SEATTLE & VANCOUVER, British Columbia--(BUSINESS WIRE)--Feb. 25,
2004--Cray Inc. (Nasdaq NM:CRAY) today announced a definitive
agreement to acquire privately held OctigaBay Systems Corporation of
Vancouver, British Columbia. OctigaBay is developing an innovative
high performance computing (HPC) system designed to make
supercomputing performance accessible to the growing community of
scientific and technical computing users. This pending acquisition,
coupled with Cray's previously announced decision to commercialize the
"Red Storm" system, will extend Cray's product portfolio and multiply
its addressable market by over four times.
Cray will acquire OctigaBay in a transaction valued at
approximately $115 million, based on Cray's closing price yesterday of
$7.84. Cray will exchange about 12.7 million shares and just under $15
million dollars for all outstanding OctigaBay shares and will assume
approximately 400,000 employee options.
The transaction has been approved by the boards of both companies
and is expected to close within 60 days of this announcement, subject
to customary approvals.
"Cray's success and leadership have been founded on delivering
superior performance to solve our customers' most challenging
computing problems," said Cray Chairman and CEO Jim Rottsolk.
"OctigaBay's product is designed with the same philosophy, yet
targeted at a different market segment. The combined company will
increasingly benefit from the growing realization that purpose-built
HPC systems like Cray's are more efficient and cost-effective than
general business computers for the high performance computing market."
"OctigaBay has developed ground-breaking technologies to bring
unmatched price/performance, reliability and usability to high
performance computing." said John Seminerio, president and CEO of
OctigaBay. "Cray's proven market success, worldwide sales and service
organization and global customer relationships will bring these
technologies to more customers, in more markets, faster."
Previewed in November 2003, the OctigaBay 12K high performance
computer's innovative architecture embeds both a high speed
interconnect and application accelerators to remove major bottlenecks,
improving performance on real-world applications. Self-monitoring,
self-healing and management features give administrators a highly
reliable and easy-to-use system.
Early shipments of the OctigaBay product are expected in the
second half of 2004, with general availability in early 2005. Pricing,
to be announced later this year, is expected to range from under
$100,000 to about $2 million. The acquisition is expected to be
accretive in 2005, excluding the impact of non-cash
acquisition-related charges. For 2004, the continuing cost of
OctigaBay's product development efforts and product launch will be
about $2 million per quarter.
"We have been working very closely with both Cray and OctigaBay.
Their solutions provide differentiated, highly innovative, and
high-bandwidth architectures that fully exploit the advanced
capabilities of AMD64 technology, including best-in-class 32-bit
performance, simultaneous 64-bit computing and HyperTransport
technology," said Marty Seyer, vice president and general manager of
AMD's Microprocessor Business Unit. "We look forward to working with
the combined company as the 'Red Storm' and OctigaBay 12K projects
near completion, and many other compute-intensive system wins are
According to Earl Joseph, IDC vice president of workstations and
high-performance systems, "The Cray-OctigaBay merger unites a renowned
industry leader that has been gaining market momentum with an
innovative and intriguing new entrant in the HPC field. The combined
company has the potential to extend Cray's custom high-bandwidth
designs into the departmental and divisional market segments, by
providing innovative higher-performance interconnect capability
without the traditional high price tag. The combination of the two
companies' product lines and the announcement in the fall of
commercializing the Red Storm product allows Cray to address a market
that is more than four fold its current addressable market."
Investor Conference Call
Management will host an investor conference today, Feb. 25, 2004,
at 1:30 p.m. Pacific time (4:30 p.m. Eastern time) to discuss the
acquisition of OctigaBay Systems Corporation. The call-in number is
888-211-8103 (no passcode required).
International callers dial 706-643-3311. If you are unable to
participate, a replay will be available beginning today at 4:00 p.m.
Pacific time for 48 hours. To access, dial 800-642-1687, or
706-645-9291 (International) -- reservation number 5796933. The
conference call will be webcast live and will be archived for 90 days.
It will be available in the Investor Relations section of the Cray
website at http://www.cray.com/invest.
About OctigaBay Systems Corporation
OctigaBay Systems Corporation is pioneering an innovative new
class of HPC products that delivers the performance of high-end SMP
systems at a fraction of the cost. Addressing the most challenging
needs of business and research institutions, OctigaBay's products are
designed to be ideal for simulation, modeling, searching, sorting,
data mining and other processing intensive applications. For more
information, please visit www.OctigaBay.com.
About Cray Inc.
Cray's mission is to be the premier provider of supercomputing
solutions for its customers' most challenging scientific and
engineering problems. Cray currently participates primarily in the HPC
capability market with its Cray X1(TM) product. The company has
announced plans to offer a second product line to the capability and
enterprise segments, based on the 40-teraop "Red Storm" massively
parallel processing system Cray plans to deliver to Sandia National
Laboratories in the second half of 2004. The Red Storm-based line will
use the Advanced Micro Devices Inc. Opteron(TM) processors connected
via a low-latency, high-bandwidth, three-dimensional interconnect
network based on HyperTransport(TM) technology, coupled with Cray's
custom interconnect technology. Go to www.cray.com for more
information about the company.
Safe Harbor Statement
This press release contains forward-looking statements. There are
certain factors that could cause Cray's execution plans to differ
materially from those anticipated by the statements above. These
include the technical challenges of developing high performance
computing systems, including development of the OctigaBay 12K product,
government support and timing of supercomputer systems purchases,
reliance on third-party suppliers, the possibility that the proposed
acquisition of OctigaBay is not completed, the uncertainty that Cray
and OctigaBay are unable to execute successfully their integration
strategies, successful porting of application programs to new computer
systems, Cray's ability to compete with larger, more established
companies and innovative competitors, Cray's ability to keep up with
rapid technological change, Cray's ability to pass acceptance tests
and general economic and market conditions. For a discussion of these
and other risks, see "Factors That Could Affect Future Results" in
Cray's most recent Quarterly Report on Form 10-Q.
Cray is a registered trademark, and Cray X1 is a trademark, of
Cray Inc. OctigaBay is a registered trademark of OctigaBay Systems
Corporation. All other trademarks are the property of their respective
CONTACT: Cray Inc.
Victor Chynoweth, 206/701-2280 (Investors)
Lori Kaiser, 206/701-2233 (Media)
Steve Conway, 651-592-7441 (Media)
SOURCE: Cray Inc.