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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934.
For the quarterly period ended March 31, 1995.
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934.
For the period from ________ to ________.
Commission File Number 0-11348
SILICON VALLEY GROUP, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 94-2264681
(State of incorporation) (IRS Employer Identification No.)
2240 RINGWOOD AVENUE, SAN JOSE, CALIFORNIA 95131
(Address of principal executive offices) (Zip Code)
(408) 434-0500
(Registrant's telephone number, including area code)
NONE
(Former name, former address and former fiscal year, if changed
since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
----- -----
The number of shares outstanding of the Registrant's Common Stock as of
April 24, 1995 was 25,033,589.
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SILICON VALLEY GROUP, INC.
INDEX
PART I. FINANCIAL INFORMATION
PAGE NO.
--------
Consolidated Condensed Balance Sheets as of
March 31, 1995 and September 30, 1994 3
Consolidated Condensed Income Statements
for the Quarters and the Six Month Periods
Ended March 31, 1995 and 1994 4
Consolidated Condensed Statements of Cash Flows
for the Six Months Ended March 31, 1995 and 1994 5
Notes to Consolidated Condensed Financial Statements 6
Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
PART II. OTHER INFORMATION 14
SIGNATURES 16
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PART I. FINANCIAL INFORMATION
SILICON VALLEY GROUP, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
March 31, September 30,
1995 1994
--------- -------------
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and equivalents $ 190,711 $ 87,829
Accounts receivable (net of allowance for doubtful
accounts of $3,173 and $2,630, respectively) 96,717 66,809
Receivable from sale of stock warrants -- 8,204
Inventories 119,610 86,829
Prepaid expenses 3,671 3,632
Deferred taxes 750 169
------------- -------------
Total current assets 411,459 253,472
PROPERTY AND EQUIPMENT - NET 17,218 13,313
DEPOSITS AND OTHER ASSETS 1,739 1,784
INTANGIBLE ASSETS - NET 2,897 3,105
------------- -------------
TOTAL $ 433,313 $ 271,674
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term debt and current portion of long-term debt $ 863 $ 828
Accounts payable 34,886 20,254
Accrued liabilities 68,767 53,644
Income taxes payable 4,916 5,443
------------- -------------
Total current liabilities 109,432 80,169
LONG-TERM DEBT AND CAPITAL LEASES 1,098 1,510
DEFERRED LIABILITIES 1,057 998
MINORITY INTEREST 3,751 3,782
STOCKHOLDERS' EQUITY:
Convertible Redeemable Preferred Stock -- 17,000
Common Stock--shares outstanding:
March 31, 1995: 25,008,909
September 30, 1994: 18,967,276 243,459 105,978
Retained earnings 74,516 62,237
------------- -------------
Stockholders' equity 317,975 185,215
------------- -------------
TOTAL $ 433,313 $ 271,674
============= =============
See Notes to Consolidated Condensed Financial Statements.
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SILICON VALLEY GROUP, INC.
CONSOLIDATED CONDENSED INCOME STATEMENTS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
Quarters Ended Six Months Ended
March 31, March 31,
----------------- -----------------
1995 1994 1995 1994
---- ---- ---- ----
NET SALES $ 109,380 $ 85,300 $ 195,351 $ 156,217
COST OF SALES 67,849 52,876 120,618 96,735
--------- --------- --------- ---------
GROSS PROFIT 41,531 32,424 74,733 59,482
OPERATING EXPENSES:
Research, development and
related engineering 9,816 7,675 18,094 14,221
Marketing, general and
administrative 21,088 16,951 38,710 32,787
--------- --------- --------- ---------
OPERATING INCOME 10,627 7,798 17,929 12,474
INTEREST AND OTHER INCOME 1,146 163 2,344 265
INTEREST EXPENSE (150) (127) (295) (481)
--------- --------- --------- ---------
INCOME BEFORE INCOME
TAXES AND MINORITY INTEREST 11,623 7,834 19,978 12,258
PROVISION FOR INCOME TAXES 4,184 3,132 7,192 4,902
MINORITY INTEREST (48) (40) (31) (105)
--------- --------- --------- ---------
NET INCOME $ 7,487 $ 4,742 $ 12,817 $ 7,461
========= ========= ========= =========
PREFERRED STOCK DIVIDEND $ 239 $ 297 $ 537 $ 595
========= ========= ========= =========
NET INCOME PER COMMON AND
COMMON EQUIVALENT SHARE $ 0.33 $ 0.23 $ 0.58 $ 0.39
========= ========= ========= =========
WEIGHTED AVERAGE COMMON AND
COMMON EQUIVALENT SHARES 22,811 19,032 21,624 17,716
========= ========= ========= =========
See Notes to Consolidated Condensed Financial Statements
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SILICON VALLEY GROUP, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
Six Months Ended
March 31,
------------------
1995 1994
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 12,817 $ 7,461
Reconciliation to net cash provided by
(used for) operating activities:
Depreciation and amortization 4,975 3,896
Amortization of intangibles 208 386
Minority interest (31) (105)
Changes in assets and liabilities:
Accounts receivable (29,908) 1,567
Inventories (32,781) (1,257)
Prepaid expenses (39) (86)
Deposits and other assets 45 (494)
Accounts payable 14,632 (3,104)
Accrued and deferred liabilities 15,390 1,559
Income taxes (1,108) 4,597
--------- ---------
Net cash provided by (used for) operating activities (15,800) 14,420
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (8,880) (511)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under credit agreements -- 8,000
Repayment of debt (377) (22,578)
Sale of Common Stock 90,089 31,096
Sale of Preferred Stock 29,800 --
Collection of receivable from sale of
Common Stock warrants 8,204 --
--------- ---------
Net cash provided by financing activities 127,716 16,518
--------- ---------
EFFECT OF EXCHANGE RATE CHANGES ON CASH (154) 15
--------- ---------
INCREASE IN CASH AND EQUIVALENTS 102,882 30,442
CASH AND EQUIVALENTS:
Beginning of period 87,829 17,617
--------- ---------
End of period $ 190,711 $ 48,059
========= =========
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Preferred Stock dividend $ 537 $ 595
========= =========
Preferred Stock Series A converted to Common Stock $ 17,000 $ --
========= =========
Preferred Stock Series B converted to Common Stock $ 29,800 $ --
========= =========
See Notes to Consolidated Condensed Financial Statements
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SILICON VALLEY GROUP, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
1. CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
The accompanying consolidated condensed financial statements have been prepared
by the Company without audit and reflect all adjustments which are, in the
opinion of management, necessary to a fair statement of the financial position
and the results of operations for the interim periods. The statements have been
prepared in accordance with the regulations of the Securities and Exchange
Commission, but omit certain information and footnote disclosures necessary to
present the statements in accordance with generally accepted accounting
principles. For further information, refer to the Consolidated Financial
Statements and Notes thereto included in the Company's Annual Report on Form
10-K for the year ended September 30, 1994.
2. INVENTORIES
Inventories are comprised of:
March 31, September 30,
1995 1994
--------- -------------
(In thousands)
Raw materials $ 51,916 $ 33,096
Work-in-process 62,412 44,558
Finished goods 5,282 4,175
--------- --------
$ 119,610 $ 86,829
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3. STOCK OFFERING
During the second quarter of fiscal 1995, the Company sold 3,192,606 shares of
its Common Stock through an underwritten public offering. The net proceeds of
the offering were approximately $87,700,000. As a part of the same public
offering, The Perkin Elmer Corporation ("Perkin Elmer") sold 1,807,394 shares of
Common Stock, including 1,000,000 shares from the conversion of the Company's
Series A Convertible Preferred Stock, all of which was held by Perkin Elmer.
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4. SALE AND SUBSEQUENT CONVERSION OF PREFERRED STOCK
In February 1995 the Company entered into a business agreement with Intel
Corporation, Motorola Inc. and Texas Instruments Incorporated (the "Investors")
related to the Company's Micrascan photolithography products. As part of this
agreement, the Investors purchased in equal amounts an aggregate of
approximately $30,000,000 of the Company's newly issued Series B Convertible
Preferred Stock (the "Series B Preferred") and received certain rights to
purchase future generations of the Company's Micrascan products. In accordance
with the terms of its issuance, the Series B Preferred automatically converted
into 1,494,300 shares of Common Stock as the result of a registration statement
which was effective concurrent with the Company's public stock offering
discussed in Note 3.
The agreement with the Investors obligates the Company to use the $30,000,000
received from the Investors, to fund increased Micrascan production capacity,
increased research and development of the Micrascan technology, the purchase of
additional capital equipment and to augment working capital for growth of the
Company's Micrascan photolithography operations. Under such agreement, the
Company is obligated, subject to the requirements of certain agreements with
SEMATECH, to fund from its own accounts an amount not less than $25,000,000 at
any time over a five year period. The agreements with SEMATECH are discussed in
Note 13 to the Consolidated Financial Statements included in the Company's
Annual Report on Form l0K for the year ended September 30, 1994. During the term
of the SEMATECH agreements, the Company is obligated to fund from its own
resources 120% of the total amount received from SEMATECH, up to a maximum of
$36,000,000, to further the development of Micrascan technology and to increase
the manufacturing capability and capacity for the Micrascan products.
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SILICON VALLEY GROUP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The Company designs, manufactures, markets and services semiconductor processing
equipment used in the fabrication of integrated circuits. The Company's products
are used in photolithography for exposure and photoresist processing, and in
deposition for oxidation/diffusion and low pressure chemical vapor deposition
("LPCVD"). The Company manufactures and markets its photolithography exposure
products through its majority owned subsidiary, SVG Lithography Systems, Inc.
("SVGL"), its photoresist processing products through its Track Systems Division
("Track") and its oxidation/diffusion and LPCVD products through its Thermco
Systems Division ("Thermco").
The semiconductor industry to which the Company sells its products is highly
cyclic and has, historically, experienced downturns. These downturns have had a
severe effect on the semiconductor industry's demand for semiconductor
processing equipment. Future weakness in demand in the semiconductor industry
can be expected to have an adverse effect on the Company's business and results
of operations. Further, the Company relies on a limited number of major
customers for a substantial percentage of its net sales (three such customers
accounted for 50% of the Company's sales in fiscal 1994 and this trend continued
into the first half of fiscal 1995). The loss of or any substantial reduction in
orders by any such customer could adversely affect the Company's business and
results of operations.
Net sales for the second fiscal quarter ended March 31, 1995 were $109,380,000,
a 27% increase over net sales of $85,971,000 for the preceding quarter and 28%
above net sales of $85,300,000 during the second quarter of fiscal 1994. The
growth in net sales over the preceding quarter was primarily the result of
increased shipments of Thermco and Track products. Higher Thermco and SVGL
shipping levels resulted in the increased net sales compared to the year-earlier
quarter.
For the first half of fiscal 1995, net sales were $195,351,000, a 25% increase
over net sales of $156,217,000 during the first half of fiscal 1994. The higher
fiscal 1995 net sales were primarily due to increased shipments of Thermco and
SVGL products.
During the second quarter of fiscal 1995, the Company had bookings of
$161,270,000 which represented a book to bill ratio of 1.47 to 1, approximately
equal to the preceding three quarters. At March 31, 1995 the Company had a
backlog of $303,866,000 compared to $209,119,000 at September 30, 1994.
Gross margins were 38% in the second quarter of fiscal 1995, compared to 39%
during the preceding quarter, and 38% in the second quarter of fiscal 1994.
During the second quarter of fiscal 1995, Thermco shipments, which have
historically had lower gross margins than those associated with Track products,
comprised a greater percentage of the Company's net sales than during the
preceding quarter, resulting in the lower overall gross margins. The decrease
was offset in part by volume efficiencies associated with increased Track
shipments. In comparing
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the second quarters of fiscal 1995 and 1994, overall gross margins were
approximately level. Improvements in Thermco's margins from the year-earlier
quarter were offset by less favorable margins on aftermarket products shipped by
Track.
Comparing the six-month periods of fiscal 1995 and 1994, gross margins remained
relatively unchanged at approximately 38%, primarily due to improved Thermco
margins offset by lower shipments of higher margin Track products during the
first half of fiscal 1995.
Research, development and related engineering (R&D) was $9,816,000 (9% of net
sales) during the second quarter of fiscal 1995, $8,278,000 (10% of net sales)
during the preceding quarter and $7,675,000 (9% of net sales) during the second
quarter of fiscal 1994. The Company's R&D expenditures exclude funding received
from outside parties under joint development agreements, the majority of which
is received by SVGL from SEMATECH. During the second and first quarters of
fiscal 1995 and the second quarter of fiscal 1994, such funding totalled
$2,592,000, $2,082,000 and $72,000, respectively. The increase in R&D over both
the preceding and year-earlier quarters was primarily the result of new product
development, costs incurred to support increased product shipments and further
design improvements on Thermco's AVP.
During the first six months of fiscal 1995 R&D was $18,094,000, up from
$14,221,000 during the same period of fiscal 1994. R&D expenditures for the six
month periods ended March 31, 1995 and 1994 exclude funding received under joint
development agreements of $4,674,000 and $311,000, respectively. The increase
over the year-earlier period corresponds to the quarter to quarter increases
discussed above.
Marketing, general and administrative expenses (MG&A) were $21,088,000 (19% of
net sales) during the second quarter of fiscal 1995 compared to $17,622,000 (21%
of net sales) during the preceding quarter and $16,951,000 (20% of net sales)
during the second quarter of fiscal 1994. In comparison to both earlier
quarters, the increased second quarter fiscal 1995 expenditures were primarily
the result of selling costs related to the higher level of shipments and
administrative costs incurred in supporting the Company's operations. The
decrease in MG&A as a percentage of sales compared to the earlier quarters was
the result of the significant increase in net sales.
During the first six months of fiscal 1995 MG&A was $38,710,000 (20% of net
sales) compared to $32,787,000 (21% of net sales) during the first half of
fiscal 1994. The primary reasons for the increased dollar expenditures and the
decrease as a percentage of net sales corresponds to the quarterly discussion
above.
Operating income was $10,627,000 for the second quarter of fiscal 1995 compared
to $7,302,000 for the preceding quarter and $7,798,000 for the second quarter of
fiscal 1994. First half fiscal 1995 operating income was $17,929,000 compared to
$12,474,000 for the first six months of fiscal 1994. For both the quarter and
six month comparisons, gross profits from the higher net sales exceeded the
growth of R&D and MG&A, resulting in increased operating income.
Interest and other income was $1,146,000 during the second quarter of fiscal
1995 compared to $1,198,000 for the preceding quarter and $163,000 for the
year-earlier quarter. For the first six months of fiscal 1995, interest and
other income was $2,344,000 compared to $265,000 for the
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first six months of fiscal 1994. The increased fiscal 1995 interest and other
income amounts were primarily due to higher cash balances available for
investment at more favorable prevailing interest rates.
Interest expense was $150,000 during the second quarter of fiscal 1995, compared
to $145,000 during the preceding quarter and $127,000 during the year-earlier
quarter. During the first six months of fiscal 1995, interest expense was
$295,000, down from $481,000 during the first half of fiscal 1994. The
year-earlier period included interest expense related to borrowings outstanding
under the Company's bank line of credit during the first several months of
fiscal 1994.
The Company recorded a 36% provision for income taxes for the first six months
of fiscal 1995, compared to a 38% provision for all of fiscal 1994. Variations
in the Company's effective tax rate relate primarily to changes in the
geographic distribution of the Company's pretax income.
The minority interest represented that share of SVGL's operating results
attributable to its minority shareholder. For the second quarters of fiscal 1995
and 1994, minority interest represented additions of $48,000 and $40,000,
respectively, compared to a reduction for minority interest of $17,000 during
the first quarter of fiscal 1995. For the first six months of fiscal 1995 and
1994, minority interest represented additions of $31,000 and $105,000,
respectively.
The Company had net income of $7,487,000 ($0.33 per share), $5,330,000 ($0.25
per share) and $4,742,000 ($0.23 per share) for the second and first quarters of
fiscal 1995 and the second quarter of fiscal 1994, respectively. First half
fiscal 1995 and 1994 net income was $12,817,000 ($0.58 per share) and $7,461,000
($0.39 per share), respectively. Net income per share amounts for the second
quarter of fiscal 1994 and the first quarter of fiscal 1995 were computed after
deducting, from net income, Series A Preferred Stock ("Series A Preferred")
dividends of $297,000 and $298,000, respectively. Until the second quarter of
fiscal 1995, such dividends have been deducted because the effect thereof has
been more dilutive than the effect of increasing the weighted average common and
common equivalent shares by the as-converted equivalent common shares into which
the Series A Preferred was convertible. Earnings per share for the second
quarter of fiscal 1995 were computed using the as-converted method which was
more dilutive.
FLUCTUATIONS IN QUARTERLY RESULTS AND DEPENDENCE ON THE
DEVELOPMENT AND SALES OF NEW PRODUCTS
The Company has, at times during its existence, experienced quarterly
fluctuations in its operating results. Due to the relatively small number of
systems sold during each fiscal quarter and the relatively high revenue per
system, production or shipping delays or customer order rescheduling can
significantly affect quarterly revenues and profitability. The Company has
experienced, and may again experience, quarters during which a substantial
portion of the Company's net sales are realized near the end of the quarter.
Accordingly, delays in shipments near the end of a quarter can cause quarterly
net sales to fall significantly short of anticipated levels. Since most of the
Company's expenses are fixed in the short term, such shortfalls in net sales
could have a material adverse effect on the Company's business and results of
operations. The Company's operating results may also vary from quarter to
quarter based upon numerous factors including the timing of new product
introductions, product mix, level of sales, the
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relative proportions of domestic and international sales, activities of
competitors and problems obtaining materials or components on a timely basis. In
light of these factors and the nature of semiconductor industry cycles, the
Company could again experience variability in quarterly operating results.
Semiconductor manufacturing equipment and processes are subject to rapid
technological change. The Company believes that its future success will depend
in part upon its ability to continue to enhance its existing products and their
process capabilities and to develop and manufacture new products with improved
process capabilities that enable semiconductor manufacturers to fabricate
semiconductors more efficiently. New product introductions could contribute to
quarterly fluctuations in operating results as orders for new products commence
and increase the potential for a decline in orders of existing products. Failure
to introduce new products successfully in a timely manner could result in loss
of competitive position and reduced sales of existing products. Furthermore, the
inability to produce such products or any failure to achieve market acceptance
could have a material adverse effect on the Company's business and results of
operations.
The Company believes that the photolithography exposure equipment market is one
of the largest segments of the semiconductor processing equipment industry and
that its Micrascan II is currently the most technically advanced machine
shipping in multiple quantities to global semiconductor manufacturers. While the
recent volume of orders for Micrascan II systems have been encouraging, they are
not necessarily indicative of industry-wide acceptance of the Micrascan
technology. In addition, the Company believes semiconductor manufacturers will
not require volume quantities of production equipment as advanced as Micrascan
until at least 1996, and that substantial sales of Micrascan systems will not
begin until late 1996 or 1997. Further, SVGL was not profitable for fiscal 1994,
nor during the first half of fiscal 1995 and there can be no assurance that it
will be able to operate profitably in the future.
The Company believes that for SVGL to succeed in the long term, it must sell its
Micrascan products on a global basis. The Japanese and Pacific Rim markets
(including fabrication plants located in other parts of the world which are
operated by Japanese and Pacific Rim semiconductor manufacturers) represent a
substantial portion of the overall market for photolithography exposure
equipment and to date neither SVGL nor the Company has been successful in
securing a substantial share of these markets. The Company is relatively new to
the photolithography exposure business and does not share the same level of
financial resources as its competitors. As a result, major customers may be
unwilling to rely on SVGL to be the sole source of this advanced technology,
which could have an adverse effect on the Company's business and results of
operations.
The Company is currently expanding its manufacturing capacity to meet current
and expected demand levels. From time to time, the Company has experienced
difficulty in ramping up production or effecting transitions to new products
and, consequently, has suffered delays in product deliveries. There can be no
assurance that the Company will not experience manufacturing problems as a
result of capacity constraints or ramping up production by upgrading or
expanding existing operations. These issues could result in product
delivery delays, causing a loss of future revenues and the associated profits.
In particular, the Company believes that protracted delays in delivering
Micrascan products could result in semiconductor manufacturers electing to
install competitive equipment in their advanced fabrication facilities, which
could impede acceptance of the Micrascan products on an industry-
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wide basis. The Company's operating results could also be adversely affected by
the increase in fixed costs and operating expenses related to increases in
production capacity if net sales do not increase commensurately.
The Company depends on external funding to assist in the high cost of
development in its photolithography operation. On September 30, 1994, SEMATECH
entered into the first of a series of agreements with the Company to assist in
funding both the development of the Micrascan technology and to increase SVGL's
manufacturing capability and capacity. The agreements with SEMATECH included
the sale of warrants to purchase the Company's Common Stock and established
certain milestones upon which the funding is based. If the Company achieves all
milestones, the SEMATECH agreements provide for an additional $21,000,000 of
such funding during fiscal 1995, 1996 and 1997, all of which the Company
expects would be an offset to its research and development expenditures. In the
event that the Company does not receive the contracted SEMATECH funding for any
reason, it would be required to either curtail development of photolithography
products or make up the shortfall from its own funds or other sources. If the
Company were required to make up these funds, its research and development
expenses would increase significantly and its operating income would be reduced
correspondingly. Under the agreements with SEMATECH the Company is obligated, at
some time over a three-year period, to fund, from its own resources, 120% of
amounts received from SEMATECH up to $36,000,000.
In February 1995 the Company entered an agreement with Intel Corporation,
Motorola Inc. and Texas Instruments Incorporated (the "Investors") related to
the Company's Micrascan photolithography products. As part of this agreement,
the Investors purchased an aggregate of $30,000,000 of the Company's newly
issued Series B Preferred Stock (which was subsequently converted to Common
Stock) and received certain rights to purchase future generations of the
Company's Micrascan products. In turn, the Company agreed to utilize the
proceeds from the sale of the Preferred Stock for research and development,
manufacturing capacity expansion and working capital related to it's Micrascan
technology and products. If, in fulfilling the SEMATECH agreements, the Company
is required to fund less than $25,000,000, the Company is obligated under its
agreement with the Investors, at some time over a five year period, to fund an
amount such that the total it funds under the agreements with both SEMATECH and
the Investors is not less than $25,000,000.
There are no assurances that the Company will be able to attain the SEMATECH
milestones or that SEMATECH will be capable of providing the agreed upon
funding, either of which could have an unfavorable impact on future
photolithography development. If the Company is able to attain such milestones,
no assurance can be given that the Company will be able to obtain the necessary
funding to meet its commitments under either the SEMATECH agreement or its
agreement with the Investors. Were the Company not to fulfill certain
obligations under such agreements, it could be required to repay all funds
received from SEMATECH and it could be required to repurchase the Common Stock
held by the Investors, either or both of which could have a material adverse
effect on the Company. Conversely, the Company could be required to provide its
portion of the funding regardless of the success of the project. As a result,
the Company may be required to use its financial resources to comply with these
commitments even if it believes that such resources would be better utilized in
other areas.
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LIQUIDITY AND CAPITAL RESOURCES
In March 1995, the Company sold 3,192,606 shares of its Common Stock through an
underwritten public offering. The net proceeds of the offering were
approximately $87,700,000. As part of the same public offering, The Perkin Elmer
Corporation sold 1,807,394 shares of Common Stock (including 1,000,000 shares
which it received upon the conversion of the Company's Series A Preferred Stock
and 807,394 shares which it previously owned).
In February 1995 the Investors purchased an aggregate of $30,000,000 of the
Company's newly issued Series B Preferred Stock. In accordance with the terms of
its issuance, the Series B Preferred automatically converted into 1,494,300
shares of Common Stock upon the effectiveness of a registration statement filed
concurrently with the Company's public offering discussed above.
At March 31, 1995 cash and cash equivalents were $190,711,000 compared to the
September 30, 1994 balance of $87,829,000, an increase of $102,882,000. During
the first six months of fiscal 1995, the Company received a total of
$128,093,000 from the sale of both Common Stock (including stock options
exercised by employees) and the Series B Preferred, as well as the collection of
the proceeds from the sale of Common Stock warrants subscribed during the fourth
quarter of fiscal 1994. These cash inflows were offset by $15,800,000 of cash
used for operating activities and $8,880,000 used for the purchase of property
and equipment. The cash used for operating activities was required to finance
increased accounts receivable resulting from the Company's increased shipments,
the majority of which occurred late in the quarter, and higher inventory levels
required to satisfy the current backlog of customer orders.
At May 11, 1995, the Company had $50,000,000 of credit available under its bank
revolving line of credit.
The Company believes that it has sufficient working capital and available bank
credit to sustain operations and provide for the future expansion of its
business for the foreseeable future.
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PART II. OTHER INFORMATION
SILICON VALLEY GROUP, INC.
ITEM 1. LEGAL PROCEEDINGS.
None.
ITEM 2. CHANGES IN SECURITIES.
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
(a) The Annual Meeting of Shareholders of the Company was
held on February 23, 1995 (the "Annual Meeting"). The
vote of holders of record of 19,173,809 shares of the
Company's Common Stock and 10,000 shares of Series A
Convertible Redeemable Preferred Stock outstanding at
the close of business on December 28, 1994 was
solicited by proxy pursuant to Regulation 14A under
the Securities Exchange Act of 1934.
(b) The following persons were elected Directors of the
Company at the Annual Meeting:
VOTES WITHHOLDING
VOTES FOR AUTHORITY
---------- -----------------
Papken S. Der Torossian 17,093,453 423,152
William A. Hightower 17,092,765 423,840
William L. Martin 17,093,600 423,005
John B. McBennett 17,096,515 420,090
Larry W. Sonsini 17,034,192 482,413
Nam P. Suh 17,092,815 423,790
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(c) The Company's 1987 Stock Option Plan (the "Option
Plan") was amended to (i) extend the term of the
Option Plan to December 31, 2000, (ii) increase the
number of shares available for grant thereunder by
1,000,000 shares, to an aggregate of 3,200,000
shares, (iii) increase the number of options granted
to directors, (iv) increase the term of options
granted to the directors, and (v) adjust the vesting
schedules of options granted to directors. The
stockholders' vote on such amendment was 12,518,584
shares FOR, 2,321,546 shares AGAINST, and 62,880
shares ABSTAINED from voting.
ITEM 5. OTHER INFORMATION.
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
10.1* Business Agreement dated as of February 21,
1995, among the Company, SVG Lithography
Systems, Inc., Intel Corporation, Motorola
Inc. and Texas Instruments Incorporated.
10.2 Series B Convertible Redeemable Preferred
Stock Purchase Agreement dated as of February
21, 1995, among the Company, Intel
Corporation, Motorola Inc. and Texas
Instruments Incorporated.
10.3 Registration Rights Agreement dated as of
February 21, 1995, among the Company, Intel
Corporation, Motorola Inc. and Texas
Instruments Incorporated.
27 Financial Data Schedule
(b) Report on Form 8-K filed March 2, 1995, relating to
the Certificate of Designation of Series B
Convertible Redeemable Preferred Stock and the terms
of the investment in the Company by Intel
Corporation, Motorola Inc. and Texas Instruments
Incorporated.
*Confidential Treatment Requested
15
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SILICON VALLEY GROUP, INC.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SILICON VALLEY GROUP, INC.
..........................
(Registrant)
Date: May 11, 1995 By: /s/ Papken S. Der Torossian
----------------------------
Papken S. Der Torossian
Chief Executive Officer and
Chairman of the Board
Date: May 11, 1995 By: /s/ Russell G. Weinstock
----------------------------
Russell G. Weinstock
Vice President Finance and
Chief Financial Officer
16