UK's EPSRC Selects Cray Inc. to Negotiate Multi-Year Contract for HECToR Procurement

Global supercomputer leader Cray Inc. (NASDAQ: CRAYD) today announced that the Engineering and Physical Sciences Research Council (EPSRC), the main funding agency in the United Kingdom for research in engineering and the physical sciences and the managing agent on behalf of the other Research Councils for High Performance Computing, has selected Cray as the preferred bidder to provide the computing hardware for the Councils' next generation national high performance computing service for the UK academic community. This project, commonly referred to as HECToR, which stands for High End Computing Terascale Resources, is expected to operate for up to six years and have an initial theoretical peak capability of over 50 teraflops. The contract is expected to provide for customer options for additional capability in the future.

Contract negotiations are ongoing and an official announcement will be made once the contract has been completed, which is expected to occur in late 2006. The full scope, conditions, options and other contract terms are subject to the negotiation process. The timing of revenue recognition is uncertain but would not begin before 2007.

The Council also is in the process of selecting third parties to provide the other aspects of the project: Service Provision and Computational Science and Engineering support. The selection of the service provider to supply the facilities for, and operation of, the supercomputer is currently a prerequisite to the Cray agreement. No assurance can be given that the negotiations will be completed successfully by Cray.

About EPSRC

The Engineering and Physical Sciences Research Council is the UK's main agency for funding research in engineering and the physical sciences. The EPSRC invests more than £500 million a year in research and postgraduate training, to help the nation handle the next generation of technological change. The areas covered range from information technology to structural engineering, and mathematics to materials science. This research forms the basis for future economic development in the UK and improvements for everyone's health, lifestyle and culture. EPSRC also actively promotes public awareness of science and engineering. EPSRC works alongside other Research Councils with responsibility for other areas of research. The Research Councils work collectively on issues of common concern via Research Councils UK. For more information about the HECToR project at EPSRC, go to www.epsrc.ac.uk/ResearchFunding/FacilitiesAndServices/HighPerformanceComputing/HECToR .

About Cray Inc.

As the global leader in supercomputing, Cray provides highly advanced supercomputing systems and world-class services and support to government, industry and academia. Cray's technology enables scientists and engineers to achieve remarkable breakthroughs by accelerating performance, improving efficiency and extending the capabilities of their most demanding applications. Cray's Adaptive Supercomputing vision will result in innovative next-generation products that integrate diverse processing technologies into a unified architecture, allowing customers to surpass today's limitations and meeting the market's continued demand for realized performance. For more information, go to www.cray.com .

Safe Harbor Statement

This press release contains forward-looking statements. There are certain factors that could cause Cray's execution to differ materially from those anticipated by the statements above. These include whether a final contract acceptable to all interested parties can be negotiated successfully, the timing of product upgrades, the timing and level of government research and development funding and supercomputer system purchases, the timing of customer acceptances for products shipped, reliance on third-party suppliers including delays in availability of parts from suppliers, technical challenges of developing high performance computing systems including potential delays in development projects, the effect of new European environmental regulations on product shipments, the successful porting of application programs to Cray computer systems, 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 "Risk Factors" in Cray's most recent Quarterly Report on Form 10-Q filed with the SEC.

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

Cray/Media: Steve Conway 651/592-7441 sttico@aol.com Investors: Victor Chynoweth 206/701-2094 vic@cray.com