AEROSPACE

SEATTLE, WA -- Global supercomputer leader Cray Inc. (Nasdaq:CRAY) today reported financial results for the third quarter ended September 30, 2001. For the third quarter ended September 30, 2001, Cray Inc. revenues were $29.4 million, compared with revenues of $33.7 million for the third 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 $1.3 million incurred during the quarter, the company reported a pro-forma net loss for third quarter 2001 of $7.7 million, or ($0.19) per share. Including the amortization of goodwill and intangible assets and restructuring charge, the company's net loss for the third quarter was $10.8 million, or ($0.26) per share. The $1.3 million restructuring charge was primarily related to severance expenses in connection with personnel reductions. For the third quarter 2001, the company's EBITDA (earnings before interest, taxes, depreciation and amortization) loss was $4.6 million. For the nine-month period ended September 30, 2001, the company reported revenues of $107.5 million, compared with revenues of $84.7 million for the prior-year period. Excluding amortization of goodwill and intangible assets related to the acquisition of the Cray Research business operations and the $1.3 million restructuring charge, the company reported a pro-forma net loss of $11.3 million, or ($0.28) per share, compared to a pro-forma net loss of $8.1 million, or ($0.26) per share in the year-ago period. Including the non-cash interest charges and amortization of goodwill and intangible assets, the company reported a net loss of $17.9 million, or ($0.45) per share for the nine months ended September 30, 2001. For the nine months ended September 30, 2001, the company's EBITDA (earnings before interest, taxes, depreciation and amortization) was $328,000. Accounts receivable was $31.9 million at September 30, 2001. Approximately 13 percent, or $4.2 million, of these receivables are non-revenue, pass-through billings. Day's sales outstanding for the current quarter calculated as gross accounts receivables less pass-through is 85 days. Third Quarter 2001 Highlights "Our third quarter financial results were affected by the factors we communicated at the start of the quarter: primarily a delay in the availability of the enhanced memory for our Cray SV1ex product, and the slowdown in the general economy," said Jim Rottsolk, Cray Inc. chairman. "In partnership with one of our parts suppliers, we are confident we will soon resolve the remaining SV1ex issue and begin shipping this product. Our Cray MTA-2 and Cray SV2 systems are on schedule for initial shipments in, respectively, the end-of-year 2001 timeframe and the second half of 2002. Under our previously announced OEM agreement with NEC, we also expect initial availability of the Cray SX-6 product in the fourth quarter of 2001, with general availability starting in the first quarter of 2002. We are seeing advance interest in this product in both the U.S. and Canada. Finally, we are in the process of refocusing our plans for the Alpha-based Cray SuperCluster product following news of the planned merger between Compaq and Hewlett Packard. This will result in a refocusing of this initiative to support higher-potential value-added professional services being requested by our customers." "We also strengthened our management team during the third quarter with several previously announced executive appointments. The most significant addition was Michael P. Haydock, an ex-IBM senior executive who joined Cray Inc. as president and CEO on October 1, 2001. In his first month here, he has circled the globe to meet with employees, customers, government officials and others. Mike's strong operating and strategic marketing experience is already making a major difference as we update our detailed plans for 2002 and beyond." "As a former Cray supercomputer user, I am very excited to be working at the firm that embodies the spirit of Seymour Cray, and is synonymous with supercomputing," said Haydock. "Since joining the company a month ago, I have visited our main locations around the world and a growing number of our customers, as well as government officials. Everywhere I go, people want Cray to win. I am confident there is a substantial opportunity for supercomputing solutions that no vendor except Cray has the talent and experience to address. We have the right people. What we need is sharper focus and better discipline, so we can pursue profitable growth with predictability."