<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 14, 1997
REGISTRATION NO. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
SILICON VALLEY GROUP, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 3559 94-2264681
(STATE OF INCORPORATION) (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
CLASSIFICATION IDENTIFICATION NUMBER)
CODE NUMBER)
</TABLE>
101 METRO DRIVE, SUITE 400
SAN JOSE, CALIFORNIA 95110
(408) 441-6700
(ADDRESS, INCLUDING ZIP CODE AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
RUSSELL G. WEINSTOCK
VICE PRESIDENT, FINANCE AND CHIEF FINANCIAL OFFICER
SILICON VALLEY GROUP, INC.
101 METRO DRIVE, SUITE 400
SAN JOSE, CALIFORNIA 95110
(408) 441-6700
(NAME, ADDRESS, INCLUDING ZIP CODE AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
AGENT FOR SERVICE)
COPY TO:
AARON J. ALTER
JEFFREY A. HERBST
WILSON SONSINI GOODRICH & ROSATI
PROFESSIONAL CORPORATION
650 PAGE MILL ROAD
PALO ALTO, CALIFORNIA 94304
(650) 493-9300
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
From time to time after the effective date of this Registration Statement.
If the only securities being registered on this Form are being 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]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<S> <C> <C> <C> <C>
==================================================================================================
PROPOSED MAXIMUM
PROPOSED MAXIMUM AGGREGATE
TITLE OF SECURITIES TO AMOUNT TO BE OFFERING PRICE OFFERING AMOUNT OF
BE REGISTERED REGISTERED PER SHARE(1) PRICE(1) REGISTRATION FEE
- --------------------------------------------------------------------------------------------------
Common Stock $0.01 par
value....................... 489,296 shares $33.16 $16,225,055 $4,916.68
==================================================================================================
</TABLE>
(1) Estimated solely for purposes of calculation of the registration fee, based
on the average of the high and low prices of the Registrant's Common Stock
as reported on the Nasdaq National Market on October 7, 1997 in accordance
with Rule 457 under the Securities Act of 1933.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
================================================================================
<PAGE> 2
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR
MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS
OF ANY SUCH STATE.
SUBJECT TO COMPLETION DATED OCTOBER 14, 1997
PROSPECTUS
489,296 SHARES
SILICON VALLEY GROUP, INC.
COMMON STOCK
($.01 PAR VALUE)
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, "SVG" or the
"Company") offered from time to time by International Business Machines
Corporation, a New York corporation (the "Selling Stockholder") for its benefit.
The Common Stock to which this Prospectus relates was received by the Selling
Stockholder pursuant to a Stock Purchase and Registration Rights Agreement
between the Company and the Selling Stockholder. Such shares were 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 on the Nasdaq National Market. On
October 7, 1997, the closing price of the Company's Common Stock was $32.6875
(Nasdaq Symbol: SVGI).
SEE "RISK FACTORS" COMMENCING ON PAGE 5 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.
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.
The date of this Prospectus is October , 1997.
<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 THE 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.
AVAILABLE INFORMATION
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 (unless such exhibits are specifically incorporated by reference into
such documents). Requests for such copies should be directed to Silicon Valley
Group, Inc., 101 Metro Drive, Suite 400, San Jose, California 95110, Attn: Vice
President, Finance and Chief Financial Officer. The Company's telephone number
at that location is (408) 441-6700.
The Company is subject to the informational reporting requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), 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 may be inspected and copied at the public
reference facilities of the Commission at 450 Fifth Street, N.W., Washington,
D.C. 20549 and at the Commission's regional offices at Seven World Trade Center,
13th Floor, New York, New York 10048, and 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661-2511. Copies of such material can be obtained from the
Public Reference Section of the Commission, 450 Fifth Street, N.W., Washington,
D.C. 20549, at prescribed rates. The Common Stock of the Company is quoted on
the Nasdaq National Market. Reports, proxy and information statements and other
information concerning the Company may be inspected at The Nasdaq Stock Market
at 1735 K Street, N.W., Washington, D.C. 20006. Information, as of particular
dates, concerning directors and officers of the Company, their remuneration,
options granted to them, and the principal holders of securities of the Company
has been disclosed in the proxy statements distributed to shareholders of the
Company and filed with the Commission. Reports, proxy statements and other
information filed electronically by the Company with the Commission are
available at the Commission's world wide web site at http://www.sec.gov.
ADDITIONAL INFORMATION
This Prospectus constitutes a part of a Registration Statement on Form S-3
(herein, together with all amendments and exhibits, referred to as the
"Registration Statement") filed by the Company with the Commission under the
Securities Act. This Prospectus does not contain all of the information set
forth in the Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the Commission. For further
information with respect to the Company and the shares of Common Stock offered
hereby, reference is hereby made to the Registration Statement. Statements
contained herein concerning the provisions of any document are not necessarily
complete, and each such statement is qualified in its entirety by reference to
the copy of such document filed with the Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents previously filed with the Commission by the Company
pursuant to the Exchange Act are incorporated by reference in this Prospectus:
(1) The Company's Annual Report on Form 10-K for the fiscal year ended
September 30, 1996, filed pursuant to Section 13 of the Exchange Act.
2
<PAGE> 4
(2) The Company's Quarterly Report on Form 10-Q for each of the
quarters ended December 31, 1996, March 31, 1997 and June 30, 1997, filed
pursuant to Section 13 of the Exchange Act.
(3) The description of the Company's Common Stock contained in the
Company's Registration Statement on Form 8-A filed with the Commission on
November 23, 1983.
All documents and reports filed by the Company pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act after the date of this Prospectus and
prior to the termination of this offering shall be deemed to be incorporated by
reference in this Prospectus and to be part hereof from the dates of filing of
such documents and reports. Any statement incorporated by reference herein shall
be deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any statement so modified or superseded
shall not be deemed, except as so modified or superseded, to constitute a part
of this Prospectus.
3
<PAGE> 5
THE COMPANY
SVG designs, manufactures, markets and services semiconductor processing
equipment used in the fabrication of integrated circuits. The fabrication of
integrated circuits involves repeating a complex series of process steps to a
semiconductor wafer. The three broad categories of wafer processing steps are
deposition, photolithography and etching. SVG has three principal product groups
which focus primarily on photolithography, photoresist processing and deposition
for oxidation/diffusion and low pressure chemical vapor deposition ("LPCVD").
The Company's products incorporate proprietary technologies and unique
processes, and focus on providing process and product technologies and
productivity enhancements to its customers.
The Company manufactures and markets its photolithography exposure products
through its subsidiary, SVG Lithography Systems, Inc. ("SVGL"), its photoresist
processing products through its PhotoProcess Division, formerly known as its
Track Systems Division ("Track"), and its oxidation/diffusion and LPCVD products
through its Thermco Systems Division ("Thermco").
The Company was incorporated in California in 1973 and became a Delaware
corporation in January 1987. The Company's principal executive offices are
located at 101 Metro Drive, Suite 400, San Jose, California 95110, and its
telephone number at that address is (408) 441-6700.
4
<PAGE> 6
RISK FACTORS
This Prospectus contains 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, as amended. Such statements are subject to certain risks
and uncertainties, including those discussed below, that could cause actual
results to differ materially from those projected. Readers are cautioned not to
place undue reliance on these forward-looking statements, which speak only as of
the date hereof. Forward-looking statements are indicated by an asterisk (*)
following the sentence in which such statement is made. The Company undertakes
no obligation to publicly release the results of any revisions to these
forward-looking statements that may be made to reflect events or circumstances
after the date hereof or to reflect the occurrence of unanticipated events.
Cyclical Nature of the Semiconductor Industry. The semiconductor industry
into which SVG 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. During
the first quarter of calendar 1996 (SVG's second fiscal quarter), the growth
rate of the worldwide semiconductor industry, measured in terms of its
book-to-bill ratio, declined. From March 1996 through March 1997, SVG's
quarterly customer order bookings (bookings) were substantially below first half
fiscal 1996 levels and SVG experienced customer deferrals of scheduled equipment
delivery dates and, to a lesser extent, customer order cancellations.
Notwithstanding a significant increase in bookings during the third quarter of
fiscal 1997, SVG believes that fiscal 1997 shipments will be lower than fiscal
1996 levels as a result of the lower bookings in the four preceding fiscal
quarters.* Further, there can be no assurance that SVG will not again experience
customer delivery deferrals, order cancellations or a prolonged period of
customer orders at reduced levels, any or a combination of which would have an
adverse effect on its operating results.*
Prior downturns in the worldwide semiconductor industry have resulted in
significant reductions in SVG's net sales, gross margin and net income.
Moreover, SVG expects that its operations as a whole will continue to be
dependent on the capital expenditures of semiconductor manufacturers, which in
turn will be dependent on anticipated demand for integrated circuits and
products utilizing integrated circuits.* Any prolonged weakness in demand
experienced by the semiconductor industry is likely to have an adverse effect on
SVG's business and results of operations.*
Customer Concentration. SVG relies on a limited number of customers for a
substantial percentage of its net sales. During fiscal 1996, SVG's two largest
customers accounted for 41% of SVG's net sales, the largest representing 31% of
the total. During the first nine months of fiscal 1997, a similar trend existed
with two customers accounting for 56% of SVG's net sales, the largest
representing 29% of the total. The loss of any significant customer, including
but not limited to the two largest customers, delays in shipments due to
rescheduling or reductions in orders by a significant customer, including
reductions in orders due to market, economic or competitive conditions in the
semiconductor industry, will adversely affect SVG's business and results of
operations.* Further, SVG believes that, due in part to its customer base
consisting primarily of manufacturers of logic devices, it may continue to rely
on a limited number of major customers for a substantial percentage of its net
sales.*
Fluctuations in Quarterly Results. SVG 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, customer order rescheduling or
cancellations, or production or shipping delays can significantly affect
quarterly revenues and profitability. SVG has experienced, and may again
experience, quarters during which a substantial portion of SVG's net sales are
realized near the end of the quarter.* Accordingly, shipments scheduled near the
end of a quarter which are delayed for any reason can cause quarterly net sales
to fall short of anticipated levels. Since most of SVG's expenses are fixed in
the short term, such shortfalls in net sales could have a material adverse
effect on SVG's business and results of operations.* SVG'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
proportion of domestic and international sales, activities of competitors,
acquisitions, international events, and difficulties obtaining materials or
components on a timely basis.* In light of these factors, SVG is likely to
continue to experience variability in quarterly operating results.*
5
<PAGE> 7
Rapid Technological Change; Dependence on New Product
Development. Semiconductor manufacturing equipment and processes are subject to
rapid technological change. SVG 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.* Additionally, SVG is developing products
capable of processing 300mm wafers to enable advanced semiconductor
manufacturers to progress from the current 200mm wafer standard.* Failure to
successfully introduce these or any other new products in a timely manner could
result in the loss of competitive position and could reduce sales of existing
products.* 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.*
From time-to-time, SVG has experienced delays in the introduction of its
products and product enhancements due to technical, manufacturing and other
difficulties and may experience similar delays in the future.* During fiscal
1996, SVG introduced a new Track product, the 200APS. Initial shipments of the
200APS were scheduled to commence during the second quarter of fiscal 1997, but
have been delayed by approximately nine to twelve months.* Further, there can be
no assurance that SVG 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 sales.* Semiconductor manufacturers tend to select
either a single supplier or a primary supplier for a certain type of equipment.
SVG believes that prolonged delays in delivering initial quantities of newly
developed products to multiple customers, whether due to the protracted release
of product from engineering into manufacturing or due to manufacturing
difficulties, could result in semiconductor manufacturers electing to install
competitive equipment in their fabrication facilities and could preclude
industry acceptance of SVG's products.* Therefore, the inability to effect the
timely production of such products or any failure to achieve market acceptance
could have a material adverse effect on SVG's business and results of
operations.*
Historically, the unit cost of SVG's products has been the highest when
they are newly introduced into production and cost reductions have come over
time through engineering improvements, economies of scale and improvements in
the manufacturing process.* As a result, new products have, at times, had an
unfavorable impact on SVG's gross margins and results of operations. There can
be no assurance that the initial shipments of new products will not have an
adverse effect on SVG's profitability or that SVG will be able to attain design
improvements, manufacturing efficiencies or manufacturing process improvements
over time.* Further, the potential unfavorable effect of newly introduced
products on profitability can be exacerbated when there is intense price
competition in the marketplace.*
Intense Competition. The semiconductor equipment industry is intensely
competitive. SVG faces substantial competition both in the United States and
other countries. In addition to technology, one significant area of competition
is cost of ownership, a formula which includes such data as initial price,
system throughput and reliability and time to maintain or repair. Other
competitive factors include familiarity with particular manufacturers' products,
established relationships between suppliers and customers, product availability
and technological differentiation. Many of SVG's competitors are Japanese
corporations. With the strength of the U.S. Dollar in relation to the Japanese
yen, SVG's ability to compete on the basis of price has been impaired.
Importance of the Japanese and Pacific Rim Markets. SVG's customers are
heavily concentrated in the United States and Europe. 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 semiconductor
manufacturing equipment. Further, in many instances, Japanese and Pacific Rim
semiconductor manufacturers fabricate devices such as DRAMs, with potentially
different economic cycles than those affecting the sales of devices manufactured
by the majority of SVG's U.S. and European customers. To date neither SVG's
shipments into Japan nor into the Pacific Rim have been significant. SVG
believes that it must substantially increase its share of these markets if it is
to compete as an industry leader.* Failure to secure customers in these markets
may limit the global market share available to SVG and may increase SVG's
vulnerability to industry or geographic downturns.*
6
<PAGE> 8
In the past, several of SVG's larger customers have entered into joint
ventures (JV) with European, Japanese or Pacific Rim semiconductor
manufacturers. In such cases, SVG has encountered intense price competition from
foreign competitors who are suppliers to the non-U.S. member of the JV. Further,
in certain instances SVG has not secured the equipment order when the non-U.S.
member has had the responsibility for selecting the equipment to be used by the
JV in its U.S. operations. There can be no assurance that as SVG's customers
form additional alliances, whether in the U.S. or in other parts of the world,
that SVG will be successful in obtaining equipment orders or that it will be
able to obtain orders with sufficient gross margin to assure a profitable
transaction, either of which could have an adverse effect on SVG's results of
operations.*
In order to expand its market share in the Pacific Rim, SVG has been
investing in the staffing and facilities necessary to sell, service and support
customers, primarily in Korea, and intends to commence such investments in
Taiwan.* Throughout the Pacific Rim, SVG will be competing with established
equipment suppliers with significant market share and anticipates that it will
encounter significant price competition as well as competition based on
technological ability.* There can be no assurance that SVG's Pacific Rim
operations will be profitable, even if it is successful in obtaining significant
sales into this region.*
SVG Lithography Systems, Inc. (SVGL) -- Uncertain Market for Micrascan
Products. SVG believes that the photolithography exposure equipment market is
one of the largest segments of the semiconductor processing equipment industry.*
To address this market, SVG has invested and expects to continue to invest
substantial resources in SVGL's Micrascan technology and its family of Micrascan
deep ultraviolet (Deep UV) step and scan photolithography systems, capable of
producing .25 micron line widths. The development of a market for SVG's
Micrascan step and scan photolithography products will be highly dependent on
the continued trend towards finer line widths in integrated circuits and the
ability of stepper manufacturers to keep pace with this trend through either
enhanced technologies or improved processes. Stepper manufacturers have been
successful in extending the capability of I-Line steppers and they have been
utilized in the fabrication of complex semiconductor devices with line widths of
less than 0.5 micron, such as 64 megabit dynamic random access memories
("DRAMs"). SVG believes Deep UV lithography will be required to fabricate
devices with line widths below 0.3 micron.* Semiconductor manufacturers can
purchase Deep UV steppers to produce product at .25 micron line widths. However,
SVG believes that as devices increase in complexity and size and require finer
line widths, the technical advantages of Deep UV step and scan systems as
compared to steppers will enable semiconductor manufacturers to achieve finer
line widths, higher yields and critical dimension control.* SVG also believes
that the transition to Deep UV step-and-scan systems will accelerate in calendar
1998 and that advanced semiconductor manufacturers are beginning to require
volume quantities of production equipment as advanced as the current and pending
versions of Micrascan.* Currently, competitive Deep UV step and scan equipment
capable of producing .25 micron line widths is available from two competitors,
and SVG believes that at least one other manufacturer of advanced
photolithography systems will begin shipping step and scan machines in the near
future.* There can be no assurance that SVG will be successful in competing with
such systems.* Further, if manufacturers of I-Line or Deep UV steppers are able
to further enhance existing technology to achieve finer line widths sufficiently
to erode the competitive and technological advantages of Deep UV step and scan
systems, demand for the Micrascan technology may not develop as SVG expects.*
SVG believes that advanced logic devices and DRAMs will require
increasingly finer line widths and that it is critical for SVGL to maintain
technological leadership.* Consequently, it must continue to develop advanced
technology equipment capable of meeting its customers' current and future
requirements while offering those customers a progressively lower cost of
ownership.* In particular, SVG believes that it must continue its development of
future systems capable of printing line widths finer than .25 micron.*
SVGL -- Need to Increase Manufacturing Capacity and System Output. SVG
believes that its ability to supply systems in volume will be a major factor in
customer decisions to commit to the Micrascan technology.* Based upon its
forecast of continued high growth for photolithography equipment and potential
future demand for advanced lithography products, SVG is increasing SVGL'S
production capacity under an extremely aggressive expansion schedule. As part of
this expansion, SVG purchased from The Perkin-Elmer Corporation a 248,000 square
foot facility occupied by SVGL in Wilton, Connecticut and an additional 201,000
square foot building, which SVGL now occupies, in Ridgefield, Connecticut.
During fiscal 1997, SVG
7
<PAGE> 9
has invested in significant further capital improvements related to the
buildings purchased and the equipment required to expand the production
capabilities of SVGL.* In addition to the timely construction and equipping of
facilities, successful completion of this expansion will require the
recruitment, training and retention of a high quality workforce, and the
achievement of satisfactory manufacturing results on a scale greater than SVGL
has attempted in the past. There can be no assurance SVG can manage these
efforts successfully, which could result in product delivery delays and a
subsequent loss of future revenues. In particular, SVG 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, SVG'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 time required to build a Micrascan system is significant. If SVGL is to
be successful in supplying increased quantities of Micrascan systems, it will
not only need to be able to build more systems, it will need to build them
faster.* SVGL will require additional trained personnel and additional raw
materials and components, as well as improved manufacturing and testing
techniques to both facilitate volume and shorten manufacturing cycle time.* To
that end, SVGL is continuing to develop its vendor supply infrastructure,
increase its staffing levels and implement manufacturing improvements to meet
anticipated 1998 and beyond shipment volumes.* Additionally, SVG must increase
its field service and technical support organization staffing and infrastructure
to support the anticipated customer requirements. There can be no assurance that
SVG will not experience manufacturing difficulties or encounter problems in its
attempt to increase production and upgrade or expand existing operations.
One of the most critical components of the Micrascan systems are the
projection optics, which are primarily manufactured by SVGL. As part of its
overall investment in capacity, SVG is increasing SVGL's optical manufacturing
floorspace and procuring metrology equipment and test stands. SVG believes that
in order for SVGL to attain it goals, it must be successfully reduce the cycle
times required to build projection optics and increase the optical manufacturing
output.*
SVG believes that protracted delays in delivering quantities of both
current and future generations of Micrascan products to multiple customers could
result in semiconductor manufacturers electing to install competitive equipment
in their advanced fabrication facilities, which could preclude industry
acceptance of the Micrascan technology and products.* In addition, SVG's
operating results could also be adversely affected by the increase in fixed
costs and operating expenses related to increases in production capacity and
field service and technical support activities if net sales do not increase
commensurately.*
SVGL -- Sole Source Materials and Components. The raw material for a
proprietary component of the optical system for the Micrascan is available from
only one supplier and SVGL's projected demand will require that supplier to
expand its capacity. The supplier has committed to expand its capacity to meet
SVGL's projected requirements in exchange for a long-term, non-cancelable supply
agreement. The agreement specifies quantities of material that increase over
time and the supplier is obligated to create and store certain defined
quantities of safety stock. Additionally, a version of SVG's Micrascan III
photolithography system utilizes an Excimer laser manufactured in volume by only
one supplier. There can be no assurance that either supplier will be able to
supply the quantities of material required by SVGL. If either supplier was
unable to meet its commitments, SVGL would be unable to manufacture the quantity
of systems required to meet the anticipated future demand, which would have a
material adverse effect on SVG's business and results of operations.
SVGL -- Research and Development Funding. Historically, SVG has depended on
external funding to assist in the high cost of development in its
photolithography operation. During fiscal 1996, SVG entered into agreements with
certain customers (the Participants) whereby each agreed to assist in funding
SVG's development of an advanced technology 193 nanometer Micrascan system. In
exchange for such funding, each Participant received the right to purchase one
such system and, in addition, received a right of first refusal (ratable among
such Participants) to all such machines manufactured during the first two years
following the initial system shipments. For each initial system ordered, each
Participant agreed to fund $5,000,000 in such
8
<PAGE> 10
development costs. The agreements call for each Participant to pay $1,000,000 of
initial development funding and four subsequent payments of $1,000,000 upon the
completion of certain development milestones. The Participants may withdraw from
the development program without penalty, but payments made against completed
development milestones are not refundable and all preferential rights to future
equipment are forfeited. At June 30, 1997, SVG had received $13,000,000 in
funding from six Participants, of which $5,098,000 had been recognized and
offset against research and development expenditures. In March 1997, one
participant withdrew from the program. There can be no assurances that the other
Participants will remain in the program.* In the event that SVG does not receive
the funding anticipated under the agreements, it would be required to replace
the shortfall from its own funds or other sources. If SVG were required to use
its own funds, its research and development expenses would increase and its
operating income would be reduced correspondingly. The agreements with the
Participants stipulate that if SVG receives funding for the development program
in excess of $25,000,000, it will issue, ratably to the Participants, credits
totaling such excess in the form of a cash discount which can be applied to the
purchase of additional systems by each Participant. There is no assurance that
SVG will receive all funding which it currently anticipates or that it will be
able to obtain future outside funding beyond that which it is currently
receiving.
SVGL -- Market Penetration. SVG believes that for SVGL to succeed in the
long term, it must sell its Micrascan products on a global basis. The Japanese
market (including fabrication plants operated outside Japan by Japanese
semiconductor manufacturers) and the Korean market represent a substantial
portion of the overall market for photolithography exposure equipment. To date,
SVG has not been successful penetrating either of these markets.
SVGL -- Future Profitability. While the recent volume of orders for
Micrascan systems has been relatively consistent and encouraging, they are not
necessarily indicative of industry-wide acceptance of the Micrascan technology.
If SVGL is to attain its objective of being a volume supplier of advanced
photolithography systems, SVG believes that it must expand its customer base to
include additional customers from whom it secures and successfully fulfills
orders for production-quantities of Micrascan systems.* Although SVGL is
profitable, SVG believes that as a result of costs associated with the continued
development of the Micrascan technology, the expansion of SVGL's manufacturing
capacity, the related increase in manpower and customer support, and the
potential difficulties inherent in manufacturing initial quantities of the .25
micron and sub-.25 micron Micrascan systems, in particular the projection optics
required for these systems, there can be no assurance that SVGL will be able to
operate profitably in the future.*
Raw Materials. Most raw materials and components not produced by SVG 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 SVG seeks to reduce its dependence on these sole and
limited source suppliers and SVG 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
SVG's business and results of operations. Moreover, a prolonged inability to
obtain certain components could have a material adverse effect on SVG's business
and results of operations and could result in damage to customer relationships.
(See "SVGL - Sole Source Materials and Components".)
Patents and Licenses. As is typical in the semiconductor equipment
industry, SVG has from time to time received, and may in the future receive,
communications from third parties asserting patents or copyrights on certain of
SVG's products and technologies. At least one of SVG's customers has put SVG on
notice that it 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 SVG on notice it intends to seek
indemnification from SVG for any damages and expenses resulting from this matter
if found liable or if the customer settles the claim. Although SVG has not
received any recent communications on this subject, it cannot predict the
outcome of this or any similar claim or its effect upon SVG, and there can be no
assurance that any such litigation or claim would not have a material adverse
effect upon SVG's financial condition or results of operations.
9
<PAGE> 11
Environmental Regulation. To date, SVG has not encountered significant
issues regarding the discharge of material into the environment or otherwise
relating to the protection of the environment and therefore has not been
required to spend significant amounts for capital or non-capital expenditures in
order to comply with laws and regulations pertaining thereto. In August 1996,
SVG purchased from The Perkin-Elmer Corporation ("Perkin-Elmer"), approximately
50 acres of land and a 201,000 square foot building thereon (the "Property"). At
the time SVG purchased the Property, it was aware that certain groundwater and
soil contamination was present and that the Property was subject to a clean-up
order being performed by Perkin-Elmer under the jurisdiction of the Connecticut
Department of Environmental Protection. Agreements between SVG and Perkin-Elmer
provide that Perkin-Elmer has sole responsibility for all obligations or
liabilities related to the clean-up order. While SVG believes that it has been
adequately indemnified, if for some reason Perkin-Elmer was unable to comply or
did not comply with the clean-up order, SVG could be required to do so.
Employees. SVG's future success is dependent upon its ability to attract
and retain qualified management, technical, sales and support personnel for its
operations. In particular, SVGL's growth is very dependent on SVG's ability to
attract and retain key skilled employees, particularly those related to the
optical segment of its business. The competition for such personnel is intense.
Some key positions in SVG are held by persons who have only recently been
appointed to such positions. SVG's growth has increased its dependence on key
management personnel. The loss of certain key people, the failure of key persons
to perform in their current positions or SVG's inability to attract and retain
new key employees could materially adversely affect SVG's performance.
SELLING STOCKHOLDER
The Selling Stockholder received the shares offered by this Prospectus
pursuant to a Stock Purchase and Registration Rights Agreement between the
Company and the Selling Stockholder. All of the shares of Common Stock held by
the Selling Stockholder may be sold pursuant to this Prospectus. The Selling
Stockholder holds no shares of Common Stock of the Company other than those
offered pursuant to this Prospectus.
PLAN OF DISTRIBUTION
The Company has been advised by the Selling Stockholder that it or its
pledgees, donees, transferees or other successors in interest intend to sell all
or a portion of the shares offered hereby from time to time in the
over-the-counter market and that sales will be made at prices prevailing at the
times of such sales. Such persons may also make private sales directly or
through a broker or brokers, who may act as agent or as principal. In connection
with any sales, the Selling Stockholder and any brokers or dealers participating
in such sales may be deemed to be underwriters within the meaning of the
Securities Act. The Company will receive no part of the proceeds of sales made
hereunder.
Any broker-dealer participating in such transactions as agent may receive
commissions from the Selling Stockholder and/or purchasers of the shares offered
hereby (and, if it acts 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 cross 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.
10
<PAGE> 12
The Company has advised the Selling Stockholder that Regulation M
promulgated under the Exchange Act may apply to its sales in the market, has
furnished the Selling Stockholder with a copy of this regulation and has
informed it 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. The Company has agreed to indemnify the Selling
Stockholder against certain liabilities, including liabilities under the
Securities Act.
Any shares of Common Stock 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 by it hereunder.
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.
EXPERTS
The consolidated financial statements of SVG at September 30, 1995 and
1996 and the related financial statement schedule, and for each of the three
years in the period ended September 30, 1996, incorporated by reference in this
Registration Statement/Prospectus have been audited by Deloitte & Touche LLP,
independent auditors, as stated in their reports incorporated by reference in
the Registration Statement/Prospectus, and are incorporated in reliance upon
the reports of such firm given upon their authority as experts in accounting
and auditing.
11
<PAGE> 13
SILICON VALLEY GROUP, INC.
REGISTRATION STATEMENT ON FORM S-3
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.*
<TABLE>
<S> <C>
Registration Statement -- Securities and Exchange
Commission............................................... $ 4,917
Nasdaq Stock Market Listing Fee............................ $ 9,786
Accountant's fees.......................................... $ 7,500
Legal fees................................................. $ 7,500
Miscellaneous.............................................. $ 2,000
-------
Total............................................ $31,703
=======
</TABLE>
- ---------------
- - Represents expenses relating to the distribution by the 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 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> 14
ITEM 16. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER
- ------
<S> <C>
5.1 Opinion of Wilson Sonsini Goodrich & Rosati, P.C.
23.1 Consent of Deloitte & Touche LLP, independent auditors
23.2 Consent of Wilson Sonsini Goodrich & Rosati, P.C. (Included in Exhibit 5.1)
24.1 Power of Attorney (see page II-3)
</TABLE>
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> 15
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of San Jose, State of California, on the 14th day of
October, 1997.
SILICON VALLEY GROUP, INC.
By: /s/ RUSSELL G. WEINSTOCK
------------------------------------
Russell G. Weinstock
Vice President, Finance and
Chief Financial Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Russell G. Weinstock, his
attorney-in-fact, with the power of substitution, for him in any and all
capacities, to sign any and all amendments to this Registration statement
(including post-effective amendments), and to file the same, with exhibits
thereto and other documents in connection therewith, with the Securities and
Exchange Commission, hereby ratifying and confirming all that said
attorney-in-fact, or his substitute or substitutes, may do or cause to be done
by virtue hereof.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------------- ---------------------------- ------------------
<C> <S> <C>
/s/ PAPKEN S. DER TOROSSIAN Chairman of the Board and October 14, 1997
- ------------------------------------------------- Chief Executive Officer
(Papken S. Der Torossian)
/s/ RUSSELL G. WEINSTOCK Vice President, Finance and October 14, 1997
- ------------------------------------------------- Chief Financial Officer
(Russell G. Weinstock)
/s/ WILLIAM A. HIGHTOWER Director October 14, 1997
- -------------------------------------------------
(William A. Hightower)
/s/ NAM P. SUH Director October 14, 1997
- -------------------------------------------------
(Nam P. Suh)
/s/ WILLIAM L. MARTIN Director October 14, 1997
- -------------------------------------------------
(William L. Martin)
/s/ LAWRENCE TOMLINSON Director October 14, 1997
- -------------------------------------------------
(Lawrence Tomlinson)
</TABLE>
II-3
<PAGE> 16
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION PAGE
- ------ ------------------------------------------------------------------------------- ----
<C> <S> <C>
5.1 Opinion of Wilson Sonsini Goodrich & Rosati, P.C...............................
23.1 Consent of Deloitte & Touche LLP, independent auditors.........................
23.2 Consent of Wilson Sonsini Goodrich & Rosati, P.C. (Included in Exhibit 5.1)....
</TABLE>
<PAGE> 1
Exhibit 5.1
October 14, 1997
Silicon Valley Group, Inc.
101 Metro Drive, Suite 400
San Jose, CA 95110
RE: REGISTRATION STATEMENT ON FORM S-3
Ladies and Gentlemen:
We have examined the Registration Statement on Form S-3 to be filed by
you with the Securities and Exchange Commission on October 14, 1997, (the
"Registration Statement") in connection with the registration under the
Securities Act of 1933, as amended, of 489,296 shares of your Common Stock (the
"Shares") to be sold by International Business Machines Corporation (the
"Selling Stockholder") from time to time. As your legal counsel, we have
examined the proceedings taken and proposed to be taken in connection with the
sale of the Shares by the Selling Stockholder in the manner set forth in the
Registration Statement in the section entitled "Plan of Distribution."
It is our opinion that the Shares, when sold by the Selling Stockholder
in the manner referred to in the Registration Statement, will be legally and
validly issued, fully paid and nonassessable.
We consent to the use of this opinion as an exhibit to the Registration
Statement and further consent to the use of our name wherever appearing in the
Registration Statement, including any Prospectus constituting a part hereof, and
any amendments thereto.
Very truly yours,
WILSON SONSINI GOODRICH & ROSATI
Professional Corporation
<PAGE> 1
Exhibit 23.1
Silicon Valley Group, Inc.
101 Metro Drive, Suite 400
San Jose, CA 95110
RE: REGISTRATION STATEMENT ON FORM S-3
Ladies and Gentlemen:
We consent to the incorporation by reference in this Registration
Statement of Silicon Valley Group, Inc. on Form S-3 of our reports dated
October 24, 1996, appearing in and incorporated by reference in the Annual
Report on Form 10-K of Silicon Valley Group, Inc. for the year ended September
30, 1996 and to the reference to us under the heading "Experts" in the
Prospectus, which is part of this Registration Statement.
DELOITTE & TOUCHE LLP
San Jose, California
October 10, 1997
