PROSPECTUS Prospectus filed pursuant to Rule 424(b)(3)
Registration Statement No. 333-73864
CRAY INC.
100,000 shares of common stock
These shares of common stock are issuable upon exercise of the stock
purchase warrant owned by the selling shareholder listed on page 3.
The selling shareholder may sell the shares from time to time at fixed
prices, market prices, prices computed with formulas based on market prices, or
at negotiated prices, and may engage a broker or dealer to sell the shares. We
will not receive any proceeds from the sale of the shares, but we will bear the
costs relating to the registration of the shares.
Our common stock is traded on the Nasdaq National Market under the
symbol "CRAY." On December 7, 2001, the closing price for our common stock was
$2.05 per share.
-------------------------------
THE SHARES OFFERED IN THIS PROSPECTUS INVOLVE A HIGH DEGREE OF RISK.
YOU SHOULD CAREFULLY CONSIDER THE "FACTORS THAT COULD AFFECT FUTURE RESULTS"
CONTAINED IN OUR QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDING SEPTEMBER
30, 2001, THE "ADDITIONAL FACTORS THAT COULD AFFECT FUTURE RESULTS" IN CURRENT
REPORT ON FORM 8-K FILED ON NOVEMBER 28, 2001, AND SIMILAR DISCLOSURES IN OUR
FUTURE FILINGS MADE WITH THE SECURITIES AND EXCHANGE COMMISSION, WHICH ARE
INCORPORATED BY REFERENCE IN THIS PROSPECTUS, IN DETERMINING WHETHER TO PURCHASE
SHARES OF OUR COMMON STOCK.
-------------------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THE SHARES, OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
-------------------------------
The date of this prospectus is December 10, 2001.
1
TABLE OF CONTENTS
Section Page
------- ----
Our Business................................................................... 3
Selling Shareholder ........................................................... 3
Plan of Distribution .......................................................... 4
Legal Matters.................................................................. 5
Experts ....................................................................... 5
Limitation of Liability and Indemnification ................................... 6
Information Incorporated by Reference ......................................... 6
Available Information ......................................................... 7
You should rely only on information contained or incorporated by
reference in this prospectus. See "Information Incorporated by Reference" on
page 6. Neither we nor the selling shareholder has authorized any other person
to provide you with information different from that contained in this
prospectus.
The shares of common stock are not being offered in any jurisdiction
where the offering is not permitted.
2
OUR BUSINESS
We design, build, sell and service high-performance computer systems,
sometimes referred to as "supercomputers." Our executive offices are located at
Merrill Place, Suite 600, 411 First Avenue South, Seattle, WA 98104-2860, and
our telephone number is (206) 701-2000.
SELLING SHAREHOLDER
On March 28, 2001, Foothill Capital Corporation, the selling
shareholder, acquired a stock purchase warrant exercisable for an aggregate of
100,000 shares of our common stock at an initial exercise price of $1.76 per
share in connection with a credit agreement with us. The warrant is exercisable
until March 28, 2005. The number of shares issuable upon exercise and the
exercise price are subject to adjustment in the event of a stock dividend, a
split, subdivision or combination of our common stock or similar event. The
warrant may also be exercised by means of a cashless exercise feature in which
case we would not receive any proceeds upon exercise of the warrant.
As of December 7, 2001, Foothill did not hold any shares of our common
stock. All of the shares covered by this prospectus are being sold for the
account of Foothill. The shares covered by this prospectus include only the
shares of common stock issuable upon exercise of the warrant.
Selling Shareholder Shares Shares Being Ownership After
------------------- Owned Prior Offered Offering if All Shares
to Offering ------- Offered Hereby Are
----------- Sold
----
Shares Percent
------ -------
Foothill Capital
Corporation 100,000 (1) 100,000 (1) 0 0
--------------------
(1) Consists of 100,000 shares of common stock issuable upon the
exercise of the warrant.
Foothill has not had any material relationship with us or any of our
affiliates within the past three years.
In recognition of the fact that Foothill may wish to be legally
permitted to sell its shares when it deems appropriate, we have agreed with
Foothill to file with the SEC, under the Securities Act of 1933, a registration
statement on Form S-3, of which this prospectus forms a part, with respect to
the resale of the shares, and we have agreed to prepare and file such amendments
and supplements to the registration statement as may be necessary to keep the
registration statement effective until the earlier of (i) a period of 120 days
or (ii) Foothill has completed the distribution described in this prospectus.
3
PLAN OF DISTRIBUTION
We are registering the shares covered by this prospectus for Foothill.
Foothill or its pledgees, donees, transferees or other successors in interest
may sell the shares in the over-the-counter market or otherwise, at market
prices prevailing at the time of sale, at prices related to prevailing market
prices, or at negotiated prices. In addition, the shares may be sold by one or
more of the following methods:
- a block trade in which a broker or dealer so engaged will
attempt to sell the shares as agent but may position and
resell a portion of the block, as principal, in order to
facilitate the transaction;
- purchases by a broker or dealer, as principal, in a market
maker capacity or otherwise and resale by the broker or dealer
for its account pursuant to their prospectus;
- ordinary brokerage transactions and transactions in which a
broker solicits purchases;
- privately negotiated transactions;
- any combination of these methods of sale; or
- any other legal method.
We will pay the costs and fees of registering the shares, but Foothill
will pay any brokerage commissions, discounts or other expenses relating to the
sale of the shares. We and Foothill each have agreed to indemnify the other
against certain liabilities, including liabilities arising under the Securities
Act, that relate to statements or omissions in the registration statement of
which this prospectus forms a part.
Regulation M under the Securities Exchange Act of 1934 provides that
during the period that any person is engaged in the distribution, as so defined
in Regulation M, of our common stock, such person generally may not purchase
shares of our common stock. Foothill is subject to applicable provisions of the
Securities Act and the Securities Exchange Act of 1934 and the rules and
regulations thereunder, including, without limitation, Regulation M, which
provisions may limit the timing of purchases and sales of shares of our common
stock by Foothill. The foregoing may affect the marketability of our common
stock.
Foothill may negotiate and pay brokers or dealers commissions,
discounts or concessions for their services. In effecting sales, brokers or
dealers engaged by Foothill may allow other brokers or dealers to participate.
However, Foothill and any brokers or dealers involved in the sale or resale of
4
the shares may qualify as "underwriters" within the meaning of the Section
2(a)(11) of the Securities Act. In addition, the brokers' or dealers'
commissions, discounts or concessions may qualify as underwriters' compensation
under the Securities Act. If Foothill qualifies as an "underwriter," it will be
subject to the prospectus delivery requirements of section 5(b)(2) of the
Securities Act.
In addition to selling its shares under this prospectus, Foothill may:
- agree to indemnify any broker or dealer or agent against
certain liabilities related to the selling of the shares,
including liabilities arising under the Securities Act;
- transfer its shares in other ways not involving market makers
or established trading markets, including directly by gift,
distribution, or other transfer; or
- sell its shares under Rule 144 of the Securities Act rather
than under this prospectus, if the transaction meets the
requirements of Rule 144.
Upon notification by Foothill that any material arrangement has been
entered into with a broker or dealer for the sale of the shares through a block
trade, special offering, exchange distribution or secondary distribution or a
purchase by a broker or dealer, we will file a supplement to this prospectus, if
required, pursuant to Rule 424(b) under the Securities Act, disclosing the
material terms of the transaction.
LEGAL MATTERS
For purposes of this offering, Kenneth W. Johnson, our General Counsel,
is giving an opinion on the validity of the common shares. As of the date of
this prospectus, Mr. Johnson held 40,914 shares of our common stock, options to
purchase 270,000 shares of our common stock and warrants to purchase 21,637
shares of our common stock.
EXPERTS
The financial statements incorporated in this prospectus by reference
from our Annual Report on Form 10-K/A for the year ended December 31, 2000 have
been audited by Deloitte & Touche LLP, independent auditors, as stated in their
report, which is incorporated herein by reference. The statements of assets
acquired and liabilities assumed of the Cray Research business unit of Silicon
Graphics, Inc. as of March 31, 2000, and the related statements of revenue and
direct operating expenses for the years ended June 30, 1998 and 1999 and the
nine month period ended March 31, 2000 incorporated in this prospectus by
reference from Form 8-K/A of Cray Inc. filed on June 16, 2000 have been audited
by Deloitte & Touche LLP, independent auditors, as stated in their report (which
report expresses an unqualified opinion and includes an explanatory paragraph
referring to note 1 which describes the expense allocations by Silicon Graphics,
Inc), which is incorporated herein by reference.
5
These financial statements have been so incorporated herein by reference in
reliance upon the reports of such firm given upon their authority as experts in
accounting and auditing.
LIMITATION OF LIABILITY AND INDEMNIFICATION
Our Restated Articles of Incorporation provide that, to the fullest
extent permitted by the Washington Business Corporation Act, our directors will
not be liable for monetary damages to us or our shareholders, excluding,
however, liability for acts or omissions involving intentional misconduct or
knowing violations of law, illegal distributions or transactions from which the
director receives benefits to which the director is not legally entitled. Our
Restated Bylaws provide that we will indemnify our directors and, by action of
the Board of Directors, may indemnify our officers, employees and other agents
to the fullest extent permitted by applicable law, except for any legal
proceeding that is initiated by such directors, officers, employees or agents
without authorization of the Board of Directors.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to our directors, officers and controlling persons pursuant
to the foregoing provisions, or otherwise, we have been advised that, in the
opinion of the SEC, such indemnification is against public policy as expressed
in the Securities Act and is, therefore, unenforceable.
INFORMATION INCORPORATED BY REFERENCE
The Securities and Exchange Commission allows us to incorporate by
reference our publicly-filed reports into this prospectus, which means that
information included in those reports is considered part of this prospectus.
Information that we file with the Securities and Exchange Commission after the
date of this prospectus will automatically update and supersede the information
contained in this prospectus. We incorporate by reference the following
documents filed with the Securities and Exchange Commission and any future
filings made with the Securities and Exchange Commission under sections 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934:
1) Our annual report on Form 10-K/A for the year ended December 31, 2000,
as filed on September 17, 2001;
2) Our quarterly reports on Form 10-Q for the quarters ended March 31,
2001, June 30, 2001, and September 30, 2001;
3) Our definitive proxy statement, as filed with the Securities and
Exchange Commission on April 9, 2001;
4) Our current report on Form 8-K for an event of November 6, 2001, as
filed on November 28, 2001;
6
5) Our current report on Form 8-K for an event of October 1, 2001 as filed
on October 10, 2001;
6) Our current report on Form 8-K for an event of May 10, 2001, as filed
on May 14, 2001;
7) Our current report on Form 8-K for an event of April 3, 2001, as filed
on April 13, 2001;
8) Our current report on Form 8-K for an event of February 7, 2001, as
filed on February 15, 2001;
9) Our current report on Form 8-K/A for an event of December 15, 2000, as
filed on July 27, 2001;
10) Our current report on Form 8-K for an event of April 3, 2000, as filed
on April 5, 2000 and amended on June 16, 2000; and
11) The description of our common stock as described in our registration
statement on Form SB-2, registration no. 33-95460-LA, including any
amendment or report filed for the purpose of updating the description,
as incorporated by reference in our registration statement on Form 8-A,
registration no. 0-26820, including the amendment on Form 8-A/A.
We will furnish without charge to you, on written or oral request, a
copy, excluding exhibits, of any or all of the documents incorporated by
reference. You should direct any requests for documents to Investor Relations,
Cray Inc., 411 First Avenue South, Suite 600, Seattle, Washington 98104,
telephone (206) 701-2000.
The information relating to us contained in this prospectus is not
comprehensive and should be read with the information contained in the
incorporated documents.
AVAILABLE INFORMATION
This prospectus is part of a registration statement on Form S-3 that we
filed with the SEC. Certain information in the registration statement has been
omitted from this prospectus in accordance with SEC rules.
We file annual, quarterly and special reports and other information
with the SEC. You may read and copy the registration statement and any other
document that we file at the SEC's public reference rooms located at Room 1024,
Judiciary Plaza, 450 Fifth Street N.W., Washington, D.C. 20549; 233 Broadway,
New York, New York 10048; and Citicorp Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661. Please call the SEC at 1-800-SEC-0330 for further
information on the public reference rooms. Our SEC filings are also available to
you free of charge at the SEC's web site at http://www.sec.gov.
7
Statements contained in this prospectus as to the contents of any contract or
other document referred to are not necessarily complete. You should refer to the
copy of such contract or other document filed as an exhibit to the registration
statement
8