Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2016 | Nov. 01, 2016 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | CRAY INC | |
Entity Central Index Key | 949,158 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2016 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q3 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 40,747,927 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Current assets: | ||
Cash and cash equivalents | $ 144,476 | $ 266,660 |
Restricted cash | 0 | 1,651 |
Short-term investments | 651 | 14,925 |
Accounts and other receivables, net | 110,006 | 124,719 |
Inventory | 243,608 | 113,655 |
Deferred tax assets | 49,353 | 38,628 |
Prepaid expenses and other current assets | 34,067 | 21,048 |
Total current assets | 582,161 | 581,286 |
Long-term restricted cash | 1,655 | 1,655 |
Long-term investment in sales-type lease, net | 34,797 | 18,317 |
Property and equipment, net | 28,454 | 31,079 |
Service spares, net | 2,726 | 3,090 |
Goodwill | 14,182 | 14,182 |
Intangible assets other than goodwill, net | 1,850 | 2,525 |
Deferred tax assets | 42,572 | 26,016 |
Other non-current assets | 14,675 | 16,025 |
TOTAL ASSETS | 723,072 | 694,175 |
Current liabilities: | ||
Accounts payable | 66,192 | 27,837 |
Accrued payroll and related expenses | 9,737 | 27,452 |
Other accrued liabilities | 8,747 | 24,079 |
Deferred revenue | 133,619 | 86,731 |
Total current liabilities | 218,295 | 166,099 |
Long-term deferred revenue | 23,467 | 33,306 |
Other non-current liabilities | 3,089 | 2,260 |
TOTAL LIABILITIES | 244,851 | 201,665 |
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 40,752,443 and 40,693,707 shares, respectively | 619,718 | 610,279 |
Accumulated other comprehensive income | 10,168 | 7,642 |
Accumulated deficit | (151,665) | (125,411) |
TOTAL SHAREHOLDERS’ EQUITY | 478,221 | 492,510 |
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ 723,072 | $ 694,175 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares | Sep. 30, 2016 | Dec. 31, 2015 |
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 (in dollars per share) | $ 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 | 40,752,443 | 40,693,707 |
Common stock and additional paid-in capital, shares outstanding | 40,752,443 | 40,693,707 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Revenue: | ||||
Product | $ 47,685 | $ 157,692 | $ 188,024 | $ 368,370 |
Service | 29,766 | 33,721 | 95,211 | 88,848 |
Total revenue | 77,451 | 191,413 | 283,235 | 457,218 |
Cost of revenue: | ||||
Cost of product revenue | 33,552 | 105,242 | 125,189 | 266,787 |
Cost of service revenue | 20,298 | 20,289 | 58,322 | 50,928 |
Total cost of revenue | 53,850 | 125,531 | 183,511 | 317,715 |
Gross profit | 23,601 | 65,882 | 99,724 | 139,503 |
Operating expenses: | ||||
Research and development, net | 29,084 | 24,989 | 82,323 | 67,282 |
Sales and marketing | 15,010 | 16,132 | 46,391 | 42,096 |
General and administrative | 7,968 | 6,729 | 24,325 | 19,304 |
Total operating expenses | 52,062 | 47,850 | 153,039 | 128,682 |
Income (loss) from operations | (28,461) | 18,032 | (53,315) | 10,821 |
Other income (expense), net | (312) | (152) | (1,169) | 334 |
Interest income, net | 544 | 337 | 1,654 | 1,114 |
Income (loss) before income taxes | (28,229) | 18,217 | (52,830) | 12,269 |
Income tax benefit (expense) | 5,208 | (7,362) | 11,670 | (5,027) |
Net income (loss) | $ (23,021) | $ 10,855 | $ (41,160) | $ 7,242 |
Basic net income (loss) per common share (in dollars per share) | $ (0.58) | $ 0.28 | $ (1.03) | $ 0.18 |
Diluted net income (loss) per common share (in dollars per share) | $ (0.58) | $ 0.27 | $ (1.03) | $ 0.18 |
Basic weighted average shares outstanding (in shares) | 39,936 | 39,382 | 39,786 | 39,164 |
Diluted weighted average shares outstanding (in shares) | 39,936 | 40,322 | 39,786 | 40,589 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income (loss) | $ (23,021) | $ 10,855 | $ (41,160) | $ 7,242 |
Other comprehensive income, net of tax: | ||||
Unrealized gain (loss) on available-for-sale investments | 0 | 3 | 8 | (17) |
Foreign currency translation adjustments | 58 | (48) | 975 | 265 |
Unrealized gain on cash flow hedges | 566 | 2,881 | 4,285 | 3,791 |
Reclassification adjustments on cash flow hedges included in net income (loss) | (114) | (2,756) | (2,742) | (2,826) |
Other comprehensive income | 510 | 80 | 2,526 | 1,213 |
Comprehensive income (loss) | $ (22,511) | $ 10,935 | $ (38,634) | $ 8,455 |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Operating activities: | ||
Net income (loss) | $ (41,160) | $ 7,242 |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||
Depreciation and amortization | 11,063 | 12,898 |
Share-based compensation expense | 8,386 | 8,637 |
Deferred income taxes | (10,555) | 3,720 |
Other | 294 | 580 |
Cash provided (used) due to changes in operating assets and liabilities: | ||
Accounts and other receivables | 11,910 | 19,380 |
Long-term investment in sales-type lease, net | (19,887) | 7,736 |
Inventory | (133,622) | (92,744) |
Prepaid expenses and other assets | (3,225) | (7,269) |
Accounts payable | 38,135 | 22,215 |
Accrued payroll and related expenses and other accrued liabilities | (32,763) | 3,106 |
Deferred revenue | 37,935 | 83,140 |
Net cash provided by (used in) operating activities | (133,489) | 68,641 |
Investing activities: | ||
Sales/maturities of available-for-sale investments | 30,340 | 16,229 |
Purchases of available-for-sale investments | (16,159) | (14,991) |
Decrease in restricted cash | 1,670 | 15,100 |
Purchases of property and equipment | (3,808) | (5,066) |
Net cash provided by investing activities | 12,043 | 11,272 |
Financing activities: | ||
Proceeds from issuance of common stock through employee stock purchase plan | 545 | 536 |
Purchase of employee restricted shares to fund related statutory tax withholding | (3,284) | (4,151) |
Proceeds from exercises of stock options | 2,098 | 986 |
Net cash used in financing activities | (641) | (2,629) |
Effect of foreign exchange rate changes on cash and cash equivalents | (97) | 172 |
Net increase (decrease) in cash and cash equivalents | (122,184) | 77,456 |
Cash and cash equivalents: | ||
Beginning of period | 266,660 | 112,633 |
End of period | 144,476 | 190,089 |
Supplemental disclosure of cash flow information: | ||
Cash paid for interest | 1 | 4 |
Cash paid for income taxes | 2,093 | 2,520 |
Non-cash investing and financing activities: | ||
Inventory transfers to fixed assets and service spares | $ 3,510 | $ 5,999 |
Basis of Presentation
Basis of Presentation | 9 Months Ended |
Sep. 30, 2016 | |
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, or 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 quarterly report on 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, 2015 . 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 usually 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 of the product 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. |
New Accounting Pronouncements
New Accounting Pronouncements | 9 Months Ended |
Sep. 30, 2016 | |
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, or 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 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 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. Adoption of ASU 2014-09 was initially required for 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. In August 2015, FASB issued Accounting Standards Update No. 2015-14, Revenue from Contracts with Customers - Deferral of the Effective Date: Topic 606 (ASU 2015-14) that deferred the effective date of ASU 2014-09 by one year. Application of the new revenue standard is permitted for fiscal and interim reporting periods beginning after December 15, 2016 and required for fiscal and interim reporting periods beginning after December 15, 2017. The Company is currently evaluating the potential impact of the pending adoption of ASU 2014-09 on its consolidated financial statements. In July 2015, FASB issued Accounting Standards Update No. 2015-11, Simplifying the Measurement of Inventory: Topic 330 (ASU 2015-11). Topic 330 currently requires an entity to measure inventory at the lower of cost or market. Market could be replacement cost, net realizable value, or net realizable value less an approximately normal profit margin. ASU 2015-11 requires that inventory measured using either the first-in-first-out (FIFO) or average cost method be measured at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. Adoption of ASU 2015-11 is required for fiscal reporting periods beginning after December 15, 2016, including interim reporting periods within those fiscal years. The Company does not expect the adoption of ASU 2015-11 to have a material impact on its consolidated financial statements. In November 2015, FASB issued Accounting Standards Update No. 2015-17, Balance Sheet Classification of Deferred Taxes: Topic 740 (ASU 2015-17). Current GAAP requires the deferred taxes for each jurisdiction to be presented as a net current asset or liability and net noncurrent asset or liability. This requires a jurisdiction-by-jurisdiction analysis based on the classification of the assets and liabilities to which the underlying temporary differences relate, or, in the case of loss or credit carryforwards, based on the period in which the attribute is expected to be realized. Any valuation allowance is then required to be allocated on a pro rata basis, by jurisdiction, between current and noncurrent deferred tax assets. The new guidance requires that all deferred tax assets and liabilities, along with any related valuation allowance, be classified as noncurrent on the balance sheet. As a result, each jurisdiction will now only have one net noncurrent deferred tax asset or liability. The guidance does not change the existing requirement that only permits offsetting within a jurisdiction. Adoption of ASU 2015-17 is required for fiscal reporting periods beginning after December 15, 2016, including interim reporting periods within those fiscal years, and either prospective or retrospective application is permitted. Early adoption of ASU 2015-17 is permitted. At the time of adoption, all of the Company’s deferred tax assets and liabilities, along with any related valuation allowance, will be classified as noncurrent on its Consolidated Balance Sheet. Currently, the Company does not plan to early-adopt ASU 2015-17. In January 2016, FASB issued Accounting Standards Update No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities: Topic 825 (ASU 2016-01). The updated guidance enhances the reporting model for financial instruments, which includes amendments to address aspects of recognition, measurement, presentation and disclosure. Adoption of ASU 2016-01 is required for fiscal reporting periods beginning after December 15, 2017, including interim reporting periods within those fiscal years. The Company is currently evaluating the potential impact of the pending adoption of ASU 2016-01 on its consolidated financial statements. In February 2016, FASB issued Accounting Standards Update No. 2016-02, Leases: Topic 842 (ASU 2016-02) that replaces existing lease guidance. The new standard is intended to provide enhanced transparency and comparability by requiring lessees to record right-of-use assets and corresponding lease liabilities on the balance sheet. Under the new guidance, leases will continue to be classified as either finance or operating, with classification affecting the pattern of expense recognition in the Consolidated Statement of Operations. Lessor accounting is largely unchanged under ASU 2016-02. Adoption of ASU 2016-02 is required for fiscal reporting periods beginning after December 15, 2018, including interim reporting periods within those fiscal years with early adoption being permitted. The new standard is required to be applied with a modified retrospective approach to each prior reporting period presented with various optional practical expedients. The Company is currently evaluating the potential impact of the pending adoption of ASU 2016-02 on its consolidated financial statements. In March 2016, FASB issued Accounting Standards Update No. 2016-09, Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting (ASU 2016-09). The updated guidance simplifies and changes how companies account for certain aspects of share-based payment awards to employees, including accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification of certain items in the statement of cash flows. Adoption of ASU 2016-09 is required for fiscal reporting periods beginning after December 15, 2016, including interim reporting periods within those fiscal years with early adoption being permitted. The Company early-adopted ASU 2016-09 in the first quarter of 2016. At the time of adoption, the Company recognized $16.6 million in deferred tax assets for all excess tax benefits that had not been previously recognized because the related tax deduction had not reduced taxes payable. This was accomplished through a cumulative-effect adjustment to accumulated deficit. All excess tax benefits and all tax deficiencies generated in the current and future periods will be recorded as income tax benefit or expense in the Company’s Consolidated Statement of Operations in the reporting period in which they occur. This will result in increased volatility in the Company’s effective tax rate. The Company has determined that none of the other provisions of ASU 2016-09 will have a significant impact on its consolidated financial statements. The table below shows the accumulated deficit activity for the nine months ended September 30, 2016 (in thousands): Accumulated Deficit BALANCE, December 31, 2015 $ (125,411 ) Purchase of employee restricted shares to fund related statutory tax withholding (1,694 ) Cumulative-effect adjustment resulting from adoption of ASU 2016-09 16,600 Net Loss (41,160 ) BALANCE, September 30, 2016 $ (151,665 ) In August 2016, FASB issued Accounting Standards Update No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (ASU 2016-15). The updated guidance clarifies how companies |
Fair Value Measurement
Fair Value Measurement | 9 Months Ended |
Sep. 30, 2016 | |
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, 2016 , and indicates the fair value hierarchy of the valuation inputs utilized to determine such fair value (in thousands): Description Fair Value Quoted Prices in Active Markets (Level 1) Significant Other Observable Inputs (Level 2) Assets: Cash and cash equivalents and restricted cash $ 146,131 $ 146,131 $ — Available-for-sale investments (1) 651 651 — Foreign currency exchange contracts (2) 18,060 — 18,060 Assets measured at fair value at September 30, 2016 $ 164,842 $ 146,782 $ 18,060 Liabilities: Foreign currency exchange contracts (3) (1,270 ) — (1,270 ) Liabilities measured at fair value at September 30, 2016 $ (1,270 ) $ — $ (1,270 ) (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, 2016 and December 31, 2015 , the Company had outstanding foreign currency exchange contracts that were designated and accounted for as cash flow hedges of anticipated future cash receipts on sales contracts payable in foreign currencies. The outstanding notional amounts were approximately (in millions): September 30, December 31, 2015 British Pounds (GBP) 29.4 39.2 Euros (EUR) 8.5 6.0 Swiss Francs (CHF) 30.5 33.0 Canadian Dollars (CAD) 86.8 — Japanese Yen (JPY) 2,230.9 — The Company had hedged foreign currency exposure related to these designated cash flow hedges of approximately $178.8 million and $107.3 million as of September 30, 2016 and December 31, 2015 , respectively. As of September 30, 2016 and December 31, 2015 , the Company had outstanding foreign currency exchange contracts that had been dedesignated for the purposes of hedge accounting treatment. The outstanding notional amounts were approximately (in millions): September 30, December 31, 2015 British Pounds (GBP) 36.5 31.5 Euros (EUR) — 3.8 Swiss Francs (CHF) — 0.3 Japanese Yen (JPY) — 274.0 The foreign currency exposure related to these contracts was approximately $54.8 million as of September 30, 2016 and $55.6 million as of December 31, 2015 . Unrealized gains or losses related to these dedesignated contracts are recorded in the Condensed Consolidated Statement of Operations and are generally offset by foreign currency adjustments on related receivables. These foreign currency exchange contracts are considered to be economic hedges. Cash receipts associated with the foreign currency exchange contracts are expected to be received from 2016 through 2022, 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 in the case of receivables denominated in a foreign currency, over the period during which hedged receivables denominated in a foreign currency are outstanding. Fair values of derivative instruments designated as cash flow hedges (in thousands): Hedge Classification Balance Sheet Location Fair Value Fair Value Foreign currency exchange contracts Prepaid expenses and other current assets $ 11,650 $ 3,956 Foreign currency exchange contracts Other non-current assets — 5,183 Foreign currency exchange contracts Other accrued liabilities (872 ) — Foreign currency exchange contracts Other non-current liabilities (398 ) (2 ) Total fair value of derivative instruments designated as cash flow hedges $ 10,380 $ 9,137 Fair values of derivative instruments not designated as cash flow hedges (in thousands): Hedge Classification Balance Sheet Location Fair Value Fair Value Foreign currency exchange contracts Prepaid expenses and other current assets $ 2,036 $ 1,807 Foreign currency exchange contracts Other non-current assets 4,374 656 Foreign currency exchange contracts Other accrued liabilities — (1 ) Total fair value of derivative instruments not designated as cash flow hedges $ 6,410 $ 2,462 |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income | 9 Months Ended |
Sep. 30, 2016 | |
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 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, 2016 and 2015 (in thousands). The gross reclassification adjustments increased product revenue for the three and nine months ended September 30, 2016 and 2015 . Three Months Ended Nine Months Ended 2016 2015 2016 2015 Gross of tax reclassifications $ 191 $ 4,593 $ 4,569 $ 4,710 Net of tax reclassifications $ 114 $ 2,756 $ 2,742 $ 2,826 The following tables show the changes in accumulated other comprehensive income by component for the three and nine months ended September 30, 2016 and 2015 (in thousands): Three Months Ended September 30, 2016 Unrealized Gain (Loss) on Investments Foreign Currency Translation Adjustments Unrealized Gain on Cash Flow Hedges Accumulated Other Comprehensive Income Beginning balance $ — $ 2,592 $ 7,066 $ 9,658 Current-period change, net of tax — 58 452 510 Ending balance $ — $ 2,650 $ 7,518 $ 10,168 Income tax expense associated with current-period change $ — $ 41 $ 301 $ 342 Three Months Ended September 30, 2015 Unrealized Loss on Investments Foreign Currency Translation Adjustments Unrealized Gain on Cash Flow Hedges Accumulated Other Comprehensive Income Beginning balance $ (8 ) $ 2,382 $ 5,262 $ 7,636 Current-period change, net of tax 3 (48 ) 125 80 Ending balance $ (5 ) $ 2,334 $ 5,387 $ 7,716 Income tax expense (benefit) associated with current-period change $ 2 $ (361 ) $ 84 $ (275 ) Nine Months Ended September 30, 2016 Unrealized Gain (Loss) on Investments Foreign Currency Translation Adjustments Unrealized Gain on Cash Flow Hedges Accumulated Other Comprehensive Income Beginning balance $ (8 ) $ 1,675 $ 5,975 $ 7,642 Current-period change, net of tax 8 975 1,543 2,526 Ending balance $ — $ 2,650 $ 7,518 $ 10,168 Income tax expense (benefit) associated with current-period change $ 6 $ (40 ) $ 1,035 $ 1,001 Nine Months Ended September 30, 2015 Unrealized Gain (Loss) on Investments Foreign Currency Translation Adjustments Unrealized Gain on Cash Flow Hedges Accumulated Other Comprehensive Income Beginning balance $ 12 $ 2,069 $ 4,422 $ 6,503 Current-period change, net of tax (17 ) 265 965 1,213 Ending balance $ (5 ) $ 2,334 $ 5,387 $ 7,716 Income tax expense (benefit) associated with current-period change $ (12 ) $ (632 ) $ 635 $ (9 ) |
Income (Loss) Per Share ("EPS")
Income (Loss) Per Share ("EPS") | 9 Months Ended |
Sep. 30, 2016 | |
Earnings Per Share [Abstract] | |
Income (Loss) Per Share (EPS) | Note 5— Income (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, unvested restricted stock and unvested restricted stock units as computed under the treasury stock method. For the three and nine months ended September 30, 2016 , outstanding stock options, unvested restricted stock and unvested restricted stock units 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, 2015 , the added shares from these items included in the calculation of diluted shares and EPS totaled 0.9 million and 1.4 million , respectively. For the three and nine months ended September 30, 2016 , potential gross common shares of 2.7 million and 2.7 million , respectively, were antidilutive and not included in computing diluted EPS. For the three and nine months ended September 30, 2015 , potential gross common shares of 1.4 million and 1.3 million , respectively, were antidilutive and not included in computing diluted EPS. An additional 1.2 million and 1.3 million performance vesting restricted stock and performance vesting restricted stock units were excluded from the computation of potential common shares for the three and nine months ended September 30, 2016 and 2015 , respectively, because the conditions for vesting had not been met as of the balance sheet date. |
Investments
Investments | 9 Months Ended |
Sep. 30, 2016 | |
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 amounts of the Company’s investments in available-for-sale securities as of September 30, 2016 are shown in the table below (in thousands): Unrealized Cost Gains Fair Value Short-term available-for-sale securities $ 651 $ — $ 651 The carrying amounts of the Company’s investments in available-for-sale securities as of December 31, 2015 are shown in the table below (in thousands): Unrealized Cost Losses Fair Value Short-term available-for-sale securities $ 14,939 $ (14 ) $ 14,925 |
Accounts and Other Receivables,
Accounts and Other Receivables, Net | 9 Months Ended |
Sep. 30, 2016 | |
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, December 31, 2015 Trade accounts receivable $ 76,440 $ 83,750 Unbilled receivables 5,764 7,685 Advance billings 2,398 11,637 Short-term investment in sales-type lease 9,064 10,004 Other receivables 16,362 11,662 110,028 124,738 Allowance for doubtful accounts (22 ) (19 ) Accounts and other receivables, net $ 110,006 $ 124,719 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, 2016 and December 31, 2015 , accounts receivable included $45.9 million and $44.2 million , respectively, that resulted from sales to the U.S. government and system acquisitions primarily funded by the U.S. government (“U.S. Government”). Of these amounts, $4.4 million and $2.2 million were unbilled as of September 30, 2016 and December 31, 2015 , respectively, based upon contractual billing arrangements with these customers. Some receivables that result from sales that are primarily funded by the U.S. Government are due from third parties. As of September 30, 2016, two such customers accounted for 28% of total accounts and other receivables. As of September 30, 2016 , no non-U.S. Government customer accounted for more than 10% of total accounts and other receivables. As of December 31, 2015 , one non-U.S. Government customer accounted for 18% of total accounts and other receivables. Other receivables as of September 30, 2016 , includes an $8.7 million insurance receivable related to an electrical smoke event that occurred at the Company's Chippewa Falls manufacturing facility in July 2016. |
Sales-type Lease
Sales-type Lease | 9 Months Ended |
Sep. 30, 2016 | |
Leases [Abstract] | |
Sales-type Lease | Note 8— Sales-type Lease The Company has a sales-type lease with one of its customers. Under the terms of the original agreement, the Company provided a high performance computing solution to the customer for a term of four years, beginning at the customer’s acceptance of the system. In the second quarter of 2016, the Company delivered a second high performance computing solution and extended the original agreement, which will now end in September 2020. The lease extension, and delivery of the second high performance computing solution, has been accounted for as a separate sale and is not considered a lease modification. The lease is designated in British Pounds and the Company has entered into certain foreign currency exchange contracts that act as an economic hedge for the foreign currency exposure associated with this arrangement. The following table shows the components of the net investment in the sales-type lease as of September 30, 2016 and December 31, 2015 (in thousands): September 30, December 31, 2015 Total minimum lease payments to be received $ 58,379 $ 36,863 Less: executory costs (11,705 ) (7,434 ) Net minimum lease payments receivable 46,674 29,429 Less: unearned income (2,813 ) (1,108 ) Net investment in sales-type lease 43,861 28,321 Less: long-term investment in sales-type lease (34,797 ) (18,317 ) Investment in sales-type lease included in accounts and other receivables $ 9,064 $ 10,004 As of September 30, 2016 , minimum lease payments for each of the succeeding five fiscal years are as follows (in thousands): 2016 (less than 1 year) $ 3,388 2017 14,405 2018 14,592 2019 14,863 2020 11,131 Total minimum lease payments to be received $ 58,379 |
Inventory
Inventory | 9 Months Ended |
Sep. 30, 2016 | |
Inventory Disclosure [Abstract] | |
Inventory | Note 9— Inventory Inventory consisted of the following (in thousands): September 30, December 31, 2015 Components and subassemblies $ 47,268 $ 20,806 Work in process 36,812 43,071 Finished goods 159,528 49,778 Total $ 243,608 $ 113,655 Finished goods inventory of $141.1 million and $49.5 million was located at customer sites pending acceptance as of September 30, 2016 and December 31, 2015 , respectively. At September 30, 2016 , two customers accounted for $126.6 million of finished goods inventory, and at December 31, 2015 , three customers accounted for $41.7 million of finished goods inventory. During the nine months ended September 30, 2016 , the Company wrote off $0.2 million of inventory. During the nine months ended September 30, 2015 , the Company wrote off $0.4 million of inventory. |
Deferred Revenue
Deferred Revenue | 9 Months Ended |
Sep. 30, 2016 | |
Deferred Revenue Disclosure [Abstract] | |
Deferred Revenue | Note 10— Deferred Revenue Deferred revenue consisted of the following (in thousands): September 30, December 31, 2015 Deferred product revenue $ 71,182 $ 22,215 Deferred service revenue 85,904 97,822 Total deferred revenue 157,086 120,037 Less: long-term deferred revenue (23,467 ) (33,306 ) Deferred revenue in current liabilities $ 133,619 $ 86,731 As of September 30, 2016 and December 31, 2015 , the U.S. Government accounted for $91.9 million and $57.7 million , respectively, of total deferred revenue. As of September 30, 2016 and December 31, 2015 , no non-U.S. Government customers accounted for more than 10% of total deferred revenue. |
Contingencies Contingencies
Contingencies Contingencies | 9 Months Ended |
Sep. 30, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Contingencies | Note 11— Contingencies A customer experienced significant reliability issues with a high-value third-party component in its Cray system after several years of use. The Company has worked with both the third-party vendor and the impacted customer and agreed upon a solution with all parties. The Company incurred $2.5 million and $3.0 million in the three and nine months ended September 30, 2016, respectively, and believes that it has resolved this matter. The Company is subject to patent lawsuits brought by the Raytheon Company (“Raytheon”). The first suit was brought by Raytheon on September 25, 2015 in the Eastern District of Texas (Civil Action No. 2:15-cv-1554) asserting infringement of four patents owned by Raytheon. Two of the asserted patents relate to computer hardware alleged to be encompassed by Cray’s current and past products, and two of the asserted patents relate to features alleged to be performed by third party software that Cray optionally includes as part of its product offerings. A second suit was brought by Raytheon on April 22, 2016 in the Eastern District of Texas (Civil Action No. 2:16-cv-423) asserting infringement of five patents owned by Raytheon. In the second suit, all five of the patents relate to features alleged to be performed by third party software that Cray optionally includes as part of its product offerings. Trial in the first action is currently scheduled to commence in March 2017 and trial in the second action is currently scheduled to commence in October 2017. The Company is vigorously defending these actions. The probable outcome of this litigation cannot be determined, nor can we estimate a range of potential loss. Based on its review of the matters to date, the Company believes it has valid defenses and claims. As a result, the Company considers the likelihood of a material loss related to these matters to be remote. |
Share-Based Compensation
Share-Based Compensation | 9 Months Ended |
Sep. 30, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Share-Based Compensation | Note 12— 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. In determining the 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, 2016 and September 30, 2015 : Three Months Ended September 30, 2016 Three Months Ended September 30, 2015 Nine Months Ended September 30, 2016 Nine Months Ended September 30, 2015 Risk-free interest rate 0.96% 1.36% 1.12% 1.31% Expected dividend yield —% —% —% —% Volatility 50.95% 50.33% 50.86% 50.58% Expected life 4.0 years 4.0 years 4.0 years 4.0 years Weighted average Black-Scholes value of options granted $12.69 $10.56 $13.23 $11.25 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 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, 2016 and 2015 was 8.0% . 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. A summary of the Company’s year-to-date stock option activity and related information follows: Options Weighted Average Exercise Price Weighted Average Remaining Contractual Term Outstanding at December 31, 2015 1,948,475 $ 14.83 Grants 235,075 $ 32.84 Exercises (166,687 ) $ 12.59 Canceled and forfeited (27,470 ) $ 26.56 Outstanding at September 30, 2016 1,989,393 $ 16.98 6.0 Exercisable at September 30, 2016 1,438,670 $ 12.56 5.0 Available for grant at September 30, 2016 3,595,412 As of September 30, 2016 , there was $17.3 million of aggregate intrinsic value of outstanding stock options, including $17.1 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 2016 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, 2016 . During the three and nine months ended September 30, 2016 , stock options covering 26,142 and 166,687 shares of common stock, respectively, with a total intrinsic value of $0.4 million and $4.0 million , respectively, were exercised. During the three and nine months ended September 30, 2015 , stock options covering 8,710 and 116,330 shares of common stock, respectively, with a total intrinsic value of $0.1 million and $2.7 million , respectively, were exercised. The fair value of unvested restricted stock and unvested restricted stock units 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. A summary of the Company’s unvested restricted stock grants and changes during the nine months ended September 30, 2016 is as follows: Service Vesting Restricted Shares Performance Vesting Restricted Shares Total Restricted Shares Shares Weighted Average Grant Date Fair Value Shares Weighted Shares Weighted Average Grant Date Fair Value Outstanding at December 31, 2015 516,443 $ 24.12 585,500 $ 15.07 1,101,943 $ 19.31 Granted 9,893 $ 34.86 — $ — 9,893 $ 34.86 Forfeited (17,850 ) $ 24.66 (67,000 ) $ 15.77 (84,850 ) $ 17.64 Vested (242,599 ) $ 21.82 — $ — (242,599 ) $ 21.82 Outstanding at September 30, 2016 265,887 $ 26.59 518,500 $ 14.98 784,387 $ 18.92 The estimated forfeiture rate applied to the Company’s service vesting restricted share grants during the three and nine months ended September 30, 2016 and 2015 , was 8% . The aggregate fair value of restricted stock vested during the three and nine months ended September 30, 2016 , was $5.1 million and $7.5 million , respectively. The aggregate fair value of restricted stock vested during the three and nine months ended September 30, 2015 , was $10.3 million and $13.4 million , respectively. The performance vesting restricted shares are subject to performance measures that are currently not considered “probable” of attainment and as such, no compensation cost has been recorded for these shares. The performance vesting restricted shares are eligible to vest in 2016 and 2017 . A summary of the Company’s unvested restricted stock unit grants and changes during the nine months ended September 30, 2016 is as follows: Service Vesting Restricted Stock Units Performance Vesting Restricted Stock Units Total Restricted Stock Units Units Weighted Average Grant Date Fair Value Units Weighted Units Weighted Average Grant Date Fair Value Outstanding at December 31, 2015 273,050 $ 29.75 632,700 $ 30.04 905,750 $ 29.95 Granted 220,575 $ 31.89 23,585 $ 42.65 244,160 $ 32.93 Forfeited (7,200 ) $ 29.64 — $ — (7,200 ) $ 29.64 Vested (55,454 ) $ 29.44 — $ — (55,454 ) $ 29.44 Outstanding at September 30, 2016 430,971 $ 30.89 656,285 $ 30.49 1,087,256 $ 30.65 The estimated forfeiture rate applied to the Company’s service vesting restricted stock unit grants during the three and nine months ended September 30, 2016 and 2015 , was 8.0% . The aggregate fair value of restricted stock units vested during the three and nine months ended September 30, 2016 , was $0.6 million and $1.8 million , respectively. Restricted stock units are not outstanding shares and do not have any voting or dividend rights. At the time of vesting, a share of common stock representing each restricted stock unit vested will be issued by the Company. The performance vesting restricted stock units are subject to performance measures that are currently not considered “probable” of attainment and as such, no compensation cost has been recorded for these units. The performance vesting restricted stock units are eligible to vest between 2017 and 2020 . Including performance-based equity awards, the Company had $45.9 million of total unrecognized compensation cost related to unvested stock options, unvested restricted stock and unvested restricted stock units as of September 30, 2016 . Excluding the $27.8 million of unrecognized compensation cost related to unvested restricted stock and unvested restricted stock units that are subject to performance measures that are currently not considered “probable” of attainment, unrecognized compensation cost is $18.1 million . No compensation expense is recognized for unvested restricted stock or unvested restricted stock units subject to performance measures that are not considered “probable” of attainment. Unrecognized compensation cost related to unvested stock options and unvested non-performance-based restricted stock is expected to be recognized over a weighted average period of 2.7 years. The following table sets forth the gross share-based compensation cost resulting from stock options, unvested restricted stock and unvested restricted stock units that were recorded in the Company’s Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2016 and 2015 (in thousands): Three Months Ended Nine Months Ended 2016 2015 2016 2015 Cost of product revenue $ 78 $ 23 $ 243 $ 171 Cost of service revenue 59 69 195 208 Research and development, net 834 1,010 2,365 2,861 Sales and marketing 907 879 2,614 2,331 General and administrative 861 729 2,969 3,066 Total $ 2,739 $ 2,710 $ 8,386 $ 8,637 The Company also has an employee stock purchase plan, or 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. |
Taxes
Taxes | 9 Months Ended |
Sep. 30, 2016 | |
Income Tax Disclosure [Abstract] | |
Taxes | Note 13— Taxes The Company’s effective tax rates for the three and nine months ended September 30, 2016 and 2015 were as follows: Three Months Ended Nine Months Ended 2016 2015 2016 2015 Effective tax rates 18% 40% 22% 41% The primary reason for the difference between the expected statutory tax rate of 35% and the actual tax rates of 18% and 22% for the three and nine months ended September 30, 2016 , was a reduction in the Company’s business outlook with respect to the current year which substantially increased the impact the Company’s research and development tax credit had on its effective tax rate. Other significant items that impacted the Company’s effective tax rate included state taxes and excess tax benefits attributable to equity related compensation. Prior to the adoption of ASU 2016-09, Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting (ASU 2016-09), excess tax benefits did not impact the Company’s effective tax rate. The primary reason for the difference between the expected statutory tax rate of 35% and the actual tax rates of 40% and 41% for the three and nine months ended September 30, 2015 was the result of state taxes. The Company continues to provide a valuation allowance against specific U.S. deferred tax assets and a valuation allowance against deferred tax assets arising in a limited number of foreign jurisdictions as the realization of such assets is not considered to be more likely than not at this time. No changes were required to previously recorded valuation allowances as a result of the adoption of ASU 2016-09. In a future period the Company’s assessment of the realizability of its deferred tax assets and therefore the appropriateness of the valuation allowance could change based on an assessment of all available evidence, both positive and negative in that future period. If the Company’s conclusion about the realizability of its deferred tax assets and therefore the appropriateness of the valuation allowance changes in a future period it could record a substantial tax provision or benefit in the Condensed Consolidated Statement of Operations when that occurs. |
Segment Information
Segment Information | 9 Months Ended |
Sep. 30, 2016 | |
Segment Reporting [Abstract] | |
Segment Information | Note 14— Segment Information The Company has the following reportable segments: Supercomputing (formerly HPC Systems), Storage and Data Management, Maintenance and Support, and Engineering Services and Other. 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, tightly integrated and cluster supercomputer systems which are used by 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 Cray Data Warp, Sonexion 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 are the Company’s analytics business and Custom Engineering. The following table presents revenues and gross margins for the Company’s operating segments for the three and nine months ended September 30, 2016 and 2015 (in thousands): Three Months Ended Nine Months Ended 2016 2015 2016 2015 Revenue: Supercomputing $ 60,730 $ 156,519 $ 216,125 $ 370,053 Storage and Data Management 12,330 22,068 50,755 63,736 Maintenance and Support 26,292 23,106 79,862 68,833 Engineering Services and Other 4,391 12,826 16,355 23,429 Elimination of inter-segment revenue (26,292 ) (23,106 ) (79,862 ) (68,833 ) Total revenue $ 77,451 $ 191,413 $ 283,235 $ 457,218 Gross Profit: Supercomputing $ 18,322 $ 51,590 $ 74,893 $ 109,639 Storage and Data Management 3,917 8,908 18,091 21,186 Maintenance and Support 8,447 9,174 30,530 30,706 Engineering Services and Other 1,362 5,384 6,740 8,678 Elimination of inter-segment gross profit (8,447 ) (9,174 ) (30,530 ) (30,706 ) Total gross profit $ 23,601 $ 65,882 $ 99,724 $ 139,503 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 Europe and the Middle East, South America, Asia Pacific and Canada. 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 2016 2015 2016 2015 2016 2015 Three months ended September 30, Product revenue $ 45,412 $ 104,729 $ 2,273 $ 52,963 $ 47,685 $ 157,692 Service revenue 19,335 25,955 10,431 7,766 29,766 33,721 Total revenue $ 64,747 $ 130,684 $ 12,704 $ 60,729 $ 77,451 $ 191,413 United States Other Countries Total 2016 2015 2016 2015 2016 2015 Nine months ended September 30, Product revenue $ 101,347 $ 232,821 $ 86,677 $ 135,549 $ 188,024 $ 368,370 Service revenue 64,080 65,456 31,131 23,392 95,211 88,848 Total revenue $ 165,427 $ 298,277 $ 117,808 $ 158,941 $ 283,235 $ 457,218 Sales to the U.S. Government totaled approximately $51.4 million and $140.4 million for the three and nine months ended September 30, 2016 , respectively, compared to approximately $68.4 million and $196.7 million for the three and nine months ended September 30, 2015 , respectively. For the nine months ended September 30, 2016 , one non-U.S. Government customer accounted for 12% of total revenue, while revenue in the United Kingdom and Australia accounted for 31% of total revenue. For the nine months ended September 30, 2015 , one non-U.S. Government customer located in Saudi Arabia accounted for 12% of total revenue. |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 9 Months Ended |
Sep. 30, 2016 | |
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 usually 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 of the product 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 |
New Accounting Pronouncements (
New Accounting Pronouncements (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
Schedule of New Accounting Pronouncements and Changes in Accounting Principles | The table below shows the accumulated deficit activity for the nine months ended September 30, 2016 (in thousands): Accumulated Deficit BALANCE, December 31, 2015 $ (125,411 ) Purchase of employee restricted shares to fund related statutory tax withholding (1,694 ) Cumulative-effect adjustment resulting from adoption of ASU 2016-09 16,600 Net Loss (41,160 ) BALANCE, September 30, 2016 $ (151,665 ) |
Fair Value Measurement (Tables)
Fair Value Measurement (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
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, 2016 , and indicates the fair value hierarchy of the valuation inputs utilized to determine such fair value (in thousands): Description Fair Value Quoted Prices in Active Markets (Level 1) Significant Other Observable Inputs (Level 2) Assets: Cash and cash equivalents and restricted cash $ 146,131 $ 146,131 $ — Available-for-sale investments (1) 651 651 — Foreign currency exchange contracts (2) 18,060 — 18,060 Assets measured at fair value at September 30, 2016 $ 164,842 $ 146,782 $ 18,060 Liabilities: Foreign currency exchange contracts (3) (1,270 ) — (1,270 ) Liabilities measured at fair value at September 30, 2016 $ (1,270 ) $ — $ (1,270 ) (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, 2016 and December 31, 2015 , the Company had outstanding foreign currency exchange contracts that had been dedesignated for the purposes of hedge accounting treatment. The outstanding notional amounts were approximately (in millions): September 30, December 31, 2015 British Pounds (GBP) 36.5 31.5 Euros (EUR) — 3.8 Swiss Francs (CHF) — 0.3 Japanese Yen (JPY) — 274.0 As of September 30, 2016 and December 31, 2015 , the Company had outstanding foreign currency exchange contracts that were designated and accounted for as cash flow hedges of anticipated future cash receipts on sales contracts payable in foreign currencies. The outstanding notional amounts were approximately (in millions): September 30, December 31, 2015 British Pounds (GBP) 29.4 39.2 Euros (EUR) 8.5 6.0 Swiss Francs (CHF) 30.5 33.0 Canadian Dollars (CAD) 86.8 — Japanese Yen (JPY) 2,230.9 — |
Fair Values of Derivative Instruments and Balance Sheet Location | Fair values of derivative instruments designated as cash flow hedges (in thousands): Hedge Classification Balance Sheet Location Fair Value Fair Value Foreign currency exchange contracts Prepaid expenses and other current assets $ 11,650 $ 3,956 Foreign currency exchange contracts Other non-current assets — 5,183 Foreign currency exchange contracts Other accrued liabilities (872 ) — Foreign currency exchange contracts Other non-current liabilities (398 ) (2 ) Total fair value of derivative instruments designated as cash flow hedges $ 10,380 $ 9,137 Fair values of derivative instruments not designated as cash flow hedges (in thousands): Hedge Classification Balance Sheet Location Fair Value Fair Value Foreign currency exchange contracts Prepaid expenses and other current assets $ 2,036 $ 1,807 Foreign currency exchange contracts Other non-current assets 4,374 656 Foreign currency exchange contracts Other accrued liabilities — (1 ) Total fair value of derivative instruments not designated as cash flow hedges $ 6,410 $ 2,462 |
Accumulated Other Comprehensi24
Accumulated Other Comprehensive Income Accumulated Other Comprehensive Income (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Other Comprehensive Income (Loss), Net of Tax [Abstract] | |
Reclassification from Accumulated Other Comprehensive Income (Loss) | The following table shows the impact on product revenue of 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, 2016 and 2015 (in thousands). The gross reclassification adjustments increased product revenue for the three and nine months ended September 30, 2016 and 2015 . Three Months Ended Nine Months Ended 2016 2015 2016 2015 Gross of tax reclassifications $ 191 $ 4,593 $ 4,569 $ 4,710 Net of tax reclassifications $ 114 $ 2,756 $ 2,742 $ 2,826 |
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, 2016 and 2015 (in thousands): Three Months Ended September 30, 2016 Unrealized Gain (Loss) on Investments Foreign Currency Translation Adjustments Unrealized Gain on Cash Flow Hedges Accumulated Other Comprehensive Income Beginning balance $ — $ 2,592 $ 7,066 $ 9,658 Current-period change, net of tax — 58 452 510 Ending balance $ — $ 2,650 $ 7,518 $ 10,168 Income tax expense associated with current-period change $ — $ 41 $ 301 $ 342 Three Months Ended September 30, 2015 Unrealized Loss on Investments Foreign Currency Translation Adjustments Unrealized Gain on Cash Flow Hedges Accumulated Other Comprehensive Income Beginning balance $ (8 ) $ 2,382 $ 5,262 $ 7,636 Current-period change, net of tax 3 (48 ) 125 80 Ending balance $ (5 ) $ 2,334 $ 5,387 $ 7,716 Income tax expense (benefit) associated with current-period change $ 2 $ (361 ) $ 84 $ (275 ) Nine Months Ended September 30, 2016 Unrealized Gain (Loss) on Investments Foreign Currency Translation Adjustments Unrealized Gain on Cash Flow Hedges Accumulated Other Comprehensive Income Beginning balance $ (8 ) $ 1,675 $ 5,975 $ 7,642 Current-period change, net of tax 8 975 1,543 2,526 Ending balance $ — $ 2,650 $ 7,518 $ 10,168 Income tax expense (benefit) associated with current-period change $ 6 $ (40 ) $ 1,035 $ 1,001 Nine Months Ended September 30, 2015 Unrealized Gain (Loss) on Investments Foreign Currency Translation Adjustments Unrealized Gain on Cash Flow Hedges Accumulated Other Comprehensive Income Beginning balance $ 12 $ 2,069 $ 4,422 $ 6,503 Current-period change, net of tax (17 ) 265 965 1,213 Ending balance $ (5 ) $ 2,334 $ 5,387 $ 7,716 Income tax expense (benefit) associated with current-period change $ (12 ) $ (632 ) $ 635 $ (9 ) |
Investments Investments (Tables
Investments Investments (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Investments, Debt and Equity Securities [Abstract] | |
Investments | The carrying amounts of the Company’s investments in available-for-sale securities as of September 30, 2016 are shown in the table below (in thousands): Unrealized Cost Gains Fair Value Short-term available-for-sale securities $ 651 $ — $ 651 The carrying amounts of the Company’s investments in available-for-sale securities as of December 31, 2015 are shown in the table below (in thousands): Unrealized Cost Losses Fair Value Short-term available-for-sale securities $ 14,939 $ (14 ) $ 14,925 |
Accounts and Other Receivable26
Accounts and Other Receivables, Net (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Receivables [Abstract] | |
Accounts and Other Receivables, Net | Net accounts and other receivables consisted of the following (in thousands): September 30, December 31, 2015 Trade accounts receivable $ 76,440 $ 83,750 Unbilled receivables 5,764 7,685 Advance billings 2,398 11,637 Short-term investment in sales-type lease 9,064 10,004 Other receivables 16,362 11,662 110,028 124,738 Allowance for doubtful accounts (22 ) (19 ) Accounts and other receivables, net $ 110,006 $ 124,719 |
Sales-type Lease Sales-type Lea
Sales-type Lease Sales-type Lease (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
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, 2016 and December 31, 2015 (in thousands): September 30, December 31, 2015 Total minimum lease payments to be received $ 58,379 $ 36,863 Less: executory costs (11,705 ) (7,434 ) Net minimum lease payments receivable 46,674 29,429 Less: unearned income (2,813 ) (1,108 ) Net investment in sales-type lease 43,861 28,321 Less: long-term investment in sales-type lease (34,797 ) (18,317 ) Investment in sales-type lease included in accounts and other receivables $ 9,064 $ 10,004 |
Minimum Lease Payments to be Received for Each of the Next Five Fiscal Years | As of September 30, 2016 , minimum lease payments for each of the succeeding five fiscal years are as follows (in thousands): 2016 (less than 1 year) $ 3,388 2017 14,405 2018 14,592 2019 14,863 2020 11,131 Total minimum lease payments to be received $ 58,379 |
Inventory Inventory (Tables)
Inventory Inventory (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Inventory Disclosure [Abstract] | |
Inventory | Inventory consisted of the following (in thousands): September 30, December 31, 2015 Components and subassemblies $ 47,268 $ 20,806 Work in process 36,812 43,071 Finished goods 159,528 49,778 Total $ 243,608 $ 113,655 |
Deferred Revenue Deferred Reven
Deferred Revenue Deferred Revenue (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Deferred Revenue Disclosure [Abstract] | |
Deferred Revenue | Deferred revenue consisted of the following (in thousands): September 30, December 31, 2015 Deferred product revenue $ 71,182 $ 22,215 Deferred service revenue 85,904 97,822 Total deferred revenue 157,086 120,037 Less: long-term deferred revenue (23,467 ) (33,306 ) Deferred revenue in current liabilities $ 133,619 $ 86,731 |
Share-Based Compensation Share-
Share-Based Compensation Share-Based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Fair Value Assumptions | The following key weighted average assumptions were employed in the calculation for the three and nine month periods ended September 30, 2016 and September 30, 2015 : Three Months Ended September 30, 2016 Three Months Ended September 30, 2015 Nine Months Ended September 30, 2016 Nine Months Ended September 30, 2015 Risk-free interest rate 0.96% 1.36% 1.12% 1.31% Expected dividend yield —% —% —% —% Volatility 50.95% 50.33% 50.86% 50.58% Expected life 4.0 years 4.0 years 4.0 years 4.0 years Weighted average Black-Scholes value of options granted $12.69 $10.56 $13.23 $11.25 |
Stock Option Activity | A summary of the Company’s year-to-date stock option activity and related information follows: Options Weighted Average Exercise Price Weighted Average Remaining Contractual Term Outstanding at December 31, 2015 1,948,475 $ 14.83 Grants 235,075 $ 32.84 Exercises (166,687 ) $ 12.59 Canceled and forfeited (27,470 ) $ 26.56 Outstanding at September 30, 2016 1,989,393 $ 16.98 6.0 Exercisable at September 30, 2016 1,438,670 $ 12.56 5.0 Available for grant at September 30, 2016 3,595,412 |
Restricted Stock Activity | A summary of the Company’s unvested restricted stock unit grants and changes during the nine months ended September 30, 2016 is as follows: Service Vesting Restricted Stock Units Performance Vesting Restricted Stock Units Total Restricted Stock Units Units Weighted Average Grant Date Fair Value Units Weighted Units Weighted Average Grant Date Fair Value Outstanding at December 31, 2015 273,050 $ 29.75 632,700 $ 30.04 905,750 $ 29.95 Granted 220,575 $ 31.89 23,585 $ 42.65 244,160 $ 32.93 Forfeited (7,200 ) $ 29.64 — $ — (7,200 ) $ 29.64 Vested (55,454 ) $ 29.44 — $ — (55,454 ) $ 29.44 Outstanding at September 30, 2016 430,971 $ 30.89 656,285 $ 30.49 1,087,256 $ 30.65 A summary of the Company’s unvested restricted stock grants and changes during the nine months ended September 30, 2016 is as follows: Service Vesting Restricted Shares Performance Vesting Restricted Shares Total Restricted Shares Shares Weighted Average Grant Date Fair Value Shares Weighted Shares Weighted Average Grant Date Fair Value Outstanding at December 31, 2015 516,443 $ 24.12 585,500 $ 15.07 1,101,943 $ 19.31 Granted 9,893 $ 34.86 — $ — 9,893 $ 34.86 Forfeited (17,850 ) $ 24.66 (67,000 ) $ 15.77 (84,850 ) $ 17.64 Vested (242,599 ) $ 21.82 — $ — (242,599 ) $ 21.82 Outstanding at September 30, 2016 265,887 $ 26.59 518,500 $ 14.98 784,387 $ 18.92 |
Allocation of Share-Based Compensation | The following table sets forth the gross share-based compensation cost resulting from stock options, unvested restricted stock and unvested restricted stock units that were recorded in the Company’s Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2016 and 2015 (in thousands): Three Months Ended Nine Months Ended 2016 2015 2016 2015 Cost of product revenue $ 78 $ 23 $ 243 $ 171 Cost of service revenue 59 69 195 208 Research and development, net 834 1,010 2,365 2,861 Sales and marketing 907 879 2,614 2,331 General and administrative 861 729 2,969 3,066 Total $ 2,739 $ 2,710 $ 8,386 $ 8,637 |
Taxes Taxes (Tables)
Taxes Taxes (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Income Tax Disclosure [Abstract] | |
Effective Tax Rates | The Company’s effective tax rates for the three and nine months ended September 30, 2016 and 2015 were as follows: Three Months Ended Nine Months Ended 2016 2015 2016 2015 Effective tax rates 18% 40% 22% 41% |
Segment Information (Tables)
Segment Information (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Segment Reporting [Abstract] | |
Information on Operating Segments | The following table presents revenues and gross margins for the Company’s operating segments for the three and nine months ended September 30, 2016 and 2015 (in thousands): Three Months Ended Nine Months Ended 2016 2015 2016 2015 Revenue: Supercomputing $ 60,730 $ 156,519 $ 216,125 $ 370,053 Storage and Data Management 12,330 22,068 50,755 63,736 Maintenance and Support 26,292 23,106 79,862 68,833 Engineering Services and Other 4,391 12,826 16,355 23,429 Elimination of inter-segment revenue (26,292 ) (23,106 ) (79,862 ) (68,833 ) Total revenue $ 77,451 $ 191,413 $ 283,235 $ 457,218 Gross Profit: Supercomputing $ 18,322 $ 51,590 $ 74,893 $ 109,639 Storage and Data Management 3,917 8,908 18,091 21,186 Maintenance and Support 8,447 9,174 30,530 30,706 Engineering Services and Other 1,362 5,384 6,740 8,678 Elimination of inter-segment gross profit (8,447 ) (9,174 ) (30,530 ) (30,706 ) Total gross profit $ 23,601 $ 65,882 $ 99,724 $ 139,503 |
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 2016 2015 2016 2015 2016 2015 Three months ended September 30, Product revenue $ 45,412 $ 104,729 $ 2,273 $ 52,963 $ 47,685 $ 157,692 Service revenue 19,335 25,955 10,431 7,766 29,766 33,721 Total revenue $ 64,747 $ 130,684 $ 12,704 $ 60,729 $ 77,451 $ 191,413 United States Other Countries Total 2016 2015 2016 2015 2016 2015 Nine months ended September 30, Product revenue $ 101,347 $ 232,821 $ 86,677 $ 135,549 $ 188,024 $ 368,370 Service revenue 64,080 65,456 31,131 23,392 95,211 88,848 Total revenue $ 165,427 $ 298,277 $ 117,808 $ 158,941 $ 283,235 $ 457,218 |
Basis of Presentation (Details)
Basis of Presentation (Details) | 9 Months Ended |
Sep. 30, 2016 | |
Accounting Policies [Abstract] | |
Product delivery period | 5 years |
Maintenance services period | 1 year |
New Accounting Pronouncements34
New Accounting Pronouncements (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Mar. 31, 2016 | Dec. 31, 2015 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||
Deferred tax assets | $ 42,572 | $ 42,572 | $ 26,016 | |||
BALANCE, December 31, 2015 | 492,510 | |||||
Net income (loss) | (23,021) | $ 10,855 | (41,160) | $ 7,242 | ||
BALANCE, September 30, 2016 | 478,221 | 478,221 | ||||
New Accounting Pronouncement, Early Adoption, Effect | Accounting Standards Update 2016-09 | ||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||
Deferred tax assets | $ 16,600 | |||||
New Accounting Pronouncement, Early Adoption, Effect | Accounting Standards Update 2016-09 | Accumulated Deficit | ||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||
BALANCE, December 31, 2015 | (125,411) | |||||
Purchase of employee restricted shares to fund related statutory tax withholding | (1,694) | |||||
Cumulative-effect adjustment resulting from adoption of ASU 2016-09 | $ 16,600 | |||||
Net income (loss) | (41,160) | |||||
BALANCE, September 30, 2016 | $ (151,665) | $ (151,665) |
Fair Value Measurement (Details
Fair Value Measurement (Details) $ in Thousands | Sep. 30, 2016USD ($) | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash and cash equivalents and restricted cash | $ 146,131 | |
Available-for-sale investments (1) | 651 | [1] |
Foreign currency exchange contracts (2) | 18,060 | [2] |
Assets measured at fair value at September 30, 2016 | 164,842 | |
Foreign currency exchange contracts (3) | (1,270) | [3] |
Liabilities measured at fair value at September 30, 2016 | (1,270) | |
Fair Value, Inputs, Level 1 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash and cash equivalents and restricted cash | 146,131 | |
Available-for-sale investments (1) | 651 | [1] |
Foreign currency exchange contracts (2) | 0 | [2] |
Assets measured at fair value at September 30, 2016 | 146,782 | |
Foreign currency exchange contracts (3) | 0 | [3] |
Liabilities measured at fair value at September 30, 2016 | 0 | |
Fair Value, Inputs, Level 2 [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash and cash equivalents and restricted cash | 0 | |
Available-for-sale investments (1) | 0 | [1] |
Foreign currency exchange contracts (2) | 18,060 | [2] |
Assets measured at fair value at September 30, 2016 | 18,060 | |
Foreign currency exchange contracts (3) | (1,270) | [3] |
Liabilities measured at fair value at September 30, 2016 | $ (1,270) | |
[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 Derivati
Fair Value Measurement Derivative Instruments and Hedging Activities Disclosure (Details) $ in Thousands, € in Millions, ¥ in Millions, £ in Millions, SFr in Millions, CAD in Millions | Sep. 30, 2016EUR (€) | Sep. 30, 2016USD ($) | Sep. 30, 2016JPY (¥) | Sep. 30, 2016CAD | Sep. 30, 2016CHF (SFr) | Sep. 30, 2016GBP (£) | Dec. 31, 2015EUR (€) | Dec. 31, 2015USD ($) | Dec. 31, 2015JPY (¥) | Dec. 31, 2015CAD | Dec. 31, 2015CHF (SFr) | Dec. 31, 2015GBP (£) |
Derivative [Line Items] | ||||||||||||
Foreign currency exposure on hedged foreign currency contracts | $ 178,800 | $ 107,300 | ||||||||||
Foreign currency exposure on dedesignated foreign currency contracts | 54,800 | 55,600 | ||||||||||
Designated as Hedging Instrument [Member] | ||||||||||||
Derivative [Line Items] | ||||||||||||
Derivative, notional amount | € 8.5 | ¥ 2,230.9 | CAD 86.8 | SFr 30.5 | £ 29.4 | € 6 | ¥ 0 | CAD 0 | SFr 33 | £ 39.2 | ||
Derivative assets (liabilities), at fair value, net | 10,380 | 9,137 | ||||||||||
Not Designated as Hedging Instrument [Member] | ||||||||||||
Derivative [Line Items] | ||||||||||||
Derivative, notional amount | € 0 | ¥ 0 | SFr 0 | £ 36.5 | € 3.8 | ¥ 274 | SFr 0.3 | £ 31.5 | ||||
Derivative assets (liabilities), at fair value, net | 6,410 | 2,462 | ||||||||||
Prepaid Expenses and Other Current Assets [Member] | Designated as Hedging Instrument [Member] | ||||||||||||
Derivative [Line Items] | ||||||||||||
Derivative asset, current | 11,650 | 3,956 | ||||||||||
Prepaid Expenses and Other Current Assets [Member] | Not Designated as Hedging Instrument [Member] | ||||||||||||
Derivative [Line Items] | ||||||||||||
Derivative asset, current | 2,036 | 1,807 | ||||||||||
Other Noncurrent Assets [Member] | Designated as Hedging Instrument [Member] | ||||||||||||
Derivative [Line Items] | ||||||||||||
Derivative asset, noncurrent | 0 | 5,183 | ||||||||||
Other Noncurrent Assets [Member] | Not Designated as Hedging Instrument [Member] | ||||||||||||
Derivative [Line Items] | ||||||||||||
Derivative asset, noncurrent | 4,374 | 656 | ||||||||||
Other Current Liabilities [Member] | Designated as Hedging Instrument [Member] | ||||||||||||
Derivative [Line Items] | ||||||||||||
Derivative liability, current | 872 | 0 | ||||||||||
Other Current Liabilities [Member] | Not Designated as Hedging Instrument [Member] | ||||||||||||
Derivative [Line Items] | ||||||||||||
Derivative liability, current | 0 | 1 | ||||||||||
Other Noncurrent Liabilities [Member] | Designated as Hedging Instrument [Member] | ||||||||||||
Derivative [Line Items] | ||||||||||||
Derivative liability, noncurrent | $ 398 | $ 2 |
Accumulated Other Comprehensi37
Accumulated Other Comprehensive Income Accumulated Other Comprehensive Income (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Gross of tax reclassifications | $ 191 | $ 4,593 | $ 4,569 | $ 4,710 |
Net of tax reclassifications | 114 | 2,756 | 2,742 | 2,826 |
Beginning balance | 9,658 | 7,636 | 7,642 | 6,503 |
Current-period change, net of tax | 510 | 80 | 2,526 | 1,213 |
Ending balance | 10,168 | 7,716 | 10,168 | 7,716 |
Income tax expense (benefit) associated with current-period change | 342 | (275) | 1,001 | (9) |
Accumulated Net Unrealized Investment Gain (Loss) [Member] | ||||
Beginning balance | 0 | (8) | (8) | 12 |
Current-period change, net of tax | 0 | 3 | 8 | (17) |
Ending balance | 0 | (5) | 0 | (5) |
Income tax expense (benefit) associated with current-period change | 0 | 2 | 6 | (12) |
Accumulated Translation Adjustment [Member] | ||||
Beginning balance | 2,592 | 2,382 | 1,675 | 2,069 |
Current-period change, net of tax | 58 | (48) | 975 | 265 |
Ending balance | 2,650 | 2,334 | 2,650 | 2,334 |
Income tax expense (benefit) associated with current-period change | 41 | (361) | (40) | (632) |
Accumulated Net Gain (Loss) from Designated or Qualifying Cash Flow Hedges [Member] | ||||
Beginning balance | 7,066 | 5,262 | 5,975 | 4,422 |
Current-period change, net of tax | 452 | 125 | 1,543 | 965 |
Ending balance | 7,518 | 5,387 | 7,518 | 5,387 |
Income tax expense (benefit) associated with current-period change | $ 301 | $ 84 | $ 1,035 | $ 635 |
Income (Loss) Per Share ("EPS38
Income (Loss) Per Share ("EPS") Income (Loss) Per Share ("EPS") (Details) - shares shares in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Incremental common shares attributable to dilutive effect of share-based payment arrangements (in shares) | 0.9 | 1.4 | ||
Time-vesting Shares [Member] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities excluded from computation of earnings per share (in shares) | 2.7 | 1.4 | 2.7 | 1.3 |
Performance Shares [Member] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities excluded from computation of earnings per share (in shares) | 1.2 | 1.3 | 1.2 | 1.3 |
Investments Investments (Detail
Investments Investments (Details) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Investments, Debt and Equity Securities [Abstract] | ||
Cost | $ 651 | $ 14,939 |
Unrealized gains (losses) | 0 | (14) |
Fair value | $ 651 | $ 14,925 |
Accounts and Other Receivable40
Accounts and Other Receivables, Net (Details) $ in Thousands | Sep. 30, 2016USD ($)Customers | Dec. 31, 2015USD ($)Customers |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts and other receivables, gross | $ 110,028 | $ 124,738 |
Allowance for doubtful accounts | (22) | (19) |
Accounts and other receivables, net | 110,006 | 124,719 |
Trade Accounts Receivable [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts and other receivables, gross | 76,440 | 83,750 |
Unbilled Receivables [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts and other receivables, gross | 5,764 | 7,685 |
Advance Billings [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts and other receivables, gross | 2,398 | 11,637 |
Financing Receivable [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts and other receivables, gross | 9,064 | 10,004 |
Other Receivables [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts and other receivables, gross | $ 16,362 | $ 11,662 |
Non-US Government Customers [Member] | Accounts Receivable [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Concentration risk, percent | 10.00% | 18.00% |
Receivables due from Third Parties on U.S. Government-funded Contracts [Member] | Accounts Receivable [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Number of customers | Customers | 2 | |
Concentration risk, percent | 0.00% | |
Other Receivable - Insurance Receivable Related to Electrical Smoke [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts and other receivables, gross | $ 8,700 | |
Government Contracts Concentration Risk [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts and other receivables, net | 45,900 | $ 44,200 |
Government Contracts Concentration Risk [Member] | Unbilled Revenues [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts and other receivables, net | $ 4,400 | $ 2,200 |
Non-US Government Customers [Member] | Non-US Government Customers [Member] | Accounts Receivable [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Number of customers | Customers | 0 | 1 |
Sales-type Lease Sales-type L41
Sales-type Lease Sales-type Lease (Details) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Leases [Abstract] | ||
Total minimum lease payments to be received | $ 58,379 | $ 36,863 |
Less: executory costs | (11,705) | (7,434) |
Net minimum lease payments receivable | 46,674 | 29,429 |
Less: unearned income | (2,813) | (1,108) |
Net investment in sales-type lease | 43,861 | 28,321 |
Less: long-term investment in sales-type lease | (34,797) | (18,317) |
Investment in sales-type lease included in accounts and other receivables | 9,064 | $ 10,004 |
2016 (less than 1 year) | 3,388 | |
2,017 | 14,405 | |
2,018 | 14,592 | |
2,019 | 14,863 | |
2,020 | 11,131 | |
Total minimum lease payments to be received | $ 58,379 |
Inventory Inventory (Details)
Inventory Inventory (Details) $ in Thousands | 9 Months Ended | ||
Sep. 30, 2016USD ($)Customers | Sep. 30, 2015USD ($) | Dec. 31, 2015USD ($)Customers | |
Inventory [Line Items] | |||
Components and subassemblies | $ 47,268 | $ 20,806 | |
Work in process | 36,812 | 43,071 | |
Finished goods | 159,528 | 49,778 | |
Total | 243,608 | 113,655 | |
Inventory written off | 200 | $ 400 | |
Located at Customer Sites [Member] | |||
Inventory [Line Items] | |||
Finished goods | 141,100 | 49,500 | |
Finished Goods Inventory [Member] | |||
Inventory [Line Items] | |||
Finished goods | $ 126,600 | $ 41,700 | |
Number of customers | Customers | 2 | 3 |
Deferred Revenue Deferred Rev43
Deferred Revenue Deferred Revenue (Details) $ in Thousands | Sep. 30, 2016USD ($) | Dec. 31, 2015USD ($)Customers |
Deferred Revenue Arrangement [Line Items] | ||
Total deferred revenue | $ 157,086 | $ 120,037 |
Long-term deferred revenue | 23,467 | 33,306 |
Deferred revenue in current liabilities | 133,619 | 86,731 |
Product [Member] | ||
Deferred Revenue Arrangement [Line Items] | ||
Total deferred revenue | 71,182 | 22,215 |
Service [Member] | ||
Deferred Revenue Arrangement [Line Items] | ||
Total deferred revenue | 85,904 | 97,822 |
Government Contracts Concentration Risk [Member] | ||
Deferred Revenue Arrangement [Line Items] | ||
Total deferred revenue | $ 91,900 | $ 57,700 |
Deferred Revenue [Member] | Non-US Government Customers [Member] | ||
Deferred Revenue Arrangement [Line Items] | ||
Number of customers | Customers | 0 | |
Concentration risk, percent | 10.00% |
Contingencies Contingencies (De
Contingencies Contingencies (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended |
Sep. 30, 2016 | Sep. 30, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Amount of loss incurred in period | $ 2.5 | $ 3 |
Share-Based Compensation Shar45
Share-Based Compensation Share-Based Compensation - Assumptions (Details) - $ / shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Risk-free interest rate | 0.96% | 1.36% | 1.12% | 1.31% |
Expected dividend yield | 0.00% | 0.00% | 0.00% | 0.00% |
Volatility | 50.95% | 50.33% | 50.86% | 50.58% |
Expected life | 4 years | 4 years | 4 years | 4 years |
Weighted average Black-Scholes value of options granted | $ 12.69 | $ 10.56 | $ 13.23 | $ 11.25 |
Employee Stock Option [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Expected average period options will be exercised after vesting | 2 years | |||
Estimated forfeiture rate | 8.00% | 8.00% | 8.00% | 8.00% |
Award vesting period | 4 years | |||
Restricted Stock [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Estimated forfeiture rate | 8.00% | 8.00% | 8.00% | 8.00% |
Restricted Stock Units (RSUs) [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Estimated forfeiture rate | 8.00% | 8.00% | 8.00% | 8.00% |
Share-Based Compensation Shar46
Share-Based Compensation Share-Based Compensation - Options (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | ||||
Outstanding beginning of the period (in shares) | 1,948,475 | |||
Grants (in shares) | 235,075 | |||
Exercises (in shares) | (26,142) | (8,710) | (166,687) | (116,330) |
Canceled and forfeited (in shares) | (27,470) | |||
Outstanding end of the period (in shares) | 1,989,393 | 1,989,393 | ||
Exercisable end of the period (in shares) | 1,438,670 | 1,438,670 | ||
Available for grant end of the period (in shares) | 3,595,412 | 3,595,412 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Abstract] | ||||
Outstanding beginning of the period (in dollars per share) | $ 14.83 | |||
Grants (in dollars per share) | 32.84 | |||
Exercises (in dollars per share) | 12.59 | |||
Canceled and forfeited (in dollars per share) | 26.56 | |||
Outstanding end of the period (in dollars per share) | $ 16.98 | 16.98 | ||
Exercisable end of the period (in dollars per share) | $ 12.56 | $ 12.56 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Additional Disclosures [Abstract] | ||||
Outstanding, weighted average remaining contractual term (in years) | 6 years | |||
Exercisable, weighted average remaining contractual term (in years) | 5 years | |||
Outstanding, aggregate intrinsic value | $ 17.3 | $ 17.3 | ||
Exercisable, aggregate intrinsic value | 17.1 | 17.1 | ||
Intrinsic value of options exercised | $ 0.4 | $ 0.1 | $ 4 | $ 2.7 |
Share-Based Compensation Shar47
Share-Based Compensation Share-Based Compensation - Restricted Stock (Details) - Restricted Stock [Member] - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | ||||
Outstanding beginning of the period (in shares) | 1,101,943 | |||
Granted (in shares) | 9,893 | |||
Forfeited (in shares) | (84,850) | |||
Vested (in shares) | (242,599) | |||
Outstanding end of the period (in shares) | 784,387 | 784,387 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract] | ||||
Outstanding beginning of the period (in dollars per share) | $ 19.31 | |||
Granted (in dollars per share) | 34.86 | |||
Forfeited (in dollars per share) | 17.64 | |||
Vested (in dollars per share) | 21.82 | |||
Outstanding end of the period (in dollars per share) | $ 18.92 | $ 18.92 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Additional Disclosures [Abstract] | ||||
Fair value of restricted stock vested in period | $ 5.1 | $ 10.3 | $ 7.5 | $ 13.4 |
Time-vesting Shares [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | ||||
Outstanding beginning of the period (in shares) | 516,443 | |||
Granted (in shares) | 9,893 | |||
Forfeited (in shares) | (17,850) | |||
Vested (in shares) | (242,599) | |||
Outstanding end of the period (in shares) | 265,887 | 265,887 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract] | ||||
Outstanding beginning of the period (in dollars per share) | $ 24.12 | |||
Granted (in dollars per share) | 34.86 | |||
Forfeited (in dollars per share) | 24.66 | |||
Vested (in dollars per share) | 21.82 | |||
Outstanding end of the period (in dollars per share) | $ 26.59 | $ 26.59 | ||
Performance Shares [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | ||||
Outstanding beginning of the period (in shares) | 585,500 | |||
Granted (in shares) | 0 | |||
Forfeited (in shares) | (67,000) | |||
Vested (in shares) | 0 | |||
Outstanding end of the period (in shares) | 518,500 | 518,500 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract] | ||||
Outstanding beginning of the period (in dollars per share) | $ 15.07 | |||
Granted (in dollars per share) | 0 | |||
Forfeited (in dollars per share) | 15.77 | |||
Vested (in dollars per share) | 0 | |||
Outstanding end of the period (in dollars per share) | $ 14.98 | $ 14.98 |
Share-Based Compensation Shar48
Share-Based Compensation Share-Based Compensation - Restricted Stock Units (Details) - Restricted Stock Units (RSUs) [Member] - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 9 Months Ended |
Sep. 30, 2016 | Sep. 30, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | ||
Outstanding beginning of the period (in shares) | 905,750 | |
Granted (in shares) | 244,160 | |
Forfeited (in shares) | (7,200) | |
Vested (in shares) | (55,454) | |
Outstanding end of the period (in shares) | 1,087,256 | 1,087,256 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract] | ||
Outstanding beginning of the period (in dollars per share) | $ 29.95 | |
Granted (in dollars per share) | 32.93 | |
Forfeited (in dollars per share) | 29.64 | |
Vested (in dollars per share) | 29.44 | |
Outstanding end of the period (in dollars per share) | $ 30.65 | $ 30.65 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Additional Disclosures [Abstract] | ||
Fair value of restricted stock units vested in period | $ 0.6 | $ 1.8 |
Time-vesting Shares [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | ||
Outstanding beginning of the period (in shares) | 273,050 | |
Granted (in shares) | 220,575 | |
Forfeited (in shares) | (7,200) | |
Vested (in shares) | (55,454) | |
Outstanding end of the period (in shares) | 430,971 | 430,971 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract] | ||
Outstanding beginning of the period (in dollars per share) | $ 29.75 | |
Granted (in dollars per share) | 31.89 | |
Forfeited (in dollars per share) | 29.64 | |
Vested (in dollars per share) | 29.44 | |
Outstanding end of the period (in dollars per share) | $ 30.89 | $ 30.89 |
Performance Shares [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | ||
Outstanding beginning of the period (in shares) | 632,700 | |
Granted (in shares) | 23,585 | |
Forfeited (in shares) | 0 | |
Vested (in shares) | 0 | |
Outstanding end of the period (in shares) | 656,285 | 656,285 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract] | ||
Outstanding beginning of the period (in dollars per share) | $ 30.04 | |
Granted (in dollars per share) | 42.65 | |
Forfeited (in dollars per share) | 0 | |
Vested (in dollars per share) | 0 | |
Outstanding end of the period (in dollars per share) | $ 30.49 | $ 30.49 |
Share-Based Compensation Shar49
Share-Based Compensation Share-Based Compensation - Aggregate (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized [Abstract] | ||||
Unrecognized compensation expense | $ 45,900 | $ 45,900 | ||
Unrecognized compensation expense period of recognition | 2 years 8 months 12 days | |||
Allocated Share-based Compensation Expense | 2,739 | $ 2,710 | $ 8,386 | $ 8,637 |
Market price offering date | 95.00% | |||
Performance Shares [Member] | ||||
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized [Abstract] | ||||
Unrecognized compensation expense | 27,800 | $ 27,800 | ||
Time-vesting Shares [Member] | ||||
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized [Abstract] | ||||
Unrecognized compensation expense | 18,100 | 18,100 | ||
Research and Development Expense [Member] | ||||
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized [Abstract] | ||||
Allocated Share-based Compensation Expense | 834 | 1,010 | 2,365 | 2,861 |
Selling and Marketing Expense [Member] | ||||
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized [Abstract] | ||||
Allocated Share-based Compensation Expense | 907 | 879 | 2,614 | 2,331 |
General and Administrative Expense [Member] | ||||
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized [Abstract] | ||||
Allocated Share-based Compensation Expense | 861 | 729 | 2,969 | 3,066 |
Product [Member] | Cost of Sales [Member] | ||||
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized [Abstract] | ||||
Allocated Share-based Compensation Expense | 78 | 23 | 243 | 171 |
Service [Member] | Cost of Sales [Member] | ||||
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized [Abstract] | ||||
Allocated Share-based Compensation Expense | $ 59 | $ 69 | $ 195 | $ 208 |
Taxes (Details)
Taxes (Details) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Income Tax Disclosure [Abstract] | ||||
Effective tax rates, percent | 18.00% | 40.00% | 22.00% | 41.00% |
Expected statutory tax rate, percent | 35.00% | 35.00% |
Segment Information - Business
Segment Information - Business Segment Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Segment Reporting Information [Line Items] | ||||
Total revenue | $ 77,451 | $ 191,413 | $ 283,235 | $ 457,218 |
Total gross profit | 23,601 | 65,882 | 99,724 | 139,503 |
Supercomputing [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Total revenue | 60,730 | 156,519 | 216,125 | 370,053 |
Total gross profit | 18,322 | 51,590 | 74,893 | 109,639 |
Storage and Data Management [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Total revenue | 12,330 | 22,068 | 50,755 | 63,736 |
Total gross profit | 3,917 | 8,908 | 18,091 | 21,186 |
Maintenance and Support [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Total revenue | 26,292 | 23,106 | 79,862 | 68,833 |
Total gross profit | 8,447 | 9,174 | 30,530 | 30,706 |
Other Segments [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Total revenue | 4,391 | 12,826 | 16,355 | 23,429 |
Total gross profit | 1,362 | 5,384 | 6,740 | 8,678 |
Intersegment Eliminations [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Total revenue | (26,292) | (23,106) | (79,862) | (68,833) |
Total gross profit | $ (8,447) | $ (9,174) | $ (30,530) | $ (30,706) |
Segment Information - Geographi
Segment Information - Geographical Segment Information (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016USD ($)Customers | Sep. 30, 2015USD ($)Customers | Sep. 30, 2016USD ($)Customers | Sep. 30, 2015USD ($)Customers | |
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Product revenue | $ 47,685 | $ 157,692 | $ 188,024 | $ 368,370 |
Service revenue | 29,766 | 33,721 | 95,211 | 88,848 |
Total revenue | 77,451 | 191,413 | 283,235 | 457,218 |
Government Contracts Concentration Risk [Member] | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Total revenue | 51,400 | 68,400 | 140,400 | 196,700 |
UNITED STATES | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Product revenue | 45,412 | 104,729 | 101,347 | 232,821 |
Service revenue | 19,335 | 25,955 | 64,080 | 65,456 |
Total revenue | 64,747 | 130,684 | 165,427 | 298,277 |
Non-US | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Product revenue | 2,273 | 52,963 | 86,677 | 135,549 |
Service revenue | 10,431 | 7,766 | 31,131 | 23,392 |
Total revenue | $ 12,704 | $ 60,729 | $ 117,808 | $ 158,941 |
Revenue [Member] | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Number of customers | Customers | 1 | 1 | ||
Concentration risk, percentage | 12.00% | |||
Revenue [Member] | Australia and the UK | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Concentration risk, percentage | 31.00% | |||
Revenue [Member] | SAUDI ARABIA | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Number of customers | Customers | 1 | 1 | ||
Concentration risk, percentage | 12.00% |