<PAGE> 1
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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 December 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
January 22, 1996 was 29,300,528.
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<PAGE> 2
SILICON VALLEY GROUP, INC.
INDEX
PART I. FINANCIAL INFORMATION
<TABLE>
<CAPTION>
PAGE NO.
-------
<S> <C>
Consolidated Condensed Balance Sheets as of
December 31, 1995 and September 30, 1995 3
Consolidated Condensed Income Statements
for the Quarters Ended December 31, 1995 and
1994 4
Consolidated Condensed Statements of Cash Flows
for the Quarters Ended December 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 15
</TABLE>
<PAGE> 3
PART I. FINANCIAL INFORMATION
SILICON VALLEY GROUP, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
December 31, September 30,
------------ -------------
1995 1995
---- ----
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and equivalents $267,148 $166,790
Temporary investments 34,736 13,733
Accounts receivable (net of allowance for doubtful
accounts of $4,615 and $4,107, respectively) 133,212 122,849
Inventories 170,642 153,973
Prepaid expenses 9,421 7,389
Deferred taxes 1,250 1,000
-------- --------
Total current assets 616,409 465,734
PROPERTY AND EQUIPMENT - NET 32,542 27,619
DEPOSITS AND OTHER ASSETS 2,449 2,097
INTANGIBLE ASSETS - NET 2,781 2,820
-------- --------
TOTAL $654,181 $498,270
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of capital lease obligations $ 800 $ 885
Accounts payable 38,439 40,219
Accrued liabilities 106,886 99,427
Income taxes payable 9,009 2,177
-------- --------
Total current liabilities 155,134 142,708
CAPITAL LEASE OBLIGATIONS 521 654
DEFERRED LIABILITIES 1,404 685
MINORITY INTEREST 4,083 3,976
STOCKHOLDERS' EQUITY:
Common Stock - Shares outstanding:
December 31, 1995: 29,269,078
September 30, 1995: 25,233,170 375,863 249,552
Retained earnings 117,176 100,695
-------- --------
Stockholders' equity 493,039 350,247
-------- --------
TOTAL $654,181 $498,270
======== ========
</TABLE>
See Notes to Consolidated Condensed Financial Statements.
3
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SILICON VALLEY GROUP, INC.
CONSOLIDATED CONDENSED INCOME STATEMENTS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
Quarter Ended Decemcber 31,
---------------------------
1995 1994
-------- -------
<S> <C> <C>
NET SALES $158,280 $85,971
COST OF SALES 92,879 52,769
-------- -------
GROSS PROFIT 65,401 33,202
OPERATING EXPENSES:
Research, development and related engineering 15,506 8,278
Marketing, general and administrative 27,699 17,622
-------- -------
OPERATING INCOME 22,196 7,302
Interest and Other Income - Net 3,459 1,198
Interest Expense (135) (145)
-------- -------
INCOME BEFORE INCOME TAXES
AND MINORITY INTEREST 25,520 8,355
Provision for Income Taxes 8,932 3,008
Minority Interest 107 17
-------- -------
NET INCOME $ 16,481 $ 5,330
======== =======
Preferred Stock Dividend $ -- $ 298
======== =======
NET INCOME PER SHARE $ 0.54 $ 0.25
======== =======
Shares Used in per Share Computations 30,505 20,322
======== =======
</TABLE>
See Notes to Consolidated Condensed Financial Statements.
4
<PAGE> 5
SILICON VALLEY GROUP, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
Quarters Ended
--------------
December 31,
------------
1995 1994
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 16,481 $ 5,330
Reconciliation to net cash provided by
(used for) operating activities:
Depreciation and amortization 2,275 3,116
Amortization of intangibles 39 169
Deferred income taxes (250) (131)
Minority interest 107 17
Changes in assets and liabilities:
Receivables (10,363) (25,973)
Inventories (16,669) (14,556)
Prepaid expenses (2,032) 816
Deposits and other assets (352) 122
Accounts payable (1,780) 7,071
Accrued and deferred liabilities 8,264 6,998
Income taxes 6,832 231
-------- --------
Net cash provided by (used for) operating activities 2,552 (16,790)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of temporary investments (30,003) --
Maturities of temporary investments 9,000 --
Purchases of property and equipment (7,198) (4,045)
-------- --------
Net cash used for investing activities (28,201) (4,045)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of debt (218) (193)
Sale of Common Stock 126,311 1,446
Collection of receivable from
sale of common stock warrants -- 8,204
-------- --------
Net cash provided by financing activities 126,093 9,457
-------- --------
EFFECT OF EXCHANGE RATE CHANGES ON CASH (86) 51
======== ========
INCREASE (DECREASE) IN CASH AND EQUIVALENTS 100,358 (11,327)
CASH AND EQUIVALENTS:
Beginning of period 166,790 87,829
-------- --------
End of period $267,148 $ 76,502
======== ========
NON-CASH FINANCING ACTIVITIES:
Preferred Stock Dividend Paid in Common Stock $ -- $ 298
======== ========
</TABLE>
See Notes to Consolidated Condensed Financial Statements.
5
<PAGE> 6
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, 1995.
2. INVENTORIES
Inventories are comprised of:
<TABLE>
<CAPTION>
December 31, September 30,
----------- ------------
1995 1995
---- ----
(In thousands)
<S> <C> <C>
Raw materials $ 69,354 $ 63,803
Work-in-process 95,327 87,060
Finished goods 5,961 3,110
-------- --------
$170,642 $153,973
======== ========
</TABLE>
3. BANK LINE OF CREDIT
In December 1995, the Company replaced its existing bank credit facility with a
$75,000,000 unsecured revolving bank credit agreement that expires in December
1998. Advances under the new facility will bear interest at either the prime
rate or LIBOR plus 1%. The agreement includes certain covenants regarding
financial ratios and prohibits the payment of cash dividends.
4. UNDERWRITTEN PUBLIC OFFERING
During the first quarter of fiscal 1996, the Company sold 4,025,000 shares of
its Common Stock through an underwritten public offering. The net proceeds
from the offering were approximately $126,200,000.
6
<PAGE> 7
5. RECENTLY ISSUED ACCOUNTING STANDARD
The Company is required to adopt Statement of Financial Accounting Standards
(SFAS) No. 123, Accounting for Stock-Based Compensation, in fiscal 1997. SFAS
No. 123 establishes accounting and disclosure requirements using a fair value
based method of accounting for stock based employee compensation plans. Under
SFAS No. 123 the Company may either adopt the new fair value based accounting
method or continue the intrinsic value based method and provide proforma
footnote disclosures of net income and earnings per share as if the accounting
provisions of SFAS No. 123 had been adopted. The Company plans to adopt only
the footnote disclosure requirements of SFAS No. 123; therefore such adoption
will have no effect on the Company's consolidated net earnings or cash flows.
7
<PAGE> 8
SILICON VALLEY GROUP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This discussion and analysis contains certain forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. Actual results could differ materially from
those projected in the forward-looking statements as a result of the risk
factors set forth below, as well as risk factors included in the Company's
Annual Report on Form 10K for the fiscal year ended September 30, 1995.
RESULTS OF OPERATIONS
The Company designs, 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 into which the Company sells its products is highly
cyclical and has, historically, experienced periodic downturns which have had a
severe effect on the semiconductor industry's demand for semiconductor
processing equipment. Prior semiconductor downturns have resulted in
significant reductions in the Company's net sales, gross margin and net income.
Moreover, the Company's operations as a whole will continue to be dependent on
the current and anticipated demand for integrated circuits and products
utilizing integrated circuits. Any future weakness in demand in the
semiconductor industry is likely to have an adverse effect on the Company's
business and results of operations. Further, the Company believes that it will
continue to rely on a limited number of major customers for a substantial
percentage of its net sales (three such customers accounted for 47% of the
Company's sales in fiscal 1995). The loss of a significant 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 results of operations.
For the first quarter of fiscal 1996, the Company recorded net sales of
$158,280,000, an 84% increase over net sales of $85,971,000 during the
year-earlier quarter and 14% above fourth quarter fiscal 1995 net sales of
$138,959,000. Net sales in each of the Company's product groups were above the
year-earlier levels with the most significant increases resulting from higher
shipments of Track's 90 Series products and SVGL's Micrascan photolithography
systems. The increase in net sales over the preceding quarter was due to higher
net sales in Track and SVGL, primarily increased shipments of Track's 90 Series
products and SVGL's Micrascan photolithography systems. During the first
quarter of fiscal 1996, the Company had
8
<PAGE> 9
bookings of $185,252,000 which represented a book to bill ratio of 1.17 to 1.
At December 31, 1995, the Company had a backlog of $418,411,000, up from
$391,439,000 at September 30, 1995. The Company includes in backlog only those
orders to which a purchase order number has been assigned by the customer and
for which delivery has been specified within twelve months. At December 31,
1995, the backlog included orders for 34 Micrascan photolithography systems,
four of which were for the next generation .25 micron product, from eight
global semiconductor manufacturers.
Gross margin was 41.3% for the first quarter of fiscal 1996, an increase from
38.6% in the year-earlier quarter, and approximately level with 40.7% for the
fourth quarter of fiscal 1995. The increase in gross margin over the
year-earlier quarter was primarily due to higher manufacturing volumes and
improvements related to SVGL's Micrascan photolithography systems and a larger
percentage of the Company's total sales being comprised of Track products,
which typically have more favorable gross margins than the rest of the
Company's products. The gross margin improvement over the fourth quarter of
fiscal 1995 was primarily the result of increased margins on higher shipments
of Track 90 Series products, as well as an increased percentage of Thermco's
shipments consisting of its highest-margin VTR 7000 products.
Research, development and related engineering expense ("R&D") was $15,506,000
(9.8% of net sales) during the first quarter of fiscal 1996 compared to
$8,278,000 (9.6% of net sales) during the first quarter of fiscal 1995 and
$12,042,000 (8.7% of net sales) in the preceding quarter. The R&D expenditures
were net of funding from outside parties under development agreements of
$2,959,000, $2,082,000 and $4,196,000 during the first quarter of fiscal 1996
and the first and fourth quarters of fiscal 1995, respectively. Substantially
all such funding was provided to SVGL by SEMATECH. In comparing the first
quarter of fiscal 1996 to the first quarter of fiscal 1995, the increased
expenditures were primarily the result of new product development activities
across the Company's product groups. The increase in R&D expenditures over the
preceding quarter reflects increased development activities by Thermco and
SVGL, as well as less SEMATECH funding recognized as an offset to R&D, as SVGL
nears completion of its development agreements with SEMATECH.
Marketing, general and administrative expenses ("MG&A") were $27,699,000 (17.5%
of net sales) in the first quarter of fiscal 1996 compared to $17,622,000
(20.5% of net sales) for the year-earlier quarter and $26,336,000 (18.9% of net
sales) in the preceding quarter. The increase over the year-earlier quarter was
primarily due to costs associated with the increased shipments and the
expansion of the Company's technical training and support functions. The
increase over the preceding quarter was principally due to costs associated
with the increased level of product shipments. The decrease in first quarter
fiscal 1995 MG&A as a percentage of net sales compared to either the first or
fourth quarters of fiscal 1994 was the result of the higher net sales during
the quarter.
Operating income was $22,196,000 for the first quarter of fiscal 1996, compared
to $7,302,000 for the year-earlier quarter and $18,205,000 for the preceding
quarter. The improvement in operating income from both the year-earlier and
preceding quarters resulted from increased gross margins on higher net sales
and total operating expenses which were lower as a percentage of such net
sales.
9
<PAGE> 10
Interest and other income was $3,459,000 during the first quarter of fiscal
1996 compared to $1,198,000 during the year-earlier quarter and $4,324,000
during the preceding quarter. As a result of higher average cash balances
available for investment, interest income was higher than either of the
preceding quarters and was the primary reason for the increase in interest and
other income from the first quarter of fiscal 1995. The decrease from the
preceding quarter resulted from a $1,500,000 initial royalty fee recorded
during the earlier quarter relating to a non-exclusive license granted to a
third party for the use of certain cleaning technology owned by the Company.
During the first quarter of fiscal 1996, interest expense was $135,000 compared
to $145,000 and $177,000 during the first and fourth quarters of fiscal 1995,
respectively.
The Company recorded a 35% provision for income taxes for the first quarter of
fiscal 1996, compared to a 36% provision for all of fiscal 1995. Variations in
the Company's effective tax rate relate primarily to changes in the geographic
distribution of the Company's pretax income.
The reductions for minority interest of $107,000 during the first quarter of
fiscal 1996 and $17,000 and $171,000 during the first and the fourth quarters
of fiscal 1995, respectively, represent that share of SVGL's operating results
attributable to its minority shareholder.
The Company had net income of $16,481,000 ($0.54 per share) during the first
quarter of fiscal 1996 compared to net income of $5,330,000 ($0.25 per share)
and $14,134,000 ($0.52 per share) for the first and fourth quarters of fiscal
1995, respectively.
FLUCTUATIONS IN QUARTERLY RESULTS AND DEPENDENCE ON NEW PRODUCT DEVELOPMENT
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, level of sales, the relative proportions of domestic and
international sales, activities of competitors, acquisitions, international
events, 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. Failure to introduce new products successfully
in a timely manner could result in the loss of competitive position and reduced
sales of existing products. In particular, the Company believes that advanced
logic devices
10
<PAGE> 11
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 during the second half of calendar 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.
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 systems has been encouraging, they
are not necessarily indicative of industry-wide acceptance of the Micrascan
technology. 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 primary source of this advanced technology. The Company believes that
advanced semiconductor manufacturers will not require volume quantities of
production equipment as advanced as Micrascan until late fiscal 1996, and that
substantial sales of Micrascan systems will not begin until late calendar 1996
or 1997. Additionally, if manufacturers of traditional I-line or Deep UV
steppers are able to further enhance their machines to achieve finer line
widths sufficiently to erode Micrascan's expected yield, throughput, and line
width advantages, demand may not develop as the Company expects. SVGL had a
marginal profit for fiscal 1995, primarily due to its fourth quarter operating
results. Although SVGL was profitable in the first quarter of fiscal 1996, it
was less so than during the preceding quarter, due in part to the increased R&D
expenditures previously discussed. However, the Company believes that with the
costs associated with the continued development of the Micrascan technology,
the expansion of SVGL's manufacturing capacity and the additional manpower
requirements related to the expanded capacity, there can be no assurance that
SVGL 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, Track nor Thermco has been successful in
obtaining a substantial share of these markets. In many instances, Japanese and
Pacific Rim semiconductor manufacturers fabricate devices such as DRAM's, with
potentially different economic cycles than those effecting the sales of devices
manufactured by the majority of the Company's US and European customers.
Failure to secure customers in these markets may limit the market share
available to the Company and may increase the Company's vulnerability to
industry or geographic downturns.
The Company is currently expanding the manufacturing capacity of each of its
operating groups to meet current demand levels. Presently, manufacturing
capacity is insufficient to meet multiple customer demands for Micrascan
products and 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 now commence facility and capital
improvements and the related staffing and administrative costs necessary to
meet expected
11
<PAGE> 12
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. These issues 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 to multiple customers could result in semiconductor manufacturers
electing to install competitive equipment in their advanced fabrication
facilities, which could preclude 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.
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
December 31, 1995, the Company had recognized $16,591,000 of such SEMATECH
funding. There are no assurances that the 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. Through
the first quarter of fiscal 1996, the Company had funded sufficient qualifying
expenditures to fulfill its contractual obligation.
In February 1995, the Company entered into an agreement 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, during the five year period ending February 2000, 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.
12
<PAGE> 13
LIQUIDITY AND CAPITAL RESOURCES
In October 1995, the Company sold 4,025,000 shares of its Common Stock through
an underwritten public offering. The net proceeds of the offering were
approximately $126,200,000.
At December 31, 1995 cash and cash equivalents and temporary investments were
$301,884,000 compared to the September 30, 1995 balance of $180,523,000, an
increase of $121,361,000. The increase was primarily the result of the Common
Stock offering discussed above. Significant operating cash inflows from the
Company's earnings were utilized to finance increased accounts receivable
resulting from the Company's increased shipments and higher inventory levels
required to satisfy the current backlog of customer orders, as well as the
purchase of property and equipment.
During the first quarter of fiscal 1996 the Company provided SVGL, its
94%-owned subsidiary, with $13,028,000 in funding, all of which was recorded as
intercompany loans. Additionally, the Company believes that for the foreseeable
future it will have to continue to provide SVGL with a significant amount of
funding. In connection with its acquisition of SVGL in 1990, the Company
committed to purchase under certain circumstances, additional SVGL securities
("the SVGL Calls") in an amount up to $23,200,000 at any time through May 1997.
To the extent the SVGL Calls are not exercised, the Company has the option to
purchase up to $15,000,000 of SVGL Common Stock under similar terms. The
Company may choose to continue funding SVGL through intercompany loans or it
may choose to make an additional equity investment in SVGL.
In December 1995, the Company replaced its existing bank credit facility with a
$75,000,000 unsecured revolving bank credit agreement which expires in December
1998. Under the new facility, advances will bear interest at either the U.S.
prime rate or the LIBOR rate plus 1%. At February 5, 1996, there were no
borrowings outstanding under the agreement.
The Company believes that it has sufficient working capital and available bank
credit to sustain operations and provide for the expansion of its business for
the foreseeable future.
13
<PAGE> 14
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.
None.
ITEM 5. OTHER INFORMATION.
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
27 Financial Data Schedule.
14
<PAGE> 15
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: February 8, 1996 By: /s/ Papken S. Der Torossian
---------------------------
Papken S. Der Torossian
Chief Executive Officer and
Chairman of the Board
Date: February 8, 1996 By: /s/ Russell G. Weinstock
------------------------
Russell G. Weinstock
Vice President Finance and
Chief Financial Officer
15
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS FOR THE FIRST QUARTER OF FISCAL 1996 AS FILED IN THE
COMPANY'S FORM 10Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FORM
10K FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1995.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> OCT-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 267,148
<SECURITIES> 34,736
<RECEIVABLES> 137,827
<ALLOWANCES> 4,615
<INVENTORY> 170,642
<CURRENT-ASSETS> 616,409
<PP&E> 91,562
<DEPRECIATION> 59,020
<TOTAL-ASSETS> 654,181
<CURRENT-LIABILITIES> 155,134
<BONDS> 0
<COMMON> 375,863
0
0
<OTHER-SE> 117,176
<TOTAL-LIABILITY-AND-EQUITY> 654,181
<SALES> 158,280
<TOTAL-REVENUES> 158,280
<CGS> 92,879
<TOTAL-COSTS> 92,879
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 135
<INCOME-PRETAX> 25,520
<INCOME-TAX> 8,932
<INCOME-CONTINUING> 16,481
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 16,481
<EPS-PRIMARY> 0.54
<EPS-DILUTED> 0
<FN>
MINORITY INTEREST OF $107,000 IS DEDUCTED FROM AFTER-TAX INCOME IN ARRIVING AT
NET INCOME OF $16,481,000.
</FN>
</TABLE>
