GOVERNMENT

SEATTLE WA -- Cray Inc. (Nasdaq NM: CRAY) today announced that new president and CEO Michael P. Haydock, who joined the company from IBM on Oct. 1, has realigned operations to strengthen future financial performance and supercomputing leadership. The company expects a profitable 2002 following the realignment, which includes lower overall R&D expenditures and a workforce reduction, along with several strategic new hires and a reordering of senior management responsibilities to drive planned revenue growth. "Our strategy is to evolve quickly from a platform-based company to a solutions-based company," Haydock said. "To do that, we will focus R&D investment on one industry-leading product line, offer additional computing platforms through OEM relationships and customer-funded initiatives, and surround our offerings with professional services beyond the world-class maintenance that currently provides a substantial portion of our revenue. "By focusing R&D investment on the Cray SV(TM) product line, we leverage our resources to address our largest market opportunity. We also free up valuable resources to pursue additional revenue opportunities through our new Professional Services group, with its arsenal of targeted HPC solutions involving the Cray MTA-2(TM) series, Cray SX-6 series and cluster platforms. We expect the successful introduction of the Cray SV2(TM) solution to drive strong product revenues and accelerating profitability in 2003 and beyond. These are key goals we are committed to achieving," he added. Details of the Strategic Realignment * Single Product Line. The company will focus R&D investment on the Cray SV product line, named "Supercomputer of the Year" for the past three years. The Cray SV1ex(TM) series began shipping on Nov. 26, 2001. The Cray SV2 series (project name), scheduled to begin shipping in the second half of 2002, is expected to be the world's most powerful supercomputer product. It will be followed by the code-named Cray SV2e(TM) series. Cray SV-series systems include powerful capabilities for the growing bioinformatics market. * Targeted High-Performance Computing (HPC) Solutions. Because no single computer architecture excels on all applications, Cray will offer additional HPC solutions in conjunction with OEM relationships and customer-funded initiatives. The Cray SX-6 series of high-efficiency, high-performance vector supercomputers is now available through an OEM agreement with NEC, with initial orders expected in first-half 2002. The revolutionary Cray MTA-2 series of multithreaded architecture supercomputers is scheduled to begin shipping by Dec. 31, 2001, with a second customer shipment slated for first-quarter 2002. Cray also expects to offer OEM-based cluster solutions. * Professional Services. Expanding on the company's sterling reputation for service, Cray has formed a Professional Services organization and hired Wayne Kugel from IBM Global Services to lead this organization. The new organization recently won its first order totaling nearly $1 million from a high-profile industrial firm, for remote use of Cray supercomputing cycles and related services. * Cray Research. Cray Inc., the world's only company fully dedicated to supercomputing, ranked number one in the November 2001 ratings of supercomputer performance by independent industry analyst firm IDC. The company has formed a new unit, called Cray Research, to focus the firm's intellectual capital on technology innovation for future generations of industry-leading supercomputers. Cray Research is directed by the company's senior technologists, Burton Smith and Steve Scott, who will engage other company resources as needed. Senior Management Realignment and Strategic New Hires * Doug Ralphs, formerly corporate controller, has been promoted to vice president finance and chief financial officer. Ken Johnson, who previously served as general counsel and CFO, will remain general counsel. * Dave Kiefer, formerly vice president of hardware development, now oversees product hardware development, software development and manufacturing. * Jerry Loe, formerly vice president of worldwide service, is now vice president of worldwide sales and service. Reporting to him are Rene Copeland (Americas Sales), Barry Utting (Europe, Middle East & Africa Sales), Dick Russell (Japan/Asia Pacific Sales), Joel Newsom (Service) and Wayne Kugel (Professional Services). * Lori Kaiser, formerly director of strategic planning, is now vice president of marketing and strategic planning. * By early January, Cray expects to announce the persons hired for two new positions: chief information officer, and head of strategic implementation initiatives. * Workforce reduction. Approximately 50 employees are being informed this week that their positions are being eliminated. Severance and outplacement assistance will be provided to affected U.S. employees. Policies for affected non-U.S. employees vary by country. "Customers and prospects consistently tell us that Cray has no equal for supercomputing technical leadership. They want us to continue taking the smart technology risks that enable them to achieve breakthroughs not possible with solutions from other vendors," said Haydock. "To succeed financially, we need to surround our technical risks with conservative management processes." For more information visit www.cray.com