PROSPECTUS Filed pursuant to Rule 424(b)(3)
Registration No. 333-83521
CRAY INC.
7,836,961 shares of Common Stock
These shares of Common Stock are being offered and sold from time to
time by certain of our current shareholders.
The selling shareholders 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. For
additional information on the selling shareholders' possible methods of sale,
you should refer to the section of this prospectus entitled "Plan of
Distribution" on page 7. We will not receive any proceeds from the sale of the
shares, but 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 June 10, 2002, the closing price for our Common Stock was
$4.27 per share.
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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 ENDED MARCH 31,
2002, AND 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.
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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.
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The date of this Prospectus is June 10, 2002.
TABLE OF CONTENTS
Section Page
------- ----
Our Business .................................................... 3
Selling Shareholders ............................................ 3
Plan of Distribution ............................................ 7
Legal Matters ................................................... 8
Experts ......................................................... 9
Limitation of Liability and Indemnification ..................... 9
Information Incorporated by Reference ........................... 9
Available Information ........................................... 11
You should rely only on information contained or incorporated by
reference in this prospectus. See "Information Incorporated by Reference" on
page 9. Neither we nor the selling shareholders have 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 and sell 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 SHAREHOLDERS
The following table sets forth certain information as of June 10, 2002,
regarding the selling shareholders ownership of our common stock and as adjusted
to reflect the selling shareholders ownership of out common stock if all shares
covered by this prospectus are sold. The shares covered by this prospectus
include:
- shares of common stock issued to certain of the selling shareholders in a
private placement in June 1999;
- shares of common stock issuable upon exercise of warrants issued to
certain of the selling shareholders as part of the private placement in
June 1999 for no additional consideration. The warrants are exercisable
only for cash, certain warrants expire on June 21, 2002, and currently
have an exercise price of $3.92 per share, and other warrants expire on
June 21, 2004, and currently have an exercise price of $3.00 per share;
- shares of common stock issuable upon exercise of warrants issued to
certain of the selling shareholders as payment for services and fees in
connection with the June 1999 private placement;
- shares of common stock issuable upon exercise of warrants issued to
certain of the selling shareholders in exchange for their agreement to
eliminate their rights to receive additional shares of common stock
pursuant to certain "reset" rights granted by us;
- shares of common stock, and shares of common stock issuable upon exercise
of warrants, issued to certain selling shareholders in June 1999 in
exchange for our 8% subordinated convertible promissory notes and
warrants held thereby; and
- shares of common stock issuable upon exercise of a warrant and conversion
of a promissory note issued to Compunetics, Inc., a selling shareholder
and one of our suppliers, as payment for parts and services.
3
The selling shareholders' percentage of ownership after this offering is
based on 45,655,702 shares of common stock that were outstanding as of June 10,
2002, and assumes no exercise of any outstanding options or warrants after June
10, 2002.
Ownership After Offering
if All Shares Offered
Shares Owned Shares Hereby Are Sold
Prior to Warrants Being -------------------------
Selling Shareholder Offering Owned Offered Shares Percent
------------------- ------------ ------------ ------- ------ -------
Douglas D. Adkins 21,642 21,642 43,284 -0- -0-
Ramsey M. Al-Salam -0- 1,941 1,941 -0- -0-
Robert M. Arnold -0- 21,628 21,628 -0- -0-
Paul Asnes -0- 3,000 3,000 -0- -0-
Banca del Gottardo 946,000 1,305,923 2,251,923 -0- -0-
Robert J. Baynham 1,941 1,941 3,882 -0- -0-
Robert W. Bellano and 21,186 21,186 42,372 -0- -0-
Suzanne Bellano
Harvey Bibicoff -0- 25,000 25,000 -0- -0-
Edward W. Bulchis 8,195 8,195 16,390 -0- -0-
James A. Capwill 21,186 21,186 42,372 -0- -0-
David V. Carlson 2,000 4,745 6,745 -0- -0-
Castle Creek Technology -0- 1,059,322 1,059,322 -0- -0-
Partners, LLC
Compunetics, Inc. -0- 14,829 14,829 -0- -0-
David N. Cutler 26,927 21,567 43,134 5,360 *
Christopher J. Daly-Watson 216 216 432 -0- -0-
James J. Darr -0- 21,186 21,186 -0- -0-
DM Management, LLC -0- 130,000 130,000 -0- -0-
Elliott Associates, L.P. -0- 105,932 105,932 -0- -0-
Jack Erlanger -0- 41,000 41,000 -0- -0-
Meryl Erlanger -0- 3,000 3,000 -0- -0-
Daniel J. Evans 31,143 10,818 21,636 20,325 -0-
S. Marcus Finkle -0- 60,000 60,000 -0- -0-
William T. Frantz 1,822,007 217,344 434,688 1,604,663 3.5
Friedlander International -0- 1,059,322 1,059,322 -0- -0-
Limited
Friedlander Limited -0- 105,932 105,932 -0- -0-
Partnership
Richard J. Garibaldi -0- 31,780 31,780 -0- -0-
Whitney Gettinger TTEE -0- 10,000 10,000 -0- -0-
U/A/D 1/15/88 FBO
James Gettinger
4
Harpel Family Partnership -0- 13,983 13,983 -0- -0-
Harpel International Ltd. -0- 13,983 13,983 -0- -0-
Harpel Partners, L.P. -0- 71,187 71,187 -0- -0-
Harpel Select Growth, L.P. -0- 31,779 31,779 -0- -0-
Harpel Ventures Partners -0- 12,712 12,712 -0- -0-
John B. Jacobs 10,784 10,784 21,568 -0- -0-
Koch Industries, Inc. -0- 526,289 526,289 -0- -0-
Laura M. Limber 36,017 36,017 72,034 -0- -0-
David J. Maki 1,510 1,510 3,020 -0- -0-
Alan O. Maxwell 266,260 -0- 21,590 244,670 *
James A. Maxwell & -0- 5,000 5,000 -0- -0-
Lori Maxwell
Maxwell Family LLC -0- 11,590 11,590 -0- -0-
Paul T. Meikeljohn 3,019 3,019 6,038 -0- -0-
Merrill Place LLC 120,746 34,771 69,542 85,975 *
Montrose Investments Ltd. -0- 635,593 635,593 -0- -0-
Karen G. Olah -0- 20,000 20,000 -0- -0-
Timothy R. Pask -0- 52,966 52,966 -0- -0-
RBC Dominion -0- 11,186 11,186 -0- -0-
Securities Inc. ITF
George W. Schiele
Elizabeth Reisen Executrix 12,009 3,603 15,612 -0- -0-
Elizabeth Reisen -0- 2,468 2,468 -0- -0-
Investment Ltd.
Reisen Family Investment -0- 9,183 9,183 -0- -0-
Partnership
Ruki D. Renov -0- 52,966 52,966 -0- -0-
George W. Schiele 186 -0- 186 -0- -0-
Terisa M. Spencer & -0- 5,000 5,000 -0- -0-
James W. Spencer
Esther Stahler -0- 15,890 15,890 -0- -0-
Stoel Rives Retirement 40,089 21,637 43,274 18,452 *
Plan FBO Kenneth W. Johnson
Strong River 189,000 211,864 211,864 189,000 *
Investments, Inc.
Templeton Holdings Ltd. 2,000 10,000 12,000 -0- -0-
John W. Titcomb, Jr. 221,564 21,623 43,246 199,941 *
Gary Voigt -0- 31,780 31,780 -0- -0-
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WBW Trust Number One 402,300 43,385 86,770 358,915 *
Westgate -0- 105,932 105,932 -0- -0-
International, L.P.
--------
* Less than 1%
Warrants covering 4,887,185 shares expire on June 21, 2002, warrants
covering 14,829 shares expire on March 31, 2004 and warrants covering 1,454,321
shares expire on June 21, 2004.
All of the shares of common stock shown as owned prior to and after this
offering may be sold under Rule 144(k). In addition, the shares of common stock
listed as owned by Strong River Investments, Inc., after this offering have been
registered for offer and sale by this selling shareholder in a Registration
Statement on Form S-3, Registration No. 333-30644.
Banca del Gottardo holds other warrants for 241,111 shares; the shares
of Common Stock underlying these other warrants have been registered for offer
and sale by Banca del Gottardo in Registration Statement on Form S-3,
Registration No. 333-76223. Banca del Gottardo has represented to us that it
purchased our common stock and warrants for its own account and on behalf of its
private banking and other clients, and that no client or group of affiliated
clients owns more than one percent of our outstanding common stock.
The shares of common stock listed as owned by David N. Cutler, Daniel J.
Evans, John W. Titcomb, Jr., and Stoel Rives Retirement Plan FBO Kenneth W.
Johnson after this offering excludes shares issuable upon exercise of
outstanding options that are or will be fully exercisable by Messrs. Cutler,
Evans, Titcomb, and Johnson within sixty days after the date of this prospectus.
Except as set forth below, none of the selling shareholders has held any
positions or office or had any other material relationship with us or any of our
affiliates within the past three years:
- David N. Cutler and Daniel J. Evans are two of our directors; John W.
Titcomb, Jr. was one of our directors until February 2000.
- Kenneth W. Johnson, the beneficiary of the Stoel Rives Retirement Plan
account listed as a selling shareholder, is one of our executive officers.
- William T. Frantz beneficially owned more than ten percent, and each of Alan
O. Maxwell and the WBW Trust Number One beneficially owned more than five
percent, of our outstanding common stock within the past three years. On
February 2, 2000, Castle Creek Technology Partners LLC filed a Schedule 13
G/A, indicating that it had beneficial ownership of 1,552,744 shares, or
6.2%, of our outstanding common stock. None of these holders are currently
beneficial owners of more than five percent of our outstanding common stock.
6
In recognition of the fact that the selling shareholders may wish to be
legally permitted to sell their shares when they deem appropriate, we have
agreed with the selling shareholders to file with the Securities and Exchange
Commission ("SEC"), under the Securities Act of 1933 (the "Securities Act"), a
registration statement on Form S-3, of which this prospectus forms a part, with
respect to the resale of the shares, and 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 shares are no longer
required to be registered for sale by the selling shareholders.
PLAN OF DISTRIBUTION
We are registering the shares covered by this prospectus for the selling
shareholders. As used in this prospectus, "selling shareholders" includes the
pledgees, donees, transferees or others who may later hold the selling
shareholders' interest. We will pay the costs and fees of registering the
shares, but the selling shareholders will pay any brokerage commissions,
discounts or other expenses relating to the sale of the shares. We and the
selling shareholders 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.
The selling shareholders 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
selling shareholders may sell some or all of their shares through:
- a block trade in which a broker-dealer may resell a portion of the block, as
principal, in order to facilitate the transaction;
- purchases by a broker-dealer, as principal, and resale by the broker-dealer
for its account; or
- ordinary brokerage transactions and transactions in which a broker solicits
purchases.
When selling the shares, the selling shareholders may enter into hedging
transactions. For example, the selling shareholders may:
- enter into transactions involving short sales of the shares by
broker-dealers;
- sell shares short themselves and redeliver such shares to close out their
short positions;
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- enter into option or other types of transactions that require the selling
shareholder to deliver shares to a broker-dealer, who will then resell or
transfer the shares under this prospectus; or
- loan or pledge the shares to a broker-dealer, who may sell the loaned shares
or, in the event of default, sell the pledged shares.
The selling shareholders may negotiate and pay broker-dealers
commissions, discounts or concessions for their services. Broker-dealers engaged
by the selling shareholders may allow other broker-dealers to participate in
resales. However, the selling shareholders and any broker-dealers involved in
the sale or resale of the shares may qualify as "underwriters" within the
meaning of the Section 2(a)(11) of the Securities Act. In addition, the
broker-dealers' commissions, discounts or concessions may qualify as
underwriters' compensation under the Securities Act. If the selling shareholders
qualify as "underwriters," they will be subject to the prospectus delivery
requirements of Section 5(b)(2) of the Securities Act.
In addition to selling their shares under this prospectus, the selling
shareholders may:
- agree to indemnify any broker-dealer or agent against certain
liabilities related to the selling of the shares, including
liabilities arising under the Securities Act;
- transfer their shares in other ways not involving market makers or
established trading markets, including directly by gift,
distribution, or other transfer; or
- sell their 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 a selling shareholder that any material arrangement
has been entered into with a broker-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. In addition, we will file a
supplement to this prospectus if a selling shareholder notifies us that a donee
or pledgee intends to sell more than 500 shares.
LEGAL MATTERS
The validity of the common stock we are offering will be passed upon by
Kenneth W. Johnson, our Vice President -- Legal and General Counsel. As of the
date of this prospectus, Mr. Johnson beneficially held 40,914 shares of our
common stock, options to purchase 310,000 shares of our common stock and
warrants to purchase 21,637 shares of our common stock.
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EXPERTS
The financial statements incorporated in this prospectus by reference
from our Annual Report on Form 10-K for the year ended December 31, 2001, have
been audited by Deloitte & Touche LLP, independent auditors, as stated in their
report, which is incorporated herein by reference, and have been so incorporated
in reliance upon the report 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
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 our directors, officers, employees or agents without
authorization of the board of directors.
We have been advised that, in the opinion of the Securities and Exchange
Commission, indemnification for liabilities arising under the Securities Act of
1933 for directors, officers and controlling persons is against public policy as
expressed in the Securities Act of 1933 and is not enforceable.
INFORMATION INCORPORATED BY REFERENCE
The SEC 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
SEC subsequent to the date of this prospectus will automatically update and
supersede the information contained in this prospectus. We incorporate by
reference the documents listed below and any future filings made with the SEC
under Sections 13(a), 13(c), 14 or 15(d) of the Shares Exchange Act of 1934
until we sell all of the shares of common stock and/or common stock purchase
warrants.
The following documents filed with the SEC are incorporated by reference
in this prospectus:
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- Our Annual Report on Form 10-K for the year ended December 31, 2001;
- Our Quarterly Report on Form 10-Q for the quarter ended March 31, 2002;
- Our Definitive Proxy Statement for the 2002 Annual Meeting of Shareholders,
as filed with the SEC on April 17, 2002;
- Our Current Report on Form 8-K for the event of February 15, 2002, as filed
on February 20, 2002;
- Our Current Report on Form 8-K for the event of March 4, 2002, as filed on
March 5, 2002; and
- The description of our common stock set forth in our Registration Statement
on Form SB-2 (Registration No. 33-95460-LA), including any amendment or
report filed for the purpose of updating such description, as incorporated
by reference in our Registration Statement on Form 8-A (Registration No.
0-26820), including the amendment thereto on Form 8-A/A.
We will furnish without charge to you, on written or oral request, a
copy of any or all of the documents incorporated by reference, other than
exhibits to such documents. You should direct any requests for documents to
Investor Relations, Cray Inc., 411 First Avenue South, Suite 600, Seattle,
Washington 98104-2860, telephone (206) 701-2000.
The information relating to us contained in this prospectus is not
comprehensive and should be read together with the information contained in the
incorporated documents. 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.
You should rely only on information contained or incorporated by
reference in this prospectus. We have not authorized any other person to provide
you with information different from that contained in this prospectus.
You should not assume that the information contained in this prospectus
or the documents incorporated by reference is accurate only as of any date other
the date on the front of this prospectus or those documents.
10
AVAILABLE INFORMATION
This prospectus is part of a registration statement on Form S-3 that we
filed with the Securities and Exchange Commission. Information in the
registration statement has been omitted from this prospectus as permitted by the
Securities and Exchange Commission's 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 room located at Room 1024, Judiciary
Plaza, 450 Fifth Street N.W., Washington, D.C. 20549. 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.
Statements contained in this prospectus about the contents of any
contract or other document referred to describe only those portions of the
contract or document which are material. You should refer to the copy of the
contract or other document filed as an exhibit to the registration statement.
11