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To: Kevin Firth who wrote (1611)	4/21/1998 1:28:00 PM
From: David Aegis	Read Replies (4) \| Respond to of 2946

Conf. Call notes: 1) Micrascan backlog: 31 units in < 12 months. 30 more beyond 12 months. 2) Book to bill: .69. 3) New products from Track and Thermco are more capacity oriented. Excellent features of new products leave them well-positioned for the eventual upturn. 4) R&D will continue to position the company for the future. Investment continues on 300 mm litho and 193 nm litho. Should be ready for 1999. R&D was up $4.5 million over the preceding quarter (this works out to about $0.10 per share). 5) Cap ex continues at SVGL. Now at 37 production bays vs. 50 bay target. Some improvement seen in cycle times. 6) Depreciation expense up $9 million (unclear whether this is an annualized run rate and Y-O-Y or Q-O-Q--I have a follow-up call in to IR--this clearly has a big impact on reported EPS). 7) Dollar/Yen exchange rate is bad for Track and Thermco. 8) Pricing pressure likely for SVGL in 6-9 months when competitors roll out production-worthy step-and-scan systems. 9) SVGL plans to use excess capacity to try to broaden the customer base, since capacity constraint is no longer as critical an issue. 10) The company expects to post a loss in its 3Q (June). My overall impression is that the company is well-positioned for the eventual upturn. I am very confident that Track and Thermco will thrive in the next round of capacity additions. I am a bit worried that the current slowdown will allow lithography competitors to work the bugs out of their systems and perhaps be able to compete better on a performance and price basis. I think Intel is playing possum, possibly trying to hold off on orders as long as possible to benefit from this competition, but I think Intel's new chip strategies will be successful (e.g. IBM, HP recently announcing orders of Intel's new chips and motherboard chip sets). Patience with SVGI will be rewarded. --David