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SEATTLE, WA -- Supercomputer leader Cray Inc. (Nasdaq:CRAY) today reported financial results for the company's fourth quarter and year-end 2001. The company said it is building a strong, diverse order backlog and expects to be profitable and cash flow positive for the 2002 first half and full year. For the fourth quarter ended December 31, 2001, Cray® revenues were $26.1 million, compared with revenues of $33.7 million for the fourth quarter of 2000. Excluding amortization of goodwill and intangible assets related to the acquisition of the Cray Research business operations and a restructuring charge of $2.5 million incurred during the quarter, the company reported a pro forma net loss for fourth-quarter 2001 of $13.1 million, or ($0.31) per share. Including amortization of goodwill and intangible assets and the restructuring charge, the company's net loss for the fourth quarter was $17.4 million, or ($0.41) per share. Fourth-quarter revenues were affected by the delay of the Cray SV1ex(TM) enhanced-memory product, which, as previously reported, began shipping on November 26, 2001. The $2.5 million restructuring charge was primarily related to severance expenses in connection with personnel reductions. The company had other one-time reserves and charges to various balance sheet items totaling $4.8 million. Taking all of these reserves and charges into account, the fourth-quarter operating results were substantially similar to those of the third quarter even with lower product revenue. For the year ended December 31, 2001, the company reported revenues of $133.6 million, compared with revenues of $118.1 million for the prior year. The company reported a net loss of $35.3 million, or ($0.87) per share for the year ended December 31, 2001, compared with a net loss for the prior year of $25.4 million, or ($0.81) per share. Accounts receivable were $25.1 million, and cash and cash equivalents were $12.8 million, at December 31, 2001. Financial Guidance The following statements are based on current expectations. These statements are forward-looking, and actual results may differ materially. President and CEO Michael P. Haydock, who joined the company from IBM on October 1, 2001, said he expects Cray Inc. to be profitable and cash flow positive for the 2002 first half and full year. ``We are building a strong, diverse order backlog. We expect a record backlog at the close of the first quarter, and a backlog of $100 million or more on December 31, 2002. We have announced orders for our Cray SV1ex and Cray MTA-2(TM) solutions. In the past week, we have received orders valued at more than $7 million. We are also closing in fast on multiple orders each for our Cray SX-6(TM) and Cray T3E(TM) solutions. Pending orders for next-generation Cray SV2(TM) solutions already total nearly $40 million. ``We have a shot at profitability in the first quarter, but this business is lumpy on the product side,'' Haydock said. ``There are a couple of orders that could fall into the first or second quarter, which is why I'm more confident saying we expect profitability for the first half.'' Cray expects initial revenue from the new Dell relationship in the second quarter of 2002. For the full year 2002, the company expects total revenues of approximately $160 million, with $80-90 million of the total occurring in the first half. These revenue expectations do not include any contribution from the previously reported large government procurement for which Cray remains a finalist. Cray expects the successful introduction of the Cray SV2 solution to drive strong product revenues and accelerating profitability in 2003 and beyond. Management Discussion ``Financially, the fourth quarter resembled the third quarter as expected, mainly because the bread-and-butter Cray SV1ex enhanced-memory product didn't start shipping until late in the quarter,'' said Haydock. ``Strategically, however, we laid the groundwork for 2002 profitability and long-term growth.'' On December 21, Haydock announced that he realigned operations to evolve Cray quickly from a platform-based company to a solutions-based company. The realignment created a professional services unit, reduced the workforce while making several strategic new hires, reduced R&D expenditures, and positioned the company to offer additional high-performance computing solutions and services through OEM relationships and customer-funded initiatives. Other fourth-quarter 2001 highlights: Cray announced it was number one in the new, more comprehensive rankings of supercomputer performance reported in November 2001 by industry analyst firm IDC. On the new test, developed with extensive input from supercomputer users in government, industry and academia, Cray supercomputers dominated in both of the top two categories. Cray Inc. announced the Cray SX-6 Series of high-performance, high-efficiency supercomputers, scheduled for general availability in the first quarter of 2002. This series is available through a previously announced long-term OEM agreement with NEC Corp. The company shipped the first Cray SV1ex enhanced memory system to the Arctic Region Supercomputing Center (ARSC) at the University of Alaska Fairbanks. At the SC2001 annual supercomputer industry conference, Cray Inc. previewed technologies for the Cray SV2 Series, expected to be the world's most powerful supercomputer product. The Cray SV2 product remains on schedule for availability in the second half of 2002. After the close of the fourth quarter: Cray shipped the first Cray MTA-2 supercomputer system to a Japanese research customer. Cray shipped the first, 16-processor installment of another Cray MTA-2 system this week to the U.S. Naval Research Laboratory, in conjunction with a previously announced $5.4 million order from Logicon Inc., a Northrop Grumman company. Cray announced $9.4 million in new orders for Cray SV1ex supercomputer solutions from undisclosed non-U.S. customers. Approximately $1 million of the revenue is expected in the first quarter of 2002, with the remainder occurring in the second, third and fourth quarters. Cray and Dell announced a definitive three-year, renewable agreement for Cray to market high-performance cluster solutions and services worldwide using Dell PowerEdge servers. For more information visit www.cray.com