From: "Carol Kleinfeld" Date: Fri, 16 Feb 1996 11:05:53 -0600 To: all-cri@cray.com Subject: Cray Sells PC Facility Mime-Version: 1.0 Cray/Media: Steve Conway, 612/683-7133 Cray/Financial: Brad Allen, 612/683-7395 Johnson/Matthey: Chris Clark, 011441712698414 CRAY ANNOUNCES SALE OF PRINTED CIRCUIT FACILITY TO UK FIRM JOHNSON MATTHEY Sale Is Part of Cray's Streamlining Strategy, Johnson Matthey Expected To Expand Capabilities of Facility EAGAN, Minn., Feb. 16, 1996 -- Cray Research, Inc. (NYSE:CYR) announced today the sale of its inhouse printed circuit board facility, 234 Cashman Drive, Chippewa Falls, Wisc., to UK firm Johnson Matthey, a world leader in materials for high technology applications. Cray said the sale was for $40 million and that as part of a separate supplier agreement, Johnson Matthey will continue production of high-technology printed circuit boards for Cray, while also expanding the facility's production capabilities by supplying other customers. This acquisition is part of Cray's efforts to streamline its business operations and improve its cost base. According to Irene Qualters, executive vice president of Cray's Supercomputing Systems unit, the Cray printed circuit board facility has been operating at less than its capacity and selling it to Johnson Matthey will allow the center to increase its volumes, thus driving down costs to Cray for parts provided by Johnson Matthey. Qualters said that under the terms of the separate supply agreement, Johnson Matthey will provide high- performance printed circuit boards to Cray, which maintains Cray's ability to effectively ship computer systems from its Wisconsin operation where it manufactures supercomputer products. Cray's Beaverton, Oregon, facility manufactures Cray's business server products and is not affected by this agreement. "Cray is on the move to change its business model, which in the past was extremely verticalized and integrated," said Qualters. "To effectively compete in today's computer market, we must commoditize and standardize our products, implement other firms' leading-edge technology, add unique Cray value and bring this high-performing Cray solution to the marketplace faster and cheaper than before. This sale to Johnson Matthey is a strong signal to our effectively making that change." According to David Davis, Johnson Matthey chairman and chief executive officer, the purchase of the Cray facility is aligned with Johnson Matthey's new strategy to broaden its business. In September of 1995, Johnson Matthey announced the acquisition of ACI, Minneapolis, a leader in both high- technology printed circuit board production and the emerging field of plastic laminate packaging for semi-conductors. The Cray printed circuit facility is complementary to ACI's operations and will provide the needed manufacturing capacity to meet the additional demand in this new area of Johnson Matthey's business. According to Davis, the Cray facility is ideally designed to manufacture plastic laminate packages for the semiconductor industry, a new technology still in its early stages. As traditional ceramic packaging is replaced by plastic, the market for plastic laminated semiconductors is expected to grow substantially in the next few years. "By our estimation, this Cray operation is possibly the most advanced printed circuit board manufacturing facility in the U.S., with a skilled workforce and state-of-the-art equipment," said Davis. "We are eager to take on the new facility and begin working with the employees to expand the operation." Cray said that about 350 employees work in the printed circuit board facility and that as part of the agreement, these employees will become Johnson Matthey employees. "Johnson Matthey acquiring this facility is great news for Cray and for the Chippewa Falls community," said Qualters. "Johnson Matthey intends to expand the capabilities of the printed circuit facility, which will mean more diverse business coming into Chippewa Falls." Completion is expected to take place in about 30 days subject to normal regulatory approvals and other conditions precedent. Cray Research provides the leading high-performance computing tools and services to help solve customers' most challenging problems. ###