Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2017 | Oct. 26, 2017 | |
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, 2017 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q3 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 40,438,022 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Current assets: | ||
Cash and cash equivalents | $ 151,886 | $ 222,962 |
Restricted cash | 1,900 | 0 |
Short-term investments | 27,926 | 0 |
Accounts and other receivables, net | 63,187 | 197,941 |
Inventory | 198,069 | 88,254 |
Prepaid expenses and other current assets | 20,256 | 20,006 |
Total current assets | 463,224 | 529,163 |
Assets, Noncurrent [Abstract] | ||
Long-term restricted cash | 1,030 | 1,655 |
Long-term investment in sales-type lease, net | 26,384 | 31,050 |
Property and equipment, net | 37,967 | 30,620 |
Service spares, net | 2,395 | 3,023 |
Goodwill | 14,182 | 14,182 |
Intangible assets other than goodwill, net | 4,634 | 1,637 |
Deferred tax assets | 105,132 | 85,613 |
Other non-current assets | 12,117 | 17,629 |
TOTAL ASSETS | 667,065 | 714,572 |
Current liabilities: | ||
Accounts payable | 41,640 | 45,504 |
Accrued payroll and related expenses | 10,623 | 17,199 |
Other accrued liabilities | 6,085 | 10,303 |
Deferred revenue | 68,034 | 83,129 |
Total current liabilities | 126,382 | 156,135 |
Liabilities, Noncurrent [Abstract] | ||
Long-term deferred revenue | 31,409 | 27,258 |
Other non-current liabilities | 15,020 | 5,703 |
TOTAL LIABILITIES | 172,811 | 189,096 |
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 40,421,143 and 40,757,458 shares, respectively | 629,671 | 622,604 |
Accumulated other comprehensive income | 1,016 | 2,782 |
Accumulated deficit | (136,433) | (99,910) |
TOTAL SHAREHOLDERS’ EQUITY | 494,254 | 525,476 |
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ 667,065 | $ 714,572 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares | Sep. 30, 2017 | Dec. 31, 2016 |
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 | 40,421,143 | 40,757,458 |
Common stock and additional paid-in capital, shares outstanding | 40,421,143 | 40,757,458 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Revenue: | ||||
Product | $ 45,280 | $ 47,685 | $ 117,939 | $ 188,024 |
Service | 34,420 | 29,766 | 107,927 | 95,211 |
Total revenue | 79,700 | 77,451 | 225,866 | 283,235 |
Cost of revenue: | ||||
Cost of product revenue | 35,090 | 33,552 | 89,356 | 125,189 |
Cost of service revenue | 16,118 | 20,298 | 55,866 | 58,322 |
Total cost of revenue | 51,208 | 53,850 | 145,222 | 183,511 |
Gross profit | 28,492 | 23,601 | 80,644 | 99,724 |
Operating expenses: | ||||
Research and development, net | 26,626 | 29,084 | 76,591 | 82,323 |
Sales and marketing | 13,392 | 15,010 | 43,292 | 46,391 |
General and administrative | 7,022 | 7,968 | 23,024 | 24,325 |
Restructuring | 0 | 0 | ||
Total operating expenses | 54,693 | 52,062 | 150,560 | 153,039 |
Loss from operations | (26,201) | (28,461) | (69,916) | (53,315) |
Other income (expense), net | 4,161 | (312) | 5,358 | (1,169) |
Interest income, net | 880 | 544 | 2,655 | 1,654 |
Gain on strategic transaction | 4,389 | 0 | 4,389 | 0 |
Loss before income taxes | (16,771) | (28,229) | (57,514) | (52,830) |
Income tax benefit | 6,539 | 5,208 | 21,227 | 11,670 |
Net loss | $ (10,232) | $ (23,021) | $ (36,287) | $ (41,160) |
Basic net loss per common share (in dollars per share) | $ (0.25) | $ (0.58) | $ (0.91) | $ (1.03) |
Diluted net loss per common share (in dollars per share) | $ (0.25) | $ (0.58) | $ (0.91) | $ (1.03) |
Basic weighted average shares outstanding (in shares) | 40,199 | 39,936 | 40,082 | 39,786 |
Diluted weighted average shares outstanding (in shares) | 40,199 | 39,936 | 40,082 | 39,786 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Statement of Comprehensive Income [Abstract] | ||||
Net loss | $ (10,232) | $ (23,021) | $ (36,287) | $ (41,160) |
Other comprehensive income (loss), net of tax: | ||||
Unrealized gain (loss) on available-for-sale investments | (98) | 0 | (4) | 8 |
Foreign currency translation adjustments | (118) | 58 | 322 | 975 |
Unrealized gain (loss) on cash flow hedges | (1,004) | 566 | (2,178) | 4,285 |
Reclassification adjustments on cash flow hedges included in net loss | 56 | (114) | 94 | (2,742) |
Other comprehensive income (loss) | (1,164) | 510 | (1,766) | 2,526 |
Comprehensive loss | $ (11,396) | $ (22,511) | $ (38,053) | $ (38,634) |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Operating activities: | ||||
Net loss | $ (10,232) | $ (23,021) | $ (36,287) | $ (41,160) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||||
Depreciation and amortization | 12,134 | 11,063 | ||
Share-based compensation expense | 7,643 | 8,386 | ||
Deferred income taxes | (21,419) | (10,555) | ||
Gain on strategic transaction | (4,389) | 0 | (4,389) | 0 |
Other | 741 | 294 | ||
Cash provided (used) due to changes in operating assets and liabilities: | ||||
Accounts and other receivables | 137,559 | 11,910 | ||
Long-term investment in sales-type lease, net | 7,065 | (19,887) | ||
Inventory | (107,621) | (133,622) | ||
Prepaid expenses and other assets | (1,411) | (3,225) | ||
Accounts payable | (3,512) | 38,135 | ||
Accrued payroll and related expenses and other liabilities | (3,982) | (32,763) | ||
Deferred revenue | (25,205) | 37,935 | ||
Net cash used in operating activities | (38,684) | (133,489) | ||
Investing activities: | ||||
Sales/maturities of available-for-sale investments | 66,610 | 30,340 | ||
Purchases of available-for-sale investments | (94,902) | (16,159) | ||
Cash received in strategic transaction | 8,000 | 0 | ||
Proceeds from sale of equity method investment | 4,481 | 0 | ||
Change in restricted cash | (1,282) | 1,670 | ||
Purchases of property and equipment | (15,647) | (3,808) | ||
Net cash provided by (used in) investing activities | (32,740) | 12,043 | ||
Financing activities: | ||||
Proceeds from issuance of common stock through employee stock purchase plan | 365 | 545 | ||
Purchase of employee restricted shares to fund related statutory tax withholding | (1,869) | (3,284) | ||
Proceeds from exercises of stock options | 693 | 2,098 | ||
Net cash used in financing activities | (811) | (641) | ||
Effect of foreign exchange rate changes on cash and cash equivalents | 1,159 | (97) | ||
Net decrease in cash and cash equivalents | (71,076) | (122,184) | ||
Cash and cash equivalents: | ||||
Beginning of period | 222,962 | 266,660 | ||
End of period | 151,886 | 144,476 | 151,886 | 144,476 |
Supplemental disclosure of cash flow information: | ||||
Cash paid for interest | 0 | 1 | ||
Cash paid for income taxes | 1,202 | 2,093 | ||
Non-cash investing and financing activities: | ||||
Inventory transfers to fixed assets and service spares | 1,248 | 3,510 | ||
Non-cash assets acquired: | ||||
Receivable from Seagate | 1,404 | 0 | 1,404 | 0 |
Inventory | 4,170 | 0 | 4,170 | 0 |
Property and equipment | 2,684 | 0 | 2,684 | 0 |
Intangible assets | 3,350 | 0 | 3,350 | 0 |
Liabilities assumed: | ||||
Deferred revenue | 11,700 | 0 | 11,700 | 0 |
Deferred tax liabilities | 3,019 | 0 | 3,019 | 0 |
Other liabilities | $ 500 | $ 0 | $ 500 | $ 0 |
Basis of Presentation
Basis of Presentation | 9 Months Ended |
Sep. 30, 2017 | |
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 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, 2016 . 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. Business Combinations The Company accounts for business combinations using the purchase method of accounting and allocates the purchase price to the tangible and intangible assets acquired and the liabilities assumed based upon their estimated fair values at the acquisition date. The excess of the purchase price over the fair value of the net assets acquired is recorded as goodwill. If the fair value of the net assets acquired exceeds the purchase price the Company records a bargain purchase gain. The Company uses estimates and assumptions to accurately value assets acquired and liabilities assumed at the acquisition date. During the measurement period, which may be up to one year from the acquisition date, any refinements made to the fair value of the assets and liabilities assumed are recorded in the period in which the adjustments are recognized. The fair values of intangible assets acquired are estimated using a discounted cash flow approach with Level 3 inputs. Under this method, an intangible asset’s fair value is equal to the present value of the incremental after-tax cash flows (excess earnings) attributable solely to the intangible asset over its remaining useful life. To calculate fair value, the Company uses risk-adjusted cash flows discounted at rates considered appropriate given the inherent risks associated with each type of asset. The Company believes the level and timing of cash flows appropriately reflects market participant assumptions. |
New Accounting Pronouncements
New Accounting Pronouncements | 9 Months Ended |
Sep. 30, 2017 | |
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, or 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 (full retrospective method); 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 (modified retrospective method). In August 2015, FASB issued Accounting Standards Update No. 2015-14, Revenue from Contracts with Customers - Deferral of the Effective Date: Topic 606, or 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 impact of the adoption of ASU 2014-09. Based on its analysis thus far, the Company believes the impact of adopting the new guidance will be immaterial to its annual and interim financial statements. The Company believes that the impact will be limited to the identification of a significant financing component in a small number of its contracts with customers. The Company will also be required to make additional disclosures under the new guidance. The Company continues to assess the impact on all areas of its revenue recognition, disclosure requirements, and changes that may be necessary to its internal controls over financial reporting. The Company plans to adopt this standard in the first quarter of 2018 using the modified retrospective method. In July 2015, FASB issued Accounting Standards Update No. 2015-11, Simplifying the Measurement of Inventory: Topic 330, or ASU 2015-11. Topic 330 previously required 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 now 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. The Company adopted ASU 2015-11 at the beginning of the first quarter of 2017. Adoption of ASU 2015-11 did not have a material impact on the Company’s consolidated financial statements. In November 2015, FASB issued Accounting Standards Update No. 2015-17, Balance Sheet Classification of Deferred Taxes: Topic 740, or 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. The Company adopted ASU 2015-17 at the beginning of the first quarter of 2017. At the time of adoption, all of the Company’s deferred tax assets and liabilities, along with any related valuation allowance, were classified as noncurrent on its Condensed Consolidated Balance Sheet. The Company adopted ASU 2015-17 on a retrospective basis. As such, prior period amounts have been adjusted to reflect the retrospective application of ASU 2015-17. This resulted in $19.1 million of current net deferred tax assets being reclassified as noncurrent on the Company’s December 31, 2016 Consolidated Balance Sheet. In January 2016, FASB issued Accounting Standards Update No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities: Topic 825, or 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 does not expect the adoption of ASU 2016-01 to have a material impact on its consolidated financial statements. In February 2016, FASB issued Accounting Standards Update No. 2016-02, Leases: Topic 842, or 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 Statements 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. While the Company expects adoption to lead to a material increase in the assets and liabilities recorded on its Consolidated Balance Sheet, the Company is still evaluating the overall impact on its consolidated financial statements. 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, or ASU 2016-15. The updated guidance clarifies how companies present and classify certain cash receipts and cash payments in the statement of cash flows. Adoption of ASU 2016-15 is required for fiscal reporting periods beginning after December 15, 2017, including interim reporting periods within those fiscal years with early adoption being permitted. The Company does not expect the adoption of ASU 2016-15 to have a material impact on its consolidated financial statements. In November 2016, FASB issued Accounting Standards Update No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash, or ASU 2016-18, which amends ASC 230 to add or clarify guidance on the classification and presentation of restricted cash in the statement of cash flows. The amended guidance requires that amounts that are deemed to be restricted cash and restricted cash equivalents be included in the cash and cash-equivalent balances in the statement of cash flows. A reconciliation between the consolidated balance sheet and the statement of cash flows must be disclosed when the consolidated balance sheet includes more than one line item for cash, cash equivalents, restricted cash, and restricted cash equivalents. The guidance also requires that changes in restricted cash and restricted cash equivalents that result from transfers between cash, cash equivalents, and restricted cash and restricted cash equivalents should not be presented as cash flow activities in the statement of cash flows. An entity with a material balance of amounts generally described as restricted cash and restricted cash equivalents must disclose information about the nature of the restrictions. Adoption of ASU 2016-18 is required for fiscal reporting periods beginning after December 15, 2017, including interim reporting periods within those fiscal years with early adoption being permitted. The Company does not expect the adoption of ASU 2016-18 to have a material impact on its consolidated financial statements. In January 2017, FASB issued Accounting Standards Update No. 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, or ASU 2017-04, which eliminates Step 2 from the goodwill impairment test. ASU 2017-04 also eliminates the requirements for any reporting unit with a zero or negative carrying amount to perform a qualitative assessment and, if it fails that qualitative test, to perform Step 2 of the goodwill impairment test. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. Adoption of ASU 2017-04 is required for annual or interim goodwill impairment tests in fiscal years beginning after December 15, 2019 with early adoption being permitted for annual or interim goodwill impairment tests performed on testing dates after January 1, 2017. The Company adopted ASU 2017-04 at the beginning of the second quarter of 2017. Adoption of ASU 2017-04 did not have a material impact on the Company’s consolidated financial statements. In August 2017, FASB issued Accounting Standards Update No. 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities, or ASU 2017-12. The new standard simplifies and expands the eligible hedging strategies for financial and nonfinancial risks. It also enhances the transparency of how hedging results are presented and disclosed. Further, the new standard provides partial relief on the timing of certain aspects of hedge documentation and eliminates the requirement to recognize hedge ineffectiveness separately in earnings. Adoption of ASU 2017-12 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 Company is currently evaluating the potential impact of the pending adoption of ASU 2017-12 on its consolidated financial statements. |
Strategic Transaction (Notes)
Strategic Transaction (Notes) | 9 Months Ended |
Sep. 30, 2017 | |
Business Combinations [Abstract] | |
Business Combination Disclosure [Text Block] | Note 3— Strategic Transaction On September 25, 2017, the Company completed a strategic transaction with Seagate Cloud Systems Inc., or Seagate, centered around the addition of Seagate’s ClusterStor high-performance storage business, or ClusterStor. The ClusterStor business consists of the ClusterStor L300, ClusterStor L300N and the ClusterStor SL220 storage solutions. The Company will sell, support, develop, manufacture, and test the ClusterStor storage solutions. The addition of ClusterStor will allow the Company to have more control over its storage products and to increase the value added in its solutions. It will also enhance the opportunity for the Company to sell its storage products through other resellers and to consolidate its service capability at a deeper level. The transaction was accounted for under the acquisition method of accounting. The assets acquired and liabilities assumed by the Company were primarily recognized at their fair value at the acquisition date using significant inputs that are not observable in the market (i.e., Level 3 inputs). The Company utilized a third-party appraisal in its determination of the fair value of the various intangible assets acquired and deferred revenue. The Company received assets valued at $19.6 million and assumed liabilities valued at $15.2 million . The excess of assets received over liabilities assumed of $4.4 million has been accounted for as a bargain purchase and recognized as a gain in the line item gain on strategic transaction in the Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2017. The bargain purchase gain was primarily the result of the seller’s planned exit from the business. Assets received included cash of $8.0 million received at closing. The Company expects to receive approximately $1.0 million to $2.0 million in additional cash in the next few months as part of post-closing adjustments based on the final analysis of obligations to be assumed. The Company has assumed customer support obligations associated with the ClusterStor business and has added more than 125 employees and contractors. Because the fair value of the assets acquired exceeded the amount of liabilities assumed, resulting in a gain on the transaction, the Company reassessed and reaffirmed that the recognition and measurement of identifiable assets acquired and liabilities assumed were appropriate as required by the accounting standards applicable to bargain purchase transactions. The Company incurred approximately $0.5 million of costs directly related to the transaction, all of which were expensed and included in general and administrative expenses in the Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2017. The Company estimated the fair value of the assets acquired and liabilities assumed as of the acquisition date based on information that is currently available. The Company expects to continue to obtain information to assist it in determining the fair value of the net assets acquired at the acquisition date during the measurement period and, as such, additional purchase price adjustments may be recorded. The Company will record measurement period adjustments, if any, in the period in which the adjustments are recognized. Pro forma financial results are not presented as it is impractical to obtain the necessary information. The seller did not operate the acquired assets as a standalone business and, therefore, historical financial information is not available. Revenue and operating results from the ClusterStor business since the September 25, 2017 date of acquisition through September 30, 2017 were not material to the Company’s Condensed Consolidated Financial Statements. The following are the estimated values of the assets acquired and the liabilities assumed (in thousands): Cash $ 8,000 Receivable from Seagate 1,404 Inventory 4,170 Property and equipment 2,684 Deferred revenue (11,700 ) Deferred tax liabilities (3,019 ) Other liabilities (500 ) Net tangible assets 1,039 Trademarks 90 Developed technology 1,400 Customer relationships 260 Supply agreement 1,600 Total net assets acquired $ 4,389 The fair values of the major components of the intangible assets acquired and their estimated useful lives are as follows (in thousands): Intangible Asset Class Fair Value Useful Life (in Years) Trademarks $ 90 5 Developed technology $ 1,400 3 Customer relationships $ 260 10 Supply agreement $ 1,600 4 The Company will begin amortizing these amounts on October 1, 2017. Aggregate amortization expense of these intangible assets expected for the years ending December 31 are as follows (in thousands): 2017 (less than one year) $ 228 2018 911 2019 911 2020 794 2021 344 2022 40 Total $ 3,228 |
Fair Value Measurement
Fair Value Measurement | 9 Months Ended |
Sep. 30, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurement | Note 4— 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, 2017 , 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 $ 154,816 $ 154,816 $ — Available-for-sale investments (1) 27,926 27,926 — Foreign currency exchange contracts (2) 3,732 — 3,732 Assets measured at fair value at September 30, 2017 $ 186,474 $ 182,742 $ 3,732 Liabilities: Foreign currency exchange contracts (3) 2,530 — 2,530 Liabilities measured at fair value at September 30, 2017 $ 2,530 $ — $ 2,530 (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, 2017 and December 31, 2016 , 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, 2016 Euros (EUR) 1.5 1.5 Swiss Francs (CHF) — 3.6 Japanese Yen (JPY) 3,377.6 — Canadian Dollars (CAD) 56.6 54.4 New Zealand Dollars (NZD) 16.2 — The Company had hedged foreign currency exposure related to these designated cash flow hedges of approximately $87.6 million and $46.9 million as of September 30, 2017 and December 31, 2016 , respectively. As of September 30, 2017 and December 31, 2016 , 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, 2016 British Pounds (GBP) 28.4 33.8 Euros (EUR) 4.1 8.0 Japanese Yen (JPY) — 2,464.7 Canadian Dollars (CAD) 0.3 32.4 New Zealand Dollars (NZD) 1.6 — Swedish Krona (SEK) 27.6 — The foreign currency exposure related to these contracts was approximately $51.5 million as of September 30, 2017 and $107.5 million as of December 31, 2016 . Unrealized gains or losses related to these dedesignated contracts are recorded in the Condensed Consolidated Statements 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 2017 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 $ 330 $ 71 Foreign currency exchange contracts Other non-current assets — 367 Foreign currency exchange contracts Other accrued liabilities (160 ) (9 ) Foreign currency exchange contracts Other non-current liabilities (2,004 ) (5 ) Total fair value of derivative instruments designated as cash flow hedges $ (1,834 ) $ 424 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 $ 1,386 $ 5,344 Foreign currency exchange contracts Other non-current assets 2,016 5,468 Foreign currency exchange contracts Other accrued liabilities (366 ) (27 ) Foreign currency exchange contracts Other non-current liabilities — — Total fair value of derivative instruments not designated as cash flow hedges $ 3,036 $ 10,785 |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income | 9 Months Ended |
Sep. 30, 2017 | |
Other Comprehensive Income (Loss), Net of Tax [Abstract] | |
Accumulated Other Comprehensive Income | Note 5— 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, 2017 and 2016 (in thousands). The gross reclassification adjustments decreased product revenue for the three and nine months ended September 30, 2017 and increased product revenue for the three and nine months ended September 30, 2016 . Three Months Ended Nine Months Ended 2017 2016 2017 2016 Gross of tax reclassifications $ (93 ) $ 191 $ (157 ) $ 4,569 Net of tax reclassifications $ (56 ) $ 114 $ (94 ) $ 2,742 The following tables show the changes in accumulated other comprehensive income by component for the three and nine months ended September 30, 2017 and 2016 (in thousands): Three Months Ended September 30, 2017 Unrealized Gain (Loss) on Investments Foreign Currency Translation Adjustments Unrealized Loss on Cash Flow Hedges Accumulated Other Comprehensive Income Beginning balance $ 94 $ 2,541 $ (455 ) $ 2,180 Current-period change, net of tax (98 ) (118 ) (948 ) (1,164 ) Ending balance $ (4 ) $ 2,423 $ (1,403 ) $ 1,016 Income tax expense (benefit) associated with current-period change $ (66 ) $ 148 $ (632 ) $ (550 ) Three Months Ended September 30, 2016 Unrealized Gain 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 (benefit) associated with current-period change $ — $ 41 $ 301 $ 342 Nine Months Ended September 30, 2017 Unrealized Loss on Investments Foreign Currency Translation Adjustments Unrealized Gain (Loss) on Cash Flow Hedges Accumulated Other Comprehensive Income Beginning balance $ — $ 2,101 $ 681 $ 2,782 Current-period change, net of tax (4 ) 322 (2,084 ) (1,766 ) Ending balance $ (4 ) $ 2,423 $ (1,403 ) $ 1,016 Income tax expense (benefit) associated with current-period change $ (3 ) $ 343 $ (1,389 ) $ (1,049 ) Nine Months Ended September 30, 2016 Unrealized Loss on Investments Foreign Currency Translation Adjustments Unrealized Gain on Cash Flow Hedges Accumulated Other Comprehensive Income Beginning balance $ (8 ) $ 1,675 $ 5,975 $ 7,642 Current-period change, net of tax 8 975 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 |
Loss Per Share (EPS)
Loss Per Share (EPS) | 9 Months Ended |
Sep. 30, 2017 | |
Earnings Per Share [Abstract] | |
Loss Per Share (EPS) | Note 6— Loss Per Share ("EPS") Basic EPS is computed by dividing net 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 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, 2017 and 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, 2017 and 2016 , potential gross common shares of 3.2 million and 2.7 million , respectively, were antidilutive and not included in computing diluted EPS. An additional 0.6 million and 1.2 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, 2017 and 2016 , respectively, because the conditions for vesting had not been met as of the balance sheet date. |
Investments
Investments | 9 Months Ended |
Sep. 30, 2017 | |
Investments, Debt and Equity Securities [Abstract] | |
Investments | Note 7— 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 (loss). The carrying amounts of the Company’s investments in available-for-sale securities as of September 30, 2017 are shown in the table below (in thousands): Unrealized Loss Cost Fair Value Short-term available-for-sale securities $ 27,933 $ (7 ) $ 27,926 |
Accounts and Other Receivables,
Accounts and Other Receivables, Net | 9 Months Ended |
Sep. 30, 2017 | |
Receivables [Abstract] | |
Accounts and Other Receivables, Net | Note 8— Accounts and Other Receivables, Net Net accounts and other receivables consisted of the following (in thousands): September 30, December 31, 2016 Trade accounts receivable $ 36,180 $ 156,705 Unbilled receivables 7,666 17,264 Advance billings 5,090 1,915 Short-term investment in sales-type lease 9,555 8,683 Other receivables 4,724 13,395 63,215 197,962 Allowance for doubtful accounts (28 ) (21 ) Accounts and other receivables, net $ 63,187 $ 197,941 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, 2017 and December 31, 2016 , accounts receivable included $23.5 million and $104.6 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, $1.5 million and $1.4 million were unbilled as of September 30, 2017 and December 31, 2016 , respectively, based upon contractual billing arrangements with these customers. As of September 30, 2017 , one non-U.S. Government customer accounted for 15% of total accounts and other receivables. As of December 31, 2016 , two non-U.S. Government customers accounted for 24% of total accounts and other receivables. |
Sales-type Lease
Sales-type Lease | 9 Months Ended |
Sep. 30, 2017 | |
Leases [Abstract] | |
Sales-type Lease | Note 9— Sales-type Lease The Company has a sales-type lease with one non-U.S. Government customer, under which it will receive quarterly payments over the term of the lease, which expires in September 2020. The lease is denominated 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, 2017 and December 31, 2016 (in thousands): September 30, December 31, 2016 Total minimum lease payments to be received $ 45,417 $ 52,224 Less: executory costs (7,837 ) (10,139 ) Net minimum lease payments receivable 37,580 42,085 Less: unearned income (1,641 ) (2,352 ) Net investment in sales-type lease 35,939 39,733 Less: long-term investment in sales-type lease (26,384 ) (31,050 ) Investment in sales-type lease included in accounts and other receivables $ 9,555 $ 8,683 As of September 30, 2017 , minimum lease payments for each of the succeeding four fiscal years are as follows (in thousands): 2017 (less than 1 year) $ 3,499 2018 15,071 2019 15,350 2020 11,497 Total minimum lease payments to be received $ 45,417 |
Inventory
Inventory | 9 Months Ended |
Sep. 30, 2017 | |
Inventory Disclosure [Abstract] | |
Inventory | Note 10— Inventory Inventory consisted of the following (in thousands): September 30, December 31, 2016 Components and subassemblies $ 42,107 $ 31,695 Work in process 88,967 39,894 Finished goods 66,995 16,665 Total $ 198,069 $ 88,254 Finished goods inventory of $23.3 million and $10.5 million was located at customer sites pending acceptance as of September 30, 2017 and December 31, 2016 , respectively. At September 30, 2017 , two customers accounted for $45.3 million of finished goods inventory, and at December 31, 2016 , two customers accounted for $11.9 million of finished goods inventory. The Company did not write off any inventory during the nine months ended September 30, 2017 . During the nine months ended September 30, 2016 , the Company wrote off $0.2 million of inventory. |
Deferred Revenue
Deferred Revenue | 9 Months Ended |
Sep. 30, 2017 | |
Deferred Revenue Disclosure [Abstract] | |
Deferred Revenue | Note 11— Deferred Revenue Deferred revenue consisted of the following (in thousands): September 30, December 31, 2016 Deferred product revenue $ 13,052 $ 14,274 Deferred service revenue 86,391 96,113 Total deferred revenue 99,443 110,387 Less: long-term deferred revenue (31,409 ) (27,258 ) Deferred revenue in current liabilities $ 68,034 $ 83,129 As of September 30, 2017 and December 31, 2016 , the U.S. Government accounted for $36.3 million and $60.3 million , respectively, of total deferred revenue. As of September 30, 2017 and December 31, 2016 , no non-U.S. Government customers accounted for more than 10% of total deferred revenue. Deferred service revenue as of September 30, 2017 included $11.7 million that was assumed by the Company as part of the strategic transaction with Seagate, which is described in Note 3, “Strategic Transaction”. |
Contingencies Contingencies
Contingencies Contingencies | 9 Months Ended |
Sep. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Contingencies | Note 12— Contingencies The Company is subject to patent lawsuits brought by Raytheon Company, or 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 the two remaining asserted patents relate to features alleged to be performed by certain 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 this second suit, all five asserted patents relate to features alleged to be performed by certain third-party software that Cray optionally includes as part of its product offerings. As of July 18, 2017, trial in the first action has been stayed by the trial court until further notice from the court. The United States Court of Appeals for the Federal Circuit granted Cray’s petition for writ of mandamus and overturned the trial court’s determination that venue was proper in the Eastern District of Texas. The Federal Circuit also remanded so the district court could determine where the case should be transferred, but the trial court has not yet ruled on that issue. Trial in the second action is currently stayed pending resolution of the first action. The Company is vigorously defending these actions. The probable outcome of either litigation cannot be determined, nor can the Company estimate a range of potential loss. Based on its review of the matters to date, the Company believes that it has valid defenses and claims in each of the two lawsuits. 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, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Share-Based Compensation | Note 13— 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 month period ended September 30, 2016 and nine month periods ended September 30, 2017 and September 30, 2016 . There were no grants during the three month period ended September 30, 2017: Three Months Ended Nine Months Ended 2016 2017 2016 Risk-free interest rate 0.96% 1.61% 1.12% Expected dividend yield —% —% —% Volatility 50.95% 54.20% 50.86% Expected life 4.0 years 4.0 years 4.0 years Weighted average Black-Scholes value of options granted $12.69 $7.75 $13.23 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 nine months ended September 30, 2017 and the three and nine months ended September 30, 2016 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, 2016 1,989,137 $ 16.99 Grants 304,500 $ 17.98 Exercises (80,757 ) $ 8.54 Canceled and forfeited (57,766 ) $ 28.86 Outstanding at September 30, 2017 2,155,114 $ 17.13 5.5 Exercisable at September 30, 2017 1,590,128 $ 14.91 4.3 Available for grant at September 30, 2017 3,014,293 As of September 30, 2017 , there was $11.9 million of aggregate intrinsic value of outstanding stock options, including $11.5 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 2017 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, 2017 . During the three and nine months ended September 30, 2017 , stock options covering 67,234 and 80,757 shares of common stock, respectively, with a total intrinsic value of $0.7 million and $0.9 million , respectively, were exercised. 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. 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, 2017 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, 2016 256,802 $ 26.43 513,500 $ 15.00 770,302 $ 18.81 Granted 44,002 $ 17.55 — $ — 44,002 $ 17.55 Forfeited (23,909 ) $ 30.93 (476,000 ) $ 14.88 (499,909 ) $ 15.65 Vested (153,717 ) $ 25.24 — $ — (153,717 ) $ 25.24 Outstanding at September 30, 2017 123,178 $ 23.87 37,500 $ 16.52 160,678 $ 22.15 The estimated forfeiture rate applied to the Company’s service vesting restricted share grants during the three and nine months ended September 30, 2017 and 2016 , was 8.0% . The aggregate fair value of restricted stock vested during the three and nine months ended September 30, 2017 , was $0.5 million and $2.8 million , respectively. 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 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 2017 . A summary of the Company’s unvested restricted stock unit grants and changes during the nine months ended September 30, 2017 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, 2016 425,721 $ 30.89 656,285 $ 30.49 1,082,006 $ 30.65 Granted 714,950 $ 18.29 26,000 $ 20.25 740,950 $ 18.36 Forfeited (54,474 ) $ 29.14 (133,200 ) $ 30.04 (187,674 ) $ 29.78 Vested (120,935 ) $ 30.65 — $ — (120,935 ) $ 30.65 Outstanding at September 30, 2017 965,262 $ 21.69 549,085 $ 30.12 1,514,347 $ 24.74 The estimated forfeiture rate applied to the Company’s service vesting restricted stock unit grants during the three and nine months ended September 30, 2017 and 2016 , was 8.0% . The aggregate fair value of restricted stock units vested during the three and nine months ended September 30, 2017 , was $0.6 million and $2.2 million , respectively. 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 $38.2 million of total unrecognized compensation cost related to unvested stock options, unvested restricted stock and unvested restricted stock units as of September 30, 2017 . Excluding the $17.2 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 $21.0 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 3.0 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, 2017 and 2016 (in thousands): Three Months Ended Nine Months Ended 2017 2016 2017 2016 Cost of product revenue $ 73 $ 78 $ 189 $ 243 Cost of service revenue 59 59 194 195 Research and development, net 798 834 2,596 2,365 Sales and marketing 650 907 1,850 2,614 General and administrative 1,005 861 2,814 2,969 Total $ 2,585 $ 2,739 $ 7,643 $ 8,386 |
Taxes
Taxes | 9 Months Ended |
Sep. 30, 2017 | |
Income Tax Disclosure [Abstract] | |
Taxes | Note 14— Taxes The Company’s effective tax rates for the three and nine months ended September 30, 2017 and 2016 were as follows: Three Months Ended Nine Months Ended 2017 2016 2017 2016 Effective tax rates 39% 18% 37% 22% The primary reason for the difference between the expected statutory tax rate of 35% and the actual tax rates of 39% and 37% for the three and nine months ended September 30, 2017 , was the result of research and development tax credits and other permanent items. One of the permanent items for the three and nine months ended September 30, 2017 was the $4.4 million gain from the strategic transaction which was not taxable under Federal income tax law. 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 , respectively, was a reduction in the Company’s business outlook for 2016, which substantially increased the impact that the Company’s research and development tax credit had on its effective tax rate. Other significant reconciling items that impacted the Company’s effective tax rate included excess tax benefits related to share-based compensation and 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. As of September 30, 2017 , the Company had $105.1 million of net deferred tax assets which included deferred tax assets of $9.0 million related to federal net operating loss carryforwards that will expire between 2019 and 2021 and a deferred tax asset of $1.3 million related to a federal research and development tax credit that will expire in 2021. The assessment of the Company’s ability to utilize its deferred tax assets includes an assessment of all known business risks and industry trends, forecasted domestic and international earnings over a number of years. The Company has also evaluated a number of tax planning strategies that should, if implemented, enable the Company to utilize its tax attributes before they expire. 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, 2017 | |
Segment Reporting [Abstract] | |
Segment Information | Note 15— Segment Information The Company has the following reportable segments: Supercomputing, 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 DataWarp, Sonexion and beginning in September 2017, ClusterStor, 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, 2017 and 2016 (in thousands): Three Months Ended Nine Months Ended 2017 2016 2017 2016 Revenue: Supercomputing $ 47,918 $ 60,730 $ 142,933 $ 216,125 Storage and Data Management 11,046 12,330 42,335 50,755 Maintenance and Support 31,701 26,292 92,483 79,862 Engineering Services and Other 20,736 4,391 40,598 16,355 Elimination of inter-segment revenue (31,701 ) (26,292 ) (92,483 ) (79,862 ) Total revenue $ 79,700 $ 77,451 $ 225,866 $ 283,235 Gross Profit: Supercomputing $ 18,807 $ 18,322 $ 50,630 $ 74,893 Storage and Data Management 3,345 3,917 15,564 18,091 Maintenance and Support 16,501 8,447 45,078 30,530 Engineering Services and Other 6,340 1,362 14,450 6,740 Elimination of inter-segment gross profit (16,501 ) (8,447 ) (45,078 ) (30,530 ) Total gross profit $ 28,492 $ 23,601 $ 80,644 $ 99,724 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 2017 2016 2017 2016 2017 2016 Three months ended September 30, Product revenue $ 38,007 $ 45,412 $ 7,273 $ 2,273 $ 45,280 $ 47,685 Service revenue 23,298 19,335 11,122 10,431 34,420 29,766 Total revenue $ 61,305 $ 64,747 $ 18,395 $ 12,704 $ 79,700 $ 77,451 United States Other Countries Total 2017 2016 2017 2016 2017 2016 Nine months ended September 30, Product revenue $ 90,148 $ 101,347 $ 27,791 $ 86,677 $ 117,939 $ 188,024 Service revenue 74,500 64,080 33,427 31,131 107,927 95,211 Total revenue $ 164,648 $ 165,427 $ 61,218 $ 117,808 $ 225,866 $ 283,235 Sales to the U.S. Government totaled approximately $53.7 million and $145.3 million for the three and nine months ended September 30, 2017 , respectively, compared to approximately $51.4 million and $140.4 million for the three and nine months ended September 30, 2016 , respectively. For the nine months ended September 30, 2017 , no non-U.S. Government or foreign country accounted for more than 10% of total revenue. 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. |
Restructuring (Notes)
Restructuring (Notes) | 9 Months Ended |
Sep. 30, 2017 | |
Restructuring and Related Activities [Abstract] | |
Restructuring and Related Activities Disclosure [Text Block] | Note 16— Restructuring In July 2017, the Company implemented a restructuring plan intended to reduce the Company’s operating costs and better align its workforce with long-term business strategies. The restructuring plan involved reducing the Company’s workforce by approximately 190 employees, with the vast majority of such terminations effective in July 2017. For the three and nine months ended September 30, 2017, the Company recorded $7.7 million in expense in connection with the restructuring plan, primarily related to employee severance. The majority of the cash payments related to the restructuring charges were paid during the third quarter of 2017. The actions associated with the restructuring plan are expected to be completed by the end of the first quarter of 2018. Restructuring charges associated with the restructuring plan were included in restructuring on the company’s Condensed Consolidated Statements of Operations. |
Basis of Presentation (Policies
Basis of Presentation (Policies) | 9 Months Ended |
Sep. 30, 2017 | |
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 |
Business Combinations | Business Combinations The Company accounts for business combinations using the purchase method of accounting and allocates the purchase price to the tangible and intangible assets acquired and the liabilities assumed based upon their estimated fair values at the acquisition date. The excess of the purchase price over the fair value of the net assets acquired is recorded as goodwill. If the fair value of the net assets acquired exceeds the purchase price the Company records a bargain purchase gain. The Company uses estimates and assumptions to accurately value assets acquired and liabilities assumed at the acquisition date. During the measurement period, which may be up to one year from the acquisition date, any refinements made to the fair value of the assets and liabilities assumed are recorded in the period in which the adjustments are recognized. The fair values of intangible assets acquired are estimated using a discounted cash flow approach with Level 3 inputs. Under this method, an intangible asset’s fair value is equal to the present value of the incremental after-tax cash flows (excess earnings) attributable solely to the intangible asset over its remaining useful life. To calculate fair value, the Company uses risk-adjusted cash flows discounted at rates considered appropriate given the inherent risks associated with each type of asset. The Company believes the level and timing of cash flows appropriately reflects market participant assumptions. |
Strategic Transaction (Tables)
Strategic Transaction (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Business Combinations [Abstract] | |
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed [Table Text Block] | The following are the estimated values of the assets acquired and the liabilities assumed (in thousands): Cash $ 8,000 Receivable from Seagate 1,404 Inventory 4,170 Property and equipment 2,684 Deferred revenue (11,700 ) Deferred tax liabilities (3,019 ) Other liabilities (500 ) Net tangible assets 1,039 Trademarks 90 Developed technology 1,400 Customer relationships 260 Supply agreement 1,600 Total net assets acquired $ 4,389 |
Schedule of Finite-Lived Intangible Assets Acquired as Part of Business Combination [Table Text Block] | The fair values of the major components of the intangible assets acquired and their estimated useful lives are as follows (in thousands): Intangible Asset Class Fair Value Useful Life (in Years) Trademarks $ 90 5 Developed technology $ 1,400 3 Customer relationships $ 260 10 Supply agreement $ 1,600 4 The Company will begin amortizing these amounts on October 1, 2017. |
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense [Table Text Block] | Aggregate amortization expense of these intangible assets expected for the years ending December 31 are as follows (in thousands): 2017 (less than one year) $ 228 2018 911 2019 911 2020 794 2021 344 2022 40 Total $ 3,228 |
Fair Value Measurement (Tables)
Fair Value Measurement (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
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, 2017 , 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 $ 154,816 $ 154,816 $ — Available-for-sale investments (1) 27,926 27,926 — Foreign currency exchange contracts (2) 3,732 — 3,732 Assets measured at fair value at September 30, 2017 $ 186,474 $ 182,742 $ 3,732 Liabilities: Foreign currency exchange contracts (3) 2,530 — 2,530 Liabilities measured at fair value at September 30, 2017 $ 2,530 $ — $ 2,530 (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, 2017 and December 31, 2016 , 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, 2016 British Pounds (GBP) 28.4 33.8 Euros (EUR) 4.1 8.0 Japanese Yen (JPY) — 2,464.7 Canadian Dollars (CAD) 0.3 32.4 New Zealand Dollars (NZD) 1.6 — Swedish Krona (SEK) 27.6 — As of September 30, 2017 and December 31, 2016 , 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, 2016 Euros (EUR) 1.5 1.5 Swiss Francs (CHF) — 3.6 Japanese Yen (JPY) 3,377.6 — Canadian Dollars (CAD) 56.6 54.4 New Zealand Dollars (NZD) 16.2 — |
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 $ 330 $ 71 Foreign currency exchange contracts Other non-current assets — 367 Foreign currency exchange contracts Other accrued liabilities (160 ) (9 ) Foreign currency exchange contracts Other non-current liabilities (2,004 ) (5 ) Total fair value of derivative instruments designated as cash flow hedges $ (1,834 ) $ 424 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 $ 1,386 $ 5,344 Foreign currency exchange contracts Other non-current assets 2,016 5,468 Foreign currency exchange contracts Other accrued liabilities (366 ) (27 ) Foreign currency exchange contracts Other non-current liabilities — — Total fair value of derivative instruments not designated as cash flow hedges $ 3,036 $ 10,785 |
Accumulated Other Comprehensi26
Accumulated Other Comprehensive Income Accumulated Other Comprehensive Income (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
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, 2017 and 2016 (in thousands). The gross reclassification adjustments decreased product revenue for the three and nine months ended September 30, 2017 and increased product revenue for the three and nine months ended September 30, 2016 . Three Months Ended Nine Months Ended 2017 2016 2017 2016 Gross of tax reclassifications $ (93 ) $ 191 $ (157 ) $ 4,569 Net of tax reclassifications $ (56 ) $ 114 $ (94 ) $ 2,742 |
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, 2017 and 2016 (in thousands): Three Months Ended September 30, 2017 Unrealized Gain (Loss) on Investments Foreign Currency Translation Adjustments Unrealized Loss on Cash Flow Hedges Accumulated Other Comprehensive Income Beginning balance $ 94 $ 2,541 $ (455 ) $ 2,180 Current-period change, net of tax (98 ) (118 ) (948 ) (1,164 ) Ending balance $ (4 ) $ 2,423 $ (1,403 ) $ 1,016 Income tax expense (benefit) associated with current-period change $ (66 ) $ 148 $ (632 ) $ (550 ) Three Months Ended September 30, 2016 Unrealized Gain 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 (benefit) associated with current-period change $ — $ 41 $ 301 $ 342 Nine Months Ended September 30, 2017 Unrealized Loss on Investments Foreign Currency Translation Adjustments Unrealized Gain (Loss) on Cash Flow Hedges Accumulated Other Comprehensive Income Beginning balance $ — $ 2,101 $ 681 $ 2,782 Current-period change, net of tax (4 ) 322 (2,084 ) (1,766 ) Ending balance $ (4 ) $ 2,423 $ (1,403 ) $ 1,016 Income tax expense (benefit) associated with current-period change $ (3 ) $ 343 $ (1,389 ) $ (1,049 ) Nine Months Ended September 30, 2016 Unrealized Loss on Investments Foreign Currency Translation Adjustments Unrealized Gain on Cash Flow Hedges Accumulated Other Comprehensive Income Beginning balance $ (8 ) $ 1,675 $ 5,975 $ 7,642 Current-period change, net of tax 8 975 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 |
Investments Investments (Tables
Investments Investments (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Investments, Debt and Equity Securities [Abstract] | |
Investments | The carrying amounts of the Company’s investments in available-for-sale securities as of September 30, 2017 are shown in the table below (in thousands): Unrealized Loss Cost Fair Value Short-term available-for-sale securities $ 27,933 $ (7 ) $ 27,926 |
Accounts and Other Receivable28
Accounts and Other Receivables, Net (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Receivables [Abstract] | |
Accounts and Other Receivables, Net | Net accounts and other receivables consisted of the following (in thousands): September 30, December 31, 2016 Trade accounts receivable $ 36,180 $ 156,705 Unbilled receivables 7,666 17,264 Advance billings 5,090 1,915 Short-term investment in sales-type lease 9,555 8,683 Other receivables 4,724 13,395 63,215 197,962 Allowance for doubtful accounts (28 ) (21 ) Accounts and other receivables, net $ 63,187 $ 197,941 |
Sales-type Lease Sales-type Lea
Sales-type Lease Sales-type Lease (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
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, 2017 and December 31, 2016 (in thousands): September 30, December 31, 2016 Total minimum lease payments to be received $ 45,417 $ 52,224 Less: executory costs (7,837 ) (10,139 ) Net minimum lease payments receivable 37,580 42,085 Less: unearned income (1,641 ) (2,352 ) Net investment in sales-type lease 35,939 39,733 Less: long-term investment in sales-type lease (26,384 ) (31,050 ) Investment in sales-type lease included in accounts and other receivables $ 9,555 $ 8,683 |
Minimum Lease Payments to be Received for Each of the Next Five Fiscal Years | As of September 30, 2017 , minimum lease payments for each of the succeeding four fiscal years are as follows (in thousands): 2017 (less than 1 year) $ 3,499 2018 15,071 2019 15,350 2020 11,497 Total minimum lease payments to be received $ 45,417 |
Inventory Inventory (Tables)
Inventory Inventory (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Inventory Disclosure [Abstract] | |
Inventory | Inventory consisted of the following (in thousands): September 30, December 31, 2016 Components and subassemblies $ 42,107 $ 31,695 Work in process 88,967 39,894 Finished goods 66,995 16,665 Total $ 198,069 $ 88,254 |
Deferred Revenue Deferred Reven
Deferred Revenue Deferred Revenue (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Deferred Revenue Disclosure [Abstract] | |
Deferred Revenue | Deferred revenue consisted of the following (in thousands): September 30, December 31, 2016 Deferred product revenue $ 13,052 $ 14,274 Deferred service revenue 86,391 96,113 Total deferred revenue 99,443 110,387 Less: long-term deferred revenue (31,409 ) (27,258 ) Deferred revenue in current liabilities $ 68,034 $ 83,129 |
Share-Based Compensation Share-
Share-Based Compensation Share-Based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
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 month period ended September 30, 2016 and nine month periods ended September 30, 2017 and September 30, 2016 . There were no grants during the three month period ended September 30, 2017: Three Months Ended Nine Months Ended 2016 2017 2016 Risk-free interest rate 0.96% 1.61% 1.12% Expected dividend yield —% —% —% Volatility 50.95% 54.20% 50.86% Expected life 4.0 years 4.0 years 4.0 years Weighted average Black-Scholes value of options granted $12.69 $7.75 $13.23 |
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, 2016 1,989,137 $ 16.99 Grants 304,500 $ 17.98 Exercises (80,757 ) $ 8.54 Canceled and forfeited (57,766 ) $ 28.86 Outstanding at September 30, 2017 2,155,114 $ 17.13 5.5 Exercisable at September 30, 2017 1,590,128 $ 14.91 4.3 Available for grant at September 30, 2017 3,014,293 |
Restricted Stock Activity | A summary of the Company’s unvested restricted stock unit grants and changes during the nine months ended September 30, 2017 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, 2016 425,721 $ 30.89 656,285 $ 30.49 1,082,006 $ 30.65 Granted 714,950 $ 18.29 26,000 $ 20.25 740,950 $ 18.36 Forfeited (54,474 ) $ 29.14 (133,200 ) $ 30.04 (187,674 ) $ 29.78 Vested (120,935 ) $ 30.65 — $ — (120,935 ) $ 30.65 Outstanding at September 30, 2017 965,262 $ 21.69 549,085 $ 30.12 1,514,347 $ 24.74 A summary of the Company’s unvested restricted stock grants and changes during the nine months ended September 30, 2017 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, 2016 256,802 $ 26.43 513,500 $ 15.00 770,302 $ 18.81 Granted 44,002 $ 17.55 — $ — 44,002 $ 17.55 Forfeited (23,909 ) $ 30.93 (476,000 ) $ 14.88 (499,909 ) $ 15.65 Vested (153,717 ) $ 25.24 — $ — (153,717 ) $ 25.24 Outstanding at September 30, 2017 123,178 $ 23.87 37,500 $ 16.52 160,678 $ 22.15 |
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, 2017 and 2016 (in thousands): Three Months Ended Nine Months Ended 2017 2016 2017 2016 Cost of product revenue $ 73 $ 78 $ 189 $ 243 Cost of service revenue 59 59 194 195 Research and development, net 798 834 2,596 2,365 Sales and marketing 650 907 1,850 2,614 General and administrative 1,005 861 2,814 2,969 Total $ 2,585 $ 2,739 $ 7,643 $ 8,386 |
Taxes Taxes (Tables)
Taxes Taxes (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Income Tax Disclosure [Abstract] | |
Effective Tax Rates | The Company’s effective tax rates for the three and nine months ended September 30, 2017 and 2016 were as follows: Three Months Ended Nine Months Ended 2017 2016 2017 2016 Effective tax rates 39% 18% 37% 22% |
Segment Information (Tables)
Segment Information (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
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, 2017 and 2016 (in thousands): Three Months Ended Nine Months Ended 2017 2016 2017 2016 Revenue: Supercomputing $ 47,918 $ 60,730 $ 142,933 $ 216,125 Storage and Data Management 11,046 12,330 42,335 50,755 Maintenance and Support 31,701 26,292 92,483 79,862 Engineering Services and Other 20,736 4,391 40,598 16,355 Elimination of inter-segment revenue (31,701 ) (26,292 ) (92,483 ) (79,862 ) Total revenue $ 79,700 $ 77,451 $ 225,866 $ 283,235 Gross Profit: Supercomputing $ 18,807 $ 18,322 $ 50,630 $ 74,893 Storage and Data Management 3,345 3,917 15,564 18,091 Maintenance and Support 16,501 8,447 45,078 30,530 Engineering Services and Other 6,340 1,362 14,450 6,740 Elimination of inter-segment gross profit (16,501 ) (8,447 ) (45,078 ) (30,530 ) Total gross profit $ 28,492 $ 23,601 $ 80,644 $ 99,724 |
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 2017 2016 2017 2016 2017 2016 Three months ended September 30, Product revenue $ 38,007 $ 45,412 $ 7,273 $ 2,273 $ 45,280 $ 47,685 Service revenue 23,298 19,335 11,122 10,431 34,420 29,766 Total revenue $ 61,305 $ 64,747 $ 18,395 $ 12,704 $ 79,700 $ 77,451 United States Other Countries Total 2017 2016 2017 2016 2017 2016 Nine months ended September 30, Product revenue $ 90,148 $ 101,347 $ 27,791 $ 86,677 $ 117,939 $ 188,024 Service revenue 74,500 64,080 33,427 31,131 107,927 95,211 Total revenue $ 164,648 $ 165,427 $ 61,218 $ 117,808 $ 225,866 $ 283,235 |
Basis of Presentation (Details)
Basis of Presentation (Details) | 9 Months Ended |
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
Product delivery period | 5 years |
Maintenance services period | 1 year |
New Accounting Pronouncements -
New Accounting Pronouncements - Narrative (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Reclassification of deferred tax asset, current, to noncurrent | $ 105,132 | $ 85,613 |
Accounting Standards Update 2015-17 [Member] | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Reclassification of deferred tax asset, current, to noncurrent | 19,100 | |
Decrease of current deferred tax asset | $ 19,100 |
Strategic Transaction (Details)
Strategic Transaction (Details) $ in Thousands | Sep. 25, 2015USD ($) | Dec. 31, 2017USD ($) | Sep. 30, 2017USD ($) | Sep. 30, 2016USD ($) | Sep. 30, 2017USD ($) | Sep. 30, 2016USD ($) | Sep. 25, 2017USD ($)position |
Business Acquisition [Line Items] | |||||||
Gain on strategic transaction | $ 4,389 | $ 0 | $ 4,389 | $ 0 | |||
Receivable from Seagate | 1,404 | 0 | 1,404 | 0 | |||
Inventory | 4,170 | 0 | 4,170 | 0 | |||
Property and equipment | 2,684 | 0 | 2,684 | 0 | |||
Deferred revenue | (11,700) | 0 | (11,700) | 0 | |||
Deferred tax liabilities | (3,019) | 0 | (3,019) | 0 | |||
Other liabilities | (500) | 0 | (500) | 0 | |||
Intangible assets | $ 3,350 | $ 0 | 3,350 | $ 0 | |||
Seagate Cloud Systems, Inc [Member] | |||||||
Business Acquisition [Line Items] | |||||||
Assets acquired | $ 19,600 | ||||||
Liabilities assumed | 15,200 | ||||||
Gain on strategic transaction | $ 4,400 | ||||||
Cash | $ 8,000 | ||||||
Employees and contractors assumed | position | 125 | ||||||
Strategic transaction related costs | $ 500 | ||||||
Receivable from Seagate | $ 1,404 | ||||||
Inventory | 4,170 | ||||||
Property and equipment | 2,684 | ||||||
Deferred revenue | (11,700) | ||||||
Deferred tax liabilities | (3,019) | ||||||
Other liabilities | (500) | ||||||
Net tangible assets | 1,039 | ||||||
Total net assets acquired | 4,389 | ||||||
2017 (less than one year) | 228 | ||||||
2,018 | 911 | ||||||
2,019 | 911 | ||||||
2,020 | 794 | ||||||
2,021 | 344 | ||||||
2,022 | 40 | ||||||
Total | 3,228 | ||||||
Trademarks [Member] | Seagate Cloud Systems, Inc [Member] | |||||||
Business Acquisition [Line Items] | |||||||
Intangible assets | 90 | ||||||
Useful Life (in Years) | 5 years | ||||||
Developed Technology Rights [Member] | Seagate Cloud Systems, Inc [Member] | |||||||
Business Acquisition [Line Items] | |||||||
Intangible assets | 1,400 | ||||||
Useful Life (in Years) | 3 years | ||||||
Customer Relationships [Member] | Seagate Cloud Systems, Inc [Member] | |||||||
Business Acquisition [Line Items] | |||||||
Intangible assets | 260 | ||||||
Useful Life (in Years) | 10 years | ||||||
Supply Agreement [Member] | Seagate Cloud Systems, Inc [Member] | |||||||
Business Acquisition [Line Items] | |||||||
Intangible assets | $ 1,600 | ||||||
Useful Life (in Years) | 4 years | ||||||
Scenario, Forecast [Member] | Minimum [Member] | Seagate Cloud Systems, Inc [Member] | |||||||
Business Acquisition [Line Items] | |||||||
Proceeds from Previous Acquisition | $ 1,000 | ||||||
Scenario, Forecast [Member] | Maximum [Member] | Seagate Cloud Systems, Inc [Member] | |||||||
Business Acquisition [Line Items] | |||||||
Proceeds from Previous Acquisition | $ 2,000 |
Fair Value Measurement (Details
Fair Value Measurement (Details) $ in Thousands | Sep. 30, 2017USD ($) | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Cash and cash equivalents and restricted cash | $ 154,816 | |
Available-for-sale investments | 27,926 | [1] |
Foreign currency exchange contracts | 3,732 | [2] |
Assets measured at fair value at September 30, 2017 | 186,474 | |
Foreign currency exchange contracts | 2,530 | [3] |
Liabilities measured at fair value at September 30, 2017 | 2,530 | |
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 | 154,816 | |
Available-for-sale investments | 27,926 | [1] |
Foreign currency exchange contracts | 0 | [2] |
Assets measured at fair value at September 30, 2017 | 182,742 | |
Foreign currency exchange contracts | 0 | [3] |
Liabilities measured at fair value at September 30, 2017 | 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 | 0 | [1] |
Foreign currency exchange contracts | 3,732 | [2] |
Assets measured at fair value at September 30, 2017 | 3,732 | |
Foreign currency exchange contracts | 2,530 | [3] |
Liabilities measured at fair value at September 30, 2017 | $ 2,530 | |
[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, SEK in Millions, NZD in Millions, CAD in Millions | Sep. 30, 2017EUR (€) | Sep. 30, 2017USD ($) | Sep. 30, 2017JPY (¥) | Sep. 30, 2017SEK | Sep. 30, 2017CAD | Sep. 30, 2017CHF (SFr) | Sep. 30, 2017NZD | Sep. 30, 2017GBP (£) | Dec. 31, 2016EUR (€) | Dec. 31, 2016USD ($) | Dec. 31, 2016JPY (¥) | Dec. 31, 2016SEK | Dec. 31, 2016CAD | Dec. 31, 2016CHF (SFr) | Dec. 31, 2016NZD | Dec. 31, 2016GBP (£) |
Derivative [Line Items] | ||||||||||||||||
Foreign currency exposure on hedged foreign currency contracts | $ 87,600 | $ 46,900 | ||||||||||||||
Foreign currency exposure on dedesignated foreign currency contracts | 51,500 | 107,500 | ||||||||||||||
Designated as Hedging Instrument [Member] | ||||||||||||||||
Derivative [Line Items] | ||||||||||||||||
Derivative, notional amount | € 1.5 | ¥ 3,377.6 | CAD 56.6 | SFr 0 | NZD 16.2 | € 1.5 | ¥ 0 | CAD 54.4 | SFr 3.6 | NZD 0 | ||||||
Derivative assets (liabilities), at fair value, net | (1,834) | 424 | ||||||||||||||
Not Designated as Hedging Instrument [Member] | ||||||||||||||||
Derivative [Line Items] | ||||||||||||||||
Derivative, notional amount | € 4.1 | ¥ 0 | SEK 27.6 | CAD 0.3 | NZD 1.6 | £ 28.4 | € 8 | ¥ 2,464.7 | SEK 0 | CAD 32.4 | NZD 0 | £ 33.8 | ||||
Derivative assets (liabilities), at fair value, net | 3,036 | 10,785 | ||||||||||||||
Prepaid Expenses and Other Current Assets [Member] | Designated as Hedging Instrument [Member] | ||||||||||||||||
Derivative [Line Items] | ||||||||||||||||
Derivative asset, current | 330 | 71 | ||||||||||||||
Prepaid Expenses and Other Current Assets [Member] | Not Designated as Hedging Instrument [Member] | ||||||||||||||||
Derivative [Line Items] | ||||||||||||||||
Derivative asset, current | 1,386 | 5,344 | ||||||||||||||
Other Noncurrent Assets [Member] | Designated as Hedging Instrument [Member] | ||||||||||||||||
Derivative [Line Items] | ||||||||||||||||
Derivative asset, noncurrent | 0 | 367 | ||||||||||||||
Other Noncurrent Assets [Member] | Not Designated as Hedging Instrument [Member] | ||||||||||||||||
Derivative [Line Items] | ||||||||||||||||
Derivative asset, noncurrent | 2,016 | 5,468 | ||||||||||||||
Other Current Liabilities [Member] | Designated as Hedging Instrument [Member] | ||||||||||||||||
Derivative [Line Items] | ||||||||||||||||
Derivative liability, current | 160 | 9 | ||||||||||||||
Other Current Liabilities [Member] | Not Designated as Hedging Instrument [Member] | ||||||||||||||||
Derivative [Line Items] | ||||||||||||||||
Derivative liability, current | 366 | 27 | ||||||||||||||
Other Noncurrent Liabilities [Member] | Designated as Hedging Instrument [Member] | ||||||||||||||||
Derivative [Line Items] | ||||||||||||||||
Derivative liability, noncurrent | (2,004) | (5) | ||||||||||||||
Other Noncurrent Liabilities [Member] | Not Designated as Hedging Instrument [Member] | ||||||||||||||||
Derivative [Line Items] | ||||||||||||||||
Derivative liability, noncurrent | $ 0 | $ 0 |
Accumulated Other Comprehensi40
Accumulated Other Comprehensive Income Accumulated Other Comprehensive Income (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Gross of tax reclassifications | $ (93) | $ 191 | $ (157) | $ 4,569 |
Net of tax reclassifications | (56) | 114 | (94) | 2,742 |
Beginning balance | 2,180 | 9,658 | 2,782 | 7,642 |
Current-period change, net of tax | (1,164) | 510 | (1,766) | 2,526 |
Ending balance | 1,016 | 10,168 | 1,016 | 10,168 |
Income tax expense (benefit) associated with current-period change | (550) | 342 | (1,049) | 1,001 |
Accumulated Net Unrealized Investment Gain (Loss) [Member] | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Beginning balance | 94 | 0 | 0 | (8) |
Current-period change, net of tax | (98) | 0 | (4) | 8 |
Ending balance | (4) | 0 | (4) | 0 |
Income tax expense (benefit) associated with current-period change | (66) | 0 | (3) | 6 |
Accumulated Translation Adjustment [Member] | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Beginning balance | 2,541 | 2,592 | 2,101 | 1,675 |
Current-period change, net of tax | (118) | 58 | 322 | 975 |
Ending balance | 2,423 | 2,650 | 2,423 | 2,650 |
Income tax expense (benefit) associated with current-period change | 148 | 41 | 343 | (40) |
Accumulated Net Gain (Loss) from Designated or Qualifying Cash Flow Hedges [Member] | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Beginning balance | (455) | 7,066 | 681 | 5,975 |
Current-period change, net of tax | (948) | 452 | (2,084) | 1,543 |
Ending balance | (1,403) | 7,518 | (1,403) | 7,518 |
Income tax expense (benefit) associated with current-period change | $ (632) | $ 301 | $ (1,389) | $ 1,035 |
Loss Per Share (EPS) Loss Per S
Loss Per Share (EPS) Loss Per Share (EPS) (Details) - shares shares in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
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) | 3.2 | 2.7 | 3.2 | 2.7 |
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) | 0.6 | 1.2 | 0.6 | 1.2 |
Investments Investments (Detail
Investments Investments (Details) $ in Thousands | Sep. 30, 2017USD ($) |
Investments, Debt and Equity Securities [Abstract] | |
Cost | $ 27,933 |
Unrealized Loss | (7) |
Fair Value | $ 27,926 |
Accounts and Other Receivable43
Accounts and Other Receivables, Net (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts and other receivables, gross | $ 63,215 | $ 197,962 |
Allowance for doubtful accounts | (28) | (21) |
Accounts and other receivables, net | 63,187 | 197,941 |
Trade Accounts Receivable [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts and other receivables, gross | 36,180 | 156,705 |
Unbilled Receivables [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts and other receivables, gross | 7,666 | 17,264 |
Advance Billings [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts and other receivables, gross | 5,090 | 1,915 |
Short-Term Tnvestment In Sales-Type Lease [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts and other receivables, gross | 9,555 | 8,683 |
Other Receivables [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts and other receivables, gross | $ 4,724 | $ 13,395 |
Non-US Government Customers [Member] | Accounts Receivable [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Concentration risk, percent | 15.00% | 24.00% |
Government Contracts Concentration Risk [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts and other receivables, net | $ 23,500 | $ 104,600 |
Government Contracts Concentration Risk [Member] | Unbilled Revenues [Member] | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Accounts and other receivables, net | $ 1,500 | $ 1,400 |
Sales-type Lease Sales-type L44
Sales-type Lease Sales-type Lease (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Leases [Abstract] | ||
Total minimum lease payments to be received | $ 45,417 | $ 52,224 |
Less: executory costs | (7,837) | (10,139) |
Net minimum lease payments receivable | 37,580 | 42,085 |
Less: unearned income | (1,641) | (2,352) |
Net investment in sales-type lease | 35,939 | 39,733 |
Less: long-term investment in sales-type lease | (26,384) | (31,050) |
Investment in sales-type lease included in accounts and other receivables | 9,555 | $ 8,683 |
2017 (less than 1 year) | 3,499 | |
2,018 | 15,071 | |
2,019 | 15,350 | |
2,020 | 11,497 | |
Total minimum lease payments to be received | $ 45,417 |
Inventory Inventory (Details)
Inventory Inventory (Details) - USD ($) $ in Thousands | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2017 | Dec. 31, 2016 | |
Inventory [Line Items] | |||
Components and subassemblies | $ 42,107 | $ 31,695 | |
Work in process | 88,967 | 39,894 | |
Finished goods | 66,995 | 16,665 | |
Total | 198,069 | 88,254 | |
Inventory written off | $ 200 | ||
Located at Customer Sites [Member] | |||
Inventory [Line Items] | |||
Finished goods | 23,300 | 10,500 | |
Finished Goods Inventory [Member] | |||
Inventory [Line Items] | |||
Finished goods | $ 45,300 | $ 11,900 |
Deferred Revenue Deferred Rev46
Deferred Revenue Deferred Revenue (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Sep. 25, 2017 | Dec. 31, 2016 | Sep. 30, 2016 |
Deferred Revenue Arrangement [Line Items] | ||||
Total deferred revenue | $ 99,443 | $ 110,387 | ||
Long-term deferred revenue | 31,409 | 27,258 | ||
Deferred revenue in current liabilities | 68,034 | 83,129 | ||
Deferred revenue | 11,700 | $ 0 | ||
Product [Member] | ||||
Deferred Revenue Arrangement [Line Items] | ||||
Total deferred revenue | 13,052 | 14,274 | ||
Service [Member] | ||||
Deferred Revenue Arrangement [Line Items] | ||||
Total deferred revenue | 86,391 | 96,113 | ||
Government Contracts Concentration Risk [Member] | ||||
Deferred Revenue Arrangement [Line Items] | ||||
Total deferred revenue | $ 36,300 | $ 60,300 | ||
Deferred Revenue [Member] | Non-US Government Customers [Member] | ||||
Deferred Revenue Arrangement [Line Items] | ||||
Concentration risk, percent | 10.00% | 10.00% | ||
Seagate Cloud Systems, Inc [Member] | ||||
Deferred Revenue Arrangement [Line Items] | ||||
Deferred revenue | $ 11,700 |
Contingencies Contingencies (De
Contingencies Contingencies (Details) | Apr. 22, 2016patent | Sep. 25, 2015patent | Sep. 30, 2017lawsuit |
Loss Contingencies [Line Items] | |||
Loss contingency, pending lawsuit, number | lawsuit | 2 | ||
Civil Action No. 2:15-cv-1554 [Member] | Pending Litigation [Member] | |||
Loss Contingencies [Line Items] | |||
Loss contingency, patents allegedly infringed, number | 4 | ||
Civil Action No. 2:15-cv-1554 [Member] | Pending Litigation [Member] | Patents Related to Company's Computer Hardware [Member] | |||
Loss Contingencies [Line Items] | |||
Loss contingency, patents allegedly infringed, number | 2 | ||
Civil Action No. 2:15-cv-1554 [Member] | Pending Litigation [Member] | Patents Related to Third Party's Computer Software [Member] | |||
Loss Contingencies [Line Items] | |||
Loss contingency, patents allegedly infringed, number | 2 | ||
Civil Action No. 2:16-cv-423 [Member] | Pending Litigation [Member] | |||
Loss Contingencies [Line Items] | |||
Loss contingency, patents allegedly infringed, number | 5 | ||
Civil Action No. 2:16-cv-423 [Member] | Pending Litigation [Member] | Patents Related to Third Party's Computer Software [Member] | |||
Loss Contingencies [Line Items] | |||
Loss contingency, patents allegedly infringed, number | 5 |
Share-Based Compensation Shar48
Share-Based Compensation Share-Based Compensation - Assumptions (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Risk-free interest rate | 0.96% | 1.61% | 1.12% | |
Expected dividend yield | 0.00% | 0.00% | 0.00% | |
Volatility | 50.95% | 54.20% | 50.86% | |
Expected life | 4 years | 4 years | 4 years | |
Weighted average Black-Scholes value of options granted (in dollars per share) | $ 12.69 | $ 7.75 | $ 13.23 | |
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% | |
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% |
Fair value of restricted stock vested in period | $ 0.5 | $ 5.1 | $ 2.8 | $ 7.5 |
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% |
Fair value of restricted stock vested in period | $ 0.6 | $ 0.6 | $ 2.2 | $ 1.8 |
Share-Based Compensation Shar49
Share-Based Compensation Share-Based Compensation - Options (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | ||||
Outstanding beginning of the period (in shares) | 1,989,137 | |||
Grants (in shares) | 304,500 | |||
Exercises (in shares) | (67,234) | (26,142) | (80,757) | (166,687) |
Canceled and forfeited (in shares) | (57,766) | |||
Outstanding end of the period (in shares) | 2,155,114 | 2,155,114 | ||
Exercisable end of the period (in shares) | 1,590,128 | 1,590,128 | ||
Available for grant end of the period (in shares) | 3,014,293 | 3,014,293 | ||
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) | $ 16.99 | |||
Grants (in dollars per share) | 17.98 | |||
Exercises (in dollars per share) | 8.54 | |||
Canceled and forfeited (in dollars per share) | 28.86 | |||
Outstanding end of the period (in dollars per share) | $ 17.13 | 17.13 | ||
Exercisable end of the period (in dollars per share) | $ 14.91 | $ 14.91 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Additional Disclosures [Abstract] | ||||
Outstanding, weighted average remaining contractual term (in years) | 5 years 6 months | |||
Exercisable, weighted average remaining contractual term (in years) | 4 years 3 months 18 days | |||
Outstanding, aggregate intrinsic value | $ 11.9 | $ 11.9 | ||
Exercisable, aggregate intrinsic value | 11.5 | 11.5 | ||
Intrinsic value of options exercised | $ 0.7 | $ 0.4 | $ 0.9 | $ 4 |
Share-Based Compensation Shar50
Share-Based Compensation Share-Based Compensation - Restricted Stock (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
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) | 256,802 | |||
Granted (in shares) | 44,002 | |||
Forfeited (in shares) | (23,909) | |||
Vested (in shares) | (153,717) | |||
Outstanding end of the period (in shares) | 123,178 | 123,178 | ||
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) | $ 26.43 | |||
Granted (in dollars per share) | 17.55 | |||
Forfeited (in dollars per share) | 30.93 | |||
Vested (in dollars per share) | 25.24 | |||
Outstanding end of the period (in dollars per share) | $ 23.87 | $ 23.87 | ||
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) | 513,500 | |||
Granted (in shares) | 0 | |||
Forfeited (in shares) | (476,000) | |||
Vested (in shares) | 0 | |||
Outstanding end of the period (in shares) | 37,500 | 37,500 | ||
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 | |||
Granted (in dollars per share) | 0 | |||
Forfeited (in dollars per share) | 14.88 | |||
Vested (in dollars per share) | 0 | |||
Outstanding end of the period (in dollars per share) | $ 16.52 | $ 16.52 | ||
Restricted Stock [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) | 770,302 | |||
Granted (in shares) | 44,002 | |||
Forfeited (in shares) | (499,909) | |||
Vested (in shares) | (153,717) | |||
Outstanding end of the period (in shares) | 160,678 | 160,678 | ||
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) | $ 18.81 | |||
Granted (in dollars per share) | 17.55 | |||
Forfeited (in dollars per share) | 15.65 | |||
Vested (in dollars per share) | 25.24 | |||
Outstanding end of the period (in dollars per share) | $ 22.15 | $ 22.15 | ||
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 | $ 0.5 | $ 5.1 | $ 2.8 | $ 7.5 |
Share-Based Compensation Shar51
Share-Based Compensation Share-Based Compensation - Restricted Stock Units (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Time-vesting Units [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) | 425,721 | |||
Granted (in shares) | 714,950 | |||
Forfeited (in shares) | (54,474) | |||
Vested (in shares) | (120,935) | |||
Outstanding end of the period (in shares) | 965,262 | 965,262 | ||
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) | $ 30.89 | |||
Granted (in dollars per share) | 18.29 | |||
Forfeited (in dollars per share) | 29.14 | |||
Vested (in dollars per share) | 30.65 | |||
Outstanding end of the period (in dollars per share) | $ 21.69 | $ 21.69 | ||
Performance Vesting Units [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) | 656,285 | |||
Granted (in shares) | 26,000 | |||
Forfeited (in shares) | (133,200) | |||
Vested (in shares) | 0 | |||
Outstanding end of the period (in shares) | 549,085 | 549,085 | ||
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) | $ 30.49 | |||
Granted (in dollars per share) | 20.25 | |||
Forfeited (in dollars per share) | 30.04 | |||
Vested (in dollars per share) | 0 | |||
Outstanding end of the period (in dollars per share) | $ 30.12 | $ 30.12 | ||
Restricted Stock Units (RSUs) [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) | 1,082,006 | |||
Granted (in shares) | 740,950 | |||
Forfeited (in shares) | (187,674) | |||
Vested (in shares) | (120,935) | |||
Outstanding end of the period (in shares) | 1,514,347 | 1,514,347 | ||
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) | $ 30.65 | |||
Granted (in dollars per share) | 18.36 | |||
Forfeited (in dollars per share) | 29.78 | |||
Vested (in dollars per share) | 30.65 | |||
Outstanding end of the period (in dollars per share) | $ 24.74 | $ 24.74 | ||
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 | $ 0.6 | $ 2.2 | $ 1.8 |
Share-Based Compensation Shar52
Share-Based Compensation Share-Based Compensation - Aggregate (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized [Abstract] | ||||
Unrecognized compensation expense | $ 38,200 | $ 38,200 | ||
Unrecognized compensation expense period of recognition | 3 years | |||
Allocated Share-based Compensation Expense | 2,585 | $ 2,739 | $ 7,643 | $ 8,386 |
Performance Shares [Member] | ||||
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized [Abstract] | ||||
Unrecognized compensation expense | 17,200 | 17,200 | ||
Time-vesting Shares [Member] | ||||
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized [Abstract] | ||||
Unrecognized compensation expense | 21,000 | 21,000 | ||
Research and Development Expense [Member] | ||||
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized [Abstract] | ||||
Allocated Share-based Compensation Expense | 798 | 834 | 2,596 | 2,365 |
Selling and Marketing Expense [Member] | ||||
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized [Abstract] | ||||
Allocated Share-based Compensation Expense | 650 | 907 | 1,850 | 2,614 |
General and Administrative Expense [Member] | ||||
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized [Abstract] | ||||
Allocated Share-based Compensation Expense | 1,005 | 861 | 2,814 | 2,969 |
Product [Member] | Cost of Sales [Member] | ||||
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized [Abstract] | ||||
Allocated Share-based Compensation Expense | 73 | 78 | 189 | 243 |
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 | $ 59 | $ 194 | $ 195 |
Taxes (Details)
Taxes (Details) - USD ($) $ in Thousands | Sep. 25, 2015 | Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 |
Operating Loss Carryforwards [Line Items] | ||||||
Effective tax rates, percent | 39.00% | 18.00% | 37.00% | 22.00% | ||
Gain on strategic transaction | $ 4,389 | $ 0 | $ 4,389 | $ 0 | ||
Expected statutory tax rate, percent | 35.00% | 35.00% | ||||
Deferred tax assets | 105,132 | $ 105,132 | $ 85,613 | |||
Domestic Tax Authority [Member] | ||||||
Operating Loss Carryforwards [Line Items] | ||||||
Operating Loss Carryforwards | 9,000 | 9,000 | ||||
Research Tax Credit Carryforward [Member] | ||||||
Operating Loss Carryforwards [Line Items] | ||||||
Tax Credit Carryforward, Amount | $ 1,300 | $ 1,300 | ||||
Seagate Cloud Systems, Inc [Member] | ||||||
Operating Loss Carryforwards [Line Items] | ||||||
Gain on strategic transaction | $ 4,400 |
Segment Information - Business
Segment Information - Business Segment Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Segment Reporting Information [Line Items] | ||||
Total revenue | $ (79,700) | $ (77,451) | $ (225,866) | $ (283,235) |
Total gross profit | $ (28,492) | $ (23,601) | (80,644) | (99,724) |
Supercomputing [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Total revenue | (142,933) | (216,125) | ||
Total gross profit | (50,630) | (74,893) | ||
Storage and Data Management [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Total revenue | (42,335) | (50,755) | ||
Total gross profit | (15,564) | (18,091) | ||
Maintenance and Support [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Total revenue | (92,483) | (79,862) | ||
Total gross profit | (45,078) | (30,530) | ||
Other Segments [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Total revenue | (40,598) | (16,355) | ||
Total gross profit | (14,450) | (6,740) | ||
Intersegment Eliminations [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Total revenue | (92,483) | (79,862) | ||
Total gross profit | $ (45,078) | $ (30,530) |
Segment Information - Geographi
Segment Information - Geographical Segment Information (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017USD ($)Customers | Sep. 30, 2016USD ($)Customers | Sep. 30, 2017USD ($)Customers | Sep. 30, 2016USD ($)Customers | |
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Product revenue | $ 45,280 | $ 47,685 | $ 117,939 | $ 188,024 |
Service revenue | 34,420 | 29,766 | 107,927 | 95,211 |
Total revenue | 79,700 | 77,451 | 225,866 | 283,235 |
Government Contracts Concentration Risk [Member] | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Total revenue | 53,700 | 51,400 | 145,300 | 140,400 |
UNITED STATES | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Product revenue | 38,007 | 45,412 | 90,148 | 101,347 |
Service revenue | 23,298 | 19,335 | 74,500 | 64,080 |
Total revenue | 61,305 | 64,747 | 164,648 | 165,427 |
Non-US | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Product revenue | 7,273 | 2,273 | 27,791 | 86,677 |
Service revenue | 11,122 | 10,431 | 33,427 | 31,131 |
Total revenue | $ 18,395 | $ 12,704 | $ 61,218 | $ 117,808 |
Revenue [Member] | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Concentration Risk, Number of Customers | Customers | 0 | 1 | 0 | 1 |
Concentration risk, percentage | 10.00% | 12.00% | ||
Revenue [Member] | Australia and the UK | ||||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||||
Concentration risk, percentage | 31.00% |
Restructuring (Details)
Restructuring (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||
Jul. 31, 2017Employees | Sep. 30, 2017USD ($) | Sep. 30, 2016USD ($) | Sep. 30, 2017USD ($) | Sep. 30, 2016USD ($) | |
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring expense | $ 0 | $ 0 | |||
2017 Restructuring Plan [Member] | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Positions eliminated | Employees | 190 | ||||
Employee Severance [Member] | 2017 Restructuring Plan [Member] | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring expense | $ 7,653 | $ 7,653 |