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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 2, 1996
REGISTRATION NO. 33-64569
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1 TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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SILICON VALLEY GROUP, INC.
(EXACT NAME OF ISSUER AS SPECIFIED IN ITS CHARTER)
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<TABLE>
<S> <C>
DELAWARE 94-2264681
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(STATE OF INCORPORATION) (I.R.S. EMPLOYER
IDENTIFICATION NUMBER)
</TABLE>
2240 RINGWOOD AVENUE
SAN JOSE, CALIFORNIA 95131
(408) 434-0500
(ADDRESS, INCLUDING ZIP CODE AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
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RUSSELL G. WEINSTOCK
VICE PRESIDENT, FINANCE AND CHIEF FINANCIAL OFFICER
SILICON VALLEY GROUP, INC.
2240 RINGWOOD AVENUE
SAN JOSE, CALIFORNIA 95131
(408) 434-0500
(NAME, ADDRESS, INCLUDING ZIP CODE AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
AGENT FOR SERVICE)
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COPY TO:
ROBERT T. CLARKSON
WILSON, SONSINI, GOODRICH & ROSATI
PROFESSIONAL CORPORATION
650 PAGE MILL ROAD
PALO ALTO, CALIFORNIA 94304
(415) 493-9300
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC UNDER THIS
REGISTRATION STATEMENT: From time to time after this Registration Statement
becomes effective.
If the only securities being registered on this Form are to be offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. /X/
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
SUBJECT TO COMPLETION DATED FEBRUARY 2, 1996
PROSPECTUS
1,750,000 SHARES
SILICON VALLEY GROUP, INC.
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COMMON STOCK
($.01 PAR VALUE)
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This Prospectus relates to the public offering, which is not being
underwritten, of shares of the common stock ("Common Stock") of Silicon Valley
Group, Inc. (together with its consolidated subsidiaries, "Silicon Valley Group"
or the "Company") offered from time to time by the Selling Stockholder named
herein (the "Selling Stockholder") who will receive such shares upon exercise of
a warrant, expiring September 30, 1998. The exercise price of the warrant is
$13.625 per share and the warrant is subject to a net exercise provision which
permitted the holder to make a cashless exercise of the warrant based on the
closing price of the Common Stock. Such warrant was issued pursuant to an
exemption from the registration requirements of the Securities Act of 1933, as
amended, provided by Section 4(2) thereof. It is anticipated that the Selling
Stockholder will generally offer shares of Common Stock for sale at prevailing
prices in the over-the-counter market on the date of sale and in certain other
ways as described in "Plan of Distribution." The Company will receive no part of
the proceeds of sales made hereunder. All expenses of registration incurred in
connection with this offering are being borne by the Company, but all selling
and other expenses incurred by the Selling Stockholder will be borne by the
Selling Stockholder. None of the shares offered pursuant to this Prospectus have
been registered prior to the filing of the Registration Statement of which this
Prospectus is a part.
The Common Stock of the Company is traded in the over-the-counter market on
the Nasdaq National Market. On January 31, 1996, the closing price of the
Company's Common Stock was $26.125 (Nasdaq Symbol: SVGI).
SEE "RISK FACTORS" FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE
CONSIDERED BY PROSPECTIVE PURCHASERS OF THE COMMON STOCK OFFERED HEREBY.
The Selling Stockholder and any broker executing selling orders on behalf
of the Selling Stockholder may be deemed to be an "underwriter" within the
meaning of the Securities Act of 1933, as amended (the "Securities Act").
Commissions received by any such broker may be deemed to be underwriting
commissions under the Securities Act.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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The date of this Prospectus is February , 1996.
<PAGE> 3
No person is authorized to give any information or to make any
representations, other than those contained in this Prospectus, in connection
with the offering described herein, and, if given or made, such information or
representations must not be relied upon as having been authorized by the Company
or any Selling Stockholder. This Prospectus does not constitute an offer to
sell, or a solicitation of an offer to buy, nor shall there be any sale of these
securities by any person in any jurisdiction in which it is unlawful for such
person to make such offer, solicitation or sale. Neither the delivery of this
Prospectus nor any sale made hereunder shall under any circumstances create an
implication that the information contained herein is correct as of any time
subsequent to the date hereof.
The Company hereby undertakes to provide without charge to each person to
whom a copy of this Prospectus is delivered, upon written or oral request of any
such person, a copy of any and all of the information that has been or may be
incorporated by reference in this Prospectus, other than exhibits to such
documents. Requests for such copies should be directed to the Company's Vice
President, Finance and Chief Financial Officer at 2240 Ringwood Avenue, San
Jose, California 95131. The Company's telephone number at that location is (408)
434-0500.
The Company is subject to the informational reporting requirements of the
Securities Exchange Act of 1934, as amended, and in accordance therewith files
reports, proxy statements and other information with the Securities and Exchange
Commission (the "Commission"). Such reports, proxy statements and other
information can be inspected and copied at the Public Reference Room of the
Commission, 450 Fifth Street, N.W., Washington, D.C. 20549 and at the
Commission's regional offices at 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511; and copies of such material can be obtained from the Public
Reference Section of the Commission, Washington, D.C. 20549, at prescribed
rates. Information, as of particular dates, concerning directors and officers of
the Company, their remuneration, options granted to them, the principal holders
of securities of the Company, and any material interest of such persons in
transactions with the Company has been or will be disclosed in the proxy
statements to be distributed to stockholders of the Company and filed with the
Commission.
This Prospectus contains information concerning the Company and sales of
its Common Stock by the Selling Stockholder but does not contain all the
information set forth in the Registration Statement on Form S-3 which the
Company has filed with the Securities and Exchange Commission under the
Securities Act of 1933, as amended (the "Registration Statement"). The
Registration Statement, including various exhibits, may be inspected at the
Commission's office in Washington, D.C.
RISK FACTORS
In addition to reviewing the Company's Annual Report on Form 10-K for 1995,
the other documents incorporated herein by reference and the other information
in this prospectus, the following factors should be considered carefully in
evaluating the Company and its business before purchasing the Common Stock
offered hereby:
Prospective purchasers of Shares offered hereby should carefully
consider the following risk factors in addition to the other information
presented in this Prospectus.
Cyclical Nature of the Semiconductor Industry. The semiconductor industry
into which the Company sells its products is highly cyclical and has
historically experienced periodic downturns, which often have had a severe
effect on the semiconductor industry's demand for semiconductor processing
equipment. Prior semiconductor industry downturns have resulted in significant
reductions in the Company's net sales, gross margin and net income. For example,
due in part to weakness in the semiconductor market, demand for the Company's
semiconductor processing equipment declined during fiscal 1992 and the Company
was not profitable for the year. While the Company has been profitable for the
past 15 quarters, there is no assurance that the Company will be able to
maintain profitability. Moreover, the Company's operations as a whole will
continue to be dependent on the capital expenditures of semiconductor
manufacturers, which in turn will be largely dependent on the current and
anticipated market demand for integrated circuits and products utilizing
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integrated circuits. Any future weakness in demand in the semiconductor industry
is likely to have a material adverse effect on the Company's business and
results of operations.
Uncertain Development of Market for Micrascan Products. The development of
a market for the Company's Micrascan photolithography products will be highly
dependent on the continued trend towards finer line widths in integrated
circuits and the ability of lithograph manufacturers to keep pace with this
trend through either enhanced technologies or improved processes. The market for
the Company's Micrascan photolithography products has developed more slowly than
the Company anticipated at the time the Company acquired SVG Lithography
Systems, Inc. ("SVGL") in May 1990. From fiscal 1990 to fiscal 1993, SVGL sold
an aggregate of 26 Micrascan systems, 20 of which were sold to IBM, a minority
shareholder in SVGL, and three of which were sold to SEMATECH, Inc.
("SEMATECH"). In fiscal 1994 and fiscal 1995, SVGL shipped 19 Micrascan systems
to eight customers, of which 13 were shipped fiscal 1995. At September 30, 1995,
SVGL had a sales order backlog of 34 Micrascan units for shipment, one of which
was for the next generation .25 micron product, to six global semiconductor
manufacturers. While such orders are encouraging, they are not necessarily
indicative of industry-wide acceptance of the Micrascan technology. The Company
and many industry observers initially believed that I-Line steppers, the most
advanced photolithography exposure equipment in widespread production use at the
time the Company acquired SVGL, could not be modified to be capable of
fabricating complex semiconductor devices with line widths of less than 0.5
micron, such as 64 and 256 megabit dynamic random access memories ("DRAMs").
Since 1990, however, stepper manufacturers have extended the capability of their
I-Line steppers to 0.5 micron or finer line widths. The Company believes that,
as a consequence, many manufacturers of complex devices are likely to continue
to use steppers for fabricating such devices. The Company believes that as
devices increase in size and complexity and require finer line widths, the
technical advantages of Micrascan systems as compared to steppers will enable
semiconductor manufacturers to achieve finer line widths, higher yields and
increased throughput. The Company believes, however, that these larger and more
complex devices will not be produced in volume until 1996 or 1997. It is
possible that the demand for these larger and more complex devices, and the
fabrication equipment to manufacture them, may never develop or may develop even
later than 1997. The Company believes semiconductor manufacturers will not
require production equipment as advanced as Micrascan until at least 1996, and
that substantial sales of the Company's Micrascan systems will not begin until
late 1996 or 1997, if at all. Stepper manufacturers have enhanced their machines
in the past, and in the future may further enhance their machines to achieve
finer line widths, sufficiently to erode Micrascan's expected yield, throughput
and line-width control advantages. If this occurs, demand for Micrascan systems
may not develop as the Company expects. SVGL had a marginal profit for fiscal
1995, primarily due to its fourth quarter operating results. However, SVGL was
not profitable for the first half of fiscal 1995 nor during fiscal 1994. There
can be no assurance that it will be able to operate profitably in the future.
Failure of SVGL to achieve substantial sales of Micrascan systems or a delay in
achieving such sales could have a material adverse effect on the Company's
ability to continue to operate profitably.
Fluctuations in Quarterly Operating Results. 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 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, levels of sales, the relative
proportions of domestic and international sales, activities of competitors,
acquisitions, international events and problems in obtaining materials or
components on a timely basis. In light of these factors and the cyclical nature
of the semiconductor industry, the Company expects to continue to experience
variability in quarterly operating results.
Need to Increase Manufacturing Capacity. The Company currently has
insufficient manufacturing capacity to meet multiple customer demands for
Micrascan products and is expanding its manufacturing
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capacity to meet current demand levels. The Company believes that its ability to
supply systems in volume will be a major factor in customer decisions to commit
to the Micrascan technology. Accordingly, the Company must initiate facility and
capital improvements today to meet expected shipment volumes in 1997 and 1998.
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. Based upon its forecast of continued high growth for
photolithography equipment, the Company has developed plans to increase its
production capacity under an extremely aggressive expansion schedule. Successful
execution of the Company's expansion will require timely identification and
acquisition of appropriate sites, receipt of requisite approvals, construction
and equipping of facilities, recruitment, training and retention of a high
quality workforce and achievement of satisfactory manufacturing results on a
scale greater than the Company's prior expansions. There can be no assurance the
Company can manage these efforts successfully. This could result in product
delivery delays and a subsequent loss of future revenues. In particular, the
Company believes that protracted delays in delivering initial quantities of
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-wide basis. In
addition, 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.
Dependence on New Products and Processes; Importance of Timely Product
Introductions and Enhancements. 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.
Failure to introduce new products successfully in a timely manner could result
in loss of competitive position and reduced sales of existing products. In
particular, the Company believes that advanced logic devices and DRAMs will
require increasingly finer line widths. As a consequence, it is important to
develop and introduce a version of the Micrascan capable of exposing line widths
of .25 micron by mid-1996. In addition, 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, particularly if new products are delayed. 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.
Significant delays can occur between a product's introduction and the
commencement by the Company of volume production of such product. There can be
no assurance that the Company will be successful in the introduction and volume
production of new and enhanced products or that the Company will be able to
develop and introduce new and enhanced products and processes which satisfy a
broad range of customer needs and achieve market acceptance.
Research and Development Funding; Certain Capital Commitments. The Company
believes that in selecting a photolithography equipment manufacturer, customers
look for a long term product development strategy and the ability to fund that
development because photolithography exposure equipment can represent a
substantial portion of the equipment cost of a fabrication facility.
Semiconductor manufacturers may be unwilling to rely on a relatively small
supplier such as the Company for a critical element of the fabrication process
if the supplier does not have sufficient capital to implement its product
development strategy. The Company depends on external funding to assist in the
high cost of development in its photolithography operation. To that end, the
Company and SEMATECH entered into a series of agreements whereby SEMATECH agreed
both to assist in funding 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, based upon the Company achieving certain performance milestones, provide
for $22,000,000 of such funding through 1997, all of which the Company expects
would be an offset to its research and development expenditures. As of September
30, 1995, the Company had recognized $13,549,000 of such SEMATECH funding. There
are no assurances that the
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Company will be able to attain the remaining SEMATECH milestones or that
SEMATECH will be capable of providing the agreed upon funding. 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 use its own funds, its research and development expenses would
increase significantly and its operating income would be reduced
correspondingly. Additionally, under the agreements with SEMATECH the Company
was obligated to fund, from its own resources, 120% of amounts received from
SEMATECH up to $36,000,000. At November 30, 1995, the Company had funded
sufficient qualifying expenditures to fulfill its contractual obligation.
The Company anticipates that it will continue to make substantial research
and development expenditures, particularly in its photolithography products, in
order to remain competitive in the semiconductor equipment industry. If the
Company were not able to secure additional external funding or increase its
revenues to support such research and development expenditures, its new product
development and product enhancement efforts would be impaired, which would have
a material adverse effect on the Company's results of operations.
In February 1995, the Company entered into agreements with Intel
Corporation, Motorola Inc., and Texas Instruments Incorporated (the Investors)
related to the Company's Micrascan photolithography products under which 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 of the
transaction for research and development related to its Micrascan technology and
the expansion of its manufacturing capacity as well as working capital for its
Micrascan products. The agreement with the Investors also obligates the Company
to fund, at any time over a five-year period, an amount such that the total it
funds under the agreements with both SEMATECH and the Investors is not less than
$25,000,000. Further, were the Company not to fulfill certain obligations under
the agreement, it could be required to repurchase the Common Stock held by the
Investors.
In connection with the Company's acquisition of SVGL in 1990, SVGL received
an equity investment and research and development funding commitments for
Micrascan from International Business Machines ("IBM"). As a part of this
transaction, the Company agreed to make future payments to IBM based on the
ongoing operating results of SVGL. As part of a subsequent agreement with the
Investors, IBM was also granted certain rights to purchase initial quantities of
future generations of the Company's Micrascan products.
Customer Concentration. The Company relies on a limited number of
customers for a substantial percentage of its net sales. In fiscal 1994, Intel
Corporation, Motorola and SGS-Thompson represented 20%, 19% and 11%,
respectively, of sales and the Company's largest five customers represented 58%
of sales. In fiscal 1995, Intel, Motorola and SGS-Thompson represented 17%, 18%
and 12%, respectively, of sales and the Company's largest five customers
represented 60% of sales. In fiscal 1994 and fiscal 1995, Intel represented 45%
and 36%, respectively, of Track Systems Division ("Track") sales. Track
operations were responsible for a substantial portion of the Company's profits
in both periods. The loss of a significant customer (and in particular the loss
of Intel as a Track customer), a delay in shipment due to customer rescheduling
or any substantial reduction in orders by a significant customer, including
reductions in orders due to market, economic or competitive conditions in the
semiconductor industry, could adversely affect the Company's business and the
results of operations.
Competition. The semiconductor processing equipment industry is intensely
competitive. The Company faces substantial competition both in the United States
and other countries for all of its products. The trend toward consolidation in
the semiconductor processing equipment industry has made it increasingly
important to have the financial resources necessary to compete effectively
across a broad range of product offerings, to fund customer service and support
on a worldwide basis and to invest in both product and process research and
development. Significant competitive factors include product performance, price
and reliability, familiarity with each particular manufacturer's products,
established relationships between suppliers and customers,
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particulate contamination control and product availability. While the Company
believes that outside Japan and the Pacific Rim it competes favorably with
respect to most of these factors it has occasionally been subject to intense
price competition with respect to particular orders and has had difficulty
establishing new relationships with certain customers who have long-standing
relationships with other suppliers. Certain of the Company's existing and
potential competitors have substantially greater name recognition, financial,
engineering, manufacturing and marketing resources and customer service and
support capabilities than the Company.
In addition, Nikon, and to a lesser extent Canon, Inc. ("Canon") have long
established relationships as suppliers of photolithography equipment to most of
the semiconductor manufacturers. Although the Company has supplied Track and
Thermo equipment to many of these customers, it has not previously sold
meaningful quantities of Micrascan photolithography equipment to them. Due to
the Company's position in the photolithography market, an announcement of a new
product by any of these large competitors may cause customers to delay purchases
until the new product is introduced.
The Company's competitors can be expected to continue to improve the design
and performance of their current products and processes and to introduce new
products and processes with improved price/performance characteristics. There
can be no assurance that the Company will be able to compete effectively in the
future. The Company faces substantial foreign and domestic competition,
including that from Tokyo Electron, Ltd. ("TEL") and DaiNippon Screen Mfg. Co.,
Ltd. in photoresist processing equipment and TEL and Kokusai Electric Co., Ltd.
in oxidation/diffusion and LPCVD equipment. SVGL competes with other suppliers
of photolithography exposure equipment, including manufacturers of steppers and
projection aligners. SVGL's Micralign products are generally not competitive
with steppers for fabrication of semiconductor devices with line widths smaller
than 1.25 micron. In marketing Micrascan systems, SVGL faces competition from
suppliers employing other technologies, principally I-Line and Deep UV steppers,
including Nikon Corp., Canon and ASM Lithography. Certain stepper manufacturers
have utilized techniques, such as the use of off-axis illumination and phase
shift mask technology, to extend the capabilities of steppers beyond their
previously estimated limits. Although the Company believes that its step and
scan system will compete favorably with steppers employing these techniques, the
status of the development of such techniques is uncertain and the Company
expects the competition from such stepper manufacturers to be intense.
Additionally, both Nikon and Canon have announced photolithography products
using step and scan technology and a Deep UV light source and Nikon has
indicated that it expects to deliver initial 0.25 micron production units in
mid-1996. Nikon, and to a lesser extent Canon, have long-established
relationships as suppliers of photolithography equipment to most of the
semiconductor manufacturers. While the Company has supplied Track and Thermco
equipment to many of these customers, it has not previously sold meaningful
quantities of Micrascan photolithography equipment to them. In addition, the
Company believes that other potential competitors, including ASM Lithography,
are developing step and scan technologies. There can be no assurance that the
Company will be able to compete effectively in the future. The Company believes
that the Japanese companies with which it competes have a competitive advantage
because their dominance of the Japanese and Pacific Rim semiconductor equipment
market provides them with the sales and technology base to compete more
effectively throughout the rest of the world. The Company is not engaged in any
collaborative effort with any Japanese or Pacific Rim semiconductor manufacturer
regarding process and equipment development. As a result, the Company may be at
a competitive disadvantage to the Japanese equipment suppliers which are engaged
in such collaborative efforts with the Japanese and Pacific Rim semiconductor
manufacturers. There can be no assurance that the Company will be able to
compete successfully in the future in Japan, the Pacific Rim or elsewhere in the
world or that competitive pressures will not adversely affect the Company's
results of operations.
Currency Fluctuations. Substantially all of the Company's manufacturing
costs currently are incurred in the U.S., while a number of the Company's
principal competitor's manufacturing costs are incurred in Japan. As a result, a
substantial increase in the value of the U.S. dollar relative to the Japanese
yen would put the Company at a competitive disadvantage, and would materially
and adversely effect the Company's business and results of operations.
Importance of the Japanese and Pacific Rim Market. 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
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(including fabrication facilities operated outside these areas by Japanese and
Pacific Rim semiconductor manufacturers) represent a substantial portion of the
overall market for semiconductor equipment. To date, the Company has not been
successful in securing an adequate share of these markets. The Company believes
that its current customer base of semiconductor manufacturers in the U.S. and
Europe, and the Korean companies that have purchased initial quantities of the
product will order a sufficient number of units to establish the Micrascan as a
competitive technology. It is also possible that Japanese manufacturers may
follow. However, semiconductor fabrication plants cost hundreds of millions of
dollars, and the Company is relatively new to the photolithography exposure
business. Further, the Company does not share the same level of financial
resources as its competitors. As a result major customers may be unwilling to
purchase photolithography exposure equipment, a critical element of the
semiconductor fabrication process, from a relatively small supplier such as the
Company. A decision by such major customers not to utilize the Micrasan would
have a material adverse effect on the Company.
Termination of Canon Letter of Intent. In April 1993, the Company entered
into a letter of intent with Canon, a major Japanese company, for the purpose of
establishing a worldwide strategic alliance based on SVGL's Micrascan
technology. The Company and Canon were unable to reach agreement and the letter
of intent expired on November 30, 1994. Although Canon is contractually
prohibited until April 2003 from manufacturing a specifically defined step and
scan photolithography machine or disclosing related information, Canon could
introduce a product that includes certain step and scan technology without
violating this prohibition. As a result of the expiration of the letter of
intent, the Company believes that Canon has accelerated its previously suspended
development of a step and scan photolithography product which will compete with
Micrascan.
Patents and Licenses. As is typical in the semiconductor equipment
industry, the Company has from time to time received, and may in the future
receive, communications form third parties asserting patents or copyrights on
certain of the Company's products and technologies. At least one of the
Company's customers has put the Company on notice that is has received a notice
of infringement from Jerome H. Lemelson, alleging that equipment used in the
manufacture of electronic devices infringes patents issued to Mr. Lemelson
relating to "machine vision" or "barcode reader" technologies. The customer has
put the Company on notice it intends to seek indemnification from the Company
for any damages and expenses resulting from this matter if found liable or if
the customer settles the claim. The Company cannot predict the outcome of this
or any other similar claim or its effect upon the Company, and there can be no
assurance that any such litigation or claim would not have a material adverse
effect upon the Company's financial condition or results of operation.
Dependence on Key Employees. The Company's future success is dependent
upon its ability to attract and retain qualified management, technical, sales
and support personnel. The competition for such personnel is intense. The loss
of certain key people or the Company's inability to attract and retain new key
employees could materially adversely affect the Company's business and results
of operations.
Dependence on Sole or Limited Source Suppliers. Most raw materials and
components not produced by the Company are available from more than one
supplier. However, certain raw materials, components and subassemblies are
obtained from single sources or a limited group of suppliers. Although the
Company seeks to reduce its dependence on these sole and limited source
suppliers, and the Company has not experienced significant production delays due
to unavailability or delay in procurement of component parts or raw materials to
date, disruption or termination of certain of these sources could occur and such
disruptions could have at least a temporary adverse effect on the Company's
business and results of operations. Moreover, a prolonged inability to obtain
certain components could have a material adverse effect on the Company's
business and results of operations and could result in damage to customer
relationships.
Volatility of Stock Price. The public offering price of the Common Stock
offered hereby may not be indicative of prices that will prevail in the trading
market for the Common Stock. The stock market has from time to time experienced
significant price and volume fluctuations that are unrelated to the operating
performance of particular companies. In addition, the market price of the
Company's Common Stock has been and is likely to be highly volatile. Factors
such as fluctuations in the Company's operating results,
7
<PAGE> 9
shortfalls in revenue or earnings from levels expected by securities analysts,
announcements of technological innovations or new products by the Company or its
competitors, governmental regulation, developments with respect to patents or
proprietary rights and litigation relating thereto and general market conditions
may have a significant adverse effect on the market price of the Common Stock.
THE COMPANY
Silicon Valley Group, Inc. was incorporated in California in 1973 and
became a Delaware corporation in January 1987. The Company's principal executive
offices are located at 2240 Ringwood Avenue, San Jose, California 95131 and its
telephone number at that address is (408) 434-0500. The Common Stock of the
Company is traded on the Nasdaq National Market and is quoted under the symbol
"SVGI".
SELLING STOCKHOLDER
The following table shows (i) the name of the Selling Stockholder, (ii) the
number of shares of Common Stock beneficially owned prior to the offering, (iii)
the number of shares of Common Stock to be sold by the Selling Stockholder
pursuant to this Prospectus and (iv) the number of shares beneficially owned
after the offering:
<TABLE>
<CAPTION>
SHARES BENEFICIALLY SHARES BENEFICIALLY
OWNED PRIOR TO SHARES TO BE SOLD OWNED AFTER THE
NAME OFFERING(1)(2) IN THE OFFERING(3) OFFERING
--------------------------------- -------------------- ------------------ --------------------
<S> <C> <C> <C>
SEMATECH, Inc. .................. 1,750,000 1,750,000 0
</TABLE>
- ---------------
(1) Based on shares beneficially owned at January 31, 1996.
(2) The Selling Stockholder will not own more than 1% of the outstanding shares
of Common Stock of the Company following the sale of the shares offered
hereby.
(3) The Selling Stockholder may offer up to such number of shares of Common
Stock of the Company.
PLAN OF DISTRIBUTION
Any broker-dealer participating in such transactions as agent may receive
commissions from the Selling Stockholder (and, if they act as agent for the
purchaser of such shares, from such purchaser). Usual and customary brokerage
fees will be paid by the Selling Stockholder. Broker-dealers may agree with the
Selling Stockholder to sell a specified number of shares at a stipulated price
per share, and, to the extent such a broker-dealer is unable to do so acting as
agent for the Selling Stockholder, to purchase as principal any unsold shares at
the price required to fulfill the broker-dealer commitment to the Selling
Stockholder. Broker-dealers who acquire shares as principal may thereafter
resell such shares from time to time in transactions (which may involve crosses
and block transactions and which may involve sales to and through other
broker-dealers, including transactions of the nature described above) in the
over-the-counter market, in negotiated transactions or otherwise at market
prices prevailing at the time of sale or at negotiated prices, and in connection
with such resales may pay to or receive from the purchasers of such shares
commissions computed as described above.
The Company has advised the Selling Stockholder that the anti-manipulative
Rules 10b-6 and 10b-7 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), may apply to their sales in the market, has furnished the
Selling Stockholder with a copy of these Rules and has informed them of the need
for delivery of copies of this Prospectus. The Selling Stockholder may indemnify
any broker-dealer that participates in transactions involving the sale of the
shares against certain liabilities, including liabilities arising under the
Securities Act. Any commissions paid or any discounts or concessions allowed to
any such broker-dealers, and any profits received on the resale of such shares,
may be deemed to be underwriting discounts and commissions under the Securities
Act if any such broker-dealers purchase shares as principal.
8
<PAGE> 10
Upon notification by the Selling Stockholder to the Company that any
material arrangement has been entered into with a broker-dealer for the sale of
shares through a cross or block trade, a supplemental prospectus will be filed
under Rule 424(c) under the Securities Act setting forth the name of the
participating broker-dealer(s), the number of shares involved, the price at
which such shares were sold by the Selling Stockholder, the commissions paid or
discounts or concessions allowed by the Selling Stockholder to such
broker-dealer(s), and where applicable, that such broker-dealer(s) did not
conduct any investigation to verify the information set out in this Prospectus.
Any securities covered by this Prospectus which qualify for sale pursuant
to Rule 144 under the Securities Act may be sold under that Rule rather than
pursuant to this Prospectus.
There can be no assurance that the Selling Stockholder will sell any or all
of the shares of Common Stock offered hereunder.
The Company has agreed to indemnify the Selling Stockholder, each of its
officers and directors and each person controlling the Selling Stockholder
within the meaning of Section 15 of the Securities Act, with respect to which
registration, qualification or compliance has been effected against all
expenses, claims, losses, damages and liabilities (or actions in respect
thereof), including any of the foregoing incurred in settlement of any
litigation, arising out of or based on any untrue statement (or alleged untrue
statement) of a material fact contained in any registration statement,
prospectus, offering circular or other document, or any amendment or supplement
thereto, incident to any such registration, qualification or compliance, or
based on any omission (or alleged omission) to state therein a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances in which they were made, not misleading, or any
violation by the Company of any rule or regulation promulgated under the
Securities Act applicable to the Company and relating to action or inaction
required of the Company in connection with any such registration, qualification
or compliance, and will reimburse the Selling Stockholder, each of its officers
and directors and each person controlling the Selling Stockholder, each such
underwriter and each person who controls any such underwriter, for any legal and
any other expenses reasonably incurred in connection with investigating,
preparing or defending any such claim, loss, damage, liability or action,
provided that the Company will not be liable in any such case to the extent that
any such claim, loss, damage, liability or expense arises out of or is based on
any untrue statement or omission or alleged untrue statement or omission, made
in reliance upon and in conformity with information furnished to the Company by
the Selling Stockholder or underwriter and stated to be specifically for use
therein.
INFORMATION INCORPORATED BY REFERENCE
There are hereby incorporated by reference in this Prospectus the following
documents and information heretofore filed with the Securities and Exchange
Commission:
(1) The Company's Annual Report on Form 10-K for the fiscal year ended
September 30, 1995, filed pursuant to Section 13 of the Exchange Act.
(2) The Company's Quarterly Report on Form 10-Q for the fiscal quarter
ended December 31, 1994, pursuant to Section 13 of the Exchange Act.
(3) The Company's Quarterly Report on Form 10-Q for the fiscal quarter
ended March 30, 1995, filed pursuant to Section 13 of the Act.
(4) The Company's Quarterly Report on Form 10-Q for the fiscal quarter
ended June 30, 1995, filed pursuant to Section 13 of the Act.
(5) The Company's Current Report on Form 8-K filed on March 2, 1995.
(6) The Company's Registration Statement on Form 8-A filed with the
Securities and Exchange Commission on November 23, 1983.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14
and 15(d) of the Exchange Act, after the date of this Prospectus and prior to
the filing of a post-effective amendment which indicates that
9
<PAGE> 11
all securities offered have been sold or which deregisters all securities then
remaining unsold, shall be deemed to be incorporated by reference in this
Prospectus and to be part hereof from the date of filing such documents.
LEGAL MATTERS
Wilson Sonsini Goodrich & Rosati, Professional Corporation, 650 Page Mill
Road, Palo Alto, California 94304-1050, counsel to the Company, will render an
opinion to the effect that the Common Stock offered hereby is duly and validly
issued, fully paid and non-assessable. Larry W. Sonsini, a member of such firm,
is a director and Secretary of the Company and holds options to purchase 19,500
shares of the Company's Common Stock.
10
<PAGE> 12
SILICON VALLEY GROUP, INC.
REGISTRATION STATEMENT ON FORM S-3
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM NUMBER
ITEM 14 OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.*
<TABLE>
<S> <C>
Registration fee -- Securities and Exchange Commission..................... $15,672
NASD fees.................................................................. 0
Accountant's fees.......................................................... 7,500
Legal fees................................................................. 5,000
Miscellaneous.............................................................. 5,000
-------
Total $33,172
=======
</TABLE>
- ---------------
* Represents expenses relating to the distribution by Selling Stockholder
pursuant to the Prospectus prepared in accordance with the requirements of
Form S-3. These expenses will be borne by the Company on behalf of the Selling
Stockholder.
ITEM 15 INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company has adopted provisions in its Certificate of Incorporation that
limit the liability of its directors and enable the Company to broaden the
indemnification provided to its directors and officers. As permitted by the
Delaware General Corporation Law, directors will not be liable for monetary
damages arising from a breach of their fiduciary duty as directors in certain
circumstances. Such limitation does not affect liability of a director to the
Company or its shareholders for (i) breaches of the director's duty of loyalty,
(ii) acts or omissions not in good faith or involving intentional misconduct or
knowing violations of law, (iii) the payment of unlawful dividends or unlawful
stock repurchases or redemptions or (iv) transactions in which the director
received an improper personal benefit. Such limitation of liability does not
affect the availability of equitable remedies such as injunctive relief or
rescission.
The Company's Bylaws provide that the Company shall indemnify its directors
and officers to the maximum extent permitted by Delaware law, including
circumstances in which indemnification is otherwise discretionary under Delaware
law. The Company has also entered into indemnification agreements with its
officers and directors containing provisions which are in some respects broader
than the specific indemnification provisions contained in the Delaware General
Corporation Law. The Indemnification Agreements may require the Company, among
other things, to indemnify such officers and directors against certain
liabilities that may arise by reason of their status or service as directors or
officers if they acted in good faith and in a manner they reasonably believed to
be in or not opposed to the best interests of the Company and, with respect to
any criminal proceeding, had no reasonable cause to believe their conduct was
unlawful, to advance their expenses incurred as a result of any proceeding
against them as to which they could be indemnified, and to obtain directors' and
officers' insurance if available on reasonable terms.
The Company understands that the staff of the Securities and Exchange
Commission is of the opinion that statutory, charter and contractual provisions
as are described above have no effect on claims arising under the federal
securities laws. The Company is not aware of any material threatened or ongoing
litigation or proceeding which may result in a claim for such indemnification.
II-1
<PAGE> 13
ITEM 16 EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER
- ------
<C> <S> <C>
5.1* Opinion of Wilson Sonsini Goodrich &
Rosati
23.1 Independent Auditors' Consent
23.2* Consent of Wilson Sonsini Goodrich &
Rosati (Included in Exhibit 5.1)
24.1* Power of Attorney
</TABLE>
- ---------------
* Previously provided
ITEM 17 UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement to include
any material information with respect to the plan of distribution not
previously disclosed in the registration statement or any material change
to such information in this registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, as amended (the "Securities Act"), each such
post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(4) That, for purposes of determining any liability under the
Securities Act, each filing of the registrant's annual report pursuant to
Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as
amended that is incorporated by reference in this registration statement
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
II-2
<PAGE> 14
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Amendment No. 1 to the Registration Statement on
Form S-3 to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of San Jose, State of California, on the 2nd day of
February, 1996.
SILICON VALLEY GROUP, INC.
By: /s/ RUSSELL G. WEINSTOCK
------------------------------------
Russell G. Weinstock
Vice President, Finance and
Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Amendment No. 1 to Registration Statement has been signed below by the
following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------------------- ------------------------------ -----------------
<C> <S> <C>
/s/ PAPKEN S. DER TOROSSIAN* Chairman of the Board and February 2, 1996
- --------------------------------------------- Chief Executive Officer
(Papken S. Der Torossian)
/s/ RUSSELL G. WEINSTOCK Vice President, Finance and February 2, 1996
- --------------------------------------------- Chief Financial Officer
(Russell G. Weinstock)
/s/ WILLIAM A. HIGHTOWER* Director February 2, 1996
- ---------------------------------------------
(William A. Hightower)
/s/ WILLIAM L. MARTIN* Director February 2, 1996
- ---------------------------------------------
(William L. Martin)
/s/ LARRY W. SONSINI* Director February 2, 1996
- ---------------------------------------------
(Larry W. Sonsini)
/s/ NAM P. SUH* Director February 2, 1996
- ---------------------------------------------
(Nam P. Suh)
*By /s/ RUSSELL G. WEINSTOCK*
- ---------------------------------------------
(Russell G. Weinstock, Attorney-in-Fact
</TABLE>
II-3
<PAGE> 15
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION PAGE
- ------ ------------------------------------------------------------------------------ ----
<C> <S> <C>
5.1* Opinion of Wilson Sonsini Goodrich & Rosati
23.1 Independent Auditors' Consent
23.2* Consent of Wilson Sonsini Goodrich & Rosati (Included in Exhibit 5.1)
</TABLE>
- ---------------
* Previously filed.
<PAGE> 1
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Amendment No. 1 to
Registration Statement No. 33-64569 of Silicon Valley Group, Inc. on Form S-3 of
our reports dated October 20, 1995 included in and incorporated by reference in
the Annual Report on Form 10-K of Silicon Valley Group, Inc. for the year ended
September 30, 1995.
DELOITTE & TOUCHE LLP
San Jose, California
January 29, 1996
