Document_and_Entity_Informatio
Document and Entity Information | 9 Months Ended | |
Sep. 30, 2014 | Oct. 22, 2014 | |
Document and Entity Information [Abstract] | ' | ' |
Entity Registrant Name | 'CRAY INC | ' |
Entity Central Index Key | '0000949158 | ' |
Document Type | '10-Q | ' |
Document Period End Date | 30-Sep-14 | ' |
Amendment Flag | 'false | ' |
Document Fiscal Year Focus | '2014 | ' |
Document Fiscal Period Focus | 'Q3 | ' |
Current Fiscal Year End Date | '--12-31 | ' |
Entity Filer Category | 'Large Accelerated Filer | ' |
Entity Common Stock, Shares Outstanding | ' | 40,728,165 |
Condensed_Consolidated_Balance
Condensed Consolidated Balance Sheets (Unaudited) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Current assets: | ' | ' |
Cash and cash equivalents | $82,973 | $192,633 |
Restricted cash | 16,939 | 0 |
Short-term investments | 41,634 | 14,048 |
Accounts and other receivables, net | 45,459 | 182,527 |
Inventory | 198,185 | 95,129 |
Prepaid expenses and other current assets | 32,522 | 20,999 |
Total current assets | 417,712 | 505,336 |
Long-term restricted cash | 0 | 13,768 |
Long-term investment in sales-type lease, net | 34,756 | 0 |
Property and equipment, net | 31,208 | 30,278 |
Service spares, net | 1,578 | 1,828 |
Goodwill | 14,182 | 14,182 |
Intangible assets other than goodwill, net | 4,482 | 6,362 |
Deferred tax assets | 26,821 | 19,206 |
Other non-current assets | 12,709 | 12,406 |
TOTAL ASSETS | 543,448 | 603,366 |
Current liabilities: | ' | ' |
Accounts payable | 43,471 | 34,225 |
Accrued payroll and related expenses | 10,979 | 22,470 |
Other accrued liabilities | 5,127 | 22,225 |
Deferred revenue | 64,867 | 91,488 |
Total current liabilities | 124,444 | 170,408 |
Long-term deferred revenue | 39,049 | 50,477 |
Other non-current liabilities | 4,450 | 6,894 |
TOTAL LIABILITIES | 167,943 | 227,779 |
Shareholders’ equity: | ' | ' |
Preferred stock — Authorized and undesignated, 5,000,000 shares; no shares issued or outstanding | 0 | 0 |
Common stock and additional paid-in capital, par value $.01 per share — Authorized, 75,000,000 shares; issued and outstanding 40,723,374 and 40,469,854 shares, respectively | 594,637 | 586,243 |
Accumulated other comprehensive income | 6,547 | 853 |
Accumulated deficit | -225,679 | -211,509 |
TOTAL SHAREHOLDERS’ EQUITY | 375,505 | 375,587 |
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $543,448 | $603,366 |
Condensed_Consolidated_Balance1
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
Statement of Financial Position [Abstract] | ' | ' |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | ' | ' |
Preferred stock, shares outstanding | ' | ' |
Common stock and additional paid-in capital, par value | $0.01 | $0.01 |
Common stock and additional paid-in capital, shares authorized | 75,000,000 | 75,000,000 |
Common stock and additional paid-in capital, shares issued | 40,723,374 | 40,469,854 |
Common stock and additional paid-in capital, shares outstanding | 40,723,374 | 40,469,854 |
Condensed_Consolidated_Stateme
Condensed Consolidated Statements of Operations (Unaudited) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, except Per Share data, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Revenue: | ' | ' | ' | ' |
Product | $133,461 | $31,720 | $225,224 | $153,941 |
Service | 25,945 | 22,646 | 74,439 | 64,439 |
Total revenue | 159,406 | 54,366 | 299,663 | 218,380 |
Cost of revenue: | ' | ' | ' | ' |
Cost of product revenue | 96,080 | 23,371 | 164,019 | 116,418 |
Cost of service revenue | 14,796 | 10,569 | 40,173 | 30,586 |
Total cost of revenue | 110,876 | 33,940 | 204,192 | 147,004 |
Gross profit | 48,530 | 20,426 | 95,471 | 71,376 |
Operating expenses: | ' | ' | ' | ' |
Research and development, net | 22,503 | 21,555 | 69,313 | 61,749 |
Sales and marketing | 14,808 | 11,480 | 39,843 | 34,173 |
General and administrative | 5,813 | 4,970 | 16,542 | 15,540 |
Total operating expenses | 43,124 | 38,005 | 125,698 | 111,462 |
Income (loss) from operations | 5,406 | -17,579 | -30,227 | -40,086 |
Other income (expense), net | -101 | 284 | -1,084 | 94 |
Interest income, net | 72 | 214 | 217 | 794 |
Income (loss) before income taxes | 5,377 | -17,081 | -31,094 | -39,198 |
Income tax benefit | 1,994 | 6,056 | 18,779 | 20,413 |
Net income (loss) | $7,371 | ($11,025) | ($12,315) | ($18,785) |
Basic net income (loss) per common share | $0.19 | ($0.29) | ($0.32) | ($0.50) |
Diluted net income (loss) per common share | $0.18 | ($0.29) | ($0.32) | ($0.50) |
Basic weighted average shares outstanding | 38,783 | 38,085 | 38,538 | 37,695 |
Diluted weighted average shares outstanding | 40,276 | 38,085 | 38,538 | 37,695 |
Condensed_Consolidated_Stateme1
Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Statement of Comprehensive Income [Abstract] | ' | ' | ' | ' |
Net income (loss) | $7,371 | ($11,025) | ($12,315) | ($18,785) |
Other comprehensive income (loss), net of tax: | ' | ' | ' | ' |
Unrealized gain on available-for-sale investments | 16 | 53 | 42 | 51 |
Foreign currency translation adjustments | 464 | 103 | -81 | -213 |
Unrealized gain (loss) on cash flow hedges | 5,653 | -5,723 | 4,534 | -3,759 |
Reclassification adjustments on cash flow hedges included in net income (loss) | 1,697 | 30 | 1,199 | 23 |
Other comprehensive income (loss) | 7,830 | -5,537 | 5,694 | -3,898 |
Comprehensive income (loss) | $15,201 | ($16,562) | ($6,621) | ($22,683) |
Condensed_Consolidated_Stateme2
Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $) | 9 Months Ended | |
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 |
Operating activities: | ' | ' |
Net loss | ($12,315) | ($18,785) |
Adjustments to reconcile net loss to net cash used in operating activities: | ' | ' |
Depreciation and amortization | 12,232 | 10,335 |
Accretion and amortization on available for sale investments | 223 | 1,796 |
Loss on disposal of fixed assets | 397 | 45 |
Share-based compensation expense | 7,553 | 5,121 |
Inventory write-down | 1,589 | 917 |
Deferred income taxes | -14,048 | -24,150 |
Cash provided (used) due to changes in operating assets and liabilities: | ' | ' |
Accounts and other receivables | 137,480 | -31,798 |
Long-term investment in sales-type lease, net | -34,652 | 0 |
Inventory | -106,465 | -121,010 |
Prepaid expenses and other assets | -5,405 | -2,893 |
Accounts payable | 9,274 | 22,134 |
Accrued payroll and related expenses and other accrued liabilities | -22,786 | -16,998 |
Other non-current liabilities | -2,437 | 3,525 |
Deferred revenue | -37,935 | -2,491 |
Net cash used in operating activities | -67,295 | -174,252 |
Investing activities: | ' | ' |
Sales/maturities of available-for-sale investments | 28,325 | 69,680 |
Purchases of available-for-sale investments | -56,064 | -85,162 |
Increase in restricted cash | -3,171 | 0 |
Purchases of property and equipment | -10,161 | -6,122 |
Net cash used in investing activities | -41,071 | -21,604 |
Financing activities: | ' | ' |
Proceeds from issuance of common stock through employee stock purchase plan | 438 | 387 |
Purchase of employee restricted shares to fund related statutory tax withholding | -3,769 | -3,758 |
Proceeds from exercises of stock options | 2,315 | 3,032 |
Net cash used in financing activities | -1,016 | -339 |
Effect of foreign exchange rate changes on cash and cash equivalents | -278 | -251 |
Net decrease in cash and cash equivalents | -109,660 | -196,446 |
Cash and cash equivalents: | ' | ' |
Beginning of period | 192,633 | 253,065 |
End of period | 82,973 | 56,619 |
Supplemental disclosure of cash flow information: | ' | ' |
Cash paid for interest | 5 | 3 |
Cash paid for income taxes | 2,564 | 2,707 |
Non-cash investing and financing activities: | ' | ' |
Inventory transfers to fixed assets and service inventory | $1,820 | $3,983 |
Basis_of_Presentation
Basis of Presentation | 9 Months Ended | |
Sep. 30, 2014 | ||
Accounting Policies [Abstract] | ' | |
Basis of Presentation | ' | |
Note 1— Basis of Presentation | ||
In these notes, Cray Inc. and its wholly-owned subsidiaries are collectively referred to as the “Company.” In the opinion of management, the accompanying Condensed Consolidated Balance Sheets, Statements of Operations, Statements of Comprehensive Income (Loss), and Statements of Cash Flows have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. Management believes that all adjustments (consisting of normal recurring adjustments) considered necessary for fair presentation have been included. Interim results are not necessarily indicative of results for a full year. The information included in this Form 10-Q should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2013. | ||
The Company’s revenue, results of operations and cash balances are likely to fluctuate significantly from quarter to quarter. These fluctuations are due to such factors as the high average sales prices and limited number of sales of the Company’s products, the timing of purchase orders and product deliveries, the revenue recognition accounting policy of generally not recognizing product revenue until customer acceptance and other contractual provisions have been fulfilled and the timing of payments for product sales, maintenance services, government research and development funding and purchases of inventory. Given the nature of the Company’s business, its revenue, receivables and other related accounts are likely to be concentrated among a relatively small number of customers. | ||
Principles of Consolidation | ||
The accompanying condensed consolidated financial statements include the accounts of Cray Inc. and its wholly-owned subsidiaries. All material intercompany accounts and transactions have been eliminated. | ||
Use of Estimates | ||
The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the amounts reported in the Company’s condensed consolidated financial statements and accompanying notes. Actual results could differ materially from those estimates. | ||
Revenue Recognition | ||
The Company recognizes revenue, including transactions under sales-type leases, when it is realized or realizable and earned. The Company considers revenue realized or realizable and earned when it has persuasive evidence of an arrangement, delivery has occurred, the sales price is fixed or determinable, and collectibility is reasonably assured. Delivery does not occur until the products have been shipped or services provided to the customer, risk of loss has transferred to the customer, and, where applicable, a customer acceptance has been obtained. The sales price is not considered to be fixed or determinable until all material contingencies related to the sales have been resolved. The Company records revenue in the Condensed Consolidated Statements of Operations net of any sales, use, value added or certain excise taxes imposed by governmental authorities on specific sales transactions. In addition to the aforementioned general policy, the following are the Company's statements of policy with regard to multiple-element arrangements and specific revenue recognition policies for each major category of revenue. | ||
Multiple-Element Arrangements. The Company commonly enters into revenue arrangements that include multiple deliverables of its product and service offerings due to the needs of its customers. Products may be delivered in phases over time periods which can be as long as five years. Maintenance services generally begin upon acceptance of the first equipment delivery and future deliveries of equipment generally have an associated maintenance period. The Company considers the maintenance period to commence upon acceptance of the product or installation in situations where a formal acceptance is not required, which may include a warranty period and accordingly allocates a portion of the arrangement consideration as a separate deliverable which is recognized as service revenue over the entire service period. Other services such as training and engineering services can be delivered as a discrete delivery or over the term of the contract. A multiple-element arrangement is separated into more than one unit of accounting if the following criteria are met: | ||
• | 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. | |
If these criteria are met for each element, the arrangement consideration is allocated to the separate units of accounting based on each unit's relative selling price. If these criteria are not met, the arrangement is accounted for as one unit of accounting which would result in revenue being recognized ratably over the contract term or being deferred until the earlier of when such criteria are met or when the last undelivered element is delivered. | ||
The Company follows a selling price hierarchy in determining the best estimate of the selling price of each deliverable. Certain products and services are sold separately in standalone arrangements for which the Company is sometimes able to determine vendor specific objective evidence, or VSOE. The Company determines VSOE based on normal pricing and discounting practices for the product or service when sold separately. | ||
When the Company is not able to establish VSOE for all deliverables in an arrangement with multiple elements, the Company attempts to establish the selling price of each remaining element based on third-party evidence, or TPE. The Company's inability to establish VSOE is often due to a relatively small sample of customer contracts that differ in system size and contract terms which can be due to infrequently selling each element separately, not pricing products within a narrow range, or only having a limited sales history, such as in the case of certain advanced and emerging technologies. TPE is determined based on the Company's prices or competitor prices for similar deliverables when sold separately. However, the Company is often unable to determine TPE, as the Company's offerings contain a significant level of customization and differentiation from those of competitors and the Company is often unable to reliably determine what similar competitor products' selling prices are on a standalone basis. | ||
When the Company is unable to establish selling price using VSOE or TPE, the Company uses estimated selling price, or ESP, in its allocation of arrangement consideration. The objective of ESP is to determine the price at which the Company would transact a sale if the product or service were sold on a standalone basis. In determining ESP, the Company uses the cost to provide the product or service plus a margin, or considers other factors. When using cost plus a margin, the Company considers the total cost of the product or service, including customer-specific and geographic factors. The Company also considers the historical margins of the product or service on previous contracts and several factors including any changes to pricing methodologies, competitiveness of products and services and cost drivers that would cause future margins to differ from historical margins. | ||
Products. The Company most often recognizes revenue from sales of products upon customer acceptance of the system. Where formal acceptance is not required, the Company recognizes revenue upon delivery or installation. When the product is part of a multiple element arrangement, the Company allocates a portion of the arrangement consideration to product revenue based on estimates of selling price. | ||
Services. Maintenance services are provided under separate maintenance contracts with customers. These contracts generally provide for maintenance services for one year, although some are for multi-year periods, often with prepayments for the term of the contract. The Company considers the maintenance period to commence upon acceptance of the product or installation in situations where a formal acceptance is not required, which may include a warranty period. When service is part of a multiple element arrangement, the Company allocates a portion of the arrangement consideration to maintenance service revenue based on estimates of selling price. Maintenance contracts that are billed in advance of revenue recognition are recorded as deferred revenue. Maintenance revenue is recognized ratably over the term of the maintenance contract. | ||
Revenue from engineering services is recognized as services are performed. | ||
Project Revenue. Revenue from design and build contracts is recognized under the percentage-of-completion (or POC method). Under the POC method, revenue is recognized based on the costs incurred to date as a percentage of the total estimated costs to fulfill the contract. If circumstances arise that change the original estimates of revenues, costs, or extent of progress toward completion, revisions to the estimates are made. These revisions may result in increases or decreases in estimated revenues or costs, and such revisions are recorded in income in the period in which the circumstances that gave rise to the revision become known by management. The Company performs ongoing profitability analyses of its contracts accounted for under the POC method in order to determine whether the latest estimates of revenue, costs and extent of progress require updating. If at any time these estimates indicate that the contract will be unprofitable, the entire estimated loss for the remainder of the contract is recorded immediately. | ||
The Company records revenue from certain research and development contracts which include milestones using the milestone method if the milestones are determined to be substantive. A milestone is considered to be substantive if management believes there is substantive uncertainty that it will be achieved and the milestone consideration meets all of the following criteria: | ||
• | 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. | |
The individual milestones are determined to be substantive or non-substantive in their entirety and milestone consideration is not bifurcated. | ||
Revenue from projects is classified as Product Revenue or Service Revenue, based on the nature of the work performed. | ||
Nonmonetary Transactions. The Company values and records nonmonetary transactions at the fair value of the asset surrendered unless the fair value of the asset received is more clearly evident, in which case the fair value of the asset received is used. | ||
Sales-type leases | ||
When the Company leases a system to a customer, the accounting involves specific determinations, which often involve complex provisions and significant judgments. The four criteria of the accounting standard that the Company uses in the determination of whether a lease is a sales-type lease or an operating lease are: (a) a review of the lease term to determine if it is equal to or greater than 75% of the economic life of the system; (b) a review of the minimum lease payments to determine if they are equal to or greater than 90% of the fair value of the system; (c) a determination of whether or not the lease transfers ownership to the lessee at the end of the lease term; and (d) a determination of whether or not the lease contains a bargain purchase option. If the lease transaction meets one of the four criteria, then it is recorded as a sales-type lease; otherwise it is an operating lease. Additionally, the Company assesses whether collectibility of the lease payments is reasonably assured and whether there are any significant uncertainties related to costs that it has yet to incur with respect to the lease. | ||
The Company considers the economic lives of most of its products to range from three to four years. There is no significant after-market for the Company's used products and the Company believes that the economic lives are representative of the periods during which its products are expected to be economically usable, with normal service, for the purposes for which they were intended. Residual values are not significant. | ||
The discount rate implicit in the sales-type lease is used to calculate the present value of minimum lease payments, which the Company records as a lease receivable. The minimum lease payment consists of the gross lease payments net of executory costs and contingencies, if any. While revenue is recognized at the inception of the lease, the cash flow from the sales-type lease occurs over the course of the lease, which results in interest income. Unearned interest income is recorded at the inception of the lease and amortized over the lease term using the effective interest method. |
New_Accounting_Pronouncements_
New Accounting Pronouncements (Notes) | 9 Months Ended |
Sep. 30, 2014 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | ' |
New Accounting Pronouncements | ' |
Note 2— New Accounting Pronouncements | |
In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers: Topic 606 (ASU 2014-09), to supersede nearly all existing revenue recognition guidance under U.S. GAAP. The core principle of ASU 2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. ASU 2014-09 defines a five step process to achieve this core principle and, in doing so, it is possible more judgment and estimates may be required within the revenue recognition process than required under existing U.S. GAAP including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. ASU 2014-09 is effective for the fiscal and interim reporting periods beginning after December 15, 2016 using either of two methods: (i) retrospective to each prior reporting period presented with the option to elect certain practical expedients as defined within ASU 2014-09; or (ii) retrospective with the cumulative effect of initially applying ASU 2014-09 recognized at the date of initial application and providing certain additional disclosures as defined per ASU 2014-09. The Company is currently evaluating the potential impact of the pending adoption of ASU 2014-09 on its consolidated financial statements. |
Fair_Value_Measurement
Fair Value Measurement | 9 Months Ended | ||||||||||||
Sep. 30, 2014 | |||||||||||||
Fair Value Disclosures [Abstract] | ' | ||||||||||||
Fair Value Measurement | ' | ||||||||||||
Note 3— Fair Value Measurement | |||||||||||||
Based on the observability of the inputs used in the valuation techniques used to determine the fair value of certain financial assets and liabilities, the Company is required to provide the following information according to the fair value hierarchy. The fair value hierarchy ranks the quality and reliability of the information used to determine fair values. | |||||||||||||
In general, fair values determined by Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities. Fair values determined by Level 2 inputs utilize observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities. Fair values determined by Level 3 inputs are unobservable data points for the asset or liability, and include situations where there is little, if any, market activity for the asset or liability. The following table presents information about the Company’s financial assets and liabilities that have been measured at fair value as of September 30, 2014, and indicates the fair value hierarchy of the valuation inputs utilized to determine such fair value (in thousands): | |||||||||||||
Description | Fair Value | Quoted | Significant | ||||||||||
as of | Prices in | Other | |||||||||||
September 30, | Active | Observable | |||||||||||
2014 | Markets | Inputs | |||||||||||
(Level 1) | (Level 2) | ||||||||||||
Assets: | |||||||||||||
Cash and cash equivalents and restricted cash | $ | 99,912 | $ | 99,912 | $ | — | |||||||
Available-for-sale investments (1) | 41,634 | 41,634 | — | ||||||||||
Foreign exchange forward contracts (2) | 5,625 | — | 5,625 | ||||||||||
Assets measured at fair value at September 30, 2014 | $ | 147,171 | $ | 141,546 | $ | 5,625 | |||||||
Liabilities: | |||||||||||||
Foreign exchange forward contracts (3) | $ | (3,247 | ) | $ | — | $ | (3,247 | ) | |||||
Liabilities measured at fair value at September 30, 2014 | $ | (3,247 | ) | $ | — | $ | (3,247 | ) | |||||
-1 | Included in "Short-term investments" on the Company’s Condensed Consolidated Balance Sheets. | ||||||||||||
-2 | Included in “Prepaid expenses and other current assets” and “Other non-current assets” on the Company’s Condensed Consolidated Balance Sheets. | ||||||||||||
-3 | Included in “Other accrued liabilities” and “Other non-current liabilities” on the Company’s Condensed Consolidated Balance Sheets. | ||||||||||||
Foreign Currency Derivatives | |||||||||||||
The Company may enter into foreign currency derivatives to hedge future cash receipts on certain sales transactions that are payable in foreign currencies. | |||||||||||||
As of September 30, 2014, the Company had outstanding forward contracts which were designated as cash flow hedges of anticipated future cash receipts on sales contracts payable in foreign currencies. The outstanding notional amounts were approximately (in millions): | |||||||||||||
30-Sep-14 | 31-Dec-13 | ||||||||||||
British Pounds (GBP) | 97 | 36.4 | |||||||||||
Euros (EUR) | 29.4 | 53 | |||||||||||
Swiss Francs (CHF) | 9 | 5.6 | |||||||||||
Canadian Dollars (CAD) | — | 3.9 | |||||||||||
Japanese Yen (JPY) | 534.4 | 1,239.80 | |||||||||||
Singapore Dollars (SGD) | 0.1 | 3.2 | |||||||||||
Swedish Krona (SEK) | 84.8 | — | |||||||||||
The Company had hedged foreign currency exposure of approximately $222.1 million and $151.4 million as of September 30, 2014 and December 31, 2013, respectively. Cash receipts associated with the hedged contracts are expected to be received from 2014 through 2018, during which time the revenue on the associated sales contracts is expected to be recognized, or in the case of receivables denominated in a foreign currency, the receivables balances will be collected. Any gain or loss on hedged foreign currency will be recognized at the time of customer acceptance or over the period during which hedged receivables denominated in a foreign currency are outstanding. | |||||||||||||
Fair Values of Derivative Instruments (in thousands): | |||||||||||||
Hedge Classification | Balance Sheet Location | Fair Value | Fair Value | ||||||||||
as of | as of | ||||||||||||
September 30, | December 31, | ||||||||||||
2014 | 2013 | ||||||||||||
Foreign currency contracts | Prepaid expenses and other current assets | $ | 3,064 | $ | 1,654 | ||||||||
Foreign currency contracts | Other non-current assets | 2,561 | 76 | ||||||||||
Foreign currency contracts | Other accrued liabilities | (1,248 | ) | (2,942 | ) | ||||||||
Foreign currency contracts | Other non-current liabilities | (1,999 | ) | (4,295 | ) | ||||||||
Total fair value of derivatives classified as hedging instruments | $ | 2,378 | $ | (5,507 | ) | ||||||||
Accumulated_Other_Comprehensiv
Accumulated Other Comprehensive Income | 9 Months Ended | |||||||||||||||
Sep. 30, 2014 | ||||||||||||||||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | ' | |||||||||||||||
Accumulated Other Comprehensive Income | ' | |||||||||||||||
Note 4— Accumulated Other Comprehensive Income | ||||||||||||||||
The following table shows the impact on product revenue of gross and net of tax reclassification adjustments from accumulated other comprehensive income resulting from hedged foreign currency transactions recorded by the Company for the three and nine months ended September 30, 2014 and 2013 (in thousands). The gross reclassification adjustments decreased product revenue for all periods presented. | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Gross of tax reclassifications | $ | (2,828 | ) | $ | (52 | ) | $ | (1,998 | ) | $ | (38 | ) | ||||
Net of tax reclassifications | $ | (1,697 | ) | $ | (30 | ) | $ | (1,199 | ) | $ | (23 | ) | ||||
The following tables show the changes in Accumulated Other Comprehensive Income by component for the three and nine months ended September 30, 2014 and 2013 (in thousands): | ||||||||||||||||
Three Months Ended September 30, 2014 | ||||||||||||||||
Unrealized Gain on Investments | Foreign Currency Translation Adjustments | Unrealized Gain (Loss) on Cash Flow Hedges | Accumulated Other Comprehensive Income (Loss) | |||||||||||||
Beginning balance | $ | 26 | $ | 2,712 | $ | (4,021 | ) | $ | (1,283 | ) | ||||||
Current-period change, net of tax | 16 | 464 | 7,350 | 7,830 | ||||||||||||
Ending balance | $ | 42 | $ | 3,176 | $ | 3,329 | $ | 6,547 | ||||||||
Income tax expense (benefit) associated with current-period change | $ | 11 | $ | (153 | ) | $ | 4,936 | $ | 4,794 | |||||||
Three Months Ended September 30, 2013 | ||||||||||||||||
Unrealized Gain (Loss) on Investments | Foreign Currency Translation Adjustments | Unrealized Gain (Loss) on Cash Flow Hedges | Accumulated Other Comprehensive Income | |||||||||||||
Beginning balance | $ | (48 | ) | $ | 3,985 | $ | 2,883 | $ | 6,820 | |||||||
Current-period change, net of tax | 53 | 103 | (5,693 | ) | (5,537 | ) | ||||||||||
Ending balance | $ | 5 | $ | 4,088 | $ | (2,810 | ) | $ | 1,283 | |||||||
Income tax expense (benefit) associated with current-period change | $ | 35 | $ | 69 | $ | (3,795 | ) | $ | (3,691 | ) | ||||||
Nine Months Ended September 30, 2014 | ||||||||||||||||
Unrealized Gain on Investments | Foreign Currency Translation Adjustments | Unrealized Gain (Loss) on Cash Flow Hedges | Accumulated Other Comprehensive Income | |||||||||||||
Beginning balance | $ | — | $ | 3,257 | $ | (2,404 | ) | $ | 853 | |||||||
Current-period change, net of tax | 42 | (81 | ) | 5,733 | 5,694 | |||||||||||
Ending balance | $ | 42 | $ | 3,176 | $ | 3,329 | $ | 6,547 | ||||||||
Income tax expense (benefit) associated with current-period change | $ | 28 | $ | (125 | ) | $ | 3,869 | $ | 3,772 | |||||||
Nine Months Ended September 30, 2013 | ||||||||||||||||
Unrealized Gain (Loss) on Investments | Foreign Currency Translation Adjustments | Unrealized Gain (Loss) on Cash Flow Hedges | Accumulated Other Comprehensive Income | |||||||||||||
Beginning balance | $ | (46 | ) | $ | 4,301 | $ | 926 | $ | 5,181 | |||||||
Current-period change, net of tax | 51 | (213 | ) | (3,736 | ) | (3,898 | ) | |||||||||
Ending balance | $ | 5 | $ | 4,088 | $ | (2,810 | ) | $ | 1,283 | |||||||
Income tax expense (benefit) associated with current-period change | $ | 34 | $ | (142 | ) | $ | (2,491 | ) | $ | (2,599 | ) | |||||
Earnings_Loss_Per_Share_EPS
Earnings (Loss) Per Share ("EPS") | 9 Months Ended |
Sep. 30, 2014 | |
Earnings Per Share [Abstract] | ' |
Earnings (Loss) Per Share ("EPS") | ' |
Note 5— Earnings (Loss) Per Share ("EPS") | |
Basic EPS is computed by dividing net income (loss) available to common shareholders by the weighted average number of common shares, excluding unvested restricted stock, outstanding during the period. Diluted EPS is computed by dividing net income (loss) available to common shareholders by the weighted average number of common and potential common shares outstanding during the period, which includes the additional dilution related to conversion of stock options and unvested restricted stock as computed under the treasury stock method. | |
For the three months ended September 30, 2014, the added shares from these items included in the calculation of diluted shares and EPS totaled 1.5 million. For the nine months ended September 30, 2014 and the three and nine months ended September 30, 2013, outstanding stock options and unvested restricted stock were antidilutive because of the net losses and, as such, their effect has not been included in the calculation of basic or diluted net loss per share. For the three and nine months ended September 30, 2014, potential gross common shares of 0.9 million and 3.0 million were antidilutive and not included in computing diluted EPS. For the three and nine months ended September 30, 2013, potential gross common shares of 4.1 million were antidilutive and not included in computing diluted EPS. |
Investments
Investments | 9 Months Ended | |||||||
Sep. 30, 2014 | ||||||||
Investments, Debt and Equity Securities [Abstract] | ' | |||||||
Investments | ' | |||||||
Note 6— Investments | ||||||||
The Company’s investments in debt securities with maturities at purchase greater than three months are classified as "available-for-sale." Changes in fair value are reflected in other comprehensive income. The carrying amount of the Company’s investments in available-for-sale securities as of September 30, 2014 and December 31, 2013 are shown in the table below (in thousands): | ||||||||
30-Sep-14 | 31-Dec-13 | |||||||
Short-term available-for-sale securities cost | $ | 41,564 | $ | 14,048 | ||||
Short-term available-for-sale securities unrealized gains | 70 | — | ||||||
Short-term available-for-sale securities fair value | $ | 41,634 | $ | 14,048 | ||||
Accounts_and_Other_Receivables
Accounts and Other Receivables, Net | 9 Months Ended | |||||||
Sep. 30, 2014 | ||||||||
Receivables [Abstract] | ' | |||||||
Accounts and Other Receivables, Net | ' | |||||||
Note 7— Accounts and Other Receivables, Net | ||||||||
Net accounts and other receivables consisted of the following (in thousands): | ||||||||
September 30, 2014 | December 31, 2013 | |||||||
Trade accounts receivable | $ | 17,116 | $ | 169,417 | ||||
Unbilled receivables | 6,308 | 9,075 | ||||||
Advance billings | 8,436 | 2,141 | ||||||
Short-term investment in sales-type lease | 10,066 | — | ||||||
Other receivables | 3,630 | 2,051 | ||||||
45,556 | 182,684 | |||||||
Allowance for doubtful accounts | (97 | ) | (157 | ) | ||||
Accounts and other receivables, net | $ | 45,459 | $ | 182,527 | ||||
Unbilled receivables represent amounts where the Company has recognized revenue in advance of the contractual billing terms. Advance billings represent billings made based on contractual terms for which revenue has not been recognized. | ||||||||
As of September 30, 2014 and December 31, 2013, accounts receivable included $14.0 million and $111.9 million, respectively, due from U.S. government agencies and customers primarily serving the U.S. government, including academic institutions. Of these amounts, $1.7 million and $0.3 million were unbilled as of September 30, 2014 and December 31, 2013, respectively, based upon contractual billing arrangements with these customers. As of September 30, 2014, two non-U.S. government customers accounted for 38% of total accounts and other receivables. As of December 31, 2013, no non-U.S. government customers accounted for more than 10% of total accounts and other receivables. |
Salestype_leases_Notes
Sales-type leases (Notes) | 9 Months Ended | |||
Sep. 30, 2014 | ||||
Leases [Abstract] | ' | |||
Sales-type lease | ' | |||
Note 8— Sales-type lease | ||||
As of September 30, 2014, the Company has a sales-type lease with one of its customers. Under the terms of the arrangement, the Company has agreed to provide a high performance computing solution to the customer for a term of four years, beginning at the customer's acceptance of the system. | ||||
The following table shows the components of the net investment in the sales-type lease as of September 30, 2014 (in thousands): | ||||
Total minimum lease payments to be received | $ | 58,257 | ||
Less: executory costs | (11,896 | ) | ||
Net minimum lease payments receivable | 46,361 | |||
Estimated residual value of leased property (unguaranteed) | 1,305 | |||
Less: unearned income | (2,844 | ) | ||
Net investment in sales-type lease | 44,822 | |||
Less: long-term investment in sales-type lease | (34,756 | ) | ||
Investment in sales-type lease included in accounts and other receivables | $ | 10,066 | ||
As of September 30, 2014, minimum lease payments for each of the succeeding five fiscal years are as follows (in thousands): | ||||
2014 | $ | 2,957 | ||
2015 | 14,747 | |||
2016 | 14,747 | |||
2017 | 14,747 | |||
2018 | 11,059 | |||
Total minimum lease payments to be received | $ | 58,257 | ||
Inventory
Inventory | 9 Months Ended | |||||||
Sep. 30, 2014 | ||||||||
Inventory Disclosure [Abstract] | ' | |||||||
Inventory | ' | |||||||
Note 9— Inventory | ||||||||
Inventory consisted of the following (in thousands): | ||||||||
30-Sep-14 | 31-Dec-13 | |||||||
Components and subassemblies | $ | 31,603 | $ | 46,339 | ||||
Work in process | 79,961 | 23,618 | ||||||
Finished goods | 86,621 | 25,172 | ||||||
Total | $ | 198,185 | $ | 95,129 | ||||
Finished goods inventory of $30.7 million and $24.8 million was located at customer sites pending acceptance as of September 30, 2014 and December 31, 2013, respectively. At September 30, 2014, two customers accounted for $52.5 million, and at December 31, 2013, one customer accounted for $18.0 million of finished goods inventory. | ||||||||
During the three and nine months ended September 30, 2014, the Company wrote off $0.6 million and $1.6 million, respectively, of inventory related to various product lines. During the three and nine months ended September 30, 2013, the Company wrote off $0.4 million and $0.9 million of inventory, primarily related to the Company's Cray XE, Cray XK and CS300 product lines. |
Deferred_Revenue
Deferred Revenue | 9 Months Ended | |||||||
Sep. 30, 2014 | ||||||||
Deferred Revenue Disclosure [Abstract] | ' | |||||||
Deferred Revenue | ' | |||||||
Note 10— Deferred Revenue | ||||||||
Deferred revenue consisted of the following (in thousands): | ||||||||
September 30, 2014 | December 31, 2013 | |||||||
Deferred product revenue | $ | 27,561 | $ | 54,065 | ||||
Deferred service revenue | 76,355 | 87,900 | ||||||
Total deferred revenue | 103,916 | 141,965 | ||||||
Less: long-term deferred revenue | (39,049 | ) | (50,477 | ) | ||||
Deferred revenue in current liabilities | $ | 64,867 | $ | 91,488 | ||||
As of September 30, 2014, four customers accounted for 76% of total deferred revenue. At December 31, 2013, three customers accounted for 47% of total deferred revenue. |
ShareBased_Compensation
Share-Based Compensation | 9 Months Ended | ||||||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||||||
Share-based Compensation [Abstract] | ' | ||||||||||||||||||||
Share-Based Compensation | ' | ||||||||||||||||||||
Note 11— Share-Based Compensation | |||||||||||||||||||||
The Company accounts for its share-based compensation based on an estimate of fair value of the grant on the date of grant. | |||||||||||||||||||||
The fair value of unvested restricted stock is based on the market price of a share of the Company’s common stock on the date of grant and is amortized over the vesting period. | |||||||||||||||||||||
In determining fair value of stock options, the Company uses the Black-Scholes option pricing model. The following key weighted average assumptions were employed in the calculation for the three and nine month periods ended September 30, 2014 and September 30, 2013: | |||||||||||||||||||||
Three Months Ended September 30, 2014 | Three Months Ended September 30, 2013 | Nine Months Ended September 30, 2014 | Nine Months Ended September 30, 2013 | ||||||||||||||||||
Risk-free interest rate | 1.32% | 1.00% | 1.22% | 0.90% | |||||||||||||||||
Expected dividend yield | —% | —% | —% | —% | |||||||||||||||||
Volatility | 52.58% | 47.20% | 52.45% | 47.50% | |||||||||||||||||
Expected life | 4.0 years | 4.0 years | 4.0 years | 4.0 years | |||||||||||||||||
Weighted average Black-Scholes value of options granted | $11.62 | $7.32 | $11.12 | $7.40 | |||||||||||||||||
The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant. The Company does not anticipate declaring dividends in the foreseeable future. Volatility is based on historical data. The expected life of an option is based on the assumption that options will be exercised, on average, about two years after vesting occurs. The Company recognizes compensation expense for only the portion of options or stock units that are expected to vest. Therefore, management applies an estimated forfeiture rate that is derived from historical employee termination data and adjusted for expected future employee turnover rates. The estimated forfeiture rate applied to the Company's stock option grants during the three and nine months ended September 30, 2014 was 8.0% and 8.3%, respectively. If the actual number of forfeitures differs from those estimated by management, additional adjustments to compensation expense may be required in future periods. The Company’s stock price volatility, option lives and expected forfeiture rates involve management’s best estimates at the time of such determination, which impact the fair value of the option calculated under the Black-Scholes methodology and, ultimately, the expense that will be recognized over the vesting period or requisite service period of the option. The Company typically issues stock options with a four year vesting period (the requisite service period) and amortizes the fair value of stock options (stock compensation cost) ratably over the requisite service period. The fair value of unvested restricted stock is based on the market price of a share of the Company’s common stock on the date of grant and is amortized over the vesting period. | |||||||||||||||||||||
The Company also has an employee stock purchase plan (“ESPP”) which allows employees to purchase shares of the Company’s common stock at 95% of fair market value on the fourth business day after the end of each offering period. The ESPP is deemed non-compensatory and therefore is not subject to the fair value provisions. | |||||||||||||||||||||
The following table sets forth the gross share-based compensation cost resulting from stock options and unvested restricted stock that were recorded in the Company’s Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2014 and 2013 (in thousands): | |||||||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||||
September 30, | September 30, | ||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||||||
Cost of product revenue | $ | 56 | $ | 36 | $ | 165 | $ | 89 | |||||||||||||
Cost of service revenue | 60 | 50 | 191 | 166 | |||||||||||||||||
Research and development, net | 339 | 337 | 1,862 | 1,053 | |||||||||||||||||
Sales and marketing | 493 | 565 | 2,309 | 1,531 | |||||||||||||||||
General and administrative | 1,205 | 848 | 3,026 | 2,282 | |||||||||||||||||
Total | $ | 2,153 | $ | 1,836 | $ | 7,553 | $ | 5,121 | |||||||||||||
A summary of the Company’s year-to-date stock option activity and related information follows: | |||||||||||||||||||||
Options | Weighted | Weighted | |||||||||||||||||||
Average | Average | ||||||||||||||||||||
Exercise | Remaining | ||||||||||||||||||||
Price | Contractual | ||||||||||||||||||||
Term | |||||||||||||||||||||
Outstanding at December 31, 2013 | 2,078,069 | $ | 9.29 | ||||||||||||||||||
Grants | 319,900 | $ | 26.83 | ||||||||||||||||||
Exercises | (307,006 | ) | $ | 7.54 | |||||||||||||||||
Canceled and forfeited | (55,165 | ) | $ | 18.88 | |||||||||||||||||
Outstanding at September 30, 2014 | 2,035,798 | $ | 12.05 | 6.8 | |||||||||||||||||
Exercisable at September 30, 2014 | 1,283,505 | $ | 7.85 | 5.8 | |||||||||||||||||
Available for grant at September 30, 2014 | 3,061,768 | ||||||||||||||||||||
As of September 30, 2014, there was $29.1 million of aggregate intrinsic value of outstanding stock options, including $23.7 million of aggregate intrinsic value of exercisable stock options. Intrinsic value represents the total pretax intrinsic value for all “in-the-money” options (i.e., the difference between the Company’s closing stock price on the last trading day of its third quarter of 2014 and the exercise price, multiplied by the number of shares of common stock underlying the stock options) that would have been received by the option holders had all option holders exercised their options on September 30, 2014. During the three and nine months ended September 30, 2014, stock options covering 135,491 and 307,006 shares of common stock, respectively with a total intrinsic value of $2.6 million and $7.5 million were exercised. During the three and nine months ended September 30, 2013, stock options covering 161,767 and 474,492 shares of common stock with a total intrinsic value of $3.0 million and $7.2 million were exercised. | |||||||||||||||||||||
A summary of the Company’s unvested restricted stock grants and changes during the nine months ended September 30, 2014 is as follows: | |||||||||||||||||||||
Service Vesting Restricted Shares | Performance Vesting Restricted Shares | Total Restricted Shares | |||||||||||||||||||
Shares | Weighted | Shares | Weighted | Shares | Weighted Average Grant Date Fair Value | ||||||||||||||||
Average | Average | ||||||||||||||||||||
Grant Date | Grant Date | ||||||||||||||||||||
Fair Value | Fair Value | ||||||||||||||||||||
Outstanding at December 31, 2013 | 1,127,700 | $ | 12.05 | 1,094,000 | $ | 15.94 | 2,221,700 | $ | 13.97 | ||||||||||||
Granted | 434,734 | $ | 28.48 | — | $ | — | 434,734 | $ | 28.48 | ||||||||||||
Forfeited | (131,164 | ) | $ | 14.84 | (241,000 | ) | $ | 17.58 | (372,164 | ) | $ | 16.62 | |||||||||
Vested | (422,179 | ) | $ | 11.12 | — | $ | — | (422,179 | ) | $ | 11.12 | ||||||||||
Outstanding at September 30, 2014 | 1,009,091 | $ | 19.16 | 853,000 | $ | 15.48 | 1,862,091 | $ | 17.47 | ||||||||||||
The estimated forfeiture rate applied to the Company's restricted stock grants during the three and nine months ended September 30, 2014 was 8.0% and 6.1%, respectively. The aggregate fair value of restricted stock vested during the nine months ended September 30, 2014 and 2013 was $11.8 million and $14.0 million, respectively. | |||||||||||||||||||||
As of September 30, 2014, the Company had $31.9 million of total unrecognized compensation cost related to unvested stock options and unvested restricted stock. This includes $12.9 million for performance vesting restricted stock subject to performance measures which are currently not considered probable to vest and $0.3 million for performance vesting restricted stock subject to performance measures which currently are considered probable to vest. No compensation expense is recognized for performance vesting restricted stock subject to performance measures that are not yet considered probable of attainment. | |||||||||||||||||||||
Unrecognized compensation cost related to unvested stock options and unvested restricted stock considered probable to vest is expected to be recognized over a weighted average period of 3.0 years. |
Taxes
Taxes | 9 Months Ended | |||||||
Sep. 30, 2014 | ||||||||
Income Tax Disclosure [Abstract] | ' | |||||||
Taxes | ' | |||||||
Note 12— Taxes | ||||||||
The Company’s effective tax rates for the three and nine months ended September 30, 2014 and 2013 were as follows: | ||||||||
Three Months Ended | Nine Months Ended | |||||||
September 30, | September 30, | |||||||
2014 | 2013 | 2014 | 2013 | |||||
Effective Tax Rates | -37% | 35% | 60% | 52% | ||||
The primary reason for the difference between the expected statutory tax rate of 35% and the actual tax rates of (37)% and 60% for the three and nine months ended September 30, 2014 was the result of a change in the business outlook with respect to the current and future years, as well as a research and development tax credit benefit, in the amount of $0.9 million, that was recorded by the Company during the three months ended September 30, 2014. | ||||||||
A number of items, none of which was material, resulted in the Company's actual tax rate for three months ended September 30, 2013 equaling the expected statutory tax rate of 35%. The primary reason for the difference between the expected statutory tax rate of 35% and the actual tax rate of 52% for the nine months ended September 30, 2013 was the impact of an improved business outlook with respect to the year ended December 31, 2013 and an improved business outlook with respect to future years that resulted in a reduction of the valuation allowance held against the Company's U.S. deferred tax assets by $8.3 million. | ||||||||
The decision to adjust the valuation allowance held against the Company’s U.S. deferred tax assets is based upon an evaluation of all available positive and negative evidence relating to the current and future years. The Company considers its actual historical results over several years to have stronger weight than other more subjective indicators when considering whether to establish or reduce a valuation allowance on deferred tax assets. The assessment of the Company’s ability to utilize its deferred tax assets included an assessment of all known business risks and industry trends as well as forecasted domestic and international earnings over a number of years. The Company’s ability to forecast results significantly into the future is severely limited due to the rapid rate of technological change in the industry in which it operates. As a result of an improved business forecast, the Company concluded that it was more likely than not that additional deferred tax assets would be realized. | ||||||||
The Company continues to provide a partial valuation allowance against its U.S. deferred tax assets and a full valuation allowance against its deferred tax assets in a limited number of foreign jurisdictions as the realization of such assets is not considered to be more likely than not. The Company’s conclusion about the realizability of its deferred tax assets, and therefore the appropriateness of a valuation allowance, is reviewed quarterly. If the Company’s conclusion about the realizability of its deferred tax assets changes in a future period, the Company could record a substantial tax provision or benefit in its Condensed Consolidated Statements of Operations when that occurs. |
Segment_Information
Segment Information | 9 Months Ended | |||||||||||||||||||||||
Sep. 30, 2014 | ||||||||||||||||||||||||
Segment Reporting [Abstract] | ' | |||||||||||||||||||||||
Segment Information | ' | |||||||||||||||||||||||
Note 13— Segment Information | ||||||||||||||||||||||||
The Company has the following reportable segments: Supercomputing (formerly HPC Systems), Storage and Data Management, and Maintenance and Support. The Company's segment presentation changed beginning January 1, 2014 to be consistent with information now provided to its Chief Executive Officer, who is the Company's Chief Operating Decision Maker. This information has been modified to include inter-segment revenue and gross profit from Maintenance and Support services in Supercomputing and Storage and Data Management resulting from the sales of products in these segments. The prior period financial information has been reclassified to conform to the current period’s presentation. | ||||||||||||||||||||||||
The Company’s reportable segments represent components of the Company for which separate financial information is available that is utilized on a regular basis by the Chief Executive Officer, who is the Chief Operating Decision Maker, in determining how to allocate the Company’s resources and evaluate performance. The segments are determined based on several factors, including the Company’s internal operating structure, the manner in which the Company’s operations are managed, client base, similar economic characteristics and the availability of separate financial information. | ||||||||||||||||||||||||
Supercomputing | ||||||||||||||||||||||||
Supercomputing includes a suite of highly advanced supercomputers and cluster systems which are used by single users all the way up through large research and engineering centers in universities, government laboratories, and commercial institutions. Supercomputing also includes the ongoing maintenance of these systems as well as system analysts. | ||||||||||||||||||||||||
Storage and Data Management | ||||||||||||||||||||||||
Storage and Data Management offers the Cray Sonexion and Tiered Adaptive Storage solution as well as other third-party storage products and their ongoing maintenance as well as system analysts. | ||||||||||||||||||||||||
Maintenance and Support | ||||||||||||||||||||||||
Maintenance and Support provides ongoing maintenance of Cray supercomputers, big data storage and analytics systems, as well as system analysts. | ||||||||||||||||||||||||
Engineering Services and Other | ||||||||||||||||||||||||
Included within Engineering Services and Other is the Company’s analytics business and Custom Engineering. | ||||||||||||||||||||||||
The following table presents revenues and gross margin for the Company’s operating segments for the three and nine months ended September 30 (in thousands): | ||||||||||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||||||||||
September 30, | September 30, | |||||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||||||||||
Revenue: | ||||||||||||||||||||||||
Supercomputing | $ | 134,619 | $ | 39,514 | $ | 244,873 | $ | 175,987 | ||||||||||||||||
Storage and Data Management | 20,587 | 10,094 | 43,298 | 32,868 | ||||||||||||||||||||
Maintenance and Support | 21,996 | 18,974 | 64,517 | 56,765 | ||||||||||||||||||||
Engineering Services and Other | 4,200 | 4,758 | 11,492 | 9,525 | ||||||||||||||||||||
Elimination of inter-segment revenue | (21,996 | ) | (18,974 | ) | (64,517 | ) | (56,765 | ) | ||||||||||||||||
Total revenue | $ | 159,406 | $ | 54,366 | $ | 299,663 | $ | 218,380 | ||||||||||||||||
Gross Profit: | ||||||||||||||||||||||||
Supercomputing | $ | 40,756 | $ | 13,158 | $ | 75,553 | $ | 51,637 | ||||||||||||||||
Storage and Data Management | 6,730 | 4,039 | 15,251 | 13,768 | ||||||||||||||||||||
Maintenance and Support | 9,551 | 9,422 | 29,818 | 28,959 | ||||||||||||||||||||
Engineering Services and Other | 1,044 | 3,229 | 4,667 | 5,971 | ||||||||||||||||||||
Elimination of inter-segment gross profit | (9,551 | ) | (9,422 | ) | (29,818 | ) | (28,959 | ) | ||||||||||||||||
Total gross profit | $ | 48,530 | $ | 20,426 | $ | 95,471 | $ | 71,376 | ||||||||||||||||
Revenue and cost of revenue is the only discrete financial information the Company prepares for its segments. Other financial results or assets are not separated by segment. | ||||||||||||||||||||||||
The Company’s geographic operations outside the United States include sales and service offices in Canada, Brazil, Europe, Japan, Australia, India, South Korea, the United Arab Emirates, China, Singapore and Taiwan. The following data represents the Company’s revenue for the United States and all other countries, which is determined based upon a customer’s geographic location (in thousands): | ||||||||||||||||||||||||
United States | Other Countries | Total | ||||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | 2014 | 2013 | |||||||||||||||||||
Three months ended September 30, | ||||||||||||||||||||||||
Product revenue | $ | 36,626 | $ | 21,708 | $ | 96,835 | $ | 10,012 | $ | 133,461 | $ | 31,720 | ||||||||||||
Service revenue | 18,867 | 16,418 | 7,078 | 6,228 | 25,945 | 22,646 | ||||||||||||||||||
Total revenue | $ | 55,493 | $ | 38,126 | $ | 103,913 | $ | 16,240 | $ | 159,406 | $ | 54,366 | ||||||||||||
United States | Other Countries | Total | ||||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | 2014 | 2013 | |||||||||||||||||||
Nine months ended September 30, | ||||||||||||||||||||||||
Product revenue | $ | 97,418 | $ | 111,300 | $ | 127,806 | $ | 42,641 | $ | 225,224 | $ | 153,941 | ||||||||||||
Service revenue | 53,747 | 45,671 | 20,692 | 18,768 | 74,439 | 64,439 | ||||||||||||||||||
Total revenue | $ | 151,165 | $ | 156,971 | $ | 148,498 | $ | 61,409 | $ | 299,663 | $ | 218,380 | ||||||||||||
Product and service revenue from U.S. government agencies and customers primarily serving the U.S. government totaled approximately $51.0 million and $131.0 million, respectively, for the three and nine months ended September 30, 2014, compared to approximately $24.2 million and $121.3 million for the three and nine months ended September 30, 2013. For the nine months ended September 30, 2014, revenue in the UK accounted for 19% of total revenue. For the nine months ended September 30, 2013, no foreign countries or non-U.S. government customers accounted for more than 10% of total revenue. |
Basis_of_Presentation_Policies
Basis of Presentation (Policies) | 9 Months Ended | |
Sep. 30, 2014 | ||
Accounting Policies [Abstract] | ' | |
Principles of Consolidation | ' | |
Principles of Consolidation | ||
The accompanying condensed consolidated financial statements include the accounts of Cray Inc. and its wholly-owned subsidiaries. All material intercompany accounts and transactions have been eliminated. | ||
Use of Estimates | ' | |
Use of Estimates | ||
The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the amounts reported in the Company’s condensed consolidated financial statements and accompanying notes. Actual results could differ materially from those estimates. | ||
Revenue Recognition | ' | |
Revenue Recognition | ||
The Company recognizes revenue, including transactions under sales-type leases, when it is realized or realizable and earned. The Company considers revenue realized or realizable and earned when it has persuasive evidence of an arrangement, delivery has occurred, the sales price is fixed or determinable, and collectibility is reasonably assured. Delivery does not occur until the products have been shipped or services provided to the customer, risk of loss has transferred to the customer, and, where applicable, a customer acceptance has been obtained. The sales price is not considered to be fixed or determinable until all material contingencies related to the sales have been resolved. The Company records revenue in the Condensed Consolidated Statements of Operations net of any sales, use, value added or certain excise taxes imposed by governmental authorities on specific sales transactions. In addition to the aforementioned general policy, the following are the Company's statements of policy with regard to multiple-element arrangements and specific revenue recognition policies for each major category of revenue. | ||
Multiple-Element Arrangements. The Company commonly enters into revenue arrangements that include multiple deliverables of its product and service offerings due to the needs of its customers. Products may be delivered in phases over time periods which can be as long as five years. Maintenance services generally begin upon acceptance of the first equipment delivery and future deliveries of equipment generally have an associated maintenance period. The Company considers the maintenance period to commence upon acceptance of the product or installation in situations where a formal acceptance is not required, which may include a warranty period and accordingly allocates a portion of the arrangement consideration as a separate deliverable which is recognized as service revenue over the entire service period. Other services such as training and engineering services can be delivered as a discrete delivery or over the term of the contract. A multiple-element arrangement is separated into more than one unit of accounting if the following criteria are met: | ||
• | 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. | |
If these criteria are met for each element, the arrangement consideration is allocated to the separate units of accounting based on each unit's relative selling price. If these criteria are not met, the arrangement is accounted for as one unit of accounting which would result in revenue being recognized ratably over the contract term or being deferred until the earlier of when such criteria are met or when the last undelivered element is delivered. | ||
The Company follows a selling price hierarchy in determining the best estimate of the selling price of each deliverable. Certain products and services are sold separately in standalone arrangements for which the Company is sometimes able to determine vendor specific objective evidence, or VSOE. The Company determines VSOE based on normal pricing and discounting practices for the product or service when sold separately. | ||
When the Company is not able to establish VSOE for all deliverables in an arrangement with multiple elements, the Company attempts to establish the selling price of each remaining element based on third-party evidence, or TPE. The Company's inability to establish VSOE is often due to a relatively small sample of customer contracts that differ in system size and contract terms which can be due to infrequently selling each element separately, not pricing products within a narrow range, or only having a limited sales history, such as in the case of certain advanced and emerging technologies. TPE is determined based on the Company's prices or competitor prices for similar deliverables when sold separately. However, the Company is often unable to determine TPE, as the Company's offerings contain a significant level of customization and differentiation from those of competitors and the Company is often unable to reliably determine what similar competitor products' selling prices are on a standalone basis. | ||
When the Company is unable to establish selling price using VSOE or TPE, the Company uses estimated selling price, or ESP, in its allocation of arrangement consideration. The objective of ESP is to determine the price at which the Company would transact a sale if the product or service were sold on a standalone basis. In determining ESP, the Company uses the cost to provide the product or service plus a margin, or considers other factors. When using cost plus a margin, the Company considers the total cost of the product or service, including customer-specific and geographic factors. The Company also considers the historical margins of the product or service on previous contracts and several factors including any changes to pricing methodologies, competitiveness of products and services and cost drivers that would cause future margins to differ from historical margins. | ||
Products. The Company most often recognizes revenue from sales of products upon customer acceptance of the system. Where formal acceptance is not required, the Company recognizes revenue upon delivery or installation. When the product is part of a multiple element arrangement, the Company allocates a portion of the arrangement consideration to product revenue based on estimates of selling price. | ||
Services. Maintenance services are provided under separate maintenance contracts with customers. These contracts generally provide for maintenance services for one year, although some are for multi-year periods, often with prepayments for the term of the contract. The Company considers the maintenance period to commence upon acceptance of the product or installation in situations where a formal acceptance is not required, which may include a warranty period. When service is part of a multiple element arrangement, the Company allocates a portion of the arrangement consideration to maintenance service revenue based on estimates of selling price. Maintenance contracts that are billed in advance of revenue recognition are recorded as deferred revenue. Maintenance revenue is recognized ratably over the term of the maintenance contract. | ||
Revenue from engineering services is recognized as services are performed. | ||
Project Revenue. Revenue from design and build contracts is recognized under the percentage-of-completion (or POC method). Under the POC method, revenue is recognized based on the costs incurred to date as a percentage of the total estimated costs to fulfill the contract. If circumstances arise that change the original estimates of revenues, costs, or extent of progress toward completion, revisions to the estimates are made. These revisions may result in increases or decreases in estimated revenues or costs, and such revisions are recorded in income in the period in which the circumstances that gave rise to the revision become known by management. The Company performs ongoing profitability analyses of its contracts accounted for under the POC method in order to determine whether the latest estimates of revenue, costs and extent of progress require updating. If at any time these estimates indicate that the contract will be unprofitable, the entire estimated loss for the remainder of the contract is recorded immediately. | ||
The Company records revenue from certain research and development contracts which include milestones using the milestone method if the milestones are determined to be substantive. A milestone is considered to be substantive if management believes there is substantive uncertainty that it will be achieved and the milestone consideration meets all of the following criteria: | ||
• | 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. | |
The individual milestones are determined to be substantive or non-substantive in their entirety and milestone consideration is not bifurcated. | ||
Revenue from projects is classified as Product Revenue or Service Revenue, based on the nature of the work performed. | ||
Nonmonetary Transactions. The Company values and records nonmonetary transactions at the fair value of the asset surrendered unless the fair value of the asset received is more clearly evident, in which case the fair value of the asset received is used. | ||
Sales-type Leases | ' | |
Sales-type leases | ||
When the Company leases a system to a customer, the accounting involves specific determinations, which often involve complex provisions and significant judgments. The four criteria of the accounting standard that the Company uses in the determination of whether a lease is a sales-type lease or an operating lease are: (a) a review of the lease term to determine if it is equal to or greater than 75% of the economic life of the system; (b) a review of the minimum lease payments to determine if they are equal to or greater than 90% of the fair value of the system; (c) a determination of whether or not the lease transfers ownership to the lessee at the end of the lease term; and (d) a determination of whether or not the lease contains a bargain purchase option. If the lease transaction meets one of the four criteria, then it is recorded as a sales-type lease; otherwise it is an operating lease. Additionally, the Company assesses whether collectibility of the lease payments is reasonably assured and whether there are any significant uncertainties related to costs that it has yet to incur with respect to the lease. | ||
The Company considers the economic lives of most of its products to range from three to four years. There is no significant after-market for the Company's used products and the Company believes that the economic lives are representative of the periods during which its products are expected to be economically usable, with normal service, for the purposes for which they were intended. Residual values are not significant. | ||
The discount rate implicit in the sales-type lease is used to calculate the present value of minimum lease payments, which the Company records as a lease receivable. The minimum lease payment consists of the gross lease payments net of executory costs and contingencies, if any. While revenue is recognized at the inception of the lease, the cash flow from the sales-type lease occurs over the course of the lease, which results in interest income. Unearned interest income is recorded at the inception of the lease and amortized over the lease term using the effective interest method. | ||
Investments | ' | |
The Company’s investments in debt securities with maturities at purchase greater than three months are classified as "available-for-sale." Changes in fair value are reflected in other comprehensive income. |
Fair_Value_Measurement_Tables
Fair Value Measurement (Tables) | 9 Months Ended | ||||||||||||
Sep. 30, 2014 | |||||||||||||
Fair Value Disclosures [Abstract] | ' | ||||||||||||
Company's financial assets and liabilities measured at fair value and the hierarchy of the valuation inputs | ' | ||||||||||||
The following table presents information about the Company’s financial assets and liabilities that have been measured at fair value as of September 30, 2014, and indicates the fair value hierarchy of the valuation inputs utilized to determine such fair value (in thousands): | |||||||||||||
Description | Fair Value | Quoted | Significant | ||||||||||
as of | Prices in | Other | |||||||||||
September 30, | Active | Observable | |||||||||||
2014 | Markets | Inputs | |||||||||||
(Level 1) | (Level 2) | ||||||||||||
Assets: | |||||||||||||
Cash and cash equivalents and restricted cash | $ | 99,912 | $ | 99,912 | $ | — | |||||||
Available-for-sale investments (1) | 41,634 | 41,634 | — | ||||||||||
Foreign exchange forward contracts (2) | 5,625 | — | 5,625 | ||||||||||
Assets measured at fair value at September 30, 2014 | $ | 147,171 | $ | 141,546 | $ | 5,625 | |||||||
Liabilities: | |||||||||||||
Foreign exchange forward contracts (3) | $ | (3,247 | ) | $ | — | $ | (3,247 | ) | |||||
Liabilities measured at fair value at September 30, 2014 | $ | (3,247 | ) | $ | — | $ | (3,247 | ) | |||||
-1 | Included in "Short-term investments" on the Company’s Condensed Consolidated Balance Sheets. | ||||||||||||
-2 | Included in “Prepaid expenses and other current assets” and “Other non-current assets” on the Company’s Condensed Consolidated Balance Sheets. | ||||||||||||
-3 | Included in “Other accrued liabilities” and “Other non-current liabilities” on the Company’s Condensed Consolidated Balance Sheets. | ||||||||||||
Schedule of notional amounts of outstanding derivative positions | ' | ||||||||||||
As of September 30, 2014, the Company had outstanding forward contracts which were designated as cash flow hedges of anticipated future cash receipts on sales contracts payable in foreign currencies. The outstanding notional amounts were approximately (in millions): | |||||||||||||
30-Sep-14 | 31-Dec-13 | ||||||||||||
British Pounds (GBP) | 97 | 36.4 | |||||||||||
Euros (EUR) | 29.4 | 53 | |||||||||||
Swiss Francs (CHF) | 9 | 5.6 | |||||||||||
Canadian Dollars (CAD) | — | 3.9 | |||||||||||
Japanese Yen (JPY) | 534.4 | 1,239.80 | |||||||||||
Singapore Dollars (SGD) | 0.1 | 3.2 | |||||||||||
Swedish Krona (SEK) | 84.8 | — | |||||||||||
Fair values of derivative instruments | ' | ||||||||||||
Fair Values of Derivative Instruments (in thousands): | |||||||||||||
Hedge Classification | Balance Sheet Location | Fair Value | Fair Value | ||||||||||
as of | as of | ||||||||||||
September 30, | December 31, | ||||||||||||
2014 | 2013 | ||||||||||||
Foreign currency contracts | Prepaid expenses and other current assets | $ | 3,064 | $ | 1,654 | ||||||||
Foreign currency contracts | Other non-current assets | 2,561 | 76 | ||||||||||
Foreign currency contracts | Other accrued liabilities | (1,248 | ) | (2,942 | ) | ||||||||
Foreign currency contracts | Other non-current liabilities | (1,999 | ) | (4,295 | ) | ||||||||
Total fair value of derivatives classified as hedging instruments | $ | 2,378 | $ | (5,507 | ) | ||||||||
Accumulated_Other_Comprehensiv1
Accumulated Other Comprehensive Income (Tables) | 9 Months Ended | |||||||||||||||
Sep. 30, 2014 | ||||||||||||||||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | ' | |||||||||||||||
Reclassification from Accumulated Other Comprehensive Income | ' | |||||||||||||||
The following table shows the impact on product revenue of gross and net of tax reclassification adjustments from accumulated other comprehensive income resulting from hedged foreign currency transactions recorded by the Company for the three and nine months ended September 30, 2014 and 2013 (in thousands). The gross reclassification adjustments decreased product revenue for all periods presented. | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
Gross of tax reclassifications | $ | (2,828 | ) | $ | (52 | ) | $ | (1,998 | ) | $ | (38 | ) | ||||
Net of tax reclassifications | $ | (1,697 | ) | $ | (30 | ) | $ | (1,199 | ) | $ | (23 | ) | ||||
Schedule of Accumulated Other Comprehensive Income (Loss) | ' | |||||||||||||||
The following tables show the changes in Accumulated Other Comprehensive Income by component for the three and nine months ended September 30, 2014 and 2013 (in thousands): | ||||||||||||||||
Three Months Ended September 30, 2014 | ||||||||||||||||
Unrealized Gain on Investments | Foreign Currency Translation Adjustments | Unrealized Gain (Loss) on Cash Flow Hedges | Accumulated Other Comprehensive Income (Loss) | |||||||||||||
Beginning balance | $ | 26 | $ | 2,712 | $ | (4,021 | ) | $ | (1,283 | ) | ||||||
Current-period change, net of tax | 16 | 464 | 7,350 | 7,830 | ||||||||||||
Ending balance | $ | 42 | $ | 3,176 | $ | 3,329 | $ | 6,547 | ||||||||
Income tax expense (benefit) associated with current-period change | $ | 11 | $ | (153 | ) | $ | 4,936 | $ | 4,794 | |||||||
Three Months Ended September 30, 2013 | ||||||||||||||||
Unrealized Gain (Loss) on Investments | Foreign Currency Translation Adjustments | Unrealized Gain (Loss) on Cash Flow Hedges | Accumulated Other Comprehensive Income | |||||||||||||
Beginning balance | $ | (48 | ) | $ | 3,985 | $ | 2,883 | $ | 6,820 | |||||||
Current-period change, net of tax | 53 | 103 | (5,693 | ) | (5,537 | ) | ||||||||||
Ending balance | $ | 5 | $ | 4,088 | $ | (2,810 | ) | $ | 1,283 | |||||||
Income tax expense (benefit) associated with current-period change | $ | 35 | $ | 69 | $ | (3,795 | ) | $ | (3,691 | ) | ||||||
Nine Months Ended September 30, 2014 | ||||||||||||||||
Unrealized Gain on Investments | Foreign Currency Translation Adjustments | Unrealized Gain (Loss) on Cash Flow Hedges | Accumulated Other Comprehensive Income | |||||||||||||
Beginning balance | $ | — | $ | 3,257 | $ | (2,404 | ) | $ | 853 | |||||||
Current-period change, net of tax | 42 | (81 | ) | 5,733 | 5,694 | |||||||||||
Ending balance | $ | 42 | $ | 3,176 | $ | 3,329 | $ | 6,547 | ||||||||
Income tax expense (benefit) associated with current-period change | $ | 28 | $ | (125 | ) | $ | 3,869 | $ | 3,772 | |||||||
Nine Months Ended September 30, 2013 | ||||||||||||||||
Unrealized Gain (Loss) on Investments | Foreign Currency Translation Adjustments | Unrealized Gain (Loss) on Cash Flow Hedges | Accumulated Other Comprehensive Income | |||||||||||||
Beginning balance | $ | (46 | ) | $ | 4,301 | $ | 926 | $ | 5,181 | |||||||
Current-period change, net of tax | 51 | (213 | ) | (3,736 | ) | (3,898 | ) | |||||||||
Ending balance | $ | 5 | $ | 4,088 | $ | (2,810 | ) | $ | 1,283 | |||||||
Income tax expense (benefit) associated with current-period change | $ | 34 | $ | (142 | ) | $ | (2,491 | ) | $ | (2,599 | ) | |||||
Investments_Tables
Investments (Tables) | 9 Months Ended | |||||||
Sep. 30, 2014 | ||||||||
Investments, Debt and Equity Securities [Abstract] | ' | |||||||
Investments | ' | |||||||
The carrying amount of the Company’s investments in available-for-sale securities as of September 30, 2014 and December 31, 2013 are shown in the table below (in thousands): | ||||||||
30-Sep-14 | 31-Dec-13 | |||||||
Short-term available-for-sale securities cost | $ | 41,564 | $ | 14,048 | ||||
Short-term available-for-sale securities unrealized gains | 70 | — | ||||||
Short-term available-for-sale securities fair value | $ | 41,634 | $ | 14,048 | ||||
Accounts_and_Other_Receivables1
Accounts and Other Receivables, Net (Tables) | 9 Months Ended | |||||||
Sep. 30, 2014 | ||||||||
Receivables [Abstract] | ' | |||||||
Accounts and Other Receivables, Net | ' | |||||||
Net accounts and other receivables consisted of the following (in thousands): | ||||||||
September 30, 2014 | December 31, 2013 | |||||||
Trade accounts receivable | $ | 17,116 | $ | 169,417 | ||||
Unbilled receivables | 6,308 | 9,075 | ||||||
Advance billings | 8,436 | 2,141 | ||||||
Short-term investment in sales-type lease | 10,066 | — | ||||||
Other receivables | 3,630 | 2,051 | ||||||
45,556 | 182,684 | |||||||
Allowance for doubtful accounts | (97 | ) | (157 | ) | ||||
Accounts and other receivables, net | $ | 45,459 | $ | 182,527 | ||||
Salestype_leases_Tables
Sales-type leases (Tables) | 9 Months Ended | |||
Sep. 30, 2014 | ||||
Leases [Abstract] | ' | |||
Components of the Net Investment in the Sales-type Lease | ' | |||
The following table shows the components of the net investment in the sales-type lease as of September 30, 2014 (in thousands): | ||||
Total minimum lease payments to be received | $ | 58,257 | ||
Less: executory costs | (11,896 | ) | ||
Net minimum lease payments receivable | 46,361 | |||
Estimated residual value of leased property (unguaranteed) | 1,305 | |||
Less: unearned income | (2,844 | ) | ||
Net investment in sales-type lease | 44,822 | |||
Less: long-term investment in sales-type lease | (34,756 | ) | ||
Investment in sales-type lease included in accounts and other receivables | $ | 10,066 | ||
Minimum Lease Payments to be Received for Each of the Next Five Fiscal Years | ' | |||
As of September 30, 2014, minimum lease payments for each of the succeeding five fiscal years are as follows (in thousands): | ||||
2014 | $ | 2,957 | ||
2015 | 14,747 | |||
2016 | 14,747 | |||
2017 | 14,747 | |||
2018 | 11,059 | |||
Total minimum lease payments to be received | $ | 58,257 | ||
Inventory_Tables
Inventory (Tables) | 9 Months Ended | |||||||
Sep. 30, 2014 | ||||||||
Inventory Disclosure [Abstract] | ' | |||||||
Inventory | ' | |||||||
Inventory consisted of the following (in thousands): | ||||||||
30-Sep-14 | 31-Dec-13 | |||||||
Components and subassemblies | $ | 31,603 | $ | 46,339 | ||||
Work in process | 79,961 | 23,618 | ||||||
Finished goods | 86,621 | 25,172 | ||||||
Total | $ | 198,185 | $ | 95,129 | ||||
Deferred_Revenue_Tables
Deferred Revenue (Tables) | 9 Months Ended | |||||||
Sep. 30, 2014 | ||||||||
Deferred Revenue Disclosure [Abstract] | ' | |||||||
Deferred revenue | ' | |||||||
Deferred revenue consisted of the following (in thousands): | ||||||||
September 30, 2014 | December 31, 2013 | |||||||
Deferred product revenue | $ | 27,561 | $ | 54,065 | ||||
Deferred service revenue | 76,355 | 87,900 | ||||||
Total deferred revenue | 103,916 | 141,965 | ||||||
Less: long-term deferred revenue | (39,049 | ) | (50,477 | ) | ||||
Deferred revenue in current liabilities | $ | 64,867 | $ | 91,488 | ||||
ShareBased_Compensation_Tables
Share-Based Compensation (Tables) | 9 Months Ended | ||||||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||||||
Share-based Compensation [Abstract] | ' | ||||||||||||||||||||
Key weighted average assumptions used in determining fair value | ' | ||||||||||||||||||||
The following key weighted average assumptions were employed in the calculation for the three and nine month periods ended September 30, 2014 and September 30, 2013: | |||||||||||||||||||||
Three Months Ended September 30, 2014 | Three Months Ended September 30, 2013 | Nine Months Ended September 30, 2014 | Nine Months Ended September 30, 2013 | ||||||||||||||||||
Risk-free interest rate | 1.32% | 1.00% | 1.22% | 0.90% | |||||||||||||||||
Expected dividend yield | —% | —% | —% | —% | |||||||||||||||||
Volatility | 52.58% | 47.20% | 52.45% | 47.50% | |||||||||||||||||
Expected life | 4.0 years | 4.0 years | 4.0 years | 4.0 years | |||||||||||||||||
Weighted average Black-Scholes value of options granted | $11.62 | $7.32 | $11.12 | $7.40 | |||||||||||||||||
Gross share-based compensation cost recorded in the condensed consolidated statements of operations | ' | ||||||||||||||||||||
The following table sets forth the gross share-based compensation cost resulting from stock options and unvested restricted stock that were recorded in the Company’s Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2014 and 2013 (in thousands): | |||||||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||||
September 30, | September 30, | ||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||||||
Cost of product revenue | $ | 56 | $ | 36 | $ | 165 | $ | 89 | |||||||||||||
Cost of service revenue | 60 | 50 | 191 | 166 | |||||||||||||||||
Research and development, net | 339 | 337 | 1,862 | 1,053 | |||||||||||||||||
Sales and marketing | 493 | 565 | 2,309 | 1,531 | |||||||||||||||||
General and administrative | 1,205 | 848 | 3,026 | 2,282 | |||||||||||||||||
Total | $ | 2,153 | $ | 1,836 | $ | 7,553 | $ | 5,121 | |||||||||||||
Stock option activity | ' | ||||||||||||||||||||
A summary of the Company’s year-to-date stock option activity and related information follows: | |||||||||||||||||||||
Options | Weighted | Weighted | |||||||||||||||||||
Average | Average | ||||||||||||||||||||
Exercise | Remaining | ||||||||||||||||||||
Price | Contractual | ||||||||||||||||||||
Term | |||||||||||||||||||||
Outstanding at December 31, 2013 | 2,078,069 | $ | 9.29 | ||||||||||||||||||
Grants | 319,900 | $ | 26.83 | ||||||||||||||||||
Exercises | (307,006 | ) | $ | 7.54 | |||||||||||||||||
Canceled and forfeited | (55,165 | ) | $ | 18.88 | |||||||||||||||||
Outstanding at September 30, 2014 | 2,035,798 | $ | 12.05 | 6.8 | |||||||||||||||||
Exercisable at September 30, 2014 | 1,283,505 | $ | 7.85 | 5.8 | |||||||||||||||||
Available for grant at September 30, 2014 | 3,061,768 | ||||||||||||||||||||
Restricted stock activity | ' | ||||||||||||||||||||
A summary of the Company’s unvested restricted stock grants and changes during the nine months ended September 30, 2014 is as follows: | |||||||||||||||||||||
Service Vesting Restricted Shares | Performance Vesting Restricted Shares | Total Restricted Shares | |||||||||||||||||||
Shares | Weighted | Shares | Weighted | Shares | Weighted Average Grant Date Fair Value | ||||||||||||||||
Average | Average | ||||||||||||||||||||
Grant Date | Grant Date | ||||||||||||||||||||
Fair Value | Fair Value | ||||||||||||||||||||
Outstanding at December 31, 2013 | 1,127,700 | $ | 12.05 | 1,094,000 | $ | 15.94 | 2,221,700 | $ | 13.97 | ||||||||||||
Granted | 434,734 | $ | 28.48 | — | $ | — | 434,734 | $ | 28.48 | ||||||||||||
Forfeited | (131,164 | ) | $ | 14.84 | (241,000 | ) | $ | 17.58 | (372,164 | ) | $ | 16.62 | |||||||||
Vested | (422,179 | ) | $ | 11.12 | — | $ | — | (422,179 | ) | $ | 11.12 | ||||||||||
Outstanding at September 30, 2014 | 1,009,091 | $ | 19.16 | 853,000 | $ | 15.48 | 1,862,091 | $ | 17.47 | ||||||||||||
Taxes_Tables
Taxes (Tables) | 9 Months Ended | |||||||
Sep. 30, 2014 | ||||||||
Income Tax Disclosure [Abstract] | ' | |||||||
Schedule of Effective Income Tax Rate Reconciliation | ' | |||||||
The Company’s effective tax rates for the three and nine months ended September 30, 2014 and 2013 were as follows: | ||||||||
Three Months Ended | Nine Months Ended | |||||||
September 30, | September 30, | |||||||
2014 | 2013 | 2014 | 2013 | |||||
Effective Tax Rates | -37% | 35% | 60% | 52% |
Segment_Information_Tables
Segment Information (Tables) | 9 Months Ended | |||||||||||||||||||||||
Sep. 30, 2014 | ||||||||||||||||||||||||
Segment Reporting [Abstract] | ' | |||||||||||||||||||||||
Information on operating segments | ' | |||||||||||||||||||||||
The following table presents revenues and gross margin for the Company’s operating segments for the three and nine months ended September 30 (in thousands): | ||||||||||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||||||||||
September 30, | September 30, | |||||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||||||||||
Revenue: | ||||||||||||||||||||||||
Supercomputing | $ | 134,619 | $ | 39,514 | $ | 244,873 | $ | 175,987 | ||||||||||||||||
Storage and Data Management | 20,587 | 10,094 | 43,298 | 32,868 | ||||||||||||||||||||
Maintenance and Support | 21,996 | 18,974 | 64,517 | 56,765 | ||||||||||||||||||||
Engineering Services and Other | 4,200 | 4,758 | 11,492 | 9,525 | ||||||||||||||||||||
Elimination of inter-segment revenue | (21,996 | ) | (18,974 | ) | (64,517 | ) | (56,765 | ) | ||||||||||||||||
Total revenue | $ | 159,406 | $ | 54,366 | $ | 299,663 | $ | 218,380 | ||||||||||||||||
Gross Profit: | ||||||||||||||||||||||||
Supercomputing | $ | 40,756 | $ | 13,158 | $ | 75,553 | $ | 51,637 | ||||||||||||||||
Storage and Data Management | 6,730 | 4,039 | 15,251 | 13,768 | ||||||||||||||||||||
Maintenance and Support | 9,551 | 9,422 | 29,818 | 28,959 | ||||||||||||||||||||
Engineering Services and Other | 1,044 | 3,229 | 4,667 | 5,971 | ||||||||||||||||||||
Elimination of inter-segment gross profit | (9,551 | ) | (9,422 | ) | (29,818 | ) | (28,959 | ) | ||||||||||||||||
Total gross profit | $ | 48,530 | $ | 20,426 | $ | 95,471 | $ | 71,376 | ||||||||||||||||
Revenue by geographic location | ' | |||||||||||||||||||||||
The following data represents the Company’s revenue for the United States and all other countries, which is determined based upon a customer’s geographic location (in thousands): | ||||||||||||||||||||||||
United States | Other Countries | Total | ||||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | 2014 | 2013 | |||||||||||||||||||
Three months ended September 30, | ||||||||||||||||||||||||
Product revenue | $ | 36,626 | $ | 21,708 | $ | 96,835 | $ | 10,012 | $ | 133,461 | $ | 31,720 | ||||||||||||
Service revenue | 18,867 | 16,418 | 7,078 | 6,228 | 25,945 | 22,646 | ||||||||||||||||||
Total revenue | $ | 55,493 | $ | 38,126 | $ | 103,913 | $ | 16,240 | $ | 159,406 | $ | 54,366 | ||||||||||||
United States | Other Countries | Total | ||||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | 2014 | 2013 | |||||||||||||||||||
Nine months ended September 30, | ||||||||||||||||||||||||
Product revenue | $ | 97,418 | $ | 111,300 | $ | 127,806 | $ | 42,641 | $ | 225,224 | $ | 153,941 | ||||||||||||
Service revenue | 53,747 | 45,671 | 20,692 | 18,768 | 74,439 | 64,439 | ||||||||||||||||||
Total revenue | $ | 151,165 | $ | 156,971 | $ | 148,498 | $ | 61,409 | $ | 299,663 | $ | 218,380 | ||||||||||||
Basis_of_Presentation_Details
Basis of Presentation (Details) | 9 Months Ended |
Sep. 30, 2014 | |
Accounting Policies [Abstract] | ' |
Product delivery period | '5 years |
Maintenance services period | '1 year |
Fair_Value_Measurement_Details
Fair Value Measurement (Details) (USD $) | Sep. 30, 2014 | |
In Thousands, unless otherwise specified | ||
Assets: | ' | |
Cash and cash equivalents and restricted cash | $99,912 | |
Short-term available-for-sale securities fair value | 41,634 | [1] |
Foreign currency contracts | 5,625 | [2] |
Assets measured at fair value at September 30, 2014 | 147,171 | |
Liabilities: | ' | |
Foreign currency contracts | -3,247 | [3] |
Liabilities measured at fair value at September 30, 2014 | -3,247 | |
Quoted Prices in Active Markets (Level 1) | ' | |
Assets: | ' | |
Cash and cash equivalents and restricted cash | 99,912 | |
Short-term available-for-sale securities fair value | 41,634 | [1] |
Foreign currency contracts | 0 | [2] |
Assets measured at fair value at September 30, 2014 | 141,546 | |
Liabilities: | ' | |
Foreign currency contracts | 0 | [3] |
Liabilities measured at fair value at September 30, 2014 | 0 | |
Significant Other Observable Inputs (Level 2) | ' | |
Assets: | ' | |
Cash and cash equivalents and restricted cash | 0 | |
Short-term available-for-sale securities fair value | 0 | [1] |
Foreign currency contracts | 5,625 | [2] |
Assets measured at fair value at September 30, 2014 | 5,625 | |
Liabilities: | ' | |
Foreign currency contracts | -3,247 | [3] |
Liabilities measured at fair value at September 30, 2014 | ($3,247) | |
[1] | Included in "Short-term investments" on the Company’s Condensed Consolidated Balance Sheets. | |
[2] | Included in “Prepaid expenses and other current assets†and “Other non-current assets†on the Company’s Condensed Consolidated Balance Sheets. | |
[3] | Included in “Other accrued liabilities†and “Other non-current liabilities†on the Company’s Condensed Consolidated Balance Sheets. |
Fair_Value_Measurement_Outstan
Fair Value Measurement Outstanding notional amounts of forward contracts designated as cash flow hedges (Details) | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 |
In Millions, unless otherwise specified | CAD | CHF | EUR (€) | GBP (£) | JPY (¥) | SEK | SGD | CAD | CHF | EUR (€) | GBP (£) | JPY (¥) | SEK | SGD |
Fair Value Disclosures [Abstract] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Notional amount of foreign currency cash flow hedge derivatives | 0 | 9 | € 29.40 | £ 97 | ¥ 534.4 | 84.8 | 0.1 | 3.9 | 5.6 | € 53 | £ 36.4 | ¥ 1,239.8 | 0 | 3.2 |
Fair_Value_Measurement_Narrati
Fair Value Measurement Narrative (Details) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Fair Value Disclosures [Abstract] | ' | ' |
Hedged foreign currency exposure | $222.10 | $151.40 |
Fair_Value_Measurement_Derivat
Fair Value Measurement Derivatives (Details) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 | |
In Thousands, unless otherwise specified | |||
Derivatives, Fair Value [Line Items] | ' | ' | |
Foreign currency contracts | $5,625 | [1] | ' |
Foreign currency contracts | -3,247 | [2] | ' |
Total fair value of derivatives classified as hedging instruments | 2,378 | -5,507 | |
Foreign currency contracts | Prepaid expenses and other current assets | ' | ' | |
Derivatives, Fair Value [Line Items] | ' | ' | |
Foreign currency contracts | 3,064 | 1,654 | |
Foreign currency contracts | Other non-current assets | ' | ' | |
Derivatives, Fair Value [Line Items] | ' | ' | |
Foreign currency contracts | 2,561 | 76 | |
Foreign currency contracts | Other accrued liabilities | ' | ' | |
Derivatives, Fair Value [Line Items] | ' | ' | |
Foreign currency contracts | -1,248 | -2,942 | |
Foreign currency contracts | Other non-current liabilities | ' | ' | |
Derivatives, Fair Value [Line Items] | ' | ' | |
Foreign currency contracts | ($1,999) | ($4,295) | |
[1] | Included in “Prepaid expenses and other current assets†and “Other non-current assets†on the Company’s Condensed Consolidated Balance Sheets. | ||
[2] | Included in “Other accrued liabilities†and “Other non-current liabilities†on the Company’s Condensed Consolidated Balance Sheets. |
Accumulated_Other_Comprehensiv2
Accumulated Other Comprehensive Income (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | ' | ' | ' | ' |
Gross of tax reclassifications | ($2,828) | ($52) | ($1,998) | ($38) |
Net of tax reclassifications | -1,697 | -30 | -1,199 | -23 |
Unrealized Gain on Investments | ' | ' | ' | ' |
Beginning balance | 26 | -48 | 0 | -46 |
Current-period change, net of tax | 16 | 53 | 42 | 51 |
Ending balance | 42 | 5 | 42 | 5 |
Income tax expense (benefit) associated with current-period change | 11 | 35 | 28 | 34 |
Foreign Currency Translation Adjustments | ' | ' | ' | ' |
Beginning balance | 2,712 | 3,985 | 3,257 | 4,301 |
Current-period change, net of tax | 464 | 103 | -81 | -213 |
Ending balance | 3,176 | 4,088 | 3,176 | 4,088 |
Income tax expense (benefit) associated with current-period change | -153 | 69 | -125 | -142 |
Unrealized Gain (Loss) on Cash Flow Hedges | ' | ' | ' | ' |
Beginning balance | -4,021 | 2,883 | -2,404 | 926 |
Current-period change, net of tax | 7,350 | -5,693 | 5,733 | -3,736 |
Ending balance | 3,329 | -2,810 | 3,329 | -2,810 |
Income tax expense (benefit) associated with current-period change | 4,936 | -3,795 | 3,869 | -2,491 |
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | ' | ' | ' | ' |
Beginning balance | -1,283 | 6,820 | 853 | 5,181 |
Current-period change, net of tax | 7,830 | -5,537 | 5,694 | -3,898 |
Ending balance | 6,547 | 1,283 | 6,547 | 1,283 |
Income tax expense (benefit) associated with current-period change | $4,794 | ($3,691) | $3,772 | ($2,599) |
Earnings_Loss_Per_Share_EPS_De
Earnings (Loss) Per Share ("EPS") (Details) | 3 Months Ended | 9 Months Ended | ||
In Millions, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Earnings Per Share [Abstract] | ' | ' | ' | ' |
Incremental Common Shares Attributable to Dilutive Effect of Share-based Payment Arrangements | 1.5 | 0 | 0 | 0 |
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 0.9 | 4.1 | 3 | 4.1 |
Investments_Details
Investments (Details) (USD $) | 9 Months Ended | 12 Months Ended | |
In Thousands, unless otherwise specified | Sep. 30, 2014 | Dec. 31, 2013 | |
Schedule of Held-to-maturity Securities [Line Items] | ' | ' | |
Short-term available-for-sale securities fair value | $41,634 | [1] | ' |
Short-term available-for-sale securities cost | ' | ' | |
Schedule of Held-to-maturity Securities [Line Items] | ' | ' | |
Short-term available-for-sale securities cost | 41,564 | 14,048 | |
Short-term available-for-sale securities unrealized gains | 70 | 0 | |
Short-term available-for-sale securities fair value | $41,634 | $14,048 | |
[1] | Included in "Short-term investments" on the Company’s Condensed Consolidated Balance Sheets. |
Accounts_and_Other_Receivables2
Accounts and Other Receivables, Net (Details) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ' | ' |
Accounts receivable | $45,556 | $182,684 |
Net accounts and other receivables | ' | ' |
Allowance for doubtful accounts | -97 | -157 |
Accounts and other receivables, net | 45,459 | 182,527 |
Trade accounts receivable | ' | ' |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ' | ' |
Accounts receivable | 17,116 | 169,417 |
Unbilled receivables | ' | ' |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ' | ' |
Accounts receivable | 6,308 | 9,075 |
Advance billings | ' | ' |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ' | ' |
Accounts receivable | 8,436 | 2,141 |
Short-term investment in sales-type lease | ' | ' |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ' | ' |
Accounts receivable | 10,066 | 0 |
Other receivables | ' | ' |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ' | ' |
Accounts receivable | $3,630 | $2,051 |
Accounts_and_Other_Receivables3
Accounts and Other Receivables, Net Narrative (Details) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ' | ' |
Accounts receivable | $45,556 | $182,684 |
U.S. government agencies and customers | ' | ' |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ' | ' |
Accounts receivable | 14,000 | 111,900 |
Accounts receivable | Non U.S. government customers | ' | ' |
Accounts and Other Receivables, Net (Textual) [Abstract] | ' | ' |
Number of non-U.S. customers that individually accounted for more than 10% of total accounts and other receivables | 2 | 0 |
Non-U.S. government customers that accounted for total accounts and other receivables, percentage | 38.00% | 10.00% |
Unbilled receivables | U.S. government agencies and customers | ' | ' |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ' | ' |
Accounts receivable | $1,700 | $300 |
Salestype_leases_Details
Sales-type leases (Details) (USD $) | Sep. 30, 2014 |
In Thousands, unless otherwise specified | |
Leases [Abstract] | ' |
Total minimum lease payments to be received | $58,257 |
Less: executory costs | -11,896 |
Net minimum lease payments receivable | 46,361 |
Estimated residual value of leased property (unguaranteed) | 1,305 |
Less: unearned income | -2,844 |
Net investment in sales-type lease | 44,822 |
Less: long-term investment in sales-type lease | -34,756 |
Investment in sales-type lease included in accounts and other receivables | 10,066 |
Capital Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract] | ' |
2014 | 2,957 |
2015 | 14,747 |
2016 | 14,747 |
2017 | 14,747 |
2018 | 11,059 |
Total minimum lease payments to be received | $58,257 |
Inventory_Details
Inventory (Details) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Inventory Disclosure [Abstract] | ' | ' |
Components and subassemblies | $31,603 | $46,339 |
Work in process | 79,961 | 23,618 |
Finished goods | 86,621 | 25,172 |
Total | $198,185 | $95,129 |
Narrative_Details
Narrative (Details) (USD $) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | |
Inventory [Line Items] | ' | ' | ' | ' | ' |
Finished goods inventory located at customer sites pending acceptance | $30,700,000 | ' | $30,700,000 | ' | $24,800,000 |
Inventory write-down | 600,000 | 400,000 | 1,589,000 | 917,000 | ' |
Finished goods inventory | ' | ' | ' | ' | ' |
Inventory [Line Items] | ' | ' | ' | ' | ' |
Number of customer that individually accounted for more than 10% of finished goods inventory | 2 | ' | 2 | ' | 1 |
Amount of total finished goods inventory from customers that individually accounted for more than 10% of total finished goods inventory | $52,500,000 | ' | $52,500,000 | ' | $18,000,000 |
Deferred_Revenue_Details
Deferred Revenue (Details) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Deferred revenue | ' | ' |
Total deferred revenue | $103,916 | $141,965 |
Less: long-term deferred revenue | -39,049 | -50,477 |
Deferred revenue in current liabilities | 64,867 | 91,488 |
Deferred product revenue | ' | ' |
Deferred revenue | ' | ' |
Total deferred revenue | 27,561 | 54,065 |
Deferred service revenue | ' | ' |
Deferred revenue | ' | ' |
Total deferred revenue | $76,355 | $87,900 |
Deferred_Revenue_Narrative_Det
Deferred Revenue Narrative (Details) (Deferred Revenue, Customer Concentration Risk) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2014 | Dec. 31, 2013 | |
Customers | Customers | |
Deferred Revenue | Customer Concentration Risk | ' | ' |
Deferred Revenue Arrangement [Line Items] | ' | ' |
Number of foreign countries that individually accounted for more than 10% of total revenue | 4 | 3 |
Percentage of total deferred revenue from customers that individually accounted for more than 10% of total deferred revenue | 76.00% | 47.00% |
ShareBased_Compensation_Assump
Share-Based Compensation Assumptions (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | |
Key weighted average assumptions used in determining the fair value | ' | ' | ' | ' |
Risk-free interest rate (percent) | 1.32% | 1.00% | 1.22% | 0.90% |
Expected dividend yield (percent) | 0.00% | 0.00% | 0.00% | 0.00% |
Volatility (percent) | 52.58% | 47.20% | 52.45% | 47.50% |
Expected life | '4 years | '4 years | '4 years | '4 years |
Weighted average Black-Scholes value of options granted (usd per share) | $11.62 | $7.32 | $11.12 | $7.40 |
ShareBased_Compensation_Compen
Share-Based Compensation Compensation Costs (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Gross share-based compensation cost recorded in the condensed consolidated statements of operations | ' | ' | ' | ' |
Gross share-based compensation cost, total | $2,153 | $1,836 | $7,553 | $5,121 |
Cost of product revenue | ' | ' | ' | ' |
Gross share-based compensation cost recorded in the condensed consolidated statements of operations | ' | ' | ' | ' |
Gross share-based compensation cost, total | 56 | 36 | 165 | 89 |
Cost of service revenue | ' | ' | ' | ' |
Gross share-based compensation cost recorded in the condensed consolidated statements of operations | ' | ' | ' | ' |
Gross share-based compensation cost, total | 60 | 50 | 191 | 166 |
Research and development, net | ' | ' | ' | ' |
Gross share-based compensation cost recorded in the condensed consolidated statements of operations | ' | ' | ' | ' |
Gross share-based compensation cost, total | 339 | 337 | 1,862 | 1,053 |
Sales and marketing | ' | ' | ' | ' |
Gross share-based compensation cost recorded in the condensed consolidated statements of operations | ' | ' | ' | ' |
Gross share-based compensation cost, total | 493 | 565 | 2,309 | 1,531 |
General and administrative | ' | ' | ' | ' |
Gross share-based compensation cost recorded in the condensed consolidated statements of operations | ' | ' | ' | ' |
Gross share-based compensation cost, total | $1,205 | $848 | $3,026 | $2,282 |
ShareBased_Compensation_Option
Share-Based Compensation Option Activity (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | |
Options | ' | ' | ' | ' |
Outstanding beginning balance (In Shares) | ' | ' | 2,078,069 | ' |
Grants (In Shares) | ' | ' | 319,900 | ' |
Exercises (In Shares) | -135,491 | -161,767 | -307,006 | -474,492 |
Cancellations (In Shares) | ' | ' | -55,165 | ' |
Outstanding ending balance (In Shares) | 2,035,798 | ' | 2,035,798 | ' |
Exercisable ending balance (In Shares) | 1,283,505 | ' | 1,283,505 | ' |
Available for grant ending balance (In Shares) | 3,061,768 | ' | 3,061,768 | ' |
Weighted Average Exercise Price | ' | ' | ' | ' |
Outstanding beginning balance (Per Share) | ' | ' | $9.29 | ' |
Grants (Per Share) | ' | ' | $26.83 | ' |
Exercises (Per Share) | ' | ' | $7.54 | ' |
Cancellations (Per Share) | ' | ' | $18.88 | ' |
Outstanding ending balance (Per Share) | $12.05 | ' | $12.05 | ' |
Exercisable ending balance (Per Share) | $7.85 | ' | $7.85 | ' |
Weighted Average Remaining Contractual Term | ' | ' | ' | ' |
Outstanding ending balance | ' | ' | '6 years 9 months 18 days | ' |
Exercisable ending balance | ' | ' | '5 years 9 months 18 days | ' |
ShareBased_Compensation_Restri
Share-Based Compensation Restricted Stock (Details) (USD $) | 9 Months Ended |
Sep. 30, 2014 | |
Shares | ' |
Outstanding beginning balance (In Shares) | 2,221,700 |
Granted (In Shares) | 434,734 |
Forfeited (In Shares) | -372,164 |
Vested (In Shares) | -422,179 |
Outstanding ending balance (In Shares) | 1,862,091 |
Weighted Average Grant Date Fair Value | ' |
Outstanding beginning balance (Per Share) | $13.97 |
Granted (Per Share) | $28.48 |
Forfeited (Per Share) | $16.62 |
Vested (Per Share) | $11.12 |
Outstanding ending balance (Per Share) | $17.47 |
Service Vesting Restricted Shares | ' |
Shares | ' |
Outstanding beginning balance (In Shares) | 1,127,700 |
Granted (In Shares) | 434,734 |
Forfeited (In Shares) | -131,164 |
Vested (In Shares) | -422,179 |
Outstanding ending balance (In Shares) | 1,009,091 |
Weighted Average Grant Date Fair Value | ' |
Outstanding beginning balance (Per Share) | $12.05 |
Granted (Per Share) | $28.48 |
Forfeited (Per Share) | $14.84 |
Vested (Per Share) | $11.12 |
Outstanding ending balance (Per Share) | $19.16 |
Performance Vesting Restricted Shares | ' |
Shares | ' |
Outstanding beginning balance (In Shares) | 1,094,000 |
Granted (In Shares) | 0 |
Forfeited (In Shares) | -241,000 |
Vested (In Shares) | 0 |
Outstanding ending balance (In Shares) | 853,000 |
Weighted Average Grant Date Fair Value | ' |
Outstanding beginning balance (Per Share) | $15.94 |
Granted (Per Share) | $0 |
Forfeited (Per Share) | $17.58 |
Vested (Per Share) | $0 |
Outstanding ending balance (Per Share) | $15.48 |
ShareBased_Compensation_Narrat
Share-Based Compensation Narrative (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Millions, except Share data, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Share-based Compensation [Abstract] | ' | ' | ' | ' |
Expected average period options will be exercised after vesting | ' | ' | '2 years | ' |
Estimated forfeiture rate for stock options | 8.00% | ' | 8.30% | ' |
Vesting period for stock options | ' | ' | '4 years | ' |
Employee stock purchase plan, percentage of fair market value for share purchase at the end of each offering period (percent) | ' | ' | 95.00% | ' |
Aggregate intrinsic value of outstanding stock option (In USD) | $29.10 | ' | $29.10 | ' |
Aggregate intrinsic value of exercisable stock option (In USD) | 23.7 | ' | 23.7 | ' |
Exercises (In Shares) | 135,491 | 161,767 | 307,006 | 474,492 |
Total intrinsic value of shares exercised (In USD) | 2.6 | 3 | 7.5 | 7.2 |
Estimated forfeiture rate for restricted stock | 8.00% | ' | 6.10% | ' |
Aggregate fair value of restricted stock vested (In USD) | ' | ' | 11.8 | 14 |
Unrecognized compensation cost (In USD) | 31.9 | ' | 31.9 | ' |
Unrecognized compensation cost for performance vesting restricted stock subject to performance measures which are not considered probable to vest (In USD) | 12.9 | ' | 12.9 | ' |
Unrecognized compensation cost for performance vesting restricted stock subject to performance measures which are considered probable to vest (In USD) | $0.30 | ' | $0.30 | ' |
Unrecognized compensation cost, weighted average period for recognition | ' | ' | '3 years | ' |
Taxes_Details
Taxes (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Millions, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Income Tax Disclosure [Abstract] | ' | ' | ' | ' |
Effective Tax Rates (percent) | -37.00% | 35.00% | 60.00% | 52.00% |
Research and development tax credit | ' | ' | $0.90 | ' |
Expected statutory tax rate (percent) | 35.00% | 35.00% | 35.00% | 35.00% |
Reduction in valuation allowance | ' | ' | ' | $8.30 |
Segment_Information_Details
Segment Information (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Information of Operating Segments | ' | ' | ' | ' |
Revenue: | $159,406 | $54,366 | $299,663 | $218,380 |
Gross Profit: | 48,530 | 20,426 | 95,471 | 71,376 |
Supercomputing | ' | ' | ' | ' |
Information of Operating Segments | ' | ' | ' | ' |
Revenue: | 134,619 | 39,514 | 244,873 | 175,987 |
Gross Profit: | 40,756 | 13,158 | 75,553 | 51,637 |
Storage and Data Management | ' | ' | ' | ' |
Information of Operating Segments | ' | ' | ' | ' |
Revenue: | 20,587 | 10,094 | 43,298 | 32,868 |
Gross Profit: | 6,730 | 4,039 | 15,251 | 13,768 |
Maintenance and Support | ' | ' | ' | ' |
Information of Operating Segments | ' | ' | ' | ' |
Revenue: | 21,996 | 18,974 | 64,517 | 56,765 |
Gross Profit: | 9,551 | 9,422 | 29,818 | 28,959 |
Engineering Services and Other | ' | ' | ' | ' |
Information of Operating Segments | ' | ' | ' | ' |
Revenue: | 4,200 | 4,758 | 11,492 | 9,525 |
Gross Profit: | 1,044 | 3,229 | 4,667 | 5,971 |
Elimination of inter-segment revenue | ' | ' | ' | ' |
Information of Operating Segments | ' | ' | ' | ' |
Revenue: | -21,996 | -18,974 | -64,517 | -56,765 |
Gross Profit: | ($9,551) | ($9,422) | ($29,818) | ($28,959) |
Segment_Information_Revenue_De
Segment Information Revenue (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Revenues from External Customers and Long-Lived Assets [Line Items] | ' | ' | ' | ' |
Product revenue | $133,461 | $31,720 | $225,224 | $153,941 |
Service | 25,945 | 22,646 | 74,439 | 64,439 |
Total revenue | 159,406 | 54,366 | 299,663 | 218,380 |
United States | ' | ' | ' | ' |
Revenues from External Customers and Long-Lived Assets [Line Items] | ' | ' | ' | ' |
Product revenue | 36,626 | 21,708 | 97,418 | 111,300 |
Service | 18,867 | 16,418 | 53,747 | 45,671 |
Total revenue | 55,493 | 38,126 | 151,165 | 156,971 |
Other Countries | ' | ' | ' | ' |
Revenues from External Customers and Long-Lived Assets [Line Items] | ' | ' | ' | ' |
Product revenue | 96,835 | 10,012 | 127,806 | 42,641 |
Service | 7,078 | 6,228 | 20,692 | 18,768 |
Total revenue | $103,913 | $16,240 | $148,498 | $61,409 |
Segment_Information_Narrative_
Segment Information Narrative (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
In Thousands, unless otherwise specified | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 |
Revenue, Major Customer [Line Items] | ' | ' | ' | ' |
Revenue: | $159,406 | $54,366 | $299,663 | $218,380 |
U.S. government agencies and customers | ' | ' | ' | ' |
Revenue, Major Customer [Line Items] | ' | ' | ' | ' |
Revenue: | 51,000 | 24,200 | 131,000 | 121,300 |
Japan | ' | ' | ' | ' |
Revenue, Major Customer [Line Items] | ' | ' | ' | ' |
Percentage of total revenue from customers that individually accounted for more than 10% of total revenue | ' | ' | 19.00% | ' |
Other Countries | ' | ' | ' | ' |
Revenue, Major Customer [Line Items] | ' | ' | ' | ' |
Revenue: | $103,913 | $16,240 | $148,498 | $61,409 |
Percentage of total revenue from customers that individually accounted for more than 10% of total revenue | ' | ' | ' | 10.00% |
Other Countries | Revenue | ' | ' | ' | ' |
Revenue, Major Customer [Line Items] | ' | ' | ' | ' |
Number of foreign countries that individually accounted for more than 10% of total revenue | ' | 0 | ' | 0 |