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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Cray Inc | NASDAQ:CRAY | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 35.01 | 34.98 | 35.68 | 0 | 01:00:00 |
þ
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Washington
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93-0962605
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(State or Other Jurisdiction of
Incorporation or Organization)
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(I.R.S. Employer
Identification No.)
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901 Fifth Avenue, Suite 1000
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98164
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Seattle, Washington
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(Zip Code)
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(Address of Principal Executive Offices)
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Title of Each Class
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Name of Each Exchange on Which Registered
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Common Stock, $.01 par value
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Nasdaq Stock Market LLC
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Large accelerated filer
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ý
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Accelerated filer
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¨
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Non-accelerated filer
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¨
(Do not check if a smaller reporting company)
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Smaller reporting company
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¨
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Emerging growth company
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¨
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Page
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PART I
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||
Item 1.
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Business
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Item 1A.
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Risk Factors
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Item 1B.
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Unresolved Staff Comments
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Item 2.
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Properties
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Item 3.
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Legal Proceedings
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Item 4.
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Mine Safety Disclosures
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PART II
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Item 5.
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Market for the Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities
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Item 6.
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Selected Consolidated Financial Data
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Item 7.
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Management’s Discussion and Analysis of Financial Condition and Results of Operations
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Item 7A.
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Quantitative and Qualitative Disclosures About Market Risk
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Item 8.
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Financial Statements and Supplementary Data
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Item 9.
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Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
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Item 9A.
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Controls and Procedures
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Item 9B.
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Other Information
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PART III
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Item 10.
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Directors, Executive Officers and Corporate Governance
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Item 11.
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Executive Compensation
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Item 12.
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Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters
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Item 13.
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Certain Relationships and Related Transactions, and Director Independence
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Item 14.
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Principal Accounting Fees and Services
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PART IV
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||
Item 15.
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Exhibits and Financial Statement Schedules
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Item 16.
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Form 10-K Summary
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•
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superior price-performance compared to other supercomputer systems, cluster computing solutions, and traditional cloud computing solutions;
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•
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productivity, quality, reliability and resiliency at the highest scale;
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•
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scalability to the world’s fastest supercomputers for HPC, analytics and AI workloads leveraging the innovative Aries network;
|
•
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support for open standards: Linux-based operating systems, containers, open file systems (
e.g
., Lustre), open programming models (
e.g.
, MPI, PGAS, shared memory, OpenMP and OpenACC), popular programming languages such as Python, Scala and R, traditional HPC languages such as Fortran, C and C++, new languages such as Chapel, big data environments (Apache Spark and distributed Dask) and machine learning frameworks (TensorFlow and BigDL);
|
•
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flexible and customizable upgrade paths that enable customers to leverage their investments over longer periods of time and thereby reduce total costs of ownership;
|
•
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integrated operating system software and Cray programming environment, including energy-aware features;
|
•
|
excellent energy efficiency optimized for minimum energy consumed to solution;
|
•
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flexibility of processor type, memory, network configuration, storage configuration and system software tools; and
|
•
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the Cray service experience, which brings with it a proven research and development team and a global sales and service organization dedicated to the needs of HPC users.
|
•
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Compute and storage architectures, high-speed interconnect and board integration and design
. We integrate a variety of processor, volatile and nonvolatile memory hierarchies and network devices using a combination of custom and industry standard printed circuit boards, high-density connectors, carefully chosen transmission and storage media and optimized topologies.
|
•
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Power, packaging and cooling
. We use a variety of dense packaging techniques to produce systems with superior performance, socket densities and energy efficiency. This packaging combines industry standard and custom-designed technologies in the areas of printed circuit board assemblies, power distribution and liquid and air cooling.
|
Item 1A.
Risk Factors
|
•
|
our ability to secure sufficient orders at high enough gross margins for our Cray XC and Cray CS systems as well as upgrades and successor systems, such as our next generation “Shasta” system;
|
•
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successfully delivering and obtaining sufficient customer acceptances of ordered systems, including attached storage systems;
|
•
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our ability to successfully integrate the ClusterStor product line, business and associated sales channel and our ability to successfully generate revenue and profitability from sales of our storage, data analytics and AI solutions;
|
•
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our ability to successfully and timely design for, procure and integrate competitive processors for our Cray XC and Cray CS systems and upgrades and successor systems, such as our next generation Shasta system;
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•
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our expense levels, including research and development expense;
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•
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delays in delivery of upgraded or new systems, longer than expected customer acceptance cycles or penalties resulting from system acceptance issues;
|
•
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our ability to resolve and the costs incurred in connection with any actual or alleged issues with our products, including third-party components of such products, such as those that relate to product defects, such as the current “Meltdown” and “Spectre” processor vulnerabilities or intellectual property rights;
|
•
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our ability to efficiently scale our internal processes to meet necessary peak requirements and growth in our business;
|
•
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the level of revenue recognized in any given period, which is affected by the very high average sales prices and limited number of significant system sales and resulting potential acceptances in any quarter, the timing of product orders and acceptances by customers and contractual provisions affecting the timing and amount of revenue recognition;
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•
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our ability to continue to broaden our customer base beyond our traditional customers;
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•
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revenue delays or losses due to customers postponing purchases as a result of delays in available budgets or waiting for the availability of future upgraded or new systems, including those containing new processors, such as our next generation Shasta systems;
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•
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the level of product gross profit contribution in any given period due to volume, competition or product mix, particularly with the introduction of flexible commodity-based supercomputers, competitive factors, strategic transactions, product life cycle, currency fluctuations, acceptance penalties and component costs;
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•
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the competitiveness of our products, services and prices;
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•
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our ability to secure additional government funding for future development projects;
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•
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maintaining and successfully completing our product development projects on schedule and within budgetary limitations;
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•
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the level and timing of maintenance contract renewals with existing customers; and
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•
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the terms and conditions of sale or lease for our products and services.
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•
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whether or when the segments of the high-end of the supercomputing market that we target, which are currently experiencing a slow-down, rebound and resume growing;
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•
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the timely availability of acceptable components, including, but not limited to, processors and memory, in sufficient quantities to meet customer delivery schedules and other customer commitments at a competitive cost and the identification of issues with already-delivered components, including processors, that require remediation and/or impact the performance of our products;
|
•
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the timing and level of government funding and resources available for product acquisitions and research and development contracts, which have been, and may continue to be, adversely affected by the current global economic and fiscal uncertainties, increased governmental budgetary limitations and disruptions in the operations of the United States and other governments;
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•
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competitor and supplier pricing strategies;
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•
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currency fluctuations, international conflicts or economic crises, including the ongoing economic challenges in the United States, Japan and Europe, and fluctuations in oil prices that can affect the resources available to potential customers to purchase products;
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•
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new tariffs or taxes imposed on components and products sourced or manufactured outside of the United States;
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•
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the introduction or announcement of competitive or key industry supplier products;
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•
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price fluctuations or product shortages in the processors and other commodity electronics and memory markets;
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•
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the availability of adequate customer facilities to install and operate new Cray systems;
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•
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general economic trends, including changes in levels of customer capital spending; and
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•
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our customers’ ability to make future payments in accordance with contractual terms of their purchase or sales-type lease agreements.
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•
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the level of product differentiation in our Cray XC systems and successor systems, such as our next generation Shasta system. We need to compete successfully against HPC systems from both large, established companies and smaller
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•
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our ability to meet all customer requirements for acceptance. Even after a system has been delivered, we sometimes do not meet all of the contract requirements for customer acceptance and ongoing reliability of our systems within the provided-for acceptance period, which has resulted in contract penalties and delays in our ability to recognize revenue from system deliveries. Most often these penalties have adversely affected revenue and gross profit at the time of revenue recognition through the provision of additional equipment and services and/or service credits to satisfy delivery delays and performance shortfalls. The risk of contract penalties is increased when we bid for new business prior to us or our suppliers completing development of new products and when we must estimate future system performance and costs, such as has been and will be required with our Cray XC systems, next generation Shasta systems and ClusterStor storage systems;
|
•
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our ability to source competitive, key components in appropriate quantities (to have enough to sell without ending up with excess inventory that can lead to obsolescence charges), in a timely fashion and with reasonable costs and terms and conditions and that meet the performance criteria required; and
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•
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whether potential customers delay purchases of our products because they decide to wait for successor systems or upgrades that we or our suppliers have announced or they believe will be available in the future.
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•
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if a supplier does not provide components or systems that meet specifications in sufficient quantities and with acceptable performance, price or quality on time or deliver when required, or delays future components or systems beyond anticipated delivery dates, then sales, production, delivery, acceptance and revenue from our systems could be delayed and/or reduced and we could be subject to costly repair and/or delay costs and penalties even once delivered and accepted, which is currently happening and has happened multiple times in the past and has at times significantly lowered our revenue for a particular quarter or year;
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•
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if a supplier provides us with hardware or software that contains bugs or other errors, defects or security vulnerabilities, such as the recent “Meltdown and “Spectre” processor vulnerabilities, or is different from what we expected, our development projects and production systems may be adversely affected through reduced performance or capabilities, additional design testing and verification efforts, including of required patches, re-spins of integrated circuits and/or development of replacement components, and the production and sales of our systems could be delayed and systems installed at customer sites could require significant, expensive field component replacements or other remediation and/or we might be required to pay penalties;
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•
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if our relationship with a key supplier, such as Intel, is adversely affected for any reason, such as due to competitive pressures or changes in company strategies and priorities, our ability to obtain components on competitive financial terms could be adversely affected;
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•
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if a supplier cannot provide a competitive key component, for example, due to inadequate performance or a prohibitive price, or eliminates key features from components, such as with the processors we design into our systems, our systems may be less competitive than systems using components with greater capabilities;
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•
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if an interruption of supply of our components, services or capabilities occurs because a supplier changes its technology roadmap, suffers damage to its manufacturing facilities, decides to no longer provide those products or services, increases the price of those products or services significantly or imposes reduced delivery allocations on its customers, it could take us a considerable period of time to identify and qualify alternative suppliers, to redesign our products as necessary and to begin to manufacture the redesigned components or otherwise obtain those services or capabilities. In some cases, such as with key integrated circuits and memory parts or processors, we may not be able to redesign such components or find alternate sources that we could use in any realistic timeframe, if at all;
|
•
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if a supplier plans future processors that are made available in a way that encourages customers to delay purchases of our products because they decide to wait for successor systems or upgrades they believe will be available in the future or to purchase products with future processors from our competitors who are willing to take greater risk on delivery, our operating results will be adversely affected;
|
•
|
if Cray systems at customer sites develop significant issues with third-party components, as has occurred in the past, the cost to Cray to repair or replace the components or otherwise address such issue may be material. If we are unable to effectively address such problem or a problem causes customer disruption, our relationship with our customers may also be harmed;
|
•
|
if a supplier of a component is subject to a claim that the component infringes a third-party’s intellectual property rights, as has happened with multiple suppliers, we may not be able to obtain necessary components or our cost to obtain such components could increase significantly;
|
•
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if a key supplier is acquired or undergoes a significant business change, as has occurred in the past, the production and sales of our systems and services may be delayed or adversely affected, or our development programs may be delayed or may be impossible to complete;
|
•
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if a supplier providing us with key research and development and design services or core technology components with respect to integrated circuit design, network communication capabilities or software is late, fails to provide us with effective functionality or loses key internal talent, our development programs may be delayed or prove to be impossible to complete; and
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•
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some of our key component and service suppliers are small companies with limited financial and other resources, and consequently may be more likely to experience financial and operational difficulties than larger, well-established companies, which increases the risk that they will be unable to deliver products as needed.
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•
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uncertainties relating to priorities of the current administration or adverse decisions by the current administration to reduce or eliminate budgets for governmental agencies or departments that purchase or fund the purchase of our products and services;
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•
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Congressional and executive branch decisions in addressing budget concerns and current policy;
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•
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disruptions in the operations of the U.S. Government, including impacts of the current administration and government “shutdowns” such as recently occurred;
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•
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“sequestration”;
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•
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the downgrading of U.S. Government debt or the possibility of such action;
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•
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the political climate in the United States focusing on cutting or limiting budgets and its effect on government budgets;
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•
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the limits on federal borrowing capacity;
|
•
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changes in procurement policies;
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•
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budgetary considerations, including Congressional delays in completing appropriation bills as has occurred in the past;
|
•
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domestic crises, such as costs of addressing the damage associated with natural disasters;
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•
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international political developments, such as the downgrading of European debt or the United Kingdom’s departure from the European Union; or
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•
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political efforts to limit the activities of U.S. intelligence community agencies, including proposed state legislation that would limit or even criminalize doing business with the U.S. National Security Agency for certain companies doing business with state governments.
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•
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pay third-party infringement claims;
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•
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discontinue manufacturing, using or selling particular products subject to infringement claims;
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•
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discontinue using the technology or processes subject to infringement claims;
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•
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develop other technology not subject to infringement claims, which could be time-consuming and costly or may not be possible; and/or
|
•
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license technology from third-parties, which license may not be available on commercially reasonable terms, or at all.
|
•
|
difficulties in successfully integrating the operations, systems, technologies, products, sales channels, manufacturing processes, offerings and personnel of the acquired company or companies, assets and/or business;
|
•
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insufficient revenue, margin or other benefits to offset increased expenses or other negative impacts associated with acquisitions or strategic transactions;
|
•
|
diversion of management’s attention from normal daily operations of the business and the challenges of managing larger and more widespread operations resulting from acquisitions or strategic transactions, including other customers of an acquired business;
|
•
|
potential difficulties in completing projects associated with in-process research and development intangibles;
|
•
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difficulties in entering markets in which we have no or limited direct prior experience and where competitors in such markets have stronger market positions;
|
•
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initial dependence on unfamiliar supply chains or relatively small supply partners;
|
•
|
the potential loss of key employees, customers, distributors, vendors and other business partners of the companies or businesses we acquire following and continuing after announcement of any transaction; and
|
•
|
the potential to invest significant time and resources into a potential acquisition or strategic transaction that does not ultimately complete or close.
|
•
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use a substantial portion of our cash reserves or incur debt;
|
•
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issue equity securities or grant equity incentives to acquired employees that would dilute our current shareholders’ percentage ownership;
|
•
|
assume or incur liabilities, including potentially unknown or underestimated liabilities;
|
•
|
record goodwill and non-amortizable intangible assets that are subject to impairment testing on a regular basis and potential periodic impairment charges;
|
•
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incur amortization expenses related to certain intangible assets;
|
•
|
incur large and immediate write-offs and restructuring and other related expenses; or
|
•
|
become subject to intellectual property litigation or other litigation.
|
•
|
supporting multiple languages;
|
•
|
recruiting sales and technical support personnel internationally with the skills to sell and support our products and the potentially high cost related to employee separations;
|
•
|
complying with governmental regulations, including obtaining required import or export approval for our products;
|
•
|
increased complexity and costs of managing international operations;
|
•
|
increased exposure to foreign currency exchange rate fluctuations;
|
•
|
trade protection measures and business practices that favor local competition;
|
•
|
risks and costs associated with employee-favorable labor laws in many foreign jurisdictions;
|
•
|
longer sales cycles and manufacturing lead times;
|
•
|
financial risks such as longer payment cycles and difficulties in collecting accounts receivable;
|
•
|
difficulties associated with repatriating cash generated or held abroad in a tax-efficient manner;
|
•
|
ineffective legal protection of intellectual property rights;
|
•
|
more complicated logistics and distribution arrangements;
|
•
|
additional taxes and penalties;
|
•
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inadequate local infrastructure that could result in business disruptions;
|
•
|
global political and economic instability; and
|
•
|
other factors beyond our control such as natural disasters, terrorism, civil unrest, war and infectious disease.
|
•
|
removal of a director only in limited circumstances and only upon the affirmative vote of not less than two-thirds of the shares entitled to vote to elect directors;
|
•
|
the ability of our Board of Directors to issue up to 5,000,000 shares of preferred stock, without shareholder approval, with rights senior to those of the common stock;
|
•
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no cumulative voting of shares;
|
•
|
the right of shareholders to call a special meeting of the shareholders only upon demand by the holders of not less than 30% of the shares entitled to vote at such a meeting;
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•
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the affirmative vote of not less than two-thirds of the outstanding shares entitled to vote on an amendment, unless the amendment was approved by a majority of our continuing directors, who are defined as directors who have either served as a director since August 31, 1995, or were nominated to be a director by the continuing directors;
|
•
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special voting requirements for mergers and other business combinations, unless the proposed transaction was approved by a majority of continuing directors;
|
•
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special procedures to bring matters before our shareholders at our annual shareholders’ meeting; and
|
•
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special procedures to nominate members for election to our Board of Directors.
|
Location of Property
|
|
Uses of Facility
|
|
Approximate
Square Footage
|
|
Chippewa Falls, WI
|
|
Manufacturing, hardware development, central service and warehouse
|
|
213,600
|
|
Bloomington, MN
|
|
Software development, sales and marketing
|
|
87,705
|
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Seattle, WA
|
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Executive offices, hardware and software development, sales and marketing
|
|
51,643
|
|
San Jose, CA
|
|
Hardware and software development
|
|
21,733
|
|
Austin, TX
|
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Hardware development
|
|
20,916
|
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Longmont, CO
|
|
ClusterStor product development
|
|
14,292
|
|
|
|
High
|
|
Low
|
||||
Year Ended December 31, 2017:
|
|
|
|
|
||||
First Quarter
|
|
$
|
22.55
|
|
|
$
|
16.10
|
|
Second Quarter
|
|
$
|
21.98
|
|
|
$
|
16.50
|
|
Third Quarter
|
|
$
|
20.95
|
|
|
$
|
17.35
|
|
Fourth Quarter
|
|
$
|
26.65
|
|
|
$
|
17.90
|
|
Year Ended December 31, 2016:
|
|
|
|
|
||||
First Quarter
|
|
$
|
43.79
|
|
|
$
|
28.25
|
|
Second Quarter
|
|
$
|
43.40
|
|
|
$
|
27.39
|
|
Third Quarter
|
|
$
|
32.30
|
|
|
$
|
20.60
|
|
Fourth Quarter
|
|
$
|
23.68
|
|
|
$
|
16.77
|
|
Plan Category
|
|
Number of Shares of
Common Stock to be
Issued Upon Exercise of
Outstanding Options
|
|
Weighted-Average
Exercise Price of
Outstanding Options
|
|
Number of Shares of
Common Stock Available
for Future Issuance Under
Equity Compensation
Plans (excluding shares
reflected in 1st column)
|
||||
Equity compensation plans approved by shareholders
(1)
|
|
2,008,538
|
|
|
$
|
17.42
|
|
|
3,107,064
|
|
Equity compensation plans not approved by shareholders
(2)
|
|
25,936
|
|
|
$
|
4.88
|
|
|
—
|
|
Total
|
|
2,034,474
|
|
|
|
|
3,107,064
|
|
(1)
|
The shareholders approved our 1995, 1999 and 2003 stock option plans, our 2004, 2006 and 2009 long-term equity compensation plans, our 2013 equity incentive plan, as amended and restated, and our 2001 employee stock purchase plan, as amended. Our 1995, 1999 and 2003 stock option plans and our 2004, 2006 and 2009 long-term equity compensation plans have terminated and no more awards may be granted under those plans. Pursuant to our 2013 equity incentive plan, incentive options may be granted to employees (including officers) and nonqualified options may be granted to employees, officers, directors, agents and consultants with exercise prices at least equal to the fair market value of the underlying common stock at the time of grant. While our Board of Directors may grant options with varying vesting periods under these plans, most options granted to employees vest over four years, with 25% of the options vesting after one year and the remaining options vesting monthly over the next three years, and most option grants to non-employee directors vesting
|
(2)
|
The shareholders did not approve our 2000 non-executive employee stock option plan. Under the 2000 non-executive employee stock option plan approved by our Board of Directors on March 30, 2000, an aggregate of 1,500,000 shares pursuant to non-qualified options could be issued to employees, agents and consultants but not to officers or directors. Otherwise, our 2000 non-executive employee stock option plan is similar to the stock option plans described in footnote (1) above. On March 30, 2010, our 2000 non-executive employee stock option plan was terminated, which ended future grants but did not affect then outstanding options. As of
December 31, 2017
, under our 2000 non-executive employee stock plan, we had options for
25,936
shares outstanding.
|
|
12/31/2012
|
|
12/31/2013
|
|
12/31/2014
|
|
12/31/2015
|
|
12/31/2016
|
|
12/31/2017
|
|
||||||
Cray Inc.
|
$
|
100.0
|
|
$
|
172.2
|
|
$
|
216.2
|
|
$
|
203.4
|
|
$
|
129.8
|
|
$
|
151.7
|
|
Nasdaq US Benchmark TR Index
|
100.0
|
|
133.5
|
|
150.1
|
|
150.8
|
|
170.5
|
|
206.9
|
|
||||||
ICB: 9572 Computer Hardware Index
|
100.0
|
|
117.6
|
|
159.5
|
|
145.2
|
|
167.4
|
|
240.7
|
|
|
|
Years Ended December 31,
|
||||||||||||||||||
|
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
||||||||||
|
|
(In thousands, except for per share data)
|
||||||||||||||||||
Operating Data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Product revenue
|
|
$
|
250,195
|
|
|
$
|
499,432
|
|
|
$
|
601,294
|
|
|
$
|
460,748
|
|
|
$
|
436,330
|
|
Service revenue
|
|
142,314
|
|
|
130,377
|
|
|
123,395
|
|
|
100,858
|
|
|
89,419
|
|
|||||
Total revenue
|
|
392,509
|
|
|
629,809
|
|
|
724,689
|
|
|
561,606
|
|
|
525,749
|
|
|||||
Cost of product revenue
|
|
188,830
|
|
|
332,016
|
|
|
426,821
|
|
|
321,554
|
|
|
298,244
|
|
|||||
Cost of service revenue
|
|
72,975
|
|
|
77,578
|
|
|
72,185
|
|
|
55,638
|
|
|
43,179
|
|
|||||
Total cost of revenue
|
|
261,805
|
|
|
409,594
|
|
|
499,006
|
|
|
377,192
|
|
|
341,423
|
|
|||||
Gross profit
|
|
130,704
|
|
|
220,215
|
|
|
225,683
|
|
|
184,414
|
|
|
184,326
|
|
|||||
Research and development, net
|
|
98,777
|
|
|
112,130
|
|
|
96,563
|
|
|
94,048
|
|
|
87,728
|
|
|||||
Sales and marketing
|
|
59,894
|
|
|
64,893
|
|
|
60,150
|
|
|
57,785
|
|
|
51,345
|
|
|||||
General and administrative
|
|
29,113
|
|
|
34,053
|
|
|
27,966
|
|
|
23,381
|
|
|
23,603
|
|
|||||
Restructuring
|
|
8,568
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Operating expenses
|
|
196,352
|
|
|
211,076
|
|
|
184,679
|
|
|
175,214
|
|
|
162,676
|
|
|||||
Income (loss) from operations
|
|
(65,648
|
)
|
|
9,139
|
|
|
41,004
|
|
|
9,200
|
|
|
21,650
|
|
|||||
Other income (expense), net
|
|
5,002
|
|
|
(1,365
|
)
|
|
365
|
|
|
(9
|
)
|
|
(1,378
|
)
|
|||||
Interest income, net
|
|
3,276
|
|
|
2,147
|
|
|
1,408
|
|
|
506
|
|
|
757
|
|
|||||
Gain on strategic transaction
|
|
4,480
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Income (loss) before income taxes
|
|
(52,890
|
)
|
|
9,921
|
|
|
42,777
|
|
|
9,697
|
|
|
21,029
|
|
|||||
Benefit (provision) for income taxes
|
|
(80,939
|
)
|
|
694
|
|
|
(15,240
|
)
|
|
52,626
|
|
|
11,194
|
|
|||||
Net income (loss)
|
|
$
|
(133,829
|
)
|
|
$
|
10,615
|
|
|
$
|
27,537
|
|
|
$
|
62,323
|
|
|
$
|
32,223
|
|
Net income (loss) per common share:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
|
$
|
(3.33
|
)
|
|
$
|
0.27
|
|
|
$
|
0.70
|
|
|
$
|
1.61
|
|
|
$
|
0.85
|
|
Diluted
|
|
$
|
(3.33
|
)
|
|
$
|
0.26
|
|
|
$
|
0.68
|
|
|
$
|
1.54
|
|
|
$
|
0.81
|
|
Weighted average outstanding shares:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
|
40,139
|
|
|
39,833
|
|
|
39,257
|
|
|
38,634
|
|
|
37,832
|
|
|||||
Diluted
|
|
40,139
|
|
|
41,012
|
|
|
40,691
|
|
|
40,435
|
|
|
39,776
|
|
|||||
Cash Flow Data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash provided by (used in):
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating activities
|
|
$
|
(73,341
|
)
|
|
$
|
(52,313
|
)
|
|
$
|
147,756
|
|
|
$
|
(58,109
|
)
|
|
$
|
(87,350
|
)
|
Investing activities
|
|
(13,663
|
)
|
|
8,998
|
|
|
7,216
|
|
|
(22,755
|
)
|
|
27,211
|
|
|||||
Financing activities
|
|
(332
|
)
|
|
(540
|
)
|
|
(1,373
|
)
|
|
(70
|
)
|
|
(93
|
)
|
|||||
Depreciation and amortization
|
|
16,760
|
|
|
14,684
|
|
|
17,017
|
|
|
16,324
|
|
|
14,242
|
|
|||||
Purchases of property and equipment
|
|
17,467
|
|
|
7,503
|
|
|
7,467
|
|
|
17,193
|
|
|
13,136
|
|
|||||
Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash, cash equivalents, restricted cash and investments
|
|
$
|
147,317
|
|
|
$
|
224,617
|
|
|
$
|
284,891
|
|
|
$
|
145,796
|
|
|
$
|
220,449
|
|
Working capital
|
|
354,300
|
|
|
373,028
|
|
|
376,559
|
|
|
325,541
|
|
|
325,733
|
|
|||||
Total assets
|
|
618,757
|
|
|
714,572
|
|
|
694,175
|
|
|
651,434
|
|
|
603,366
|
|
|||||
Shareholders’ equity
|
|
400,297
|
|
|
525,476
|
|
|
492,510
|
|
|
453,854
|
|
|
375,587
|
|
•
|
convergence of traditional supercomputing modeling simulation with big data analytics and AI;
|
•
|
supercomputing with many-core commodity processors driving increasing scalability requirements;
|
•
|
increased micro-architectural diversity, including increased usage of many-core processors and accelerators, as the rate of increases in per-core performance slows;
|
•
|
data I/O and capacity needs growing much faster than computational needs;
|
•
|
the rise of AI along with machine learning and deep learning technologies which utilize HPC technologies for performance and scale;
|
•
|
technology innovations in memory and storage allowing for faster data access such as high bandwidth memory, NVRAM, SSDs and flash devices;
|
•
|
the increasing commoditization of HPC hardware, particularly processors and system interconnects;
|
•
|
the growing concentration of very large suppliers of key computing, memory and storage components in the industry;
|
•
|
the growing commoditization of software, including plentiful building blocks and more capable open source software;
|
•
|
electrical power requirements becoming a design constraint and driver in total cost of ownership determinations;
|
•
|
increasing use of analytics technologies (Hadoop, Spark, NoSQL and Graph) in both the HPC and big data markets;
|
•
|
increased adoption of cloud computing as a solution for loosely-coupled HPC applications;
|
•
|
large increases in memory prices during the past year; and
|
•
|
decreasing demand for supercomputers and significant variability in market demand from quarter-to-quarter and year-to-year.
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Product revenue
|
|
$
|
250,195
|
|
|
$
|
499,432
|
|
|
$
|
601,294
|
|
Less: Cost of product revenue
|
|
188,830
|
|
|
332,016
|
|
|
426,821
|
|
|||
Product gross profit
|
|
$
|
61,365
|
|
|
$
|
167,416
|
|
|
$
|
174,473
|
|
Product gross profit percentage
|
|
25
|
%
|
|
34
|
%
|
|
29
|
%
|
|||
|
|
|
|
|
|
|
||||||
Service revenue
|
|
$
|
142,314
|
|
|
$
|
130,377
|
|
|
$
|
123,395
|
|
Less: Cost of service revenue
|
|
72,975
|
|
|
77,578
|
|
|
72,185
|
|
|||
Service gross profit
|
|
$
|
69,339
|
|
|
$
|
52,799
|
|
|
$
|
51,210
|
|
Service gross profit percentage
|
|
49
|
%
|
|
40
|
%
|
|
42
|
%
|
|||
|
|
|
|
|
|
|
||||||
Total revenue
|
|
$
|
392,509
|
|
|
$
|
629,809
|
|
|
$
|
724,689
|
|
Less: Total cost of revenue
|
|
261,805
|
|
|
409,594
|
|
|
499,006
|
|
|||
Total gross profit
|
|
$
|
130,704
|
|
|
$
|
220,215
|
|
|
$
|
225,683
|
|
Total gross profit percentage
|
|
33
|
%
|
|
35
|
%
|
|
31
|
%
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Gross research and development expenses
|
|
$
|
141,289
|
|
|
$
|
130,006
|
|
|
$
|
126,060
|
|
Less: Amounts included in cost of revenue
|
|
(9,473
|
)
|
|
(12,621
|
)
|
|
(16,515
|
)
|
|||
Less: Reimbursed research and development (excludes amounts in revenue)
|
|
(33,039
|
)
|
|
(5,255
|
)
|
|
(12,982
|
)
|
|||
Net research and development expenses
|
|
$
|
98,777
|
|
|
$
|
112,130
|
|
|
$
|
96,563
|
|
Percentage of total revenue
|
|
25
|
%
|
|
18
|
%
|
|
13
|
%
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Sales and marketing
|
|
$
|
59,894
|
|
|
$
|
64,893
|
|
|
$
|
60,150
|
|
Percentage of total revenue
|
|
15
|
%
|
|
10
|
%
|
|
8
|
%
|
|||
General and administrative
|
|
$
|
29,113
|
|
|
$
|
34,053
|
|
|
$
|
27,966
|
|
Percentage of total revenue
|
|
7
|
%
|
|
5
|
%
|
|
4
|
%
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Interest income
|
|
$
|
3,386
|
|
|
$
|
2,120
|
|
|
$
|
1,465
|
|
Interest expense
|
|
(110
|
)
|
|
27
|
|
|
(57
|
)
|
|||
Net interest income
|
|
$
|
3,276
|
|
|
$
|
2,147
|
|
|
$
|
1,408
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Net income (loss) before income taxes
|
|
$
|
(52,890
|
)
|
|
$
|
9,921
|
|
|
$
|
42,777
|
|
Tax benefit (expense)
|
|
(80,939
|
)
|
|
694
|
|
|
(15,240
|
)
|
|||
Net income (loss)
|
|
$
|
(133,829
|
)
|
|
$
|
10,615
|
|
|
$
|
27,537
|
|
Effective tax rate
|
|
(153
|
)%
|
|
(7
|
)%
|
|
36
|
%
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
Cash provided by (used in):
|
|
|
|
|
|
|
||||||
Operating Activities
|
|
$
|
(73,341
|
)
|
|
$
|
(52,313
|
)
|
|
$
|
147,756
|
|
Investing Activities
|
|
(13,663
|
)
|
|
8,998
|
|
|
7,216
|
|
|||
Financing Activities
|
|
(332
|
)
|
|
(540
|
)
|
|
(1,373
|
)
|
|
|
Amounts Committed by Year
|
||||||||||||||||||
Contractual Obligations
|
|
Total
|
|
1 Year
|
|
Years 2-3
|
|
Years 4-5
|
|
Thereafter
|
||||||||||
Development agreements
|
|
$
|
25,061
|
|
|
$
|
19,930
|
|
|
$
|
5,131
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Operating leases
|
|
53,933
|
|
|
7,461
|
|
|
13,150
|
|
|
12,613
|
|
|
20,709
|
|
|||||
Total contractual cash obligations
|
|
$
|
78,994
|
|
|
$
|
27,391
|
|
|
$
|
18,281
|
|
|
$
|
12,613
|
|
|
$
|
20,709
|
|
•
|
The delivered item(s) has value to the customer on a standalone basis; and
|
•
|
If the arrangement includes a general right of return relative to the delivered item(s), delivery or performance of the undelivered item(s) is considered probable and substantially in our control.
|
•
|
It is commensurate with either of the following:
|
•
|
Our performance to achieve the milestone; or
|
•
|
The enhancement of value of the delivered item or items as a result of a specific outcome resulting from our performance to achieve the milestone.
|
•
|
It relates solely to past performance.
|
•
|
It is reasonable relative to all of the deliverables and payment terms (including other potential milestone consideration) within the arrangement.
|
|
|
|
Consolidated Balance Sheets at December 31, 2017 and December 31, 2016
|
|
F-1
|
Consolidated Statements of Operations for the years ended December 31, 2017, 2016 and 2015
|
|
F-2
|
Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2017, 2016 and 2015
|
|
F-3
|
Consolidated Statements of Shareholders’ Equity for the years ended December 31, 2017, 2016 and 2015
|
|
F-4
|
Consolidated Statements of Cash Flows for the years ended December 31, 2017, 2016 and 2015
|
|
F-5
|
Notes to Consolidated Financial Statements
|
|
F-6
|
Report of Independent Registered Public Accounting Firm
|
|
F-37
|
* The Financial Statements are located following page F-1.
|
Exhibit
Number
|
|
Exhibit Description
|
|
Incorporated by Reference
|
|
|
|
||||||
|
|
|
|
Form
|
|
File No.
|
|
Filing
Date
|
|
Exhibit/
Annex
|
|
Filed
Herewith
|
|
2.1
|
|
|
8-K
|
|
000-26820
|
|
04/25/12
|
|
2.1
|
|
|
||
3.1
|
|
|
8-K
|
|
000-26820
|
|
06/08/06
|
|
3.3
|
|
|
||
3.2
|
|
|
8-K
|
|
000-26820
|
|
02/12/07
|
|
3.1
|
|
|
||
3.3
|
|
|
8-K
|
|
000-26820
|
|
04/19/12
|
|
3.1
|
|
|
||
3.4
|
|
|
8-K
|
|
000-26820
|
|
02/28/17
|
|
3.1
|
|
|
||
10.0*
|
|
|
S-8
|
|
333-57970
|
|
03/30/01
|
|
4.1
|
|
|
||
10.1*
|
|
|
S-8
|
|
333-57970
|
|
03/30/01
|
|
4.2
|
|
|
||
10.2*
|
|
|
10-K
|
|
000-26820
|
|
03/04/11
|
|
10.28
|
|
|
||
10.3*
|
|
|
DEF
14A
|
|
000-26820
|
|
03/31/03
|
|
A
|
|
|
||
10.4*
|
|
|
DEF
14A
|
|
000-26820
|
|
03/24/04
|
|
B
|
|
|
||
10.5*
|
|
|
DEF
14A
|
|
000-26820
|
|
04/28/06
|
|
B
|
|
|
||
10.6*
|
|
|
DEF
14A
|
|
000-26820
|
|
03/31/09
|
|
A
|
|
|
||
10.7*
|
|
|
DEF
14A
|
|
000-26820
|
|
04/24/13
|
|
A
|
|
|
||
10.8*
|
|
|
DEF 14A
|
|
000-26820
|
|
04/25/16
|
|
A
|
|
|
||
10.9*
|
|
|
10-K
|
|
000-26820
|
|
04/01/05
|
|
10.32
|
|
|
||
10.10*
|
|
|
10-K
|
|
000-26820
|
|
04/01/05
|
|
10.33
|
|
|
||
10.11*
|
|
|
10-K
|
|
000-26820
|
|
03/09/07
|
|
10.11
|
|
|
||
10.12*
|
|
|
8-K
|
|
000-26820
|
|
06/08/06
|
|
10.1
|
|
|
||
10.13*
|
|
|
8-K
|
|
000-26820
|
|
07/03/13
|
|
99.1
|
|
|
||
10.14*
|
|
|
8-K
|
|
000-26820
|
|
07/03/13
|
|
99.2
|
|
|
||
10.15*
|
|
|
8-K
|
|
000-26820
|
|
12/17/14
|
|
10.1
|
|
|
||
10.16*
|
|
|
8-K
|
|
000-26820
|
|
12/17/14
|
|
10.2
|
|
|
||
10.17*
|
|
|
8-K
|
|
000-26820
|
|
12/17/14
|
|
10.3
|
|
|
||
10.18*
|
|
|
8-K
|
|
000-26820
|
|
12/17/14
|
|
10.4
|
|
|
Exhibit
Number
|
|
Exhibit Description
|
|
Incorporated by Reference
|
|
|
|
||||||
|
|
|
|
Form
|
|
File No.
|
|
Filing
Date
|
|
Exhibit/
Annex
|
|
Filed
Herewith
|
|
10.19*
|
|
|
8-K
|
|
000-26820
|
|
03/08/05
|
|
10.1
|
|
|
||
10.20*
|
|
|
10-Q
|
|
000-26820
|
|
11/09/05
|
|
10.1
|
|
|
||
10.21*
|
|
|
|
|
|
|
|
|
|
|
X
|
||
10.22*
|
|
|
10-Q
|
|
000-26820
|
|
05/02/17
|
|
10.2
|
|
|
||
10.23*
|
|
|
|
|
|
|
|
|
|
|
X
|
||
10.24*
|
|
|
10-Q
|
|
000-26820
|
|
04/29/14
|
|
10.2
|
|
|
||
10.25*
|
|
|
10-Q
|
|
000-26820
|
|
10/28/14
|
|
10.1
|
|
|
||
10.26*
|
|
|
8-K
|
|
000-26820
|
|
12/22/08
|
|
10.1
|
|
|
||
10.27*
|
|
|
10-K
|
|
000-26820
|
|
02/13/14
|
|
10.20
|
|
|
||
10.28*
|
|
|
8-K
|
|
000-26820
|
|
12/17/10
|
|
10.1
|
|
|
||
10.29*
|
|
|
10-Q
|
|
000-26820
|
|
04/29/14
|
|
10.3
|
|
|
||
10.30*
|
|
|
10-Q
|
|
000-26820
|
|
05/02/17
|
|
10.1
|
|
|
||
10.31*
|
|
|
8-K
|
|
000-26820
|
|
02/08/11
|
|
10.1
|
|
|
||
10.32
|
|
|
8-K
|
|
000-26820
|
|
04/27/16
|
|
10.10
|
|
|
||
10.33
|
|
|
8-K
|
|
000-26820
|
|
05/03/12
|
|
10.1
|
|
|
||
10.34
|
|
|
|
|
|
|
|
|
|
|
X
|
||
10.35
|
|
|
8-K
|
|
000-26820
|
|
01/11/16
|
|
10.2
|
|
|
Exhibit
Number
|
|
Exhibit Description
|
|
Incorporated by Reference
|
|
|
|
||||||
|
|
|
|
Form
|
|
File No.
|
|
Filing
Date
|
|
Exhibit/
Annex
|
|
Filed
Herewith
|
|
21.1
|
|
|
|
|
|
|
|
|
|
|
X
|
||
23.1
|
|
|
|
|
|
|
|
|
|
|
X
|
||
24.1
|
|
|
|
|
|
|
|
|
|
|
X
|
||
31.1
|
|
|
|
|
|
|
|
|
|
|
X
|
||
31.2
|
|
|
|
|
|
|
|
|
|
|
X
|
||
32.1
|
|
|
|
|
|
|
|
|
|
|
X
|
||
101.INS
|
|
XBRL Instance Document
|
|
|
|
|
|
|
|
|
|
X
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document
|
|
|
|
|
|
|
|
|
|
X
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
|
|
|
|
|
|
|
X
|
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
|
|
|
|
|
|
|
|
X
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
|
|
|
|
|
|
|
X
|
*
|
|
Management contract or compensatory plan or arrangement.
|
|
|
|
CRAY INC.
|
||
|
|
|
By
|
|
/s/ P
ETER
J. U
NGARO
|
|
|
Peter J. Ungaro
|
|
|
Chief Executive Officer and President
|
|
|
|
Signature
|
|
Title
|
|
|
|
By /s/ P
ETER
J. U
NGARO
|
|
Chief Executive Officer, President and Director
|
Peter J. Ungaro
|
|
(Principal Executive Officer)
|
|
|
|
By /s/ B
RIAN
C. H
ENRY
|
|
Chief Financial Officer and Executive Vice President
|
Brian C. Henry
|
|
(Principal Financial Officer)
|
|
|
|
By /s/ C
HARLES
D. F
AIRCHILD
|
|
Chief Accounting Officer, Controller and Vice President
|
Charles D. Fairchild
|
|
(Principal Accounting Officer)
|
|
|
|
By /s/ P
RITHVIRAJ
B
ANERJEE
|
|
Director
|
Prithviraj Banerjee
|
|
|
|
|
|
By /s/ C
ATRIONA
M. F
ALLON
|
|
Director
|
Catriona M. Fallon
|
|
|
|
|
|
By /s/ S
TEPHEN
C. K
IELY
|
|
Director
|
Stephen C. Kiely
|
|
|
|
|
|
By /s/ S
ALLY
G. N
ARODICK
|
|
Director
|
Sally G. Narodick
|
|
|
|
|
|
By /s/ D
ANIEL
C. R
EGIS
|
|
Director
|
Daniel C. Regis
|
|
|
|
|
|
By /s/ M
AX
L. S
CHIRESON
|
|
Director
|
Max L. Schireson
|
|
|
|
|
|
By /s/ B
RIAN
V. T
URNER
|
|
Director
|
Brian V. Turner
|
|
|
|
|
December 31,
2017 |
|
December 31,
2016 |
||||
ASSETS
|
||||||||
Current assets:
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
137,326
|
|
|
$
|
222,962
|
|
Restricted cash
|
|
1,964
|
|
|
—
|
|
||
Short-term investments
|
|
6,997
|
|
|
—
|
|
||
Accounts and other receivables, net
|
|
162,034
|
|
|
197,941
|
|
||
Inventory
|
|
186,307
|
|
|
88,254
|
|
||
Prepaid expenses and other current assets
|
|
25,015
|
|
|
20,006
|
|
||
Total current assets
|
|
519,643
|
|
|
529,163
|
|
||
|
|
|
|
|
||||
Long-term restricted cash
|
|
1,030
|
|
|
1,655
|
|
||
Long-term investment in sales-type lease, net
|
|
23,367
|
|
|
31,050
|
|
||
Property and equipment, net
|
|
36,623
|
|
|
30,620
|
|
||
Service spares, net
|
|
2,551
|
|
|
3,023
|
|
||
Goodwill
|
|
14,182
|
|
|
14,182
|
|
||
Intangible assets other than goodwill, net
|
|
4,345
|
|
|
1,637
|
|
||
Deferred tax assets, net
|
|
1,106
|
|
|
85,613
|
|
||
Other non-current assets
|
|
15,910
|
|
|
17,629
|
|
||
TOTAL ASSETS
|
|
$
|
618,757
|
|
|
$
|
714,572
|
|
|
|
|
|
|
||||
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
||||||||
Current liabilities:
|
|
|
|
|
||||
Accounts payable
|
|
$
|
57,207
|
|
|
$
|
45,504
|
|
Accrued payroll and related expenses
|
|
18,546
|
|
|
17,199
|
|
||
Other accrued liabilities
|
|
9,471
|
|
|
10,303
|
|
||
Deferred revenue
|
|
80,119
|
|
|
83,129
|
|
||
Total current liabilities
|
|
165,343
|
|
|
156,135
|
|
||
|
|
|
|
|
||||
Long-term deferred revenue
|
|
38,622
|
|
|
27,258
|
|
||
Other non-current liabilities
|
|
14,495
|
|
|
5,703
|
|
||
TOTAL LIABILITIES
|
|
218,460
|
|
|
189,096
|
|
||
Commitments and contingencies (Note 13)
|
|
|
|
|
||||
Shareholders’ equity:
|
|
|
|
|
||||
Preferred stock — Authorized and undesignated, 5,000,000 shares; no shares issued or outstanding
|
|
—
|
|
|
—
|
|
||
Common stock and additional paid-in capital, par value $.01 per share — Authorized, 75,000,000 shares; issued and outstanding 40,464,963 and 40,757,458 shares, respectively
|
|
633,408
|
|
|
622,604
|
|
||
Accumulated other comprehensive income
|
|
915
|
|
|
2,782
|
|
||
Accumulated deficit
|
|
(234,026
|
)
|
|
(99,910
|
)
|
||
TOTAL SHAREHOLDERS’ EQUITY
|
|
400,297
|
|
|
525,476
|
|
||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
$
|
618,757
|
|
|
$
|
714,572
|
|
|
|
Years Ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Revenue:
|
|
|
|
|
|
|
||||||
Product
|
|
$
|
250,195
|
|
|
$
|
499,432
|
|
|
$
|
601,294
|
|
Service
|
|
142,314
|
|
|
130,377
|
|
|
123,395
|
|
|||
Total revenue
|
|
392,509
|
|
|
629,809
|
|
|
724,689
|
|
|||
Cost of revenue:
|
|
|
|
|
|
|
||||||
Cost of product revenue
|
|
188,830
|
|
|
332,016
|
|
|
426,821
|
|
|||
Cost of service revenue
|
|
72,975
|
|
|
77,578
|
|
|
72,185
|
|
|||
Total cost of revenue
|
|
261,805
|
|
|
409,594
|
|
|
499,006
|
|
|||
Gross profit
|
|
130,704
|
|
|
220,215
|
|
|
225,683
|
|
|||
Operating expenses:
|
|
|
|
|
|
|
||||||
Research and development, net
|
|
98,777
|
|
|
112,130
|
|
|
96,563
|
|
|||
Sales and marketing
|
|
59,894
|
|
|
64,893
|
|
|
60,150
|
|
|||
General and administrative
|
|
29,113
|
|
|
34,053
|
|
|
27,966
|
|
|||
Restructuring
|
|
8,568
|
|
|
—
|
|
|
—
|
|
|||
Total operating expenses
|
|
196,352
|
|
|
211,076
|
|
|
184,679
|
|
|||
Income (loss) from operations
|
|
(65,648
|
)
|
|
9,139
|
|
|
41,004
|
|
|||
|
|
|
|
|
|
|
||||||
Other income (expense), net
|
|
5,002
|
|
|
(1,365
|
)
|
|
365
|
|
|||
Interest income, net
|
|
3,276
|
|
|
2,147
|
|
|
1,408
|
|
|||
Gain on strategic transaction
|
|
4,480
|
|
|
—
|
|
|
—
|
|
|||
Income (loss) before income taxes
|
|
(52,890
|
)
|
|
9,921
|
|
|
42,777
|
|
|||
Income tax benefit (expense)
|
|
(80,939
|
)
|
|
694
|
|
|
(15,240
|
)
|
|||
Net income (loss)
|
|
$
|
(133,829
|
)
|
|
$
|
10,615
|
|
|
$
|
27,537
|
|
|
|
|
|
|
|
|
||||||
Basic net income (loss) per common share
|
|
$
|
(3.33
|
)
|
|
$
|
0.27
|
|
|
$
|
0.70
|
|
Diluted net income (loss) per common share
|
|
$
|
(3.33
|
)
|
|
$
|
0.26
|
|
|
$
|
0.68
|
|
|
|
|
|
|
|
|
||||||
Basic weighted average shares outstanding
|
|
40,139
|
|
|
39,833
|
|
|
39,257
|
|
|||
Diluted weighted average shares outstanding
|
|
40,139
|
|
|
41,012
|
|
|
40,691
|
|
|
|
Years Ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Net income (loss)
|
|
$
|
(133,829
|
)
|
|
$
|
10,615
|
|
|
$
|
27,537
|
|
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
|
||||||
Unrealized gain (loss) on available-for-sale investments
|
|
(7
|
)
|
|
8
|
|
|
(20
|
)
|
|||
Foreign currency translation adjustments
|
|
(490
|
)
|
|
426
|
|
|
(394
|
)
|
|||
Unrealized gain (loss) on cash flow hedges
|
|
(1,457
|
)
|
|
8,030
|
|
|
5,251
|
|
|||
Reclassification adjustments on cash flow hedges included in net income (loss)
|
|
87
|
|
|
(13,324
|
)
|
|
(3,698
|
)
|
|||
Other comprehensive income (loss)
|
|
(1,867
|
)
|
|
(4,860
|
)
|
|
1,139
|
|
|||
Comprehensive income (loss)
|
|
$
|
(135,696
|
)
|
|
$
|
5,755
|
|
|
$
|
28,676
|
|
|
|
Common Stock
and Additional
Paid In Capital
|
|
Accumulated
Other
Comprehensive
Income
|
|
Accumulated
Deficit
|
|
Total
|
|||||||||||
|
|
Number
of Shares
|
|
Amount
|
|
||||||||||||||
BALANCE, December 31, 2014
|
|
40,822
|
|
|
$
|
598,390
|
|
|
$
|
6,503
|
|
|
$
|
(151,039
|
)
|
|
$
|
453,854
|
|
Issuance of shares under employee stock purchase plan
|
|
27
|
|
|
711
|
|
|
|
|
|
|
711
|
|
||||||
Exercise of stock options
|
|
229
|
|
|
2,289
|
|
|
|
|
|
|
2,289
|
|
||||||
Restricted shares issued for compensation, net of forfeitures and taxes
|
|
(384
|
)
|
|
(2,464
|
)
|
|
|
|
(1,909
|
)
|
|
(4,373
|
)
|
|||||
Share-based compensation
|
|
—
|
|
|
11,353
|
|
|
|
|
|
|
11,353
|
|
||||||
Other comprehensive income
|
|
|
|
|
|
1,139
|
|
|
|
|
1,139
|
|
|||||||
Net income
|
|
|
|
|
|
|
|
27,537
|
|
|
27,537
|
|
|||||||
BALANCE, December 31, 2015
|
|
40,694
|
|
|
$
|
610,279
|
|
|
$
|
7,642
|
|
|
$
|
(125,411
|
)
|
|
$
|
492,510
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Issuance of shares under employee stock purchase plan
|
|
27
|
|
|
718
|
|
|
|
|
|
|
718
|
|
||||||
Exercise of stock options
|
|
169
|
|
|
2,121
|
|
|
|
|
|
|
2,121
|
|
||||||
Restricted shares issued for compensation, net of forfeitures and taxes
|
|
(133
|
)
|
|
(1,665
|
)
|
|
|
|
(1,714
|
)
|
|
(3,379
|
)
|
|||||
Share-based compensation
|
|
—
|
|
|
11,151
|
|
|
|
|
|
|
11,151
|
|
||||||
Other comprehensive loss
|
|
|
|
|
|
(4,860
|
)
|
|
|
|
(4,860
|
)
|
|||||||
Cumulative-effect adjustment resulting from adoption of ASU 2016-09 (Note 14)
|
|
|
|
|
|
|
|
16,600
|
|
|
16,600
|
|
|||||||
Net income
|
|
|
|
|
|
|
|
10,615
|
|
|
10,615
|
|
|||||||
BALANCE, December 31, 2016
|
|
40,757
|
|
|
$
|
622,604
|
|
|
$
|
2,782
|
|
|
$
|
(99,910
|
)
|
|
$
|
525,476
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Issuance of shares under employee stock purchase plan
|
|
20
|
|
|
365
|
|
|
|
|
|
|
365
|
|
||||||
Exercise of stock options
|
|
157
|
|
|
1,342
|
|
|
|
|
|
|
1,342
|
|
||||||
Restricted shares issued for compensation, net of forfeitures and taxes
|
|
(469
|
)
|
|
(1,752
|
)
|
|
|
|
(287
|
)
|
|
(2,039
|
)
|
|||||
Share-based compensation
|
|
—
|
|
|
10,849
|
|
|
|
|
|
|
10,849
|
|
||||||
Other comprehensive loss
|
|
|
|
|
|
(1,867
|
)
|
|
|
|
(1,867
|
)
|
|||||||
Net loss
|
|
|
|
|
|
|
|
(133,829
|
)
|
|
(133,829
|
)
|
|||||||
BALANCE, December 31, 2017
|
|
40,465
|
|
|
$
|
633,408
|
|
|
$
|
915
|
|
|
$
|
(234,026
|
)
|
|
$
|
400,297
|
|
|
|
Years Ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Operating activities:
|
|
|
|
|
|
|
||||||
Net income (loss)
|
|
$
|
(133,829
|
)
|
|
$
|
10,615
|
|
|
$
|
27,537
|
|
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
|
|
|
|
|
|
|
||||||
Depreciation and amortization
|
|
16,760
|
|
|
14,684
|
|
|
17,017
|
|
|||
Share-based compensation expense
|
|
10,849
|
|
|
11,151
|
|
|
11,353
|
|
|||
Deferred income taxes
|
|
81,468
|
|
|
(1,861
|
)
|
|
12,103
|
|
|||
Gain on strategic transaction
|
|
(4,480
|
)
|
|
—
|
|
|
—
|
|
|||
Gain on sale of equity investment
|
|
(3,349
|
)
|
|
—
|
|
|
—
|
|
|||
Other
|
|
837
|
|
|
2,850
|
|
|
1,945
|
|
|||
Cash provided (used) due to changes in operating assets and liabilities:
|
|
|
|
|
|
|
||||||
Accounts and other receivables
|
|
38,660
|
|
|
(78,396
|
)
|
|
36,665
|
|
|||
Long-term investment in sales-type lease, net
|
|
10,129
|
|
|
(17,224
|
)
|
|
11,510
|
|
|||
Inventory
|
|
(97,688
|
)
|
|
15,343
|
|
|
21,292
|
|
|||
Prepaid expenses and other assets
|
|
(5,306
|
)
|
|
2,265
|
|
|
(3,972
|
)
|
|||
Accounts payable
|
|
11,527
|
|
|
16,903
|
|
|
(19,849
|
)
|
|||
Accrued payroll and related expenses and other accrued liabilities
|
|
7,572
|
|
|
(21,073
|
)
|
|
23,841
|
|
|||
Deferred revenue
|
|
(6,491
|
)
|
|
(7,570
|
)
|
|
8,314
|
|
|||
Net cash provided by (used in) operating activities
|
|
(73,341
|
)
|
|
(52,313
|
)
|
|
147,756
|
|
|||
Investing activities:
|
|
|
|
|
|
|
||||||
Sales and maturities of available-for-sale investments
|
|
87,513
|
|
|
30,990
|
|
|
16,229
|
|
|||
Purchases of available-for-sale investments
|
|
(94,902
|
)
|
|
(16,159
|
)
|
|
(14,991
|
)
|
|||
Cash received in strategic transaction
|
|
8,000
|
|
|
—
|
|
|
—
|
|
|||
Proceeds from sale of equity investment
|
|
4,481
|
|
|
—
|
|
|
—
|
|
|||
Change in restricted cash
|
|
(1,288
|
)
|
|
1,670
|
|
|
13,445
|
|
|||
Purchases of property and equipment
|
|
(17,467
|
)
|
|
(7,503
|
)
|
|
(7,467
|
)
|
|||
Net cash provided by (used in) investing activities
|
|
(13,663
|
)
|
|
8,998
|
|
|
7,216
|
|
|||
Financing activities:
|
|
|
|
|
|
|
||||||
Proceeds from issuance of common stock through employee stock purchase plan
|
|
365
|
|
|
718
|
|
|
711
|
|
|||
Purchase of employee restricted shares to fund related statutory tax withholding
|
|
(2,039
|
)
|
|
(3,379
|
)
|
|
(4,373
|
)
|
|||
Proceeds from exercise of options
|
|
1,342
|
|
|
2,121
|
|
|
2,289
|
|
|||
Net cash used in financing activities
|
|
(332
|
)
|
|
(540
|
)
|
|
(1,373
|
)
|
|||
Effect of foreign exchange rate changes on cash and cash equivalents
|
|
1,700
|
|
|
157
|
|
|
428
|
|
|||
Net increase (decrease) in cash and cash equivalents
|
|
(85,636
|
)
|
|
(43,698
|
)
|
|
154,027
|
|
|||
Cash and cash equivalents:
|
|
|
|
|
|
|
||||||
Beginning of period
|
|
222,962
|
|
|
266,660
|
|
|
112,633
|
|
|||
End of period
|
|
$
|
137,326
|
|
|
$
|
222,962
|
|
|
$
|
266,660
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
|
|
|
||||||
Cash paid for interest
|
|
$
|
14
|
|
|
$
|
31
|
|
|
$
|
4
|
|
Cash paid for income taxes
|
|
930
|
|
|
2,441
|
|
|
3,890
|
|
•
|
The delivered item(s) has value to the customer on a standalone basis; and
|
•
|
If the arrangement includes a general right of return relative to the delivered item(s), delivery or performance of the undelivered item(s) is considered probable and substantially in the control of the Company.
|
•
|
It is commensurate with either of the following:
|
•
|
The Company’s performance to achieve the milestone; or
|
•
|
The enhancement of value of the delivered item or items as a result of a specific outcome resulting from the Company’s performance to achieve the milestone.
|
•
|
It relates solely to past performance.
|
•
|
It is reasonable relative to all of the deliverables and payment terms (including other potential milestone consideration) within the arrangement.
|
|
|
2017
|
|
2016
|
||||
Accumulated unrealized net loss on available-for-sale investments
|
|
$
|
(7
|
)
|
|
$
|
—
|
|
Accumulated currency translation adjustments
|
|
1,611
|
|
|
2,101
|
|
||
Accumulated unrealized net gain (loss) on cash flow hedges
|
|
(689
|
)
|
|
681
|
|
||
Accumulated other comprehensive income
|
|
$
|
915
|
|
|
$
|
2,782
|
|
Cash
|
|
$
|
8,000
|
|
Receivable from Seagate
|
|
1,782
|
|
|
Inventory
|
|
4,120
|
|
|
Property and equipment
|
|
2,915
|
|
|
Deferred revenue
|
|
(12,168
|
)
|
|
Deferred tax liabilities
|
|
(3,019
|
)
|
|
Other liabilities
|
|
(500
|
)
|
|
Net tangible assets
|
|
1,130
|
|
|
|
|
|
||
Trademarks
|
|
90
|
|
|
Developed technology
|
|
1,400
|
|
|
Customer relationships
|
|
260
|
|
|
Supply agreement
|
|
1,600
|
|
|
Total net assets acquired
|
|
$
|
4,480
|
|
Intangible Asset Class
|
|
Fair Value
|
|
Useful Life (in Years)
|
||
Trademarks
|
|
$
|
90
|
|
|
5
|
Developed technology
|
|
$
|
1,400
|
|
|
3
|
Customer relationships
|
|
$
|
260
|
|
|
10
|
Supply agreement
|
|
$
|
1,600
|
|
|
4
|
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net Carrying Amount
|
||||||
Trademarks
|
$
|
90
|
|
|
$
|
5
|
|
|
$
|
85
|
|
Developed technology
|
1,400
|
|
|
117
|
|
|
1,283
|
|
|||
Customer relationships
|
260
|
|
|
7
|
|
|
253
|
|
|||
Supply agreement
|
1,600
|
|
|
100
|
|
|
1,500
|
|
|||
Total
|
$
|
3,350
|
|
|
$
|
229
|
|
|
$
|
3,121
|
|
2018
|
|
$
|
911
|
|
2019
|
|
911
|
|
|
2020
|
|
794
|
|
|
2021
|
|
344
|
|
|
2022
|
|
40
|
|
|
Thereafter
|
|
121
|
|
|
Total
|
|
$
|
3,121
|
|
Description
|
|
Fair Value
as of December 31, 2017 |
|
Quoted
Prices in
Active
Markets
(Level 1)
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
||||||
Assets:
|
|
|
|
|
|
|
||||||
Cash and cash equivalents and restricted cash
|
|
$
|
140,320
|
|
|
$
|
140,320
|
|
|
$
|
—
|
|
Available-for-sale investments (1)
|
|
6,997
|
|
|
6,997
|
|
|
—
|
|
|||
Foreign currency exchange contracts (2)
|
|
3,251
|
|
|
—
|
|
|
3,251
|
|
|||
Assets measured at fair value at December 31, 2017
|
|
$
|
150,568
|
|
|
$
|
147,317
|
|
|
$
|
3,251
|
|
Liabilities:
|
|
|
|
|
|
|
||||||
Foreign currency exchange contracts (3)
|
|
2,431
|
|
|
—
|
|
|
2,431
|
|
|||
Liabilities measured at fair value at December 31, 2017
|
|
$
|
2,431
|
|
|
$
|
—
|
|
|
$
|
2,431
|
|
Description
|
|
Fair Value
as of December 31, 2016 |
|
Quoted
Prices in
Active
Markets
(Level 1)
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
||||||
Assets:
|
|
|
|
|
|
|
||||||
Cash and cash equivalents and restricted cash
|
|
$
|
224,617
|
|
|
$
|
224,617
|
|
|
$
|
—
|
|
Foreign currency exchange contracts (2)
|
|
11,250
|
|
|
—
|
|
|
11,250
|
|
|||
Assets measured at fair value at December 31, 2016
|
|
$
|
235,867
|
|
|
$
|
224,617
|
|
|
$
|
11,250
|
|
Liabilities:
|
|
|
|
|
|
|
||||||
Foreign currency exchange contracts (3)
|
|
41
|
|
|
—
|
|
|
41
|
|
|||
Liabilities measured at fair value at December 31, 2016
|
|
$
|
41
|
|
|
$
|
—
|
|
|
$
|
41
|
|
(1)
|
Included in “Short-term investments” on the Company’s Consolidated Balance Sheets.
|
(2)
|
Included in “Prepaid expenses and other current assets” and “Other non-current assets” on the Company’s Consolidated Balance Sheets.
|
(3)
|
Included in “Other accrued liabilities” and “Other non-current liabilities” on the Company’s Consolidated Balance Sheets.
|
|
|
December 31,
|
||||
|
|
2017
|
|
2016
|
||
Euros (EUR)
|
|
2.1
|
|
|
1.5
|
|
Swiss Francs (CHF)
|
|
—
|
|
|
3.6
|
|
Japanese Yen (JPY)
|
|
4,345.6
|
|
|
—
|
|
Canadian Dollars (CAD)
|
|
56.0
|
|
|
54.4
|
|
New Zealand Dollars (NZD)
|
|
16.2
|
|
|
—
|
|
|
|
December 31,
|
||||
|
|
2017
|
|
2016
|
||
British Pounds (GBP)
|
|
26.1
|
|
|
33.8
|
|
Euros (EUR)
|
|
4.7
|
|
|
8.0
|
|
Japanese Yen (JPY)
|
|
—
|
|
|
2,464.7
|
|
Canadian Dollars (CAD)
|
|
0.3
|
|
|
32.4
|
|
Swiss Francs (CHF)
|
|
2.6
|
|
|
—
|
|
|
|
December 31,
|
||||||
Balance Sheet Location
|
|
2017
|
|
2016
|
||||
Prepaid expenses and other current assets
|
|
$
|
546
|
|
|
$
|
71
|
|
Other non-current assets
|
|
—
|
|
|
367
|
|
||
Other accrued liabilities
|
|
(129
|
)
|
|
(9
|
)
|
||
Other non-current liabilities
|
|
(1,907
|
)
|
|
(5
|
)
|
||
Total fair value of derivative instruments designated as cash flow hedges
|
|
$
|
(1,490
|
)
|
|
$
|
424
|
|
|
|
December 31,
|
||||||
Balance Sheet Location
|
|
2017
|
|
2016
|
||||
Prepaid expenses and other current assets
|
|
$
|
1,252
|
|
|
$
|
5,344
|
|
Other non-current assets
|
|
1,453
|
|
|
5,468
|
|
||
Other accrued liabilities
|
|
(395
|
)
|
|
(27
|
)
|
||
Total fair value of derivative instruments not designated as cash flow hedges
|
|
$
|
2,310
|
|
|
$
|
10,785
|
|
|
|
Year Ended
December 31, |
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
|
|
|
|
|
|
|
||||||
Gross of Tax Reclassifications
|
|
$
|
(146
|
)
|
|
$
|
22,207
|
|
|
$
|
6,163
|
|
Net of Tax Reclassifications
|
|
$
|
(87
|
)
|
|
$
|
13,324
|
|
|
$
|
3,698
|
|
Year Ended December 31, 2017
|
|||||||||||||||
|
Unrealized Loss on Investments
|
|
Foreign Currency Translation Adjustments
|
|
Unrealized Gain (Loss) on Cash Flow Hedges
|
|
Accumulated Other Comprehensive Income
|
||||||||
Beginning balance
|
$
|
—
|
|
|
$
|
2,101
|
|
|
$
|
681
|
|
|
$
|
2,782
|
|
Current-period change, net of tax
|
(7
|
)
|
|
(490
|
)
|
|
(1,370
|
)
|
|
(1,867
|
)
|
||||
Ending balance
|
$
|
(7
|
)
|
|
$
|
1,611
|
|
|
$
|
(689
|
)
|
|
$
|
915
|
|
|
|
|
|
|
|
|
|
||||||||
Income tax expense (benefit) associated with current-period change
|
$
|
(3
|
)
|
|
$
|
1,110
|
|
|
$
|
(1,399
|
)
|
|
$
|
(292
|
)
|
Year Ended December 31, 2016
|
|||||||||||||||
|
Unrealized Loss on Investments
|
|
Foreign Currency Translation Adjustments
|
|
Unrealized Gain on Cash Flow Hedges
|
|
Accumulated Other Comprehensive Income
|
||||||||
Beginning balance
|
$
|
(8
|
)
|
|
$
|
1,675
|
|
|
$
|
5,975
|
|
|
$
|
7,642
|
|
Current-period change, net of tax
|
8
|
|
|
426
|
|
|
(5,294
|
)
|
|
(4,860
|
)
|
||||
Ending balance
|
$
|
—
|
|
|
$
|
2,101
|
|
|
$
|
681
|
|
|
$
|
2,782
|
|
|
|
|
|
|
|
|
|
||||||||
Income tax expense (benefit) associated with current-period change
|
$
|
6
|
|
|
$
|
(152
|
)
|
|
$
|
(2,425
|
)
|
|
$
|
(2,571
|
)
|
|
|
December 31, 2017
|
||
Short-term available-for-sale securities cost
|
|
$
|
7,007
|
|
Short-term available-for-sale securities unrealized loss
|
|
(10
|
)
|
|
Short-term available-for-sale securities fair value
|
|
$
|
6,997
|
|
|
|
December 31,
|
||||||
|
|
2017
|
|
2016
|
||||
Trade accounts receivable
|
|
$
|
131,151
|
|
|
$
|
156,705
|
|
Unbilled receivables
|
|
9,321
|
|
|
17,264
|
|
||
Advance billings
|
|
3,569
|
|
|
1,915
|
|
||
Short-term investment in sales-type lease
|
|
10,684
|
|
|
8,683
|
|
||
Other receivables
|
|
7,337
|
|
|
13,395
|
|
||
|
|
162,062
|
|
|
197,962
|
|
||
Allowance for doubtful accounts
|
|
(28
|
)
|
|
(21
|
)
|
||
Accounts and other receivables, net
|
|
$
|
162,034
|
|
|
$
|
197,941
|
|
|
December 31
|
||||||
|
2017
|
|
2016
|
||||
Total minimum lease payments to be received
|
$
|
42,268
|
|
|
$
|
52,224
|
|
Less: executory costs
|
(6,831
|
)
|
|
(10,139
|
)
|
||
Net minimum lease payments receivable
|
35,437
|
|
|
42,085
|
|
||
Less: unearned income
|
(1,386
|
)
|
|
(2,352
|
)
|
||
Net investment in sales-type lease
|
34,051
|
|
|
39,733
|
|
||
Less: long-term investment in sales-type lease
|
(23,367
|
)
|
|
(31,050
|
)
|
||
Investment in sales-type lease included in accounts and other receivables
|
$
|
10,684
|
|
|
$
|
8,683
|
|
2018
|
$
|
15,197
|
|
2019
|
15,478
|
|
|
2020
|
11,593
|
|
|
Total minimum lease payments to be received
|
$
|
42,268
|
|
|
|
December 31
|
||||||
|
|
2017
|
|
2016
|
||||
Components and subassemblies
|
|
$
|
37,219
|
|
|
$
|
31,695
|
|
Work in process
|
|
59,456
|
|
|
39,894
|
|
||
Finished goods
|
|
89,632
|
|
|
16,665
|
|
||
|
|
$
|
186,307
|
|
|
$
|
88,254
|
|
|
|
December 31,
|
||||||
|
|
2017
|
|
2016
|
||||
Land
|
|
$
|
203
|
|
|
$
|
498
|
|
Buildings
|
|
20,480
|
|
|
20,679
|
|
||
Furniture and equipment
|
|
13,219
|
|
|
11,740
|
|
||
Computer equipment
|
|
58,358
|
|
|
54,541
|
|
||
Leasehold improvements
|
|
9,961
|
|
|
2,976
|
|
||
|
|
102,221
|
|
|
90,434
|
|
||
Accumulated depreciation and amortization
|
|
(65,598
|
)
|
|
(59,814
|
)
|
||
Property and equipment, net
|
|
$
|
36,623
|
|
|
$
|
30,620
|
|
|
|
December 31,
|
||||||
|
|
2017
|
|
2016
|
||||
Service spares
|
|
$
|
7,670
|
|
|
$
|
6,503
|
|
Accumulated depreciation
|
|
(5,119
|
)
|
|
(3,480
|
)
|
||
Service spares, net
|
|
$
|
2,551
|
|
|
$
|
3,023
|
|
|
|
December 31
|
||||||
|
|
2017
|
|
2016
|
||||
Deferred product revenue
|
|
$
|
22,245
|
|
|
$
|
14,274
|
|
Deferred service revenue
|
|
96,496
|
|
|
96,113
|
|
||
Total deferred revenue
|
|
118,741
|
|
|
110,387
|
|
||
Less long-term deferred revenue
|
|
(38,622
|
)
|
|
(27,258
|
)
|
||
Deferred revenue in current liabilities
|
|
$
|
80,119
|
|
|
$
|
83,129
|
|
|
|
Operating
Leases
|
|
Development
Agreements
|
||||
2018
|
|
$
|
7,461
|
|
|
$
|
19,930
|
|
2019
|
|
6,918
|
|
|
5,116
|
|
||
2020
|
|
6,232
|
|
|
15
|
|
||
2021
|
|
6,271
|
|
|
—
|
|
||
2022
|
|
6,342
|
|
|
—
|
|
||
Thereafter
|
|
20,709
|
|
|
—
|
|
||
Minimum contractual commitments
|
|
$
|
53,933
|
|
|
$
|
25,061
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Current provision (benefit):
|
|
|
|
|
|
|
||||||
Federal
|
|
$
|
445
|
|
|
$
|
3
|
|
|
$
|
725
|
|
State
|
|
310
|
|
|
(279
|
)
|
|
1,389
|
|
|||
Foreign
|
|
1,735
|
|
|
1,443
|
|
|
1,023
|
|
|||
Total current provision
|
|
2,490
|
|
|
1,167
|
|
|
3,137
|
|
|||
Deferred provision (benefit):
|
|
|
|
|
|
|
||||||
Federal
|
|
77,152
|
|
|
(2,127
|
)
|
|
12,198
|
|
|||
State
|
|
1,185
|
|
|
416
|
|
|
(52
|
)
|
|||
Foreign
|
|
112
|
|
|
(150
|
)
|
|
(43
|
)
|
|||
Total deferred provision (benefit)
|
|
78,449
|
|
|
(1,861
|
)
|
|
12,103
|
|
|||
Total provision (benefit) for income taxes
|
|
$
|
80,939
|
|
|
$
|
(694
|
)
|
|
$
|
15,240
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Income tax provision (benefit) at statutory rate
|
|
$
|
(18,511
|
)
|
|
$
|
3,472
|
|
|
$
|
14,972
|
|
State taxes, net of federal benefit
|
|
(1,066
|
)
|
|
89
|
|
|
897
|
|
|||
Foreign income taxes
|
|
135
|
|
|
(407
|
)
|
|
(12
|
)
|
|||
Additional increases (deductions) from share-based compensation
|
|
1,036
|
|
|
(1,815
|
)
|
|
—
|
|
|||
Deemed dividends for U.S. income tax purposes
|
|
—
|
|
|
329
|
|
|
407
|
|
|||
Nondeductible expenses
|
|
222
|
|
|
231
|
|
|
283
|
|
|||
Disallowed compensation
|
|
60
|
|
|
331
|
|
|
455
|
|
|||
Audit accrual (settlement)
|
|
1,156
|
|
|
(297
|
)
|
|
—
|
|
|||
Research and development tax credit
|
|
(3,827
|
)
|
|
(2,470
|
)
|
|
(1,733
|
)
|
|||
Tax effect of repatriation transition tax on unremitted earnings
|
|
605
|
|
|
—
|
|
|
—
|
|
|||
Gain on strategic transaction
|
|
(1,568
|
)
|
|
—
|
|
|
—
|
|
|||
Deferred tax impact from tax rate change
|
|
28,907
|
|
|
—
|
|
|
—
|
|
|||
Effect of change in valuation allowance on deferred tax assets
|
|
73,790
|
|
|
(157
|
)
|
|
(29
|
)
|
|||
Effective income tax provision (benefit)
|
|
$
|
80,939
|
|
|
$
|
(694
|
)
|
|
$
|
15,240
|
|
|
|
December 31,
|
||||||
|
|
2017
|
|
2016
|
||||
Deferred Income Tax Assets
|
|
|
|
|
||||
Inventory
|
|
$
|
6,495
|
|
|
$
|
4,127
|
|
Accrued compensation
|
|
262
|
|
|
511
|
|
||
Deferred revenue
|
|
8,285
|
|
|
14,742
|
|
||
Research and development credit carryforwards
|
|
32,218
|
|
|
28,241
|
|
||
Net operating loss carryforwards
|
|
22,775
|
|
|
38,348
|
|
||
Property and equipment
|
|
4,136
|
|
|
8,188
|
|
||
Goodwill
|
|
289
|
|
|
106
|
|
||
Research and development expenses
|
|
9,944
|
|
|
—
|
|
||
Share-based compensation
|
|
4,124
|
|
|
7,016
|
|
||
Other
|
|
2,592
|
|
|
12,939
|
|
||
Gross deferred tax assets
|
|
91,120
|
|
|
114,218
|
|
||
Valuation allowance
|
|
(82,875
|
)
|
|
(8,727
|
)
|
||
Deferred tax assets
|
|
8,245
|
|
|
105,491
|
|
||
Deferred Income Tax Liabilities
|
|
|
|
|
||||
Investment in sales-type lease, net
|
|
(3,084
|
)
|
|
(13,728
|
)
|
||
Intangible assets
|
|
(205
|
)
|
|
(421
|
)
|
||
Other
|
|
(3,850
|
)
|
|
(5,729
|
)
|
||
Deferred tax liabilities
|
|
(7,139
|
)
|
|
(19,878
|
)
|
||
Net deferred tax asset
|
|
$
|
1,106
|
|
|
$
|
85,613
|
|
Balance at December 31, 2014
|
$
|
5,630
|
|
Increase related to prior year income tax positions
|
151
|
|
|
Increase related to current year income tax positions
|
433
|
|
|
Balance at December 31, 2015
|
$
|
6,214
|
|
Increase related to prior year income tax positions
|
53
|
|
|
Decrease related to prior year income tax positions
|
(365
|
)
|
|
Increase related to current year income tax positions
|
565
|
|
|
Balance at December 31, 2016
|
$
|
6,467
|
|
Increase related to prior year income tax positions
|
1,440
|
|
|
Increase related to current year income tax positions
|
673
|
|
|
Balance at December 31, 2017
|
$
|
8,580
|
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
Risk-free interest rate
|
|
1.64
|
%
|
|
1.12
|
%
|
|
1.31
|
%
|
|||
Expected dividend yield
|
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|||
Volatility
|
|
54.14
|
%
|
|
50.92
|
%
|
|
50.55
|
%
|
|||
Expected life (in years)
|
|
4.0
|
|
|
4.0
|
|
|
4.0
|
|
|||
Weighted average Black-Scholes value of options granted
|
|
$
|
7.91
|
|
|
$
|
13.16
|
|
|
$
|
11.23
|
|
|
|
Options
|
|
Weighted
Average
Exercise
Price
|
|
Weighted Average Remaining
Contractual
Term (Years)
|
|||
Outstanding at January 1, 2015
|
|
1,930,990
|
|
|
$
|
12.34
|
|
|
|
Granted
|
|
307,450
|
|
|
27.86
|
|
|
|
|
Exercised
|
|
(229,118
|
)
|
|
9.99
|
|
|
|
|
Canceled and forfeited
|
|
(60,847
|
)
|
|
20.00
|
|
|
|
|
Outstanding at December 31, 2015
|
|
1,948,475
|
|
|
14.83
|
|
|
|
|
Granted
|
|
240,075
|
|
|
32.65
|
|
|
|
|
Exercised
|
|
(168,825
|
)
|
|
12.57
|
|
|
|
|
Canceled and forfeited
|
|
(30,588
|
)
|
|
26.60
|
|
|
|
|
Outstanding at December 31, 2016
|
|
1,989,137
|
|
|
16.99
|
|
|
|
|
Granted
|
|
324,500
|
|
|
18.36
|
|
|
|
|
Exercised
|
|
(157,257
|
)
|
|
8.51
|
|
|
|
|
Canceled and forfeited
|
|
(121,906
|
)
|
|
27.02
|
|
|
|
|
Outstanding at December 31, 2017
|
|
2,034,474
|
|
|
17.26
|
|
|
5.2
|
|
|
|
|
|
|
|
|
|||
Exercisable at December 31, 2017
|
|
1,532,691
|
|
|
15.39
|
|
|
4.0
|
|
|
|
|
|
|
|
|
|||
Available for grant at December 31, 2017
|
|
3,107,064
|
|
|
|
|
|
|
|
Outstanding Options
|
|
Exercisable Options
|
||||||||||||
Range of Exercise
Prices per Share
|
|
Number
Outstanding
|
|
Weighted
Average
Remaining
Life (Years)
|
|
Weighted
Average
Exercise
Price
|
|
Number
Exercisable
|
|
Weighted
Average
Exercise
Price
|
||||||
$ 0.00 - $ 10.00
|
|
673,584
|
|
|
1.9
|
|
$
|
5.49
|
|
|
673,584
|
|
|
$
|
5.49
|
|
$ 10.01 - $ 20.00
|
|
619,941
|
|
|
6.7
|
|
16.78
|
|
|
327,941
|
|
|
15.71
|
|
||
$ 20.01 - $ 30.00
|
|
507,844
|
|
|
6.6
|
|
26.30
|
|
|
411,552
|
|
|
26.15
|
|
||
$ 30.01 - $ 42.40
|
|
233,105
|
|
|
7.5
|
|
32.86
|
|
|
119,614
|
|
|
33.34
|
|
||
$ 0.00 - $ 42.40
|
|
2,034,474
|
|
|
5.2
|
|
17.26
|
|
|
1,532,691
|
|
|
15.39
|
|
|
Service Vesting Restricted Shares
|
|
Performance Vesting Restricted Shares
|
|
Total Restricted Shares
|
|||||||||||||||
|
Shares
|
|
Weighted
Average
Grant Date
Fair Value
|
|
Shares
|
|
Weighted
Average Grant Date Fair Value |
|
Shares
|
|
Weighted Average Grant Date Fair Value
|
|||||||||
Outstanding at January 1, 2015
|
1,033,602
|
|
|
$
|
19.48
|
|
|
817,000
|
|
|
$
|
15.41
|
|
|
1,850,602
|
|
|
$
|
17.68
|
|
Granted
|
45,175
|
|
|
30.44
|
|
|
—
|
|
|
—
|
|
|
45,175
|
|
|
30.44
|
|
|||
Forfeited
|
(48,998
|
)
|
|
24.00
|
|
|
(219,000
|
)
|
|
15.60
|
|
|
(267,998
|
)
|
|
17.14
|
|
|||
Vested
|
(513,336
|
)
|
|
15.34
|
|
|
(12,500
|
)
|
|
28.20
|
|
|
(525,836
|
)
|
|
15.64
|
|
|||
Outstanding at December 31, 2015
|
516,443
|
|
|
24.12
|
|
|
585,500
|
|
|
15.07
|
|
|
1,101,943
|
|
|
19.31
|
|
|||
Granted
|
9,893
|
|
|
34.86
|
|
|
—
|
|
|
—
|
|
|
9,893
|
|
|
34.86
|
|
|||
Forfeited
|
(18,685
|
)
|
|
24.73
|
|
|
(72,000
|
)
|
|
15.57
|
|
|
(90,685
|
)
|
|
17.46
|
|
|||
Vested
|
(250,849
|
)
|
|
22.14
|
|
|
—
|
|
|
—
|
|
|
(250,849
|
)
|
|
22.14
|
|
|||
Outstanding at December 31, 2016
|
256,802
|
|
|
26.43
|
|
|
513,500
|
|
|
15.00
|
|
|
770,302
|
|
|
18.81
|
|
|||
Granted
|
44,002
|
|
|
17.55
|
|
|
—
|
|
|
—
|
|
|
44,002
|
|
|
17.55
|
|
|||
Forfeited
|
(32,207
|
)
|
|
28.15
|
|
|
(513,500
|
)
|
|
15.00
|
|
|
(545,707
|
)
|
|
15.78
|
|
|||
Vested
|
(156,272
|
)
|
|
25.25
|
|
|
—
|
|
|
—
|
|
|
(156,272
|
)
|
|
25.25
|
|
|||
Outstanding at December 31, 2017
|
112,325
|
|
|
24.09
|
|
|
—
|
|
|
—
|
|
|
112,325
|
|
|
24.09
|
|
|
|
Service Vesting Restricted Stock Units
|
|
Performance Vesting Restricted Stock Units
|
|
Total Restricted Stock Units
|
|||||||||||||||
|
|
Units
|
|
Weighted
Average Grant Date Fair Value |
|
Units
|
|
Weighted
Average Grant Date Fair Value |
|
Units
|
|
Weighted Average Grant Date Fair Value
|
|||||||||
Outstanding at January 1, 2015
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
Granted
|
|
285,550
|
|
|
29.78
|
|
|
699,300
|
|
|
30.04
|
|
|
984,850
|
|
|
29.97
|
|
|||
Forfeited
|
|
(12,500
|
)
|
|
30.48
|
|
|
(66,600
|
)
|
|
30.04
|
|
|
(79,100
|
)
|
|
30.11
|
|
|||
Vested
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Outstanding at December 31, 2015
|
|
273,050
|
|
|
29.75
|
|
|
632,700
|
|
|
30.04
|
|
|
905,750
|
|
|
29.95
|
|
|||
Granted
|
|
220,575
|
|
|
31.89
|
|
|
23,585
|
|
|
42.65
|
|
|
244,160
|
|
|
32.93
|
|
|||
Forfeited
|
|
(7,700
|
)
|
|
29.44
|
|
|
—
|
|
|
—
|
|
|
(7,700
|
)
|
|
29.44
|
|
|||
Vested
|
|
(60,204
|
)
|
|
29.57
|
|
|
—
|
|
|
—
|
|
|
(60,204
|
)
|
|
29.57
|
|
|||
Outstanding at December 31, 2016
|
|
425,721
|
|
|
30.89
|
|
|
656,285
|
|
|
30.49
|
|
|
1,082,006
|
|
|
30.65
|
|
|||
Granted
|
|
799,000
|
|
|
18.40
|
|
|
26,000
|
|
|
20.25
|
|
|
825,000
|
|
|
18.46
|
|
|||
Forfeited
|
|
(95,001
|
)
|
|
25.75
|
|
|
(199,800
|
)
|
|
30.04
|
|
|
(294,801
|
)
|
|
28.66
|
|
|||
Vested
|
|
(141,697
|
)
|
|
30.91
|
|
|
—
|
|
|
—
|
|
|
(141,697
|
)
|
|
30.91
|
|
|||
Outstanding at December 31, 2017
|
|
988,023
|
|
|
21.29
|
|
|
482,485
|
|
|
30.13
|
|
|
1,470,508
|
|
|
24.19
|
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
Cost of product revenue
|
|
$
|
294
|
|
|
$
|
320
|
|
|
$
|
254
|
|
Cost of service revenue
|
|
290
|
|
|
211
|
|
|
276
|
|
|||
Research and development
|
|
3,759
|
|
|
3,113
|
|
|
3,770
|
|
|||
Sales and marketing
|
|
2,432
|
|
|
3,710
|
|
|
3,047
|
|
|||
General and administrative
|
|
4,074
|
|
|
3,797
|
|
|
4,006
|
|
|||
Total share-based compensation expense
|
|
$
|
10,849
|
|
|
$
|
11,151
|
|
|
$
|
11,353
|
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
Revenue:
|
|
|
|
|
|
|
||||||
Supercomputing
|
|
$
|
282,217
|
|
|
$
|
510,403
|
|
|
$
|
581,733
|
|
Storage and Data Management
|
|
63,620
|
|
|
89,438
|
|
|
112,862
|
|
|||
Maintenance and Support
|
|
124,840
|
|
|
107,795
|
|
|
97,091
|
|
|||
Engineering Services and Other
|
|
46,672
|
|
|
29,968
|
|
|
30,094
|
|
|||
Elimination of inter-segment revenue
|
|
(124,840
|
)
|
|
(107,795
|
)
|
|
(97,091
|
)
|
|||
Total revenue
|
|
$
|
392,509
|
|
|
$
|
629,809
|
|
|
$
|
724,689
|
|
|
|
|
|
|
|
|
||||||
Gross Profit:
|
|
|
|
|
|
|
||||||
Supercomputing
|
|
$
|
93,272
|
|
|
$
|
173,245
|
|
|
$
|
177,048
|
|
Storage and Data Management
|
|
20,288
|
|
|
34,125
|
|
|
37,181
|
|
|||
Maintenance and Support
|
|
61,305
|
|
|
43,147
|
|
|
41,487
|
|
|||
Engineering Services and Other
|
|
17,144
|
|
|
12,845
|
|
|
11,454
|
|
|||
Elimination of inter-segment gross profit
|
|
(61,305
|
)
|
|
(43,147
|
)
|
|
(41,487
|
)
|
|||
Total gross profit
|
|
$
|
130,704
|
|
|
$
|
220,215
|
|
|
$
|
225,683
|
|
|
|
United
States
|
|
All
Other
Countries
|
|
Total
|
||||||
For the year ended December 31, 2017:
|
|
|
|
|
|
|
||||||
Product revenue
|
|
$
|
159,279
|
|
|
$
|
90,916
|
|
|
$
|
250,195
|
|
Service revenue
|
|
$
|
96,406
|
|
|
$
|
45,908
|
|
|
$
|
142,314
|
|
Long-lived assets
|
|
$
|
48,989
|
|
|
$
|
28,009
|
|
|
$
|
76,998
|
|
For the year ended December 31, 2016:
|
|
|
|
|
|
|
||||||
Product revenue
|
|
$
|
251,317
|
|
|
$
|
248,115
|
|
|
$
|
499,432
|
|
Service revenue
|
|
$
|
88,208
|
|
|
$
|
42,169
|
|
|
$
|
130,377
|
|
Long-lived assets
|
|
$
|
39,933
|
|
|
$
|
36,555
|
|
|
$
|
76,488
|
|
For the year ended December 31, 2015:
|
|
|
|
|
|
|
||||||
Product revenue
|
|
$
|
373,494
|
|
|
$
|
227,800
|
|
|
$
|
601,294
|
|
Service revenue
|
|
$
|
88,956
|
|
|
$
|
34,439
|
|
|
$
|
123,395
|
|
Long-lived assets
|
|
$
|
39,014
|
|
|
$
|
23,238
|
|
|
$
|
62,252
|
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
Gross research and development expenses
|
|
$
|
141,289
|
|
|
$
|
130,006
|
|
|
$
|
126,060
|
|
Less: Amounts included in cost of revenue
|
|
(9,473
|
)
|
|
(12,621
|
)
|
|
(16,515
|
)
|
|||
Less: Reimbursed research and development (excludes amounts in revenue)
|
|
(33,039
|
)
|
|
(5,255
|
)
|
|
(12,982
|
)
|
|||
Net research and development expenses
|
|
$
|
98,777
|
|
|
$
|
112,130
|
|
|
$
|
96,563
|
|
|
|
2017
|
|
2016
|
|
2015
|
||||||
Interest income
|
|
$
|
3,386
|
|
|
$
|
2,120
|
|
|
$
|
1,465
|
|
Interest expense
|
|
(110
|
)
|
|
27
|
|
|
(57
|
)
|
|||
Net interest income
|
|
$
|
3,276
|
|
|
$
|
2,147
|
|
|
$
|
1,408
|
|
|
|
2017
|
2016
|
|||||||||||||||||||||||||||||
For the Quarter Ended
|
|
3/31
|
|
6/30
|
|
9/30
|
|
12/31
|
|
3/31
|
|
6/30
|
|
9/30
|
|
12/31
|
||||||||||||||||
Revenue
|
|
$
|
59,031
|
|
|
$
|
87,135
|
|
|
$
|
79,700
|
|
|
$
|
166,643
|
|
|
$
|
105,549
|
|
|
$
|
100,235
|
|
|
$
|
77,451
|
|
|
$
|
346,574
|
|
Cost of revenue
|
|
35,222
|
|
|
58,792
|
|
|
51,208
|
|
|
116,583
|
|
|
65,587
|
|
|
64,074
|
|
|
53,850
|
|
|
226,083
|
|
||||||||
Gross profit
|
|
23,809
|
|
|
28,343
|
|
|
28,492
|
|
|
50,060
|
|
|
39,962
|
|
|
36,161
|
|
|
23,601
|
|
|
120,491
|
|
||||||||
Research and development, net
|
|
32,640
|
|
|
17,325
|
|
|
26,626
|
|
|
22,186
|
|
|
25,840
|
|
|
27,399
|
|
|
29,084
|
|
|
29,807
|
|
||||||||
Sales and marketing
|
|
14,653
|
|
|
15,247
|
|
|
13,392
|
|
|
16,602
|
|
|
16,001
|
|
|
15,380
|
|
|
15,010
|
|
|
18,502
|
|
||||||||
General and administrative
|
|
8,797
|
|
|
7,205
|
|
|
7,022
|
|
|
6,089
|
|
|
7,338
|
|
|
9,019
|
|
|
7,968
|
|
|
9,728
|
|
||||||||
Restructuring
|
|
—
|
|
|
—
|
|
|
7,653
|
|
|
915
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Net income (loss)
|
|
(19,215
|
)
|
|
(6,840
|
)
|
|
(10,232
|
)
|
|
(97,542
|
)
|
|
(5,013
|
)
|
|
(13,126
|
)
|
|
(23,021
|
)
|
|
51,775
|
|
||||||||
Net income (loss) per common share, basic
|
|
$
|
(0.48
|
)
|
|
$
|
(0.17
|
)
|
|
$
|
(0.25
|
)
|
|
$
|
(2.42
|
)
|
|
$
|
(0.13
|
)
|
|
$
|
(0.33
|
)
|
|
$
|
(0.58
|
)
|
|
$
|
1.30
|
|
Net income (loss) per common share, diluted
|
|
$
|
(0.48
|
)
|
|
$
|
(0.17
|
)
|
|
$
|
(0.25
|
)
|
|
$
|
(2.42
|
)
|
|
$
|
(0.13
|
)
|
|
$
|
(0.33
|
)
|
|
$
|
(0.58
|
)
|
|
$
|
1.27
|
|
Description
|
|
Balance at
Beginning
of Period
|
|
Charge to Expense
|
|
Deductions
(2)
|
|
Balance at
End of
Period
|
||||||||
Year ended December 31, 2015:
|
|
|
|
|
|
|
|
|
||||||||
Allowance for doubtful accounts
|
|
$
|
97
|
|
|
$
|
—
|
|
|
$
|
(78
|
)
|
|
$
|
19
|
|
Year ended December 31, 2016:
|
|
|
|
|
|
|
|
|
||||||||
Allowance for doubtful accounts
|
|
$
|
19
|
|
|
$
|
2
|
|
|
$
|
—
|
|
|
$
|
21
|
|
Year ended December 31, 2017:
|
|
|
|
|
|
|
|
|
||||||||
Allowance for doubtful accounts
|
|
$
|
21
|
|
|
$
|
7
|
|
|
$
|
—
|
|
|
$
|
28
|
|
(1)
|
The Company does not have any warranty liabilities.
|
(2)
|
Deductions represent uncollectible accounts written off, net of recoveries.
|
1 Year Cray Chart |
1 Month Cray Chart |
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