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<P align="center" style="font-size: 14pt"><B>UNITED STATES<BR>
SECURITIES AND EXCHANGE COMMISSION<BR>
<FONT style="font-size: 12pt">Washington, D.C. 20549
</FONT></B>

<P align="center" style="font-size: 18pt"><B>FORM 8-K</B>

<P align="center" style="font-size: 12pt"><B>CURRENT REPORT<BR>
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934</B>

<P align="center" style="font-size: 10pt"><B>Date of Report (Date of earliest event reported): November 10, 2008</B>

<P align="center">

<P align="center" style="font-size: 24pt"><B>CRAY INC.<BR></B>
<FONT style="font-size: 10pt">(Exact name of registrant as specified in its charter)
</FONT>

<TABLE border="0" width="100%" cellspacing="0" cellpadding="0" style="font-size: 10pt; text-align: center">
<TR>
    <TD width="32%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="33%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="32%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD style="border-bottom: 1px solid #000000"><B>Washington</B></TD>
    <TD>&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000"><B>0-26820</B></TD>
    <TD>&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000"><B>93-0962605</B></TD>
</TR>
<TR valign="top">
    <TD>(State or other Jurisdiction of Incorporation)</TD>
    <TD>&nbsp;</TD>
    <TD>(Commission File Number)</TD>
    <TD>&nbsp;</TD>
    <TD>(IRS Employer Identification No.)</TD>
</TR>
</TABLE>

<TABLE border="0" width="100%" cellspacing="0" cellpadding="0" style="font-size: 10pt; text-align: center">
<TR>
    <TD width="49%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="49%">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD style="border-bottom: 1px solid #000000"><B>411 First Avenue South, Suite 600<BR>Seattle, WA<BR></B></TD>
    <TD>&nbsp;</TD>
    <TD style="border-bottom: 1px solid #000000"><B>98104-2860</B></TD>
</TR>
<TR valign="top">
    <TD>(Address of Principal Executive Offices)</TD>
    <TD>&nbsp;</TD>
    <TD>(Zip Code)</TD>
</TR>
</TABLE>

<P align="center" style="font-size: 10pt">Registrant&#146;s telephone number, including area code: <B>(206) 701-2000</B><br>
Registrant&#146;s facsimile number, including area code:                <b>(206) 701-2500</b>


<TABLE border="0" width="30%" cellspacing="0" cellpadding="0" style="font-size: 10pt; text-align: center">
<TR>
    <TD width="100%">&nbsp;</TD>
</TR>
<TR>
    <TD nowrap style="border-bottom: 1px solid #000000"><B>None<BR></B></TD>
</TR>
<TR>
    <TD nowrap>(Former name or former address if changed since last report.)</TD>
</TR>
</TABLE>

<P align="left" style="font-size: 10pt">Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant
under any of the following provisions:

<P align="left" style="font-size: 10pt">
<FONT face="Wingdings">&#111;</FONT> Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)<BR><BR>
<FONT face="Wingdings">&#111;</FONT> Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)<BR><BR>
<FONT face="Wingdings">&#111;</FONT> Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))<BR><BR>
<FONT face="Wingdings">&#111;</FONT> Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))<BR>


<P>
<DIV style="width: 100%; border-bottom: 1pt solid black; margin-top: 10pt; font-size: 1pt">&nbsp;</DIV>
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</DIV>

<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

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<P align="left" style="font-size: 10pt"><B>Item&nbsp;8.01 Other Events</B>


<P align="left" style="font-size: 10pt; text-indent: 4%">On November&nbsp;10, 2008, we entered into an amendment to our agreement covering Phase III of the Defense Advanced
Research Projects Agency&#146;s (&#147;DARPA&#148;) High Productivity Computing Systems program. This amendment incorporates Intel
technologies into our development project and establishes later delivery dates, new milestones and new payment dates
and amounts.


<P align="left" style="font-size: 10pt; text-indent: 4%">The overall goal of the DARPA program, which has not changed, is to facilitate the development of the next
generation of high productivity computing systems for the national security, research and industrial user communities,
with significant improvements in performance, programmability, portability and robustness. Under our agreement, we are
to develop a prototype system that demonstrates the functionality required for scaling to multiple sustained petaflops
(1,000 trillion floating point operations per second) levels of performance on real applications. Based on our Adaptive
Supercomputing vision, our proposed system involves a new hybrid system architecture that combines multiple processor
technologies, a new high-performance network and an adaptive software layer into a single integrated system designed to
automatically match the most effective processor technology to each application. In addition to the final prototype
demonstration, we will also perform a number of technology demonstrations throughout the program to demonstrate
progress in key areas that the prototype system is dependent on. We will own the prototype system and will provide our
mission partners access to the prototype system for a period of six months following the demonstration of the prototype
system pursuant to the last milestone of the DARPA program.


<P align="left" style="font-size: 10pt; text-indent: 4%">The program is milestone-based. For each milestone, we meet with DARPA and its mission partners and provide
information regarding the status of our development efforts to date. Each milestone has specific requirements for
information and deliverables that we are to provide and specified minimum exit criteria demonstrating that we are
making required progress towards completion of the prototype system. Based on our submissions and presentations at each
milestone meeting, DARPA and its mission partners may request that we provide additional or supplemental information.
DARPA provides a formal acceptance of each milestone, which is required for us to invoice for the DARPA
payment associated with the particular milestone.


<P align="left" style="font-size: 10pt; text-indent: 4%">Before the recent amendment, we had met three milestones and had received a total of $62,500,000 in payments from
DARPA; the following milestones remain, with the final milestone now scheduled for August&nbsp;2012. The remaining
milestones and associated payments are:


<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt">2
</DIV>

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<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif; margin-left: .25in; width: 7.5in">
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="10%">&nbsp;</TD>

    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="13%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>

    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="13%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>

    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="16%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>

    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="19%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Minimum<br>Cumulative</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Total</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000">Milestone</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">Spending</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">Government Share</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="3" style="border-bottom: 1px solid #000000">Schedule</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" colspan="3" style="border-bottom: 1px solid #000000">Event</TD>
</TR>
<TR style="font-size: 10pt" valign="bottom">
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:20px; text-indent:-10px">4</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right">104,166,667</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right">25,000,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left">Nov-2008</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left">Project Review</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:20px; text-indent:-10px">5</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right">145,833,333</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right">25,000,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left">Feb-2009</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left">Project Review</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:20px; text-indent:-10px">6</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right">187,500,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right">25,000,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left">Sep-2009</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left">Project Review</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:20px; text-indent:-10px">7</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right">229,166,667</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right">25,000,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left">Apr-2010</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left">Project Review</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:20px; text-indent:-10px">8</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right">270,833,333</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right">25,000,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left">Dec-2010</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left">Project Review</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:20px; text-indent:-10px">9A</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right">295,833,333</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right">15,000,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left">Mar-2011</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left">Project Review</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:20px; text-indent:-10px">9B</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right">312,500,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right">10,000,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left">Aug-2011</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left">Project Review</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;10</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right">375,000,001</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right">37,500,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left">Aug-2012</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="left">Final Demonstration</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:10px; text-indent:-10px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000" colspan="2">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:10px; text-indent:-10px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right">375,000,001</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="bottom">$</TD>
    <TD align="right">250,000,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="left" style="font-size: 10pt; text-indent: 4%">The Cumulative Total Spending is the sum of the government&#146;s share and our cumulative contribution to Phase III. We report
the actual Cumulative Total Spending to DARPA 30&nbsp;days prior to each scheduled milestone review. If the spending is
less than the Minimum Cumulative Total Spending threshold, we are to estimate a date when the spending threshold will
be met. Based on this estimate, DARPA may delay the milestone review until after the spending threshold is achieved.


<P align="left" style="font-size: 10pt; text-indent: 4%">There was no change to the overall commitment by DARPA to deliver up to $250&nbsp;million to us pursuant to this
program, payable over all of the milestones, nor any change in our obligation to spend at least one-third of the total
programming spending, including the amounts provided by the DARPA payments. Overall, we anticipate spending in excess
of the minimum required amount to complete the program.


<P align="left" style="font-size: 10pt; text-indent: 4%">The parties mutually may modify the terms of the agreement and, if funding is available and research opportunities
reasonably warrant, may extend the term of the agreement. Either DARPA or we may terminate the agreement based on a
reasonable determination that the program will not produce beneficial results commensurate with the expenditure of
resources. Any such termination must be preceded by consultation between DARPA and us. DARPA&#146;s future financial
commitments are subject to subsequent Congressional action, and we are not obligated to continue work on this project
beyond the point that DARPA obligates funds to this program. The recent amendment did not change these rights or
obligations.


<P align="left" style="font-size: 10pt; text-indent: 4%">We have met the minimum cumulative total spending requirement for Milestone 4. While we expect to complete
Milestone 4 in the fourth quarter of 2008, it is possible that DARPA acceptance of Milestone 4 could be delayed until
2009. In such event, our net research and development expense for the fourth quarter of 2008 would increase by $10
million over the amount currently anticipated, with a similar decrease in net research and development spending
reported for the quarter in which the Milestone is accepted.


<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt">3
</DIV>

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<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt">###



<P align="left" style="font-size: 10pt; text-indent: 4%">This Current Report contains forward-looking statements. There are certain factors that could cause actual results
to differ materially from those anticipated by the statements above. See &#147;Risk Factors&#148; in our most recent Quarterly
Report on Form 10-Q filed with the SEC.

<P align="center" style="font-size: 10pt">_________________
<P align="center" style="font-size: 10pt">&nbsp;
<P align="center" style="font-size: 10pt"><B>SIGNATURES</B>



<P align="left" style="font-size: 10pt">&nbsp;
<BR>
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.


<P align="left" style="font-size: 10pt">November&nbsp;20, 2008

<DIV align="right">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="50%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="90%">&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top" colspan="3"><DIV style="margin-left:0px; text-indent:-0px">Cray Inc.<BR>&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">By:
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/&nbsp;&nbsp;Kenneth W. Johnson</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">
&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Kenneth W. Johnson<BR>
Senior Vice President and General Counsel</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<P align="center" style="font-size: 10pt">&nbsp;

<P align="center" style="font-size: 10pt">4




</DIV>
</BODY>
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Filed by Bowne Pure Compliance
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 10, 2008
CRAY INC.
(Exact name of registrant as specified in its charter)
Washington
0-26820
93-0962605
(State or other Jurisdiction of Incorporation)
(Commission File Number)
(IRS Employer Identification No.)
411 First Avenue South, Suite 600
Seattle, WA
98104-2860
(Address of Principal Executive Offices)
(Zip Code)
Registrant's telephone number, including area code:
(206) 701-2000
Registrant's facsimile number, including area code:
(206) 701-2500
None
(Former name or former address if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant
under any of the following provisions:
o
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 8.01 Other Events
On November 10, 2008, we entered into an amendment to our agreement covering Phase III of the Defense Advanced
Research Projects Agency's ("DARPA") High Productivity Computing Systems program. This amendment incorporates Intel
technologies into our development project and establishes later delivery dates, new milestones and new payment dates
and amounts.
The overall goal of the DARPA program, which has not changed, is to facilitate the development of the next
generation of high productivity computing systems for the national security, research and industrial user communities,
with significant improvements in performance, programmability, portability and robustness. Under our agreement, we are
to develop a prototype system that demonstrates the functionality required for scaling to multiple sustained petaflops
(1,000 trillion floating point operations per second) levels of performance on real applications. Based on our Adaptive
Supercomputing vision, our proposed system involves a new hybrid system architecture that combines multiple processor
technologies, a new high-performance network and an adaptive software layer into a single integrated system designed to
automatically match the most effective processor technology to each application. In addition to the final prototype
demonstration, we will also perform a number of technology demonstrations throughout the program to demonstrate
progress in key areas that the prototype system is dependent on. We will own the prototype system and will provide our
mission partners access to the prototype system for a period of six months following the demonstration of the prototype
system pursuant to the last milestone of the DARPA program.
The program is milestone-based. For each milestone, we meet with DARPA and its mission partners and provide
information regarding the status of our development efforts to date. Each milestone has specific requirements for
information and deliverables that we are to provide and specified minimum exit criteria demonstrating that we are
making required progress towards completion of the prototype system. Based on our submissions and presentations at each
milestone meeting, DARPA and its mission partners may request that we provide additional or supplemental information.
DARPA provides a formal acceptance of each milestone, which is required for us to invoice for the DARPA
payment associated with the particular milestone.
Before the recent amendment, we had met three milestones and had received a total of $62,500,000 in payments from
DARPA; the following milestones remain, with the final milestone now scheduled for August 2012. The remaining
milestones and associated payments are:
2
Minimum
Cumulative
Total
Milestone
Spending
Government Share
Schedule
Event
4
$
104,166,667
$
25,000,000
Nov-2008
Project Review
5
$
145,833,333
$
25,000,000
Feb-2009
Project Review
6
$
187,500,000
$
25,000,000
Sep-2009
Project Review
7
$
229,166,667
$
25,000,000
Apr-2010
Project Review
8
$
270,833,333
$
25,000,000
Dec-2010
Project Review
9A
$
295,833,333
$
15,000,000
Mar-2011
Project Review
9B
$
312,500,000
$
10,000,000
Aug-2011
Project Review
10
$
375,000,001
$
37,500,000
Aug-2012
Final Demonstration
Total
$
375,000,001
$
250,000,000
The Cumulative Total Spending is the sum of the government's share and our cumulative contribution to Phase III. We report
the actual Cumulative Total Spending to DARPA 30 days prior to each scheduled milestone review. If the spending is
less than the Minimum Cumulative Total Spending threshold, we are to estimate a date when the spending threshold will
be met. Based on this estimate, DARPA may delay the milestone review until after the spending threshold is achieved.
There was no change to the overall commitment by DARPA to deliver up to $250 million to us pursuant to this
program, payable over all of the milestones, nor any change in our obligation to spend at least one-third of the total
programming spending, including the amounts provided by the DARPA payments. Overall, we anticipate spending in excess
of the minimum required amount to complete the program.
The parties mutually may modify the terms of the agreement and, if funding is available and research opportunities
reasonably warrant, may extend the term of the agreement. Either DARPA or we may terminate the agreement based on a
reasonable determination that the program will not produce beneficial results commensurate with the expenditure of
resources. Any such termination must be preceded by consultation between DARPA and us. DARPA's future financial
commitments are subject to subsequent Congressional action, and we are not obligated to continue work on this project
beyond the point that DARPA obligates funds to this program. The recent amendment did not change these rights or
obligations.
We have met the minimum cumulative total spending requirement for Milestone 4. While we expect to complete
Milestone 4 in the fourth quarter of 2008, it is possible that DARPA acceptance of Milestone 4 could be delayed until
2009. In such event, our net research and development expense for the fourth quarter of 2008 would increase by $10
million over the amount currently anticipated, with a similar decrease in net research and development spending
reported for the quarter in which the Milestone is accepted.
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This Current Report contains forward-looking statements. There are certain factors that could cause actual results
to differ materially from those anticipated by the statements above. See "Risk Factors" in our most recent Quarterly
Report on Form 10-Q filed with the SEC.
_________________
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
November 20, 2008
Cray Inc.
By:
/s/  Kenneth W. Johnson
Kenneth W. Johnson
Senior Vice President and General Counsel
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