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Cray, Inc. (CRAY) Announces Financial Results

Cray Inc. yesterday announced its financial results for the full-year and fourth quarter ended December 31, 2008. The company announced that the total revenue generated was $282.9 million for the year. The company would have had a profitable year if it were not for a $54.5 million non-cash goodwill impairment taken in the fourth quarter. According to the company, this goodwill impairment will have no effect on its cash balances or cash flow from operating activities.

Overall gross profit margin improved to 39.3 percent in 2008, a respectable increase over the 35.1 percent reported for 2007. Product margin for 2008 improved to 38.9 percent compared to 33.0 percent in 2007. For the fourth quarter 2008, overall gross profit margin was 36.2 percent compared to 29.6 percent in the fourth quarter 2007.

Peter Ungaro, President and CEO of Cray, commented, “I am very pleased to report one of the strongest years in our company’s history and a record year on several fronts. We delivered on our goal of growth by posting a 52% increase in annual revenue, led by the launch of our XT5 supercomputer, and we were nicely profitable except for the non-cash write-down of goodwill recorded in the fourth quarter. The XT5 ‘Jaguar’ supercomputer at Oak Ridge, which was delivered and accepted in 2008, is the largest system in our history and was the first and only system in the world to break the petaflops performance hurdle on real, scientific applications. “

He continued, “We made strides in diversifying our revenue base, expanding our addressable market, and improving our balance sheet through opportunistic repurchasing of our convertible notes. With the strength of our supercomputing business and the introductions of our custom engineering initiative and the CX1, we are optimistic that we will achieve our long term goals of both growth and sustained profitability.”

For the current year, Cray anticipates revenue to be in the range of $260 million with a small operating loss. Because of the unfavorable impact of a multi-phase contract, overall gross margin is expected to decline to the low to mid-30 percent range. Core operating expenses will likely be lower by roughly $2 million from 2008 levels. The company expects quarterly revenue to be weighted more evenly during 2009 than in previous years, though results will fluctuate depending on the timing of system acceptances.

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