<PAGE> 1
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 10-Q
------------------------
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE THREE MONTH PERIOD ENDED DECEMBER 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER: 0-26824
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TEGAL CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
DELAWARE 68-0370244
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
</TABLE>
2201 SOUTH MCDOWELL BLVD.
PETALUMA, CALIFORNIA 94954
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
TELEPHONE NUMBER (707) 763-5600
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
------------------------
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 reports) and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No. [ ].
As of February 10, 2000, there were 11,112,219 shares of the registrant's
Common Stock outstanding.
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TEGAL CORPORATION
INDEX
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
PART I. FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Condensed Consolidated Statements of Operations -- for the
three and nine months ended December 31, 1999 and 1998...... 3
Condensed Consolidated Balance Sheets, as of December 31,
1999 and March 31, 1999..................................... 4
Condensed Consolidated Statements of Cash Flows -- for the
nine months ended December 31, 1999 and 1998................ 5
Notes to Condensed Consolidated Financial Statements........ 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS......................... 8
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK........................................................ 11
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS........................................... 12
SIGNATURES............................................................ 13
</TABLE>
2
<PAGE> 3
PART I -- FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
TEGAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
DECEMBER 31, DECEMBER 31,
------------------ --------------------
1999 1998 1999 1998
------- ------- -------- --------
<S> <C> <C> <C> <C>
Revenue........................................... $ 6,541 $ 6,456 $ 17,900 $ 22,973
Cost of sales..................................... 4,360 4,642 12,026 16,064
------- ------- -------- --------
Gross profit............................ 2,181 1,814 5,874 6,909
Operating expenses:
Research and development........................ 2,493 2,060 7,617 7,073
Sales and marketing............................. 1,110 1,148 3,530 4,032
General and administrative...................... 1,521 2,414 5,745 6,502
------- ------- -------- --------
Total operating expenses................ 5,124 5,622 16,892 17,607
------- ------- -------- --------
Operating loss.......................... (2,943) (3,808) (11,018) (10,698)
Other income (expense), net....................... 46 (126) 368 300
------- ------- -------- --------
Net loss.......................................... $(2,897) $(3,934) $(10,650) $(10,398)
======= ======= ======== ========
Net loss per common share:
Basic/Diluted................................... $ (0.27) $ (0.37) $ (0.99) $ (0.98)
Shares used in per share computation:
Basic/Diluted................................... 10,790 10,623 10,759 10,603
</TABLE>
See accompanying Notes to Unaudited Condensed Consolidated Financial Statements
3
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TEGAL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(IN THOUSANDS)
ASSETS
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1999 1999
------------ ---------
<S> <C> <C>
Current assets:
Cash and cash equivalents................................. $ 10,589 $ 17,569
Receivables, net.......................................... 8,346 4,831
Inventories............................................... 14,327 12,226
Prepaid expenses and other current assets................. 1,176 1,478
-------- --------
Total current assets.............................. 34,438 36,104
Property and equipment, net................................. 2,304 3,185
Other assets, net........................................... 395 363
-------- --------
Total assets...................................... $ 37,137 $ 39,652
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes and leases payable.................................. $ 7,433 $ 223
Accounts payable.......................................... 1,842 2,254
Accrued expenses and other current liabilities............ 5,875 6,329
-------- --------
Total current liabilities......................... 15,150 8,806
Long-term portion of capital lease obligation............... 151 30
-------- --------
Total liabilities................................. 15,301 8,836
-------- --------
Stockholders' equity:
Common stock.............................................. 111 107
Additional paid-in capital................................ 57,069 55,635
Cumulative translation adjustment......................... 388 156
Accumulated deficit....................................... (35,732) (25,082)
-------- --------
Total stockholders' equity........................ 21,836 30,816
-------- --------
$ 37,137 $ 39,652
======== ========
</TABLE>
See accompanying Notes to Unaudited Condensed Consolidated Financial Statements
4
<PAGE> 5
TEGAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
DECEMBER 31,
--------------------
1999 1998
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net loss.................................................. $(10,650) $(10,398)
Adjustments to reconcile net loss to cash used in
operating activities:
Depreciation and amortization.......................... 1,185 1,654
Allowance for doubtful accounts and sales return
allowances............................................ 272 (211)
Changes in operating assets and liabilities:
Accounts receivable.................................. (3,788) 2,262
Inventory............................................ (2,100) 594
Prepaid expenses and other assets.................... 271 238
Income taxes payable................................. (569) (11)
Accounts payable..................................... (412) (818)
Other accrued liabilities............................ 311 932
-------- --------
Net cash used in operating activities............. (15,480) (5,758)
-------- --------
Cash flows used in investing activities -- purchases of
property and equipment, net of retirements................ (304) (466)
-------- --------
Cash flows from financing activities:
Proceeds from issuance of common stock.................... 1,438 177
Borrowings under lines of credit.......................... 7,210 424
Repayment of capital lease financing...................... (76) (181)
-------- --------
Net cash provided by financing activities......... 8,572 420
-------- --------
Effect of exchange rates on cash and cash equivalents....... 232 727
-------- --------
Decrease in cash and cash equivalents....................... (6,980) (5,077)
Cash and cash equivalents at beginning of period............ 17,569 25,660
-------- --------
Cash and cash equivalents at end of period.................. $ 10,589 $ 20,583
======== ========
</TABLE>
See accompanying Notes to Unaudited Condensed Consolidated Financial Statements
5
<PAGE> 6
TEGAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(ALL AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)
1. BASIS OF PRESENTATION:
In the opinion of management, the unaudited condensed consolidated interim
financial statements have been prepared on the same basis as the March 31, 1999
audited consolidated financial statements and include all adjustments consisting
only of normal recurring adjustments necessary to fairly state the information
set forth herein. The statements have been prepared in accordance with the
regulations of the Securities and Exchange Commission ("SEC"), but omit certain
information and footnote disclosures necessary to present the statements in
accordance with generally accepted accounting principles. These interim
financial statements should be read in conjunction with the financial statements
and footnotes included in the annual report on Form 10-K of Tegal Corporation
(the "Company") for the year ended March 31, 1999. The results of operations for
the three and nine months ended December 31, 1999 are not necessarily indicative
of results to be expected for the entire year.
2. INVENTORIES:
Inventories consisted of:
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1999 1999
------------ ---------
<S> <C> <C>
Raw materials........................................ $ 3,157 $ 2,554
Work in progress..................................... 1,870 1,590
Finished goods and spares............................ 9,300 8,082
------- -------
$14,327 $12,226
======= =======
</TABLE>
3. NET LOSS PER COMMON SHARE:
Options to purchase 3,155,909 and 2,582,559 shares of common stock were
outstanding at December 31, 1999 and December 31, 1998, respectively, but were
not reflected in the computations of diluted Earnings Per Share because the
Company recorded a net loss in those periods and to do so would have been
anti-dilutive.
4. INCOME TAX EXPENSE:
No provision for federal or state income tax has been recorded for the
three and nine month periods ended December 31, 1999 and 1998, respectively, as
the Company has recorded a net loss before taxes for those periods. The Company
did not recognize a benefit for these net losses before taxes because any
benefit derived would require offsetting current losses against future
profitability where such profitability's timing and magnitude are uncertain.
5. NEW ACCOUNTING PRONOUNCEMENTS:
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities." SFAS No. 133
requires that an entity recognize all derivatives as either assets or
liabilities in the statement of financial position and measure those instruments
at fair value. It further provides criteria for derivative instruments to be
designated as fair value, cash flow and foreign currency hedges and establishes
respective accounting standards for reporting changes in the fair value of the
instruments. The statement is effective for all fiscal quarters of fiscal years
beginning after June 15, 2000 pursuant to the issuance of SFAS No. 137,
"Accounting for Derivative Instruments and Hedging Activities-Deferral of the
Effective Date of FASB statement No. 133", which deferred the effective date of
SFAS No. 133 by one year. Upon adoption of SFAS No. 133, the Company will be
required to adjust hedging instruments to fair value in the balance sheet and
recognize the offsetting gain or loss as transition adjustments
6
<PAGE> 7
TEGAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
(ALL AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)
to be reported in net income or other comprehensive income, as appropriate, and
presented in a manner similar to the cumulative effect of a change in accounting
principle. While the Company believes the adoption of this statement will not
have a significant effect on the Company's results of operations, the impact of
the adoption of SFAS No. 133 as of the effective date cannot be reasonably
estimated at this time.
7
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Information herein contains "forward-looking statements" within the meaning
of the Private Securities Litigation Reform Act of 1995, which can be identified
by the use of forward-looking terminology such as "may," "will," "expect,"
"anticipate," "estimate," or "continue" or the negative thereof or other
variations thereon or comparable terminology or which constitute projected
financial information. The forward-looking statements relate to the near-term
semiconductor capital equipment industry outlook, demand for the Company's
products, the Company's quarterly revenue and earnings prospects for the
near-term future and other matters contained herein. Such statements are based
on current expectations and beliefs and involve a number of uncertainties and
risks that could cause the actual results to differ materially from those
projected. Such uncertainties and risks include, but are not limited to, the
cyclicality of the semiconductor industry, dependence on recently introduced
systems for the critical etch markets, impediments to customer acceptance,
fluctuations in quarterly operating results, competitive pricing pressures, the
introduction of competitor products having technological and/or pricing
advantages, product volume and mix and other risks detailed from time to time in
the Company's SEC reports. For further information, refer to the business
description and additional risk factors sections included in the Company's Form
10-K for the year ended March 31, 1999, as filed with the SEC.
RESULTS OF OPERATIONS
The Company designs, manufactures, markets and services plasma etch systems
used in the fabrication of integrated circuits, read-write heads for the disk
drive industry, printer heads and small flat panel displays.
The following table sets forth certain financial items as a percentage of
revenue for the three and nine month periods ended December 31, 1999 and 1998:
<TABLE>
<CAPTION>
THREE MONTHS NINE MONTHS
ENDED ENDED
DECEMBER 31, DECEMBER 31,
--------------- ---------------
1999 1998 1999 1998
----- ----- ----- -----
<S> <C> <C> <C> <C>
Revenue.................................................. 100.0% 100.0% 100.0% 100.0%
Cost of sales............................................ 66.7 71.9 67.2 69.9
----- ----- ----- -----
Gross profit................................... 33.3 28.1 32.8 30.1
Operating expenses:
Research and development............................... 38.1 31.9 42.6 30.8
Sales and marketing.................................... 17.0 17.8 19.7 17.6
General and administrative............................. 23.2 37.4 32.1 28.3
----- ----- ----- -----
Total operating expenses....................... 78.3 87.1 94.4 76.7
----- ----- ----- -----
Operating loss................................. (45.0) (59.0) (61.6) (46.6)
Other income (expense), net.............................. 0.7 (1.9) 2.1 1.3
----- ----- ----- -----
Net Loss................................................. (44.3)% (60.9)% (59.5)% (45.3)%
===== ===== ===== =====
</TABLE>
Revenue. Revenue for the three and nine months ended December 31, 1999 was
$6.5 million and $17.9 million, respectively, up 1.3% and down 22.1% over the
comparable periods in 1998. The decrease of $5.1 million for the nine months
ended December 31, 1999, was principally due to a change in mix of 900 series
systems and to reduced sales of service and spare parts.
Revenue from spare parts and service sales was $3.2 million and $9.9
million for the three and nine month periods ended December 31, 1999, up from
$2.8 million and down from $10.9 million for the comparable periods in the prior
year. The Company believes that the improvement in spares and service revenue in
the three month period ended December 31, 1999 is attributable to increased
utilization of its installed base of equipment as the semiconductor industry
emerges from the recent semiconductor industry slowdown.
International sales as a percentage of the Company's revenue was
approximately 57.2% and 72.7% for the three months and 62.1% and 71.9% for the
nine months ended December 31, 1999 and 1998, respectively. The Company believes
that international sales will continue to represent a significant portion of its
revenue.
8
<PAGE> 9
Gross profit. Gross profit as a percentage of revenue (gross margin) was
33.3% and 28.1% for the three months and 32.8% and 30.1% for the nine months
ended December 31, 1999 and 1998, respectively. The increase in gross margin for
the three and nine months ended December 31, 1999 compared to the comparable
periods in the prior year was principally attributable to improved spare parts
and service gross margins which were primarily due to an improved parts mix and
to reduced service expenses.
Research and development. Research and development expenses consist
primarily of salaries, prototype material and other costs associated with the
Company's ongoing systems and process technology development, applications and
field process support efforts. Research and development expenses were $2.5
million and $2.1 million for the three months and $7.6 and $7.1 million for the
nine months ended December 31, 1999 and 1998, respectively, representing 38.1%,
31.9%, 42.0% and 30.8% of revenue, respectively.
Sales and marketing. Sales and marketing expenses consist primarily of
salaries, commissions, trade show promotion and travel and living expenses
associated with those functions. Sales and marketing expenses were $1.1 million
and $1.1 million for the three months and $3.5 million and $4.0 million for the
nine months ended December 31, 1999 and 1998, respectively, representing 17.0%,
17.8%, 19.7% and 17.6% of revenue, respectively. The decrease in sales and
marketing expense for the nine months ended December 31, 1999, compared to the
same period in the prior year was due principally to reduced sales commissions
on a lower revenue base and to reduced advertising expenses.
General and administrative. General and administrative expenses consist
primarily of compensation for general management, accounting and finance, human
resources, information systems and investor relations functions and for legal,
consulting and accounting fees of the Company. General and administrative
expenses were $1.5 million and $2.4 million for the three months and $5.7
million and $6.5 million for the nine months ended December 31, 1999 and 1998,
respectively, representing 23.2%, 37.4%, 32.1% and 28.3% of revenue,
respectively. The decrease in general and administrative spending for the three
month and nine month periods ended December 31, 1999, compared to the same
periods in the prior year was primarily attributable to reduced legal expenses
in connection with its patent disputes. See "Part II, Item 1. Legal
Proceedings."
Other income, net. Other income, net consists primarily of interest income
on outstanding cash balances and gains and losses on foreign exchange.
Income tax expense. No provision for federal or state income tax has been
recorded for the three and nine months ended December 31, 1999 and 1998,
respectively, as the Company has recorded a net loss before taxes in those
periods. The Company did not recognize a benefit for this net loss before taxes
in those periods because any benefit derived would require offsetting current
losses against future profitability where such profitability's timing and
magnitude is uncertain.
LIQUIDITY AND CAPITAL RESOURCES
For the nine month period ended December 31, 1999, the Company financed its
operations through the use of outstanding cash balances and borrowings against
its promissory note borrowing facilities in Japan and the USA. For the nine
month period ended December 31, 1998, the Company financed its operations
through the use of outstanding cash balances.
Net cash used in operations was $15.7 million during the nine months ended
December 31, 1999, due principally to a net loss of $9.5 million after adjusting
for depreciation. In addition, there has been an increase in accounts receivable
and inventory. Net cash used in operations was $5.8 million for the nine months
ended December 31, 1998, due principally to a net loss of $8.7 million after
adjusting for depreciation, offset in part, by reductions in accounts receivable
and net inventories.
Net capital expenditures totaled $0.3 and $0.5 million for the nine months
ended December 31, 1999 and 1998, respectively. Capital expenditures in both
periods were incurred principally for leasehold improvements and to acquire
design tools, analytical equipment and computers.
Net cash provided by financing activities totaled $8.8 million for the nine
months ended December 31, 1999. The increase was due principally to increased
borrowings under the Company's two Japanese borrowing
9
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facilities, domestic line of credit and an increase in capital lease
obligations. Net cash provided by financing activities totaled $0.4 million for
the nine months ended December 31, 1998, due principally to increased borrowings
under the Company's two Japanese borrowing facilities offset, in part, by
repayment of capital lease obligations.
As of December 31, 1999, the Company had approximately $10.6 million of
cash and cash equivalents. In addition to cash and cash equivalents, the
Company's other principal sources of liquidity consisted of the unused portions
of several bank borrowing facilities. At December 31, 1999, the Company had
utilized $3.9 million out of an effective borrowing capacity of $4.0 million
available under a domestic line of credit secured by substantially all of the
Company's assets. The facility is available until August 15, 2000. In addition
to the foregoing facility, as of December 31, 1999, the Company's Japanese
subsidiary had available a 289 million Yen (approximately $2.8 million at
exchange rates prevailing on December 31, 1999) unused portion of two Japanese
bank lines of credit totaling 650 million Yen (approximately $6.4 million at
exchange rates prevailing on December 31, 1999) secured by Japanese customer
promissory notes held by such subsidiary in advance of payment on customers'
accounts receivable.
The Company believes that anticipated cash flow from operations, funds
available under its lines of credit and existing cash and cash equivalent
balances will be sufficient to meet the Company's cash requirements for the next
twelve months. The Company is currently in the process of raising approximately
$5.0 million for issuance of common stock under an $8.0 million shelf
registration statement filed with the SEC. The Company may seek to raise
additional capital to further meet its longer term liquidity needs. There can be
no assurance that such financing will be available when required or on
reasonable terms.
YEAR 2000 COMPLIANCE
In the past, many information technology products were designed with two
digit year codes that did not recognize century and millennium fields. As a
result these hardware and software products may not function or may give
incorrect results when Year 2000 dates are used. The "Year 2000 Issue" is faced
by substantially every company which relies on computer systems. In order to
address this issue, such hardware and software products may need to be upgraded
or replaced in order to correctly process dates beginning in the Year 2000.
The Company formed a team and named an executive sponsor to identify
remedies and test and develop contingency plans for the Year 2000 Issue. The
tasks identified by this team have been completed. The Company evaluated,
upgraded and tested its internal systems, and has evaluated its products and the
readiness of its key suppliers and other third parties to determine their Year
2000 status.
The Company's Enterprise Resource Planning system is provided by a software
vendor and contains some custom modifications to meet the Company's business
requirements. The vendor-provided software is certified Year 2000 compliant by
the Information Technology Association of America. The custom modifications have
been changed to make them compliant. The Company's current product offerings
have been tested and determined to either be Year 2000 compliant or, where they
are not compliant, an upgrade program is available to address the problem.
The Company completed its Year 2000 risk assessment and its corrective
action and contingency plans in April 1999. The risk assessment evaluated the
readiness of its key suppliers and other third parties and the effect their
compliance readiness might have had on the Company. For key suppliers where the
risk of non-compliance was assessed as high, backup or contingency plans were
developed and documented and audits of those vendors for Year 2000 compliance
were performed. The Company did not assess the compliance readiness of its
customers. The Company's customers are generally considerably larger than the
Company and are unlikely to complete any questionnaire which the Company would
have furnished to its customers to assess Year 2000 compliance.
The total expense of preparing the Company for Year 2000 compliance has
been approximately $0.4 million, which is not material to the Company's business
operations or financial condition. Nevertheless, satisfactorily addressing the
Year 2000 Issue was dependent on many factors, some of which were not within the
Company's control. Should the Company's internal systems, or the internal
systems of one or more of its
10
<PAGE> 11
significant vendors, customers, or other third parties fail to achieve Year 2000
compliance, the Company's business, financial condition and results of
operations could be materially adversely affected.
As of February 11, 2000, the Company has not experienced any adverse
effects related to the Year 2000 roll over.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company has an investment portfolio of securities principally comprised
of money market funds. These funds are subject to interest rate risk and may
fall in value if market interest rates increase. The Company attempts to limit
this exposure by investing primarily in short-term securities having a maturity
of three months or less.
The Company has foreign subsidiaries which operate and sell the Company's
products in various global markets. As a result, the Company's cash flow and
earnings are exposed to fluctuations in interest and foreign currency exchange
rates. The Company attempts to limit these exposures through the use of various
hedge instruments, primarily forward exchange contracts and currency option
contracts (with maturities of less than three months) to manage its exposure
associated with firm obligations and net asset and liability positions
denominated in non-functional currencies. There have been no material changes
regarding market risk since the disclosures made in the Company's Form 10-K for
the year ended March 31, 1999.
11
<PAGE> 12
PART II -- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There are no material legal proceedings pending against the Company.
However, on March 17, 1998, the Company filed a suit in the United States
District Court in the Eastern District of Virginia against Tokyo Electron
Limited and several of its U.S. subsidiaries (collectively, "TEL") alleging that
TEL's current generation of etch equipment infringes certain of the Company's
patents. The suit was tried to the court in May, 1999, and on August 31, 1999,
the court found both patents-in-suit valid, and found that TEL had willfully
infringed Tegal's '223 dual-frequency triode etcher patent. The court enjoined
TEL from further sales or service of its IEM etchers. In addition, the court
ordered TEL to pay attorney's fees and court costs to the Company. TEL has filed
an appeal of the court's ruling. No assurance can be given as to the outcome of
that appeal or as to the effect of any such outcome on the Company. A companion
suit against TEL's parent company, Tokyo Electron Ltd., seeking injunctive
relief for infringement of the '223 patent, is currently pending in the same
court. That case is in its early stages, and no assurance can be given as to the
outcome of that lawsuit or as to the effect of any such outcome on the Company.
On September 1, 1999, the Company filed a patent infringement action
against Lam Research Corporation ("Lam"), asserting infringement of the '223
patent and a second, related patent. That suit was also filed in the Eastern
District of Virginia, Richmond Division. The Company is seeking injunctive
relief barring Lam from manufacturing, selling and supporting products that
incorporate the Company's patented technology. The Company is further seeking
enhanced damages for willful infringement of its patents. Lam has filed a motion
to dismiss that action for lack of jurisdiction, or in the alternative to
transfer that action to the Northern District of California. On December 7,
1999, the motion to transfer was granted. The case has since been transferred to
the Northern District of California. No discovery has been conducted to date in
that action. No assurance can be given as to the outcome of that lawsuit or as
to the effect of any such outcome on the Company.
12
<PAGE> 13
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.
TEGAL CORPORATION
(Registrant)
/s/ DAVID CURTIS
--------------------------------------
David Curtis
Chief Financial Officer, Treasurer and
Secretary (Principal Financial
Officer)
Dated: February 14, 2000
13
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-2000
<PERIOD-START> OCT-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 10,589
<SECURITIES> 0
<RECEIVABLES> 8,882
<ALLOWANCES> 536
<INVENTORY> 14,327
<CURRENT-ASSETS> 34,438
<PP&E> 14,176
<DEPRECIATION> 11,872
<TOTAL-ASSETS> 37,137
<CURRENT-LIABILITIES> 15,150
<BONDS> 0
0
0
<COMMON> 111
<OTHER-SE> 21,725
<TOTAL-LIABILITY-AND-EQUITY> 37,137
<SALES> 6,541
<TOTAL-REVENUES> 6,541
<CGS> 4,360
<TOTAL-COSTS> 4,360
<OTHER-EXPENSES> 2,493
<LOSS-PROVISION> 6
<INTEREST-EXPENSE> 36
<INCOME-PRETAX> (2,897)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,897)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,897)
<EPS-BASIC> (.27)
<EPS-DILUTED> (.27)
</TABLE>
