Attached files
| file | filename |
|---|---|
| 8-K/A - 8-K/A - CRAY INC | appro8-k.htm |
| EX-23.1 - EX-23.1 - CRAY INC | a112112ex231.htm |
| EX-99.2 - EX-99.2 - CRAY INC | a112112ex992.htm |
| EX-99.1 - EX-99.1 - CRAY INC | a112112ex991.htm |
Exhibit 99.3
Unaudited Pro Forma Financial Information
On November 21, 2012 (the “Closing Date”), Cray Inc. (“Cray”) acquired all the outstanding shares of Appro International, Inc. (“Appro”) for cash consideration of $24.9 million ($21.8 million of the cash consideration was paid to Appro shareholders and $3.1 million was paid to other parties related to Appro's transaction costs). The acquisition of Appro will allow the Company to expand its product offerings in the high performance computing market.
The acquisition is accounted for using the acquisition method of accounting whereby the assets acquired and liabilities assumed as of the Closing Date, including identifiable intangible assets such as developed technologies, are recorded at their estimated fair value. The excess of the consideration transferred over the estimated fair value of the identifiable assets acquired and liabilities assumed is recognized as goodwill, which will not be amortized but will be subject to an annual impairment test.
The following unaudited pro forma combined financial statements are based on the latest available historical consolidated financial statements of Cray.
The unaudited pro forma combined balance sheet as of September 30, 2012, gives effect to the acquisition as if it had been completed on September 30, 2012, and therefore will differ from actual amounts reported by Cray. The pro forma combined statements of operations for the nine months ended September 30, 2012 and for the year ended December 31, 2011, give effect to the acquisition as if it had been completed on January 1, 2011, and therefore will differ from actual results reported by Cray.
The historical financial information has been adjusted to give effect to pro forma events that are (1) directly attributable to the acquisition, (2) factually supportable and (3) expected to have a continuing impact on the combined results of Cray and Appro. The unaudited pro forma combined financial statements do not reflect any operating efficiencies, cost savings or revenue enhancements that may be achieved by the combined companies. In addition, certain nonrecurring expenses expected to be incurred within the first twelve months after the acquisition are also not reflected in the pro forma statements.
Cray is reviewing Appro's accounting policies to determine whether to harmonize any differences in policies. These unaudited pro forma combined financial statements assume no material differences in accounting policies.
These unaudited pro forma combined financial statements are based on the preliminary allocation of purchase price and are provided for informational purposes only and are not indicative of what the actual results of operations and financial position would have been had the acquisition taken place on the dates indicated, nor are they indicative of the future consolidated results of operations or financial position of the combined companies. The pro forma adjustments are based on information available as of the date of this Current Report on Form 8-K/A. Assumptions and estimates underlying the pro forma adjustments are described in the accompanying notes. These preliminary assumptions and estimates are subject to change as Cray finalizes the valuations of the assets acquired and liabilities assumed in connection with its acquisition of Appro. Therefore, final adjustments may differ from the pro forma adjustments presented herein.
The unaudited pro forma combined financial statements, including the notes thereto, should be read in conjunction with the historical financial statements of Cray, which are included in its Annual Report on Form 10-K for the year ended December 31, 2011 and its Quarterly Report on Form 10-Q as of September 30, 2012; and Appro, whose audited consolidated financial statements as of December 31, 2011 and 2010, and the related consolidated statements of operations, stockholders' equity and cash flows for each of the years in the three-year period ended December 31, 2011and unaudited condensed consolidated financial statements as of September 30, 2012 and 2011 and for the nine months then ended are included in this Current Report on Form 8-K/A.
Cray Inc. and Subsidiaries
Unaudited Condensed Combined Pro Forma Balance Sheet
(in thousands)
September 30, 2012 | |||||||||||||
Cray | Appro | Adjustments | Pro Forma | ||||||||||
ASSETS | |||||||||||||
Current assets: | |||||||||||||
Cash and cash equivalents | $ | 228,251 | $ | 534 | $ | (24,881 | ) | (a) | $ | 203,904 | |||
Restricted cash | 3,500 | — | — | 3,500 | |||||||||
Short-term investments | 30,697 | — | — | 30,697 | |||||||||
Accounts and other receivables, net | 22,120 | 12,483 | — | 34,603 | |||||||||
Inventory | 169,246 | 8,160 | — | 177,406 | |||||||||
Prepaid expenses and other current assets | 13,041 | 1,693 | (472 | ) | (f) | 14,262 | |||||||
Total current assets | 466,855 | 22,870 | (25,353 | ) | 464,372 | ||||||||
Long-term investments | 20,087 | — | — | 20,087 | |||||||||
Property and equipment, net | 20,602 | 336 | — | 20,938 | |||||||||
Service inventory, net | 1,411 | — | — | 1,411 | |||||||||
Deferred tax assets | 13,083 | 1,478 | (2,667 | ) | (f) | 11,894 | |||||||
Trade name & trademarks | — | — | 300 | (b) | 300 | ||||||||
Developed technology | — | — | 5,400 | (b) | 5,400 | ||||||||
Customer relationships | — | — | 1,800 | (b) | 1,800 | ||||||||
Non-compete agreements | — | — | 400 | (b) | 400 | ||||||||
Goodwill | — | — | 14,300 | (e) | 14,300 | ||||||||
Other non-current assets | 12,694 | 261 | — | 12,955 | |||||||||
TOTAL ASSETS | $ | 534,732 | $ | 24,945 | $ | (5,820 | ) | $ | 553,857 | ||||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||||||||
Current liabilities: | |||||||||||||
Accounts payable | $ | 61,131 | $ | 4,257 | $ | — | $ | 65,388 | |||||
Accrued payroll and related expenses | 13,497 | — | — | 13,497 | |||||||||
Other accrued liabilities | 4,170 | 7,597 | — | 11,767 | |||||||||
Deferred revenue | 99,655 | 5,395 | (486 | ) | (c) | 104,564 | |||||||
Total current liabilities | 178,453 | 17,249 | (486 | ) | 195,216 | ||||||||
Long-term deferred revenue | 29,431 | 3,633 | (1,557 | ) | (c) | 31,507 | |||||||
Other non-current liabilities | 2,607 | 286 | — | 2,893 | |||||||||
TOTAL LIABILITIES | 210,491 | 21,168 | (2,043 | ) | 229,616 | ||||||||
Shareholders' equity: | |||||||||||||
Preferred stock | — | 2,400 | (2,400 | ) | (d) | — | |||||||
Common stock and additional paid-in capital | 575,216 | 2,720 | (2,720 | ) | (d) | 575,216 | |||||||
Accumulated other comprehensive income | 5,604 | 5,604 | |||||||||||
Accumulated deficit | (256,579 | ) | (1,343 | ) | 1,343 | (d) | (256,579 | ) | |||||
TOTAL SHAREHOLDERS' EQUITY | 324,241 | 3,777 | (3,777 | ) | 324,241 | ||||||||
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ | 534,732 | $ | 24,945 | $ | (5,820 | ) | $ | 553,857 | ||||
Cray Inc. and Subsidiaries
Unaudited Condensed Combined Pro Forma Statements of Operations
(in thousands, except per-share amounts)
Nine Months Ended September 30, 2012 | |||||||||||||
Cray | Appro | Adjustments | Pro Forma | ||||||||||
REVENUE: | |||||||||||||
Product | $ | 182,806 | $ | 65,514 | $ | $ | 248,320 | ||||||
Service | 49,423 | 1,416 | 50,839 | ||||||||||
Total revenue | 232,229 | 66,930 | — | 299,159 | |||||||||
COST OF REVENUE: | |||||||||||||
Cost of product revenue | 107,545 | 52,380 | 1,350 | (a) | 161,275 | ||||||||
Cost of service revenue | 27,701 | 919 | 28,620 | ||||||||||
Total cost of revenue | 135,246 | 53,299 | 1,350 | 189,895 | |||||||||
Gross profit | 96,983 | 13,631 | (1,350 | ) | 109,264 | ||||||||
OPERATING EXPENSES: | |||||||||||||
Research and development, net | 46,126 | 4,548 | 50,674 | ||||||||||
Sales and marketing | 24,601 | 2,897 | 135 | (a) | 27,633 | ||||||||
General and administrative | 13,425 | 3,672 | 195 | (a) | 17,292 | ||||||||
Total operating expenses | 84,152 | 11,117 | 330 | 95,599 | |||||||||
Net gain on sale of hardware development program | 139,068 | — | 139,068 | ||||||||||
Income from operations | 151,899 | 2,514 | (1,680 | ) | 152,733 | ||||||||
Other income, net | 573 | 438 | 1,011 | ||||||||||
Interest income (expense), net | 144 | (109 | ) | 35 | |||||||||
Income before income taxes | 152,616 | 2,843 | (1,680 | ) | 153,779 | ||||||||
Income tax expense | (5,381 | ) | (1,143 | ) | 638 | (b) | (5,886 | ) | |||||
Net Income | $ | 147,235 | $ | 1,700 | $ | (1,042 | ) | $ | 147,893 | ||||
Basic net income per common share | $ | 4.06 | $ | 4.08 | |||||||||
Diluted net income per common share | $ | 3.92 | $ | 3.95 | |||||||||
Basic weighted average shares | 36,300 | 36,300 | |||||||||||
Diluted weighted average shares | 37,516 | 37,516 | |||||||||||
Cray Inc. and Subsidiaries
Unaudited Condensed Combined Pro Forma Statements of Operations
(in thousands, except per-share amounts)
Year Ended December 31, 2011 | |||||||||||||
Cray | Appro | Adjustments | Pro Forma | ||||||||||
REVENUE: | |||||||||||||
Product | $ | 155,561 | $ | 53,973 | $ | $ | 209,534 | ||||||
Service | 80,485 | 1,390 | 81,875 | ||||||||||
Total revenue | 236,046 | 55,363 | — | 291,409 | |||||||||
COST OF REVENUE: | |||||||||||||
Cost of product revenue | 101,000 | 45,218 | 1,800 | (a) | 148,018 | ||||||||
Cost of service revenue | 40,680 | 554 | 41,234 | ||||||||||
Total cost of revenue | 141,680 | 45,772 | 1,800 | 189,252 | |||||||||
Gross profit | 94,366 | 9,591 | (1,800 | ) | 102,157 | ||||||||
OPERATING EXPENSES: | |||||||||||||
Research and development, net | 49,452 | 5,081 | 54,533 | ||||||||||
Sales and marketing | 26,134 | 3,017 | 180 | (a) | 29,331 | ||||||||
General and administrative | 15,840 | 4,006 | 260 | (a) | 20,106 | ||||||||
Restructuring | 1,783 | — | 1,783 | ||||||||||
Total operating expenses | 93,209 | 12,104 | 440 | 105,753 | |||||||||
Income (loss) from operations | 1,157 | (2,513 | ) | (2,240 | ) | (3,596 | ) | ||||||
Other expense, net | (989 | ) | (284 | ) | (1,273 | ) | |||||||
Interest income (expense), net | (33 | ) | 75 | 42 | |||||||||
Income (loss) before income taxes | 135 | (2,722 | ) | (2,240 | ) | (4,827 | ) | ||||||
Income tax benefit | 14,194 | 1,235 | 851 | (b) | 16,280 | ||||||||
Net income (loss) | $ | 14,329 | $ | (1,487 | ) | $ | (1,389 | ) | $ | 11,453 | |||
Basic net income per common share | $ | 0.41 | $ | 0.33 | |||||||||
Diluted net income per common share | $ | 0.40 | $ | 0.32 | |||||||||
Basic weighted average shares | 35,122 | 35,122 | |||||||||||
Diluted weighted average shares | 36,072 | 36,072 | |||||||||||
Cray Inc. and Subsidiaries
Notes to Unaudited Pro Forma Statements
Pro Forma Balance Sheet
(a) | Represents the cash purchase price paid for Appro. |
(b) | Represents the estimated fair value of intangible assets acquired. |
(c) | Reflects adjustment to state balances of acquired assets and liabilities at estimated fair value. |
(d) | Adjustments reflect elimination of Appro equity balances. |
(e) | Goodwill represents the difference between the purchase price and the estimated fair value of the tangible and intangible assets and liabilities acquired. |
(f) | Deferred tax effect of acquisition adjustments primarily related to intangible assets acquired. |
Pro Forma Statements of Operations
(a) | Reflects the preliminary estimate of amortization of acquired intangibles on a straight-line basis over estimated useful lives. Annual amortization is estimated at about $2.2 million for each of the first two years. |
(b) | Tax effects of the pro forma adjustments are based on Cray's consolidated federal, state, and international statutory rates. |