CRAYE Cray (MM)

Seattle-Based Cray Accused of Violating Securities Laws Proposed Class-Action Alleges Company Withheld Key Information While Insiders Sold off Stock SEATTLE, May 25 /PRNewswire-FirstCall/ -- Cray, Inc. (NASDAQ:CRAYE), a Seattle-based designer and developer of high-performance computer systems, has been hit with a proposed class-action suit filed on behalf of investors. The complaint charges Cray with hiding damaging information about the company's operational and financial problems while Cray's executives sold $4.6 million in Cray shares at inflated prices. The suit was filed on May 24, 2005 in U.S. District Court in Seattle by Steve Berman, managing partner of Hagens Berman Sobol Shapiro and lead attorney for the plaintiffs. "We intend to show the leadership at Cray intentionally misled investors through a well-orchestrated campaign of misinformation," said Berman. "Their actions have hurt thousands of individuals who should have had the benefit of the same information that executives used when they sold their stock." According to the complaint, the defendants knew and concealed several basic problems. Among these issues was the fact that there were several unfavorable factors affecting the company's projected revenue; Cray had manufacturing problems and had mismanaged many of its third-party contracts; and flawed internal policies had increased the unpredictability of Cray's revenue reports. The suit further states that Cray made false statements regarding the financial status, stability and growth potential of the company. In several press releases, Cray announced various quarterly results and forecasted revenues. The suit claims that these statements were false and misleading to investors because they were based on unstable factors, such as prospective contracts; they misrepresented certain products and their affect on the flow of revenue; and they belied the company's difficulty in managing a growing backlog of orders. The complaint contends that the defendant's failure to disclose its unreliable method of forecasting revenues and growth gave investors an inaccurate sense of predictability of the business's success. Eventually, Cray's weaknesses were revealed, the suit states. On February 3, 2005, the company issued a press release alluding to faulty accounting measures and internal controls, and an ever-increasing backlog. As Cray made this and other disclosures over the following months, the company's stock sharply plummeted, ending in a 35.6 percent loss on May 12, 2005. "Investors were astounded when they finally learned of the trouble Cray was in," Berman stated. "The company's choice to lie to investors and ignore basic problems in their business model inevitably came to a head, and when it did, investors lost millions." The complaint charges the defendant with violating Rule 10(b) and 20(a) of the Securities Exchange Act of 1934. The proposed class action seeks to represent all those who purchased shares of Cray stock at artificially inflated prices from July 31, 2003 to May 12, 2005, and requests damages to be awarded to the plaintiffs. About Hagens Berman Sobol Shapiro LLP Hagens Berman Sobol Shapiro LLP is a law firm with offices in Seattle, Cambridge, Chicago, Los Angeles, and Phoenix. The firm has developed a nationally recognized practice in class-action litigation. The firm is co-lead counsel in litigation to recover losses from Enron employees' retirement funds, and represented Washington and 12 other states in lawsuits against the tobacco industry that resulted in the largest settlement in the history of litigation. The firm also served as counsel in several other high-profile cases including the Washington Public Power Supply litigation, which resulted in a settlement of more than $850 million, and the $92.5 million settlement of The Boeing Company litigation. Other notable cases include litigation involving the Exxon Valdez oil spill, Average Wholesale Price Drug litigation, United Airlines litigation, Exxon Mobile Securities litigation, and Louisiana Pacific Siding litigation. CONTACTS: Steve Berman 206-623-7292 Hagens Berman Sobol Shapiro LLP Mark Firmani 206-443-9357 Firmani & Associates, Inc. DATASOURCE: Hagens Berman Sobol Shapiro LLP CONTACT: Steve Berman of Hagens Berman Sobol Shapiro LLP, +1-206-623-7292, or ; or Mark Firmani of Firmani & Associates, Inc., +1-206-443-9357, or , for Hagens Berman Sobol Shapiro LLP

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