other expense, net (1,509) (722) ---------------------------- --------- --------- Earnings before taxes 31,353 22,078 Income tax expense (9,400) (7,054) ---------------------------- --------- --------- Net earnings $ 21,953 $ 15,024 ---------------------------- ========= ========= Earnings per common and common equivalent share $ 0.84 $ 0.58 ---------------------------- ========= ========= Average number of common and common equivalent shares outstanding 26,002 26,050 ---------------------------- ========= ========= ------------------------------------------------------------------------------ CRAY RESEARCH, INC. and SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Unaudited) March 31 December 31 1994 1993 ------------ ------------ Assets (In thousands) ------------------------------------------- Current assets: Cash and equivalents $ 8,366 $ 78,373 Receivables 227,609 186,852 Inventories 332,621 315,100 Other current assets 50,943 46,988 ------------------------------------------- ---------- ---------- Total current assets 619,539 627,313 Long-term receivables 35,487 10,593 Leased systems and spares, net 98,905 99,859 Property, plant and equipment, net 219,970 225,649 Investments and other assets 191,431 206,354 ------------------------------------------- ---------- ---------- $1,165,332 $1,169,768 ========== ========== Liabilities and Stockholders• Equity ------------------------------------------- Current liabilities: Current installments of long-term debt $ 1,447 $ 2,216 Accounts payable 34,252 41,679 Accrued expenses 85,111 109,300 Income taxes payable 42,660 30,422 Deferred income and customer advances 84,686 88,346 ------------------------------------------- ---------- ---------- Total current liabilities 248,156 271,963 ------------------------------------------- ---------- ---------- Long-term debt, excluding current installments 105,000 105,478 Other long-term obligations 13,266 12,986 Stockholders' equity: Common stock 31,511 31,511 Additional paid-in capital 99,195 102,489 Retained earnings 888,817 866,864 Foreign currency translation adjustments (1,638) (3,024) Treasury stock, at cost (218,975) (218,499) ------------------------------------------- ---------- ---------- Total stockholders' equity 798,910 779,341 ------------------------------------------- ---------- ---------- $1,165,332 $1,169,768 ========== ========== ------------------------------------------------------------------------------ CRAY RESEARCH, INC. CUSTOMER SYSTEMS INSTALLED DURING THE YEAR ------------------ Three Months Ended March 31 ------------------ 1994 1993 ------------------ PRODUCT TYPE: High-end systems: Parallel Vector Processing 16 11 Massively Parallel Processing 3 0 ------------------ 19 11 ------------------ Low-end systems: Parallel Vector Processing 26 8 Symmetric Multiprocessing 8 1 ------------------ 34 9 ------------------ 53 20 ================== GEOGRAPHIC REGION: United States, Canada and Latin America 18 10 Europe 11 5 Japan 24 3 Asia Pacific 0 2 ----------------- 53 20 ================= MARKET SECTOR: Government 19 11 University 23 3 Commercial 11 6 ----------------- 53 20 =================