CRAY TO ACQUIRE OCTIGABAY
Positions Cray To Address Entire High Performance Computing Market
SEATTLE, WA and VANCOUVER, BC, February 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
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 announced.”
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, February 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™ 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‘
processors connected via a low-latency, high-bandwidth, three-dimensional interconnect network
based on HyperTransport™ 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
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