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Cray Inc. Completes OctigaBay Acquisition

SEATTLE--(BUSINESS WIRE)--April 2, 2004--Cray Inc. (Nasdaq:CRAY) today announced that it has completed the acquisition of privately held OctigaBay Systems Corporation of Vancouver, British Columbia. This acquisition, coupled with Cray's previously announced decision to commercialize the Sandia "Red Storm" system, will extend Cray's product portfolio and multiply its addressable market by over four times, according to market analyst firm IDC.

In completing the transaction, Cray exchanged about 12.4 million shares and just under $15 million dollars for all outstanding OctigaBay shares and assumed approximately 740,000 options. 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-related product development efforts and the product launch will be about $2 million per quarter.

OctigaBay has been developing a high performance computing (HPC) system designed around its direct connected processor architecture, an innovative approach to massively parallel processing that directly links together processors, alleviating memory contention and interconnect bottlenecks found in cluster systems. The OctigaBay system, formerly known as the 12K, will be called the Cray XD1 product.

Early shipments of the Cray XD1 direct connect processor 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.

"With the addition of OctigaBay, Cray can provide purpose-built systems at a wide range of price points that allow customers to get more work done at a lower cost than they can with mainstream HPC systems today," said Cray Chairman and CEO Jim Rottsolk.

Previewed by OctigaBay in November 2003, the Cray XD1 high performance computer has an innovative architecture that embeds both a high speed interconnect and application accelerators to remove major bottlenecks and improve performance on real-world applications. Self-monitoring, self-healing and management features give administrators a highly reliable and easy-to-use system.

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. In October 2003, the company announced plans to offer a second product line to the capability and enterprise segments, based on the 40-teraops "Red Storm" massively parallel processing system Cray plans to deliver to Sandia National Laboratories in the second half of 2004. Both the "Red Storm" and Cray XD1 products will use the Advanced Micro Devices Inc. Opteron(TM) processors connected via a low-latency, high-bandwidth 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 the "Red Storm" and Cray XD1 products, government support and timing of supercomputer systems purchases, reliance on third-party suppliers, the possibility that Cray and OctigaBay may be 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, and general economic and market conditions. For a discussion of these and other risks, see Cray's Annual Report on Form 10-K filed with the SEC on March 12, 2004.

Cray is a registered trademark, and Cray X1 and Cray XD1 are trademarks, of Cray Inc. All other trademarks are the property of their respective owners.

CONTACT: Cray Inc.
Lori Kaiser, 206/701-2233 (Media)
lkaiser@cray.com
Victor Chynoweth, 206/701-2280 (Investors)
victorc@cray.com

SOURCE: Cray Inc.