GOVERNMENT

DARPA Milestone Passed, Goodwill Impairment Recorded and Additional Notes Repurchased --

The latest upgrade to the Cray XT5 "Jaguar" supercomputer at ORNL has increased the system's computing power to a peak of 1.64 petaflops, making Jaguar the world's first petaflops system dedicated to open research. Scientists have already used the newly upgraded Jaguar to complete an unprecedented superconductivity calculation that achieved a sustained performance of more than 1.3 petaflops.

The project to build a petaflops machine was completed on time, on budget and exceeding the original scope. The Jaguar petaflops system is unique in the balance it represents among speed, power, and other elements essential to scientific discovery. Several design choices make it an excellent machine for computational sciences -- including unique Cray ECOphlex liquid cooling, more memory by almost a factor of three than any other machine, more I/O bandwidth, and the high-speed Cray SeaStar network developed specifically for very-high-performance computing.

"We are extremely pleased to announce the acceptance of 'Jaguar,' the first system in the world to achieve sustained petaflops performance on a real-world application," said Cray CEO, Peter Ungaro. "Thanks to the hard work and dedication of many people across Oak Ridge, the U.S. Department of Energy and Cray, the scientific community now has access to one of the most powerful computing systems in the world, leveraging unique Cray technology to open new possibilities for discovery and major scientific breakthroughs."

During the fourth quarter of 2008, as anticipated, the Company was also notified that it passed Milestone 4 in the amended agreement covering Phase III of the Defense Advanced Research Projects Agency's ("DARPA") High Productivity Computing Systems program.