<PAGE>
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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 quarterly period ended August 31, 1996
[_] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from to
------------ ------------
Commission File Number 0-26784
SPEEDFAM INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
Illinois 36-2421613
----------------------------------------- ----------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
7406 West Detroit, Chandler, Arizona 85226
----------------------------------------- ----------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (602) 961-2175
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
------- ------
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date (October 11, 1996).
Common Stock, no par value: 10,597,593 shares
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<PAGE>
SPEEDFAM INTERNATIONAL, INC.
INDEX
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Part I Financial Information
Item 1. Financial Statements
Condensed Consolidated Balance Sheets
August 31, 1996 and May 31, 1996................................ 2
Condensed Consolidated Statements of Earnings
Three Months Ended August 31, 1996 and 1995..................... 3
Condensed Consolidated Statements of Cash Flows
Three Months Ended August 31, 1996 and 1995..................... 4
Notes to Condensed Consolidated Financial Statements............ 5
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.......................................... 8
Part II Other Information
Item 6. Exhibits and Reports on Form 8-K................................... 12
Signature.............................................................................. 13
Exhibit Index
Exhibit 10 Amendment No. 1 to Revolving Credit Agreement Between the
Registrant and the First National Bank of Chicago and Firstar
Bank Milwaukee, N.A. dated September 13, 1996.
Exhibit 11 Computation of Net Earnings Per Share
Exhibit 27 Financial Data Schedule
</TABLE>
-1-
<PAGE>
PART I - FINANCIAL INFORMATION
SPEEDFAM INTERNATIONAL, INC. AND CONSOLIDATED SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
<TABLE>
<CAPTION>
AUGUST 31, MAY 31,
1996 1996
---------- -------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 4,507 $ 10,871
Trade accounts and notes receivable, net 32,868 34,693
Inventories 31,239 27,931
Other current assets 2,300 2,470
-------- --------
Total current assets 70,914 75,965
Investments in affiliates 22,040 20,450
Property, plant and equipment, net 11,798 9,969
Other assets 1,871 1,600
-------- --------
Total assets $106,623 $107,984
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term borrowings and current
portion of long-term debt $ 654 $ 727
Accounts payable and due to affiliates 21,148 26,460
Customer deposits 6,894 4,814
Other current liabilities 10,593 12,771
-------- --------
Total current liabilities 39,289 44,772
-------- --------
Long-term liabilities:
Long-term debt 2,362 2,593
Deferred income taxes 583 580
-------- --------
Total long-term liabilities 2,945 3,173
-------- --------
Shareholders' equity
Common stock, no par value,
20,000,000 shares authorized, 10,580,613
and 10,514,868 shares issued and
outstanding at August 31 and
May 31, 1996, respectively 1 1
Additional paid-in capital 26,695 26,174
Retained earnings 33,285 29,247
Foreign currency translation adjustment 4,408 4,617
-------- --------
Total shareholders' equity 64,389 60,039
-------- --------
Total liabilities and $106,623 $107,984
shareholders' equity ======== ========
</TABLE>
See Accompanying Notes to Condensed Consolidated Financial Statements.
-2-
<PAGE>
SPEEDFAM INTERNATIONAL, INC. AND CONSOLIDATED SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
THREE MONTHS ENDED AUGUST 31, 1996 AND 1995
(dollars and shares in thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended
August 31,
---------------------
1996 1995
---------- ---------
<S> <C> <C>
Revenue:
Net sales $38,059 $17,633
Commissions from affiliate 1,669 183
------- -------
Total revenue 39,728 17,816
Cost of sales 25,782 12,766
------- -------
Gross margin 13,946 5,050
Research, development and engineering 3,781 1,195
Selling, general and administrative 6,805 3,482
------- -------
Operating profit 3,360 373
Interest expense (78) (271)
Other expense, net (367) (225)
------- -------
Earnings (loss) from consolidated
companies before income taxes 2,915 (123)
Income tax expense (benefit) 1,063 (27)
------- -------
Earnings (loss) from consolidated
companies 1,852 (96)
Equity in net earnings of affiliates 2,186 800
------- -------
Net earnings $ 4,038 $ 704
======= =======
Net earnings per share $0.36 $0.09
======= =======
Weighted average common and common
equivalent shares 11,277 8,248
======= =======
</TABLE>
See Accompanying Notes to Condensed Consolidated Financial Statements.
-3-
<PAGE>
SPEEDFAM INTERNATIONAL, INC. AND CONSOLIDATED SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED AUGUST 31, 1996 AND 1995
(dollars in thousands)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
AUGUST 31,
--------------------
1996 1995
--------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings $ 4,038 $ 704
Adjustments to reconcile net
earnings to net cash used in
operating activities:
Equity in net earnings of affiliates (2,186) (800)
Depreciation and amortization 463 178
Discount on sale of stock to
employees 191 --
Other (24) 6
Changes in assets and liabilities:
Decrease in trade accounts and
notes receivable 1,864 4,014
Increase in inventories (3,363) (3,923)
(Increase) decrease in other
current assets 191 (455)
Decrease in accounts payable and
due to affiliates (5,436) (2,788)
Increase (decrease) in accrued
expenses, customer deposits
and other liabilities (154) 1,974
---------- -------
Net cash used in operating activities (4,416) (1,090)
---------- -------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (2,295) (550)
Other investing activities 236 (269)
---------- -------
Net cash used in investing activities (2,059) (819)
---------- -------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from exercise of stock options 57 --
Proceeds from sale of stock to
employees 273 --
Treasury stock transactions -- 16
Increase in short-term borrowings 4 293
Proceeds from long-term debt -- 1,023
Principal payments on long-term debt (312) (172)
---------- -------
Net cash provided by financing
activities 22 1,160
---------- -------
Effects of foreign currency rate
changes on cash 89 (39)
Net decrease in cash and cash ---------- -------
equivalents (6,364) (788)
Cash and cash equivalents at beginning
of year 10,871 1,095
---------- -------
Cash and cash equivalents at August
31, 1996 and 1995 $ 4,507 $ 307
========== =======
</TABLE>
See Accompanying Notes to Condensed Consolidated Financial Statements.
-4-
<PAGE>
SPEEDFAM INTERNATIONAL, INC. AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands)
(1) BASIS OF PRESENTATION
The condensed consolidated financial statements included herein have been
prepared by management without audit. Certain information and note
disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been
condensed or omitted, although management believes that the disclosures
made are adequate to make the information presented not misleading. These
condensed consolidated financial statements should be read in conjunction
with the consolidated financial statements for the year ended May 31, 1996,
as filed with the Securities and Exchange Commission on September 5, 1996
as part of its Annual Report on Form 10-K/A. In the opinion of management
the information furnished herein reflects all adjustments (consisting of
normal recurring adjustments) necessary for a fair statement of results for
the interim periods presented. Results of operations for the three months
ended August 31, 1996 are not necessarily indicative of results to be
expected for the full fiscal year.
(2) INVENTORIES
The components of inventory were:
<TABLE>
<CAPTION>
August 31, May 31,
1996 1996
----------- ----------
<S> <C> <C>
Raw materials $ 15,996 $ 14,626
Work-in-process 9,097 10,777
Finished goods 6,146 2,528
----------- ----------
$ 31,239 $ 27,931
=========== ==========
</TABLE>
(3) INVESTMENTS IN AFFILIATES
The Company owns a 50% interest in SpeedFam Co., Ltd. which is translated
in accordance with SFAS No. 52. The Company's equity interest in SpeedFam
Co., Ltd. was $19,717 and $18,545 at August 31, 1996 and at May 31, 1996,
respectively based on the balance sheet of SpeedFam Co., Ltd. at July 31,
1996 and April 30, 1996, respectively. The remaining equity interest
included in investments in affiliates relates to the Company's 50%
ownership interest in Fujimi Corporation. Condensed consolidated financial
statements of SpeedFam Co., Ltd., which are consolidated on a fiscal year
that ends April 30, are as follows:
-5-
<PAGE>
SPEEDFAM INTERNATIONAL, INC. AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands)
BALANCE SHEETS
<TABLE>
<CAPTION>
JULY 31, APRIL 30,
1996 1996
----------- -------------
Assets
<S> <C> <C>
Total current assets $112,278 $ 98,492
Investment in affiliates 868 891
Property, plant and equipment, net 23,144 20,161
Deferred income taxes and other assets 8,192 7,007
-------- --------
Total assets $144,482 $126,551
======== ========
Liabilities and Stockholders'
Equity
Total current liabilities $ 87,699 $ 74,966
Long-term debt 10,648 9,106
Other long-term liabilities 6,700 5,388
Stockholders' equity
Common stock 664 664
Retained earnings 29,857 26,943
Foreign currency translation
adjustment 8,789 9,346
Unrealized gains on marketable
securities 125 138
Total liabilities and -------- --------
stockholders' equity $144,482 $126,551
======== ========
</TABLE>
STATEMENTS OF EARNINGS AND RETAINED EARNINGS
<TABLE>
<CAPTION>
Three Months Ended
July 31,
----------------------
1996 1995
---------- ----------
<S> <C> <C>
Net sales $56,750 $37,417
Costs and operating expenses 48,792 33,625
------- -------
Earnings before income taxes 7,958 3,792
Income taxes 4,103 2,158
------- -------
Net earnings before minority interest 3,855 1,634
Minority interest 34 (26)
------- -------
Net earnings 3,821 1,660
Beginning retained earnings 26,943 18,036
Dividends (907) (276)
Transfers to capital -- (454)
------- -------
Ending retained earnings $29,857 $18,966
======= =======
</TABLE>
-6-
<PAGE>
SPEEDFAM INTERNATIONAL, INC. AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands)
(4) In fiscal year 1996, the Company entered into an unsecured credit agreement
with two U.S. banks. The credit agreement includes a $22,500 revolving line
of credit maturing April 14, 1999. As of September 13, 1996, the Company
had negotiated an amendment to the credit facility, providing for an
additional $14,000 in a 5-year unsecured term loan to fund the construction
of a new corporate headquarters and manufacturing facility in Chandler,
Arizona. The loan's principal is to be repaid in fifteen (15) quarterly
installments of $350 each beginning in October of 1997. Interest accrues
and is paid monthly on the outstanding balance at LIBOR plus 1.4%.
-7-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
SEGMENTS
The Company's total revenue consists of net sales in two segments: (i)
equipment, parts and expendables, and (ii) slurries, as well as commissions
earned on the distribution in the U.S. and Europe of products of SpeedFam Co.,
Ltd.
RESULTS OF OPERATIONS
The following table sets forth certain consolidated statements of earnings
data for the periods indicated as a percentage of total revenue:
<TABLE>
<CAPTION>
Three Months Ended
August 31,
-------------------
1996 1995
------ ------
<S> <C> <C>
Revenue:
Net sales 95.8% 99.0%
Commissions from affiliate 4.2 1.0
----- -----
Total revenue 100.0 100.0
Cost of sales 64.9 71.7
----- -----
Gross margin 35.1 28.3
Research, development and engineering 9.5 6.7
Selling, general and administrative expenses 17.1 19.5
----- -----
Operating profit 8.5 2.1
Interest expense (0.2) (1.5)
Other expense, net (0.9) (1.3)
----- -----
Earnings (loss) from consolidated companies before income taxes 7.4 (0.7)
Income tax expense (benefit) 2.7 (0.2)
----- -----
Earnings (loss) from consolidated companies 4.7 (0.5)
Equity in net earnings of affiliates 5.5 4.5
----- -----
Total liabilities and stockholders' equity 10.2% 4.0%
===== =====
</TABLE>
-8-
<PAGE>
Net Sales. The Company's net sales for the three months ended August 31,
1996 were $38.1 million, an increase of 115.8% over net sales of $17.6 million
for the corresponding period in the prior year. This increase in net sales
resulted primarily from growth in the equipment, parts and expendables segment.
Sales of equipment, parts and expendables increased to $31.2 million or 82.0% of
total sales in the first three months of fiscal 1997 as compared to $11.2
million or 63.7% of total sales in the same period of fiscal 1996. A significant
portion of the growth in this segment was attributable to higher CMP-V sales to
the semiconductor industry as well as a significant increase in sales to the
thin film memory disk media market. Sales of slurries increased slightly to $6.8
million or 18.0% of total sales in the first three months of fiscal 1997 from
$6.4 million or 36.3% of total sales in the comparable period of fiscal 1996.
Commissions from Affiliate. Commissions from affiliate increased to $1.7
million during the first quarter of fiscal 1997 from $183,000 in the
corresponding period of fiscal 1996. The increase in the three month period, as
compared to the respective period in fiscal 1996, was due primarily to the
expanding demands in the silicon wafer industry for edge polishing systems
developed and manufactured by the Company's affiliate, SpeedFam Co., Ltd. (Far
East Joint Venture). In addition, sales of cleaning and polishing systems, also
produced by the Far East Joint Venture, to customers in the thin film memory
disk media market increased significantly in the first quarter of fiscal 1997
over the same period in the prior year.
Gross Margin. Gross margin increased to $13.9 million or 35.1% of total
revenue for the three months ended August 31, 1996 from $5.1 million or 28.3% of
total revenue for the three months ended August 31, 1995. In addition to higher
sales levels, gross margin has increased due to a considerable shift towards
higher margin products in the equipment, parts and expendables segment,
particularly the CMP-V planarization system.
Research, Development and Engineering. Research, development and
engineering expense increased to $3.8 million or 9.5% of total revenue in the
first quarter of fiscal 1997 from $1.2 million or 6.7% of total revenue in the
first quarter of fiscal 1996. This increase is primarily attributable to
continued development of the CMP process, equipment and other related
technologies. The Company believes that increased spending in research,
development and engineering, including technical support services to meet its
customers' needs, is critical to grow sales to the semiconductor and thin film
memory disk industries.
Selling, General and Administrative. Selling, general and administrative
expense increased 95.4% to $6.8 million in the first quarter of fiscal 1997 from
$3.5 million in the first quarter of fiscal 1996. For the three month period
ending August 31, 1996, selling, general and administrative expense as a percent
of total revenue decreased to 17.1% compared to 19.5% of total revenue in the
similar period of fiscal 1996 due to the significantly higher level of sales
during the first quarter of fiscal 1997 as compared to the sales level during
the same period of fiscal 1996. However, higher levels of spending were required
to support the sales growth in the first quarter of fiscal 1997 including
additional administrative and sales personnel, new service and sales locations,
and distributor commissions to an affiliate on export sales from the U.S. to the
Far East region.
Interest Expense. Interest expense decreased to $78,000 in the first
quarter of fiscal 1997 compared to $271,000 in the first quarter of fiscal 1996.
The decrease was due to the significant reduction of long-term debt since the
end of first quarter of fiscal 1996 using funds received primarily in the
initial
-9-
<PAGE>
public offering of October 1996. As a percentage of total revenue,
interest expense decreased to 0.2% in the first quarter of fiscal 1997 from 1.5%
in the comparable prior year period.
Other Expense, Net. Other expense increased to $367,000 in the first three
months of fiscal 1997 from $225,000 in the comparable period of fiscal 1996.
The increase is due primarily to non-recurring charges associated with the
Company's secondary equity offering which was subsequently canceled. These
charges were partially offset by interest income.
Equity in Net Earnings of Affiliates. Equity in net earnings of affiliates
increased to $2.2 million for the three months ended August 31, 1996 from
$800,000 in the comparable period of fiscal 1996. With the gradual recovery of
the general Japanese economy, demand continued to be strong for products sold
to the thin film memory and semiconductor wafer industries by the Far East Joint
Venture. In addition, the Company's share of the net earnings of its other
joint venture, Fujimi Corporation, were significantly higher than in the
comparable period of fiscal 1996 due to increased sales and improved margins
realized during the first quarter of fiscal 1997 on slurry products sold by that
affiliate to the U.S. silicon wafer market.
-10-
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
For the first quarter ended August 31, 1996, the Company used $4.4 million
in cash from operating activities primarily to reduce current trade payables to
creditors and affiliates. Inventories also increased by approximately $3.4
million. Manufacturing lead times for machines and equipment are measured in
weeks, and result in fluctuating inventory balances depending on timing of
shipments.
As of September 30, 1996, the Company had spent approximately $4.8 million
in land and construction costs for a new corporate headquarters and
manufacturing facility in Chandler, Arizona. The Company presently estimates the
total costs to be incurred for the project will be approximately $20.3 million.
The current total estimated project cost has increased from previous estimates
due to changes in equipment production capacity and waste neutralization
requirements, power and HVAC demands.
As of September 13, 1996, the Company had successfully negotiated an
amendment to its existing $22.5 million unsecured credit facility, in which its
U.S. bank group provided the Company an additional $14.0 million in an unsecured
term loan to fund the majority of the remaining costs to construct the new
corporate headquarters and manufacturing facility in Chandler, Arizona.
The Company believes that anticipated funds provided by operations and
current bank lines of credit will be sufficient to meet the Company's capital
requirements during the next 12 months.
Statement of Financial Accounting Standards No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of" was
issued in March 1995 and is effective for fiscal years beginning after December
15, 1995. Management has reviewed the Statement and determined that its
provisions do not have a material effect upon the financial condition or results
of operations of the Company.
Statement of Financial Accounting Standards No. 123, "Accounting for Stock-
Based Compensation Plans" was issued in October 1995. The Statement will be
effective for the Company's fiscal year 1997. As allowed by the new Statement,
the Company plans to continue to use Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees" in accounting for its stock options.
Certain pro forma and other information will be disclosed in the annual
financial statements as if the Company had measured compensation costs in a
manner consistent with the new Statement. Management has reviewed the Statement
and determined that its provisions do not have a material effect upon the
financial condition or results of operations of the Company.
Certain statements in "Management's Discussion and Analysis - Liquidity and
Capital Resources" constitute "forward-looking statements" within the meaning of
the Private Securities Litigation Reform Act of 1995. Such forward-looking
statements involve known and unknown risks, uncertainties and other factors
which may cause the actual results, performance or achievements of the Company
to be materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements.
-11-
<PAGE>
SPEEDFAM INTERNATIONAL, INC.
Part II - Other Information
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
Exhibit 10 - Amendment No. 1 to Revolving Credit Agreement
Between the Registrant and the First National
Bank of Chicago and Firstar Bank Milwaukee, N.A.
dated September 13, 1996
Exhibit 11 - Computation of Net Earnings Per Share
Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K.
One report on Form 8-K was filed July 8, 1996 to disclose
information contained in a press release announcing operating
results for the fourth quarter and year ended May 31, 1996.
-12-
<PAGE>
SPEEDFAM INTERNATIONAL, INC.
SIGNATURE
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.
SpeedFam International, Inc.
/s/ Roger K. Marach
----------------------------------
Date: October 11, 1996 By Roger K. Marach
Treasurer and Chief Financial Officer
(As Chief Accounting Officer and Duly
Authorized Officer of SpeedFam
International, Inc.)
-13-
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
10 Amendment No. 1 to Revolving Credit Agreement Between the
Registrant and the First National Bank of Chicago and Firstar
Bank Milwaukee, N.A. dated September 13, 1996
11 Computation of Net Earnings Per Share
27 Financial Data Schedule
</TABLE>
<PAGE>
AMENDMENT NO. 1 TO CREDIT AGREEMENT
-----------------------------------
THIS AMENDMENT NO. 1 TO CREDIT AGREEMENT is made as of September 13, 1996,
by and among SPEEDFAM INTERNATIONAL, INC., an Illinois corporation (the
"Company"), and FIRSTAR BANK MILWAUKEE, N.A., a national banking association
("Firstar") and THE FIRST NATIONAL BANK OF CHICAGO, a national banking
association ("First Chicago") (Firstar and First Chicago are collectively
referred to as the "Banks") and Firstar as Agent for the Banks (the "Agent").
IN CONSIDERATION of the mutual covenants, conditions and agreements set
forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, it is hereby agreed that:
ARTICLE I
DEFINITIONS
-----------
When used herein, the following terms shall have the meanings specified:
1.1 Amendment. "Amendment" shall mean this Amendment No. 1 to Revolving
Credit Agreement.
1.2 Credit Agreement. "Credit Agreement" shall mean the Revolving Credit
Agreement dated as of April 15, 1996 among the Borrower, the Banks and the
Agent; and the Revolving Credit Agreement shall be retitled as the "Credit
Agreement."
1.3 Other Terms. The other capitalized terms used in this Amendment shall
have the definitions assigned to them in the Credit Agreement.
ARTICLE II
AMENDMENTS
----------
The Credit Agreement is amended as follows:
2.1 Section 1.1 - Definitions.
-------------------------
(a) Section 1.1 of the Credit Agreement is amended by adding the
following definitions thereto in alphabetical order:
(i) "Agreement Not to Convey or Encumber" shall mean the Ageement
Not to Convey or Encumber dated September 13, 1996, from the Company in
favor of the Banks and the Agent.
<PAGE>
(ii) "Capitalized Lease" shall mean any lease, the obligations under
which have been, or in accordance with GAAP are required to be, recorded as
a capital lease liability on the consolidated balance sheet of the Company
and its Consolidated Subsidiaries
(iii) "Construction Agreement" shall mean the Construction Agreement
dated September 13, 1996, by and among the Company, the Banks and the
Agent.
(iv) "Debt Service Coverage Ratio" shall mean the relationship,
expressed as a numerical ratio, between:
(1) the sum of (a) Net Income less Equity in Net Earnings of
Affiliates, (b) depreciation, amortization and other
noncash charges, to the extent that they have been
deducted in determining Net Income, (c) interest expense
(including imputed interest charges with respect to
Capitalized Leases and the interest incurred on the Term
Loans up to September 1, 1997), (d) rent expense with
respect to Operating Leases, and (e) cash dividends
received by the Company from Affiliates; and
(2) the sum of (a) interest expense (including imputed
interest charges with respect to Capitalized Leases), rent
expense with respect to Operating Leases, (b) scheduled
principal payments with respect to Funded Debt, and (c)
principal payments made with respect to Capitalized
Leases; and with respect to clauses (1) and (2), all as
determined without duplication in accordance with GAAP for
the Company and its Subsidiaries for the period consisting
of the four fiscal quarters of the Company immediately
preceding the first day of any fiscal quarter.
(v) "Environmental Indemnity Agreement" shall mean the
Environmental Indemnity Agreement dated September 13, 1996, from the
Company in favor of the Banks and the Agent.
(vi) "Operating Leases" shall mean any lease, the obligations
under which have been, or in accordance with GAAP are required to be,
recorded as an operating lease liability on the consolidated balance sheet
of the Company and its Subsidiaries.
2
<PAGE>
(vii) "Term Loans" shall mean the loans to the Company pursuant to
Section 2.10 evidenced by the Term Notes.
(viii) "Term Notes" shall mean the promissory notes from the
Company to Firstar and to First Chicago in the form of EXHIBIT D-1 AND
EXHIBIT D-2, respectively, evidencing the Term Loans, as amended,
supplemented, modified or extended from time to time.
(b) The definition of "LIBOR Interest Margin" is amended in its
entirety to read as follows:
"LIBOR Interest Margin" shall mean: (a) with respect to Revolving
Loans, 1.25% per annum, subject to adjustment pursuant to Section
2.1(b)(ii); and (b) with respect to Term Loans, 1.40% per annum.
(c) The definition of "LIBOR Rate" is amended by adding the word
"applicable" immediately after the word "the" in subparagraph (b) of such
definition.
(d) The definition of "LIBOR Rate Loans" is amended in its entirety to
read as follows:
"LIBOR Rate Loans" shall mean (i) Revolving Loans for which the
Company has selected the LIBOR Rate as the base rate of interest under
Section 2.1, and (ii) all Term Loans."
(e) The definition of "Loan Period" is amended by adding the words "or
Section 2.10(b), as the case may be," immediately after the words "Section
2.1(c)" in the fourth line thereof.
(f) The definition of "Maximum Credit" is amended in its entirety to
read as follows:
"Maximum Credit" shall mean (i) with respect to Revolving Loans, the
extension by the Banks to the Company of aggregate Obligations up to
the Revolving Loan Commitment; provided that each Bank's independent
obligation to extend credit is limited to the following amounts:
First Chicago $ 9,000,000
Firstar $13,500,000
and (ii) with respect to Term Loans, the extension by the Banks to the
Company of an amount not to exceed $14,000,000; provided that each
Bank's independent obligation to
3
<PAGE>
extend credit is limited to the following amounts:
First Chicago $7,000,000
Firstar $7,000,000
(g) The definition of "Obligations" is amended by adding the words
"the Term Loans" immediately after the word "Credit," in the second line
thereof.
(h) The definition of "Pro Rata" is amended in its entirety to read
as follows:
"Pro Rata" shall mean ratably among the Banks in proportion to the
ratio that each of their respective applicable Maximum Credits bear to
the applicable aggregate Maximum Credit.
(i) The definition of "Related Documents" is amended in its entirety
to read as follows:
"Related Documents" shall mean the Revolving Credit Notes, the Term
Notes, the Guaranty, the Construction Agreement, the Environmental
Indemnity Agreement, the Agreement Not to Convey or Encumber, and all
other certificates, resolutions, or other documents required or
contemplated hereunder.
(j) The definition of Termination Date is amended in its entirety to
read as follows:
"Termination Date" shall mean (i) with respect to the Revolving Loans,
April 14, 1999, and (ii) with respect to the Term Loans, September 12,
2001; or such earlier date on which the Obligations shall terminate as
provided in Section 7.2.
2.1 Section 2.3 - Funding Procedures. Section 2.3 of the Credit Agreement
is amended in its entirety to read as follows:
"2.3 Funding Procedures. Unless the Company or a Bank, as the
case may be, notifies the Agent prior to the date on which it is
scheduled to make payment to the Agent, of (i) in the case of a Bank,
the proceeds of a Revolving Loan, Term Loan or draw under a Letter of
Credit as required hereunder or (ii) in the case of the Company, a
payment of principal, interest, fees or charges to the Agent for the
account of the Banks, that it
4
<PAGE>
does not intend to make such payment, the Agent may assume that such
payment has been made. The Agent may, but shall not be obligated to,
make the amount of such payment available to the intended recipient in
reliance upon such assumption. If such Bank or the Company, as the
case may be, has not in fact made such payment to the Agent, the
recipient of such payment shall, on demand by the Agent, repay to the
Agent the amount so made available together with interest thereon in
respect of each day during the period commencing on the date such
amount was so made available by the Agent until the date the Agent
recovers such amount at a rate per annum equal to (a) in the case of
payment by a Bank, the federal funds rate for each of the first three
business days after the date of funding (as determined by the Agent)
and thereafter at the interest rate applicable to the relevant
Obligation, or (b) in the case of payment by the Company, the interest
rate applicable to the relevant Obligation. A statement of the Agent
submitted to the Company or any Bank with respect to any amounts owing
under this Section 2.3 shall be conclusive, in the absence of manifest
error. The failure of one of the Banks to make any Revolving Loan,
Term Loan or loan respecting a draw under a Letter of Credit as
required hereunder shall not relieve any other Bank of its obligation
to lend its Pro Rata share of such Revolving Loan, Term Loan or Letter
of Credit, hereunder, and in no event shall such other Banks or the
Agent be liable in any way whatsoever to the Company for such failure
of any Bank to make any Revolving Loan, Term Loan or loan respecting a
Letter of Credit hereunder."
2.3 Section 2.4 - Interest After Default. Section 2.4 of the Credit
Agreement is amended in its entirety to read as follows:
2.4 Interest After Default. After an Event of Default, each of
the Obligations shall bear interest at the rate of 2% per annum in
excess of the applicable rates set forth herein; provided, that in the
case of a LIBOR Rate Loan which is a Revolving Loan the maturity of
which is accelerated, such LIBOR Rate Loan shall bear interest for the
remainder of the applicable Loan Period at a
5
<PAGE>
rate equal to 2% plus the higher of the rate on the LIBOR Rate Loan or
the rate on Revolving Loans which are not LIBOR Rate Loans. In no
event shall the interest rate on the Obligations exceed the highest
rate permitted by law.
2.4 Section 2.5 - Loan Account. Section 2.5 of the Credit Agreement is
amended by adding the words "and Term Loans" immediately after the words
"Revolving Loans" in the thirteenth line thereof.
2.5 Section 2.10 - Term Loans. A new Section 2.10 is added to the Credit
Agreement as follows:
2.10 Term Loans.
----------
(a) Prior to the Termination Date for Term Loans and so long as
no Default has occurred, the Banks agree separately and independently
(and not jointly) to extend to the Company Term Loans in an aggregate
principal amount not to exceed $14,000,000. Term Loans shall be made
by each Bank Pro Rata. The Term Loans made by each Bank shall be
evidenced by their respective Term Notes.
(b) The Company may obtain Term Loans by making a request
therefor to the Agent, orally or in writing. Such request shall
specify a Business Day prior to September 30, 1997 (the "Construction
Disbursement Expiration Date") on which such Term Loans are to be made
(the "Disbursement Date"), shall be received by the Agent by 12:00
Noon (Milwaukee time) three Business Days before the Disbursement
Date, and shall specify the amount of the Term Loans requested;
provided, however, that within three days after any oral request for a
Term Loan, the Agent shall receive from the Company a written
confirmation in form acceptable to the Agent confirming the Company's
Term Loan request, and the Banks' obligation to make further Term
Loans hereunder shall be suspended until such confirmation has been
received by the Agent. In the event of any inconsistency between the
telephonic notice and the written confirmation thereof, the telephonic
notice shall control. The Company shall be obligated to repay all Term
Loans notwithstanding the failure of the Agent to receive written
confirmation, and
6
<PAGE>
notwithstanding the fact that the person requesting the Term Loan was
not in fact authorized to do so. No Term Loan request shall be
modified, altered or amended without the prior written consent of the
Agent. The Company may not request Term Loans in an amount less than
$500,000 per request and the Company shall not make more than one
request for Term Loans in any calendar month prior to the Construction
Disbursement Expiration Date. The Agent shall promptly inform each
Bank of each Term Loan request. Each Bank shall make available to the
Agent at its principal office in Milwaukee, Wisconsin, in immediately
available funds and not later than 3:00 p.m. Milwaukee time on the
Disbursement Date, the amount of such Bank's Pro Rata share of such
Term Loans. Upon receipt by the Agent of the amount of a Bank's Term
Loan and fulfillment of the conditions specified in Section 4.2, the
Agent shall promptly deposit the amount of such Term Loan in the
general deposit account of the Company maintained at the Agent. At the
end of each respective Loan Period, the new Loan Period shall be three
months unless the Agent, by 12:00 Noon (Milwaukee time) and at least
three Business Days prior to the expiration of the applicable Loan
Period, is in receipt of a written notice from the Company requesting
a one or two month period.
(c) The Company shall pay all accrued and unpaid interest on the
Term Loans on the first day of each month commencing on October 1,
1996, and continuing on the first day of each consecutive month
thereafter until the Term Loans are paid in full. Prior to an Event of
Default, interest shall accrue on the aggregate unpaid principal
amount outstanding under the Term Notes at a rate per annum equal to
the applicable LIBOR Rate on each LIBOR Rate Loan. Interest shall be
computed and adjusted daily based on the actual number of days elapsed
in a year of 360 days. The Company shall pay principal outstanding
under the Term Notes in fifteen (15) equal quarterly installments of
$350,000, each payable on the first day of October of 1997, and on the
first day of each January, April, July and October thereafter, and a
final payment of the balance of all unpaid principal and accrued
interest on the Termination Date for the Term Loans.
7
<PAGE>
Amounts paid or prepaid on the Term Loans may not be reborrowed.
(d) Notwithstanding anything contained herein to the contrary,
the provisions contained in Section 2.1(e) and (f) shall apply to
Revolving Loans which are LIBOR Rate Loans and all Term Loans.
2.6 Section 4.2 - Subsequent Obligations. Section 4.2(d) of the Credit
Agreement is amended by adding the words "Term Loans and" immediately after the
word "for" in the second line thereof.
2.7 Section 5.5 - Use of Proceeds. Section 5.5 of the Credit Agreement is
amended in its entirety to read as follows:
"5.5 Use of Proceeds. Use the entire proceeds of the Obligations
as follows: (a) the proceeds of the Revolving Loans and Letters of
Credit will be used for working capital and general corporate purposes
of the Company and the Guarantor only (including any payments required
under Standby Letter of Credit No. S100408), and (b) the proceeds of
Term Loans will be used for the construction of an approximately
135,000 square foot corporate headquarters and manufacturing facility
to be located at 305 N. 54th Street, Chandler, Arizona, and for the
purchase of machinery and equipment to be used at such facility."
2.8 Section 5.9 - Fees and Costs. Section 5.9 of the Credit Agreement is
amended by adding a new subsection (i) as follows:
"(i) Pay the Agent for the ratable account of the Banks on
September 13, 1996, a closing fee with respect to the Term Loans equal
to $100,000."
2.9 Section 5.13 - Certain Lender Notices. Section 5.13 of the Credit
Agreement is deleted in its entirety.
2.10 Section 6.2 - Indebtedness. Section 6.2 of the Credit Agreement is
amended in its entirety to read as follows:
"6.2 Indebtedness. Issue, create, incur, assume or otherwise
become liable with respect to (or agree to issue, create, incur,
assume or otherwise become liable with respect to), or permit to
remain outstanding, any Indebtedness except (a) the Obligations; (b)
8
<PAGE>
Indebtedness which has been subordinated to the Banks in form and
substance satisfactory to the Banks; (c) current liabilities (other
than for borrowed money) of the Company and the Guarantor incurred in
the ordinary course of business which are not more than 90 days
overdue, unless being contested in good faith and with due diligence;
(d) Indebtedness secured by Permitted Liens; (e) Indebtedness
disclosed on the Company's most recent financial statements described
in Section 3.2(a), provided that such Indebtedness shall not be
increased; (f) operating lease or rental obligations as permitted
under Section 6.12 and (h) Indebtedness in an aggregate amount of not
more than $250,000 in excess of the amounts permitted by Sections
6.2(a), (b), (c), (d), (e) and (f).
2.11 6.13 Certain Lender Amendments. Section 6.13 of the Credit Agreement
is deleted in its entirety and replaced with the following new Section 6.13:
"6.13 Debt Service Coverage Ratio. Commencing on September 13,
1996, permit the Debt Service Coverage Ratio to be less than 1.50 to 1
at the end of each fiscal quarter of the Company during the term of
this Agreement.
2.12 8.5 Application of Payments. Section 8.5 of the Credit Agreement is
amended in its entirety to read as follows:
"8.5 Application of Payments. All payments of principal and
interest with respect to the Obligations shall be made to the Agent in
immediately available funds for the ratable account of the Banks. The
Agent shall promptly distribute to each Bank, Pro Rata, the amount of
(a) principal and interest received by the Agent, (b) any fees,
expenses or charges collected by Agent, and (c) all amounts received
by the Agent upon realization from the Property. Any payment in good
funds to the Agent for the account of a Bank hereunder shall
constitute a payment by the Company to such Bank of the amounts so
paid to the Agent, and any Obligations or portions thereof so paid
shall not be considered outstanding for any purpose after the date of
such payment in good funds to the Agent. Notwithstanding the
foregoing, for purposes of clause (c) above, the parties acknowledge
that
9
<PAGE>
all amounts received by the Agent upon realization of the Property
shall be applied Pro Rata, on an aggregate basis. Notwithstanding
anything herein to the contrary, all payments or prepayments of
principal and interest shall be made Pro Rata in accordance with the
amounts of the relevant Obligation(s) then being paid or prepaid, as
the case may be. In the event any Bank shall receive from the Company
or any other source any payment of, on account of, any of the
Obligations (whether pursuant to the exercise of any right of setoff,
banker's lien, realization upon any security held for or appropriated
to such obligation, counterclaim or otherwise) other than as provided
above, then such Bank shall immediately purchase, without recourse and
for cash, an interest in the obligations of the same nature held by
the other Banks so that each Bank shall thereafter have a percentage
interest in all of such obligations equal to the percentage interest
which such Bank held in the relevant Obligations immediately before
such payment; provided, if any payment so received shall be recovered
in whole or in part from such purchasing Bank, the purchase shall be
rescinded and the purchase price restored to the extent of such
recovery, but without interest. The Company specifically acknowledges
and consents to the preceding sentence.
2.13 8.9 Reliance on Documents, Counsel. Section 8.9 of the Credit
Agreement is amended by adding the words "Term Note," immediately after the
words "Revolving Credit Note" in line 2 thereof.
2.14 8.15 - Noteholders. Section 8.15 of the Credit Agreement is amended
by adding the words "or Term Note" immediately after the words "Revolving Credit
Note" in line 2 thereof.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
------------------------------
The Company hereby represents and warrants to the Banks and the Agent that:
3.1 Credit Agreement. All of the representations and warranties made by
the Company in the Credit Agreement are true and
10
<PAGE>
correct on the date of this Amendment. No Default or Event of Default under the
Credit Agreement has occurred and is continuing as of the date of this
Amendment.
3.2 Authorization; Enforceability. The making, execution and delivery of
this Amendment, the Term Notes and other Related Documents, and performance of
and compliance with the terms of the Credit Agreement as amended, the Term Notes
and other Related Documents, have been duly authorized by all necessary
corporate action by the Company. This Amendment, the Term Notes and other
Related Documents are the valid and binding obligation of the Company,
enforceable against the Company in accordance with their respective terms.
3.3 Absence of Conflicting Obligations. The making, execution and
delivery of this Amendment, the Term Notes and other Related Documents, and
performance of and compliance with the terms of the Credit Agreement as amended,
the Term Notes and other Related Documents, do not violate any presently
existing provision of law or the articles or certificate of incorporation or
bylaws of the Company or any agreement to which the Company is a party or by
which it or any of its assets is bound.
ARTICLE IV
MISCELLANEOUS
-------------
4.1 Continuance of Credit Agreement. Except as specifically amended by
this Amendment, the Credit Agreement shall remain in full force and effect.
4.2 Survival. All agreements, representations and warranties made in this
Amendment or in any documents delivered pursuant to this Amendment shall survive
the execution of this Amendment and the delivery of any such document.
4.3 Governing Law. This Amendment shall be governed by, and construed and
interpreted in accordance with, the laws of the State of Wisconsin applicable to
agreements made and wholly performed within such state.
4.4 Counterparts; Headings. This Amendment may be executed in several
counterparts, each of which shall be deemed an original, but such counterparts
shall together constitute but one and the same agreement. Article and section
headings in this Amendment are inserted for convenience of reference only and
shall not constitute a part hereof.
4.5 Severability. Any provision of this Amendment which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or
11
<PAGE>
unenforceability without invalidating the remaining provisions of this Amendment
in such jurisdiction or affecting the validity or enforceability of any
provision in any other jurisdiction.
4.6 Conditions. The effectiveness of this Amendment, and the obligations
of the Banks to make the Term Loans evidenced by the Term Notes, are subject to
the following conditions:
(a) The Agent shall have received on or before the date of this
Amendment, each of the following, in form and substance satisfactory to the
Agent and its counsel:
(i) for the account of each Bank, the executed Term Notes;
(ii) the executed Construction Agreement;
(iii) the executed Environmental Indemnity Agreement;
(iv) the executed Agreement Not to Convey or Encumber;
(v) the opinion of counsel for the Company and the Guarantor;
(vi) the Reaffirmation of Guaranty executed by the Guarantor;
(vii) a certificate of the secretary or an assistant secretary
of the Company and the Guarantor certifying (i) an attached complete and
correct copy of its bylaws; (ii) an attached complete and correct copy of
resolutions duly adopted by its board of directors which have not been
amended since their adoption and remain in full force and effect,
authorizing the execution, delivery and performance of this Agreement and
those Related Documents to which it is a party and which are being executed
in connection with this Amendment; (iii) that its articles of incorporation
have not been amended since the date of the last date of amendment thereto
indicated on the certificate of the secretary of state; and (iv) as to the
incumbency and specimen signature of each officer executing this Agreement
and all other Related Documents to which it is a party and which are being
executed in connection with this Amendment, and including a certification
by another officer as to the incumbency and signature of the secretary or
assistant secretary executing the certificate;
(viii) certificates of good standing for the Company and the
Guarantor and certified articles of incorporation for the Company and the
Guarantor, all issued by the Office of the Secretary of State of Illinois
within 30 days of the date
12
<PAGE>
hereof together with a certificate of authority from the Office of the
Secretary of State of Arizona authorizing the Company to transact business
in Arizona;
(ix) evidence that there are no liens of record on the Property
other than Permitted Liens;
(x) the closing fee under Section 5.9(i);
(xi) a Phase One Environmental Audit;
(xii) an ALTA Survey;
(xiii) an informational commitment for title insurance issued by
a title insurance company acceptable to the Agent; and
(xiv) such additional supporting documents and materials as the
Agent may request.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of
the day and year first above written.
SPEEDFAM INTERNATIONAL, INC.
By: /s/ Roger K. Marach
-------------------------------
Roger K. Marach, Treasurer
and Chief Financial Officer
FIRSTAR BANK MILWAUKEE, N.A.
By: /s/ James A. Meyer
-------------------------------
James A. Meyer, Vice President
THE FIRST NATIONAL BANK OF CHICAGO
By: /s/ Robert D. Curtis
-------------------------------
Robert D. Curtis,
First Vice President
FIRSTAR BANK MILWAUKEE, N.A.
By: /s/ James A. Meyer
-------------------------------
James A. Meyer, Vice President
13
<PAGE>
EXHIBIT D-1
-----------
TERM NOTE
---------
$7,000,000 Milwaukee, Wisconsin
September 13, 1996
FOR VALUE RECEIVED, SPEEDFAM INTERNATIONAL, INC., an Illinois
corporation (the "Borrower"), promises to pay to the order of FIRSTAR BANK
MILWAUKEE, N.A. (the "Bank") at its main office in Milwaukee, Wisconsin or at
such other place as the holder hereof may from time to time in writing
designate, in lawful money of the United States of America, the principal sum of
Seven Million Dollars ($7,000,000.00), pursuant to Section 2.10 of the Credit
Agreement by and among the Borrower, the Bank, in its capacity as lender and as
agent, and The First National Bank of Chicago, dated as of April 15, 1996, as
amended (the "Loan Agreement"), together with accrued interest and all other
costs, charges and fees due thereunder.
The undersigned further promises to pay interest on the unpaid principal
amount of this Term Loan (as such term is defined in the Loan Agreement)
outstanding under the Loan Agreement, payable at such rates and at such times,
as provided in the Loan Agreement. Subject to the provisions of the Loan
Agreement with respect to acceleration, prepayment or loan limitations, all
unpaid principal with respect to this Term Loan, together with accrued interest
and all other costs, charges and fees, shall be due and payable in full on the
Termination Date for this Note.
This Note evidences indebtedness incurred under, and is entitled to the
benefits of, the Loan Agreement, together with all future amendments,
modifications, waivers, supplements and replacements thereof, to which Loan
Agreement reference is made for a statement of the terms and provisions under
which this Note may be paid prior to its due date or its due date accelerated.
The Borrower hereby agrees to pay all costs of collection, including
reasonable attorneys' fees and legal expenses in the event this Note is not
paid when due.
This Note is issued in and shall be governed by the laws of the State of
Wisconsin.
D-1
<PAGE>
No delay or omission on the part of the holder in exercising any right
hereunder shall operate as a waiver of such right or of any other remedy under
this Note. A waiver on any one occasion shall not be construed as a waiver of
any such right or remedy on a future occasion.
All makers, endorsers, sureties, guarantors and other accommodation
parties hereby waive presentment for payment, protest and notice of nonpayment
and consent, without affecting their liability hereunder, to any and all
extensions, renewals, substitutions and alterations of any of the terms of this
Note and to the release of or failure by the Bank to exercise any rights against
any party liable for or any property securing payment thereof.
SPEEDFAM INTERNATIONAL, INC.
By:
-----------------------------------
Roger K. Marach, Treasurer and CFO
D-2
<PAGE>
EXHIBIT D-2
-----------
TERM NOTE
---------
$7,000,000 Milwaukee, Wisconsin
September 13, 1996
FOR VALUE RECEIVED, SPEEDFAM INTERNATIONAL, INC., an Illinois corporation
(the "Borrower"), promises to pay to the order of THE FIRST NATIONAL BANK OF
CHICAGO (the "Bank") at its main office in Chicago, Illinois or at such other
place as the holder hereof may from time to time in writing designate, in lawful
money of the United States of America, the principal sum of Seven Million
Dollars ($7,000,000.00), pursuant to Section 2.10 of the Credit Agreement by and
among the Borrower, the Bank, Firstar Bank Milwaukee, N.A., in its capacity as
lender and agent, dated as of April 15, 1996, as amended (the "Loan Agreement"),
together with accrued interest and all other costs, charges and fees due
thereunder.
The undersigned further promises to pay interest on the unpaid principal
amount of this Term Loan (as such term is defined in the Loan Agreement) as is
outstanding under the Loan Agreement, payable at such rates and at such times,
as provided in the Loan Agreement. Subject to the provisions of the Loan
Agreement with respect to acceleration, prepayment or loan limitations, all
unpaid principal with respect to this Term Loan, together with accrued interest
and all other costs, charges and fees, shall be due and payable in full on the
Termination Date for this Note.
This Note evidences indebtedness incurred under, and is entitled to the
benefits of, the Loan Agreement, together with all future amendments,
modifications, waivers, supplements and replacements thereof, to which Loan
Agreement reference is made for a statement of the terms and provisions under
which this Note may be paid prior to its due date or its due date accelerated.
The Borrower hereby agrees to pay all costs of collection, including
reasonable attorneys' fees and legal expenses in the event this Note is not
paid when due.
This Note is issued in and shall be governed by the laws of the State of
Wisconsin.
D-2-1
<PAGE>
No delay or omission on the part of the holder in exercising any right
hereunder shall operate as a waiver of such right or of any other remedy under
this Note. A waiver on any one occasion shall not be construed as a waiver of
any such right or remedy on a future occasion.
All makers, endorsers, sureties, guarantors and other accommodation parties
hereby waive presentment for payment, protest and notice of nonpayment and
consent, without affecting their liability hereunder, to any and all extensions,
renewals, substitutions and alterations of any of the terms of this Note and to
the release of or failure by the Bank to exercise any rights against any party
liable for or any property securing payment thereof.
SPEEDFAM INTERNATIONAL, INC.
By:
----------------------------------
Roger K. Marach, Treasurer and CFO
D-2-2
<PAGE>
Exhibit 11
SPEEDFAM INTERNATIONAL, INC.
COMPUTATION OF NET EARNINGS PER SHARE
THREE MONTHS ENDED AUGUST 31, 1996 AND 1995
(dollars and shares in thousands, except per share data)
<TABLE>
<CAPTION>
Three Months
Ended
August 31,
---------------
1996 1995
------- ------
<S> <C> <C>
Net earnings $ 4,038 $ 704
======= ======
Weighted average shares:
Common shares outstanding 10,534 7,468
Common equivalent shares issuable upon
exercise of employee stock options 743 780
------- ------
Shares used in net earnings per share 11,277 8,248
======= ======
Net earnings per share $ .36 $ .09
======= ======
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAY-31-1997
<PERIOD-START> JUN-01-1996
<PERIOD-END> AUG-31-1996
<EXCHANGE-RATE> 1
<CASH> 4,507
<SECURITIES> 0
<RECEIVABLES> 32,868
<ALLOWANCES> 0
<INVENTORY> 31,239
<CURRENT-ASSETS> 70,914
<PP&E> 11,798
<DEPRECIATION> 0
<TOTAL-ASSETS> 106,623
<CURRENT-LIABILITIES> 39,289
<BONDS> 0
<COMMON> 1
0
0
<OTHER-SE> 64,388
<TOTAL-LIABILITY-AND-EQUITY> 106,623
<SALES> 38,059
<TOTAL-REVENUES> 39,728
<CGS> 25,782
<TOTAL-COSTS> 36,368
<OTHER-EXPENSES> 445
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 78
<INCOME-PRETAX> 2,915
<INCOME-TAX> 1,063
<INCOME-CONTINUING> 1,852
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,038
<EPS-PRIMARY> .36
<EPS-DILUTED> 0
</TABLE>
