<PAGE>
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 quarterly period ended May 27, 1995
------------
or
[ ] 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: 0-17276
-----------
FSI INTERNATIONAL, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
MINNESOTA 41-1223238
- --------------------------------------------------------------------------------
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
322 LAKE HAZELTINE DRIVE, CHASKA, MINNESOTA 55318
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
612-448-5440
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. [X] YES [_] NO
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practical data Common Stock, No Par Value -
17,148,598 shares outstanding as of June 9, 1995 (as adjusted for two-for-one
common stock split to be distributed on or about June 19, 1995 to holders of
record on June 13, 1995).
This report, including all exhibits and attachments, contains 24 pages.
Page 1 of 18
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FSI INTERNATIONAL, INC.
QUARTERLY REPORT ON FORM 10-Q
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION PAGE NO.
--------------------- --------
<S> <C> <C>
Item 1. Consolidated Condensed Financial
Statements:
Consolidated condensed balance sheets
as of May 27, 1995 (Unaudited) and
August 27, 1994 3
Consolidated condensed statements of
operations (Unaudited) for the quarters
ended May 27, 1995 and
May 28, 1994 5
Consolidated condensed statements of
operations (Unaudited) for the nine
months ended May 27, 1995 and
May 28, 1994 6
Consolidated condensed statements of
cash flows (Unaudited) for the nine
months ended May 27, 1995 and
May 28, 1994 7
Notes to the Consolidated Condensed
Financial Statements (Unaudited) 8
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of
Operations. 11
PART II. OTHER INFORMATION
-----------------
Item 6 Exhibits and Reports on Form 8-K 15
SIGNATURES 18
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</TABLE>
Page 2 of 18
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PART 1. FINANCIAL INFORMATION
FSI INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
MAY 27, 1995 AND AUGUST 27, 1994
ASSETS
<TABLE>
<CAPTION>
May 27, August 27,
1995 1994
(Unaudited) (Audited)
------------- -------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 38,951,747 $10,724,729
Trade accounts receivable, net of
allowance for
doubtful accounts of $1,025,000
and $525,000, respectively 43,518,142 16,234,940
Trade accounts receivable from
affiliates 7,555,529 5,378,164
Inventories 24,986,505 16,452,665
Deferred income tax benefit 2,070,222 1,832,000
Other current assets 6,802,219 4,112,238
------------ -----------
Total current assets 123,884,364 54,734,736
------------ -----------
Buildings, leasehold improvements and
equipment, net 10,509,680 5,143,244
Other assets:
Investment in affiliates 6,622,101 4,494,699
Deposits and other assets 4,914,047 4,622,798
------------ -----------
$145,930,192 $68,995,477
============ ===========
</TABLE>
See accompanying notes to consolidated condensed financial statements.
Page 3 of 18
<PAGE>
FSI INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
MAY 27, 1995 AND AUGUST 27, 1994
(continued)
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
May 27, August 27,
1995 1994
(Unaudited) (Audited)
------------- ------------
<S> <C> <C>
Current liabilities:
Current maturities of long-term debt $ 45,273 $ 148,834
Trade accounts payable 15,604,723 10,968,855
Accrued expenses 13,759,646 8,948,086
Customer deposits 3,936,387 3,685,948
Deferred revenue 6,160,688 3,204,892
------------ -----------
Total current liabilities 39,506,717 26,956,615
------------ -----------
Long-term debt, less current maturities 1,933 33,228
Stockholders' Equity:
Preferred stock, no par value;
10,000,000 shares authorized,
none issued and outstanding --- ---
Common stock, no par value;
50,000,000 shares authorized;
issued and outstanding,
17,135,782 and 13,166,073 shares
at May 27, 1995 and
August 27, 1994, respectively 80,989,682 28,719,418
Retained earnings 25,431,860 13,286,216
------------ -----------
Total stockholders' equity 106,421,542 42,005,634
------------ -----------
$145,930,192 $68,995,477
============ ===========
</TABLE>
See accompanying notes to consolidated condensed financial statements.
Page 4 of 18
<PAGE>
FSI INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
FOR THE QUARTERS ENDED MAY 27, 1995 AND MAY 28, 1994
(Unaudited)
<TABLE>
<CAPTION>
May 27, May 28,
1995 1994
----------- -----------
<S> <C> <C>
Sales (including sales to affiliates of
$17,160,000 and $7,429,000,
respectively) $53,503,162 $26,087,343
Cost of sales 31,527,000 15,668,597
----------- -----------
Gross profit 21,976,162 10,418,746
Selling, general and administrative
expenses 10,291,601 4,851,190
Research and development expenses 6,464,886 3,859,734
----------- -----------
Operating income 5,219,675 1,707,822
Interest expense (8,865) (86,789)
Other income, net 746,852 7,167
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Income before income taxes 5,957,662 1,628,200
Income tax expense 1,756,180 362,000
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Income before equity in earnings of
affiliates 4,201,482 1,266,200
Equity in earnings of affiliates 804,502 378,300
----------- -----------
Net income $ 5,005,984 $ 1,644,500
=========== ===========
Earnings per share of common stock:
Net income per common share $0.27 $0.12
===== =====
Weighted average common shares
and common share equivalents 18,473,546 13,996,494
=========== ===========
</TABLE>
See accompanying notes to consolidated condensed financial statements.
Page 5 of 18
<PAGE>
FSI INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
FOR THE NINE-MONTHS ENDED MAY 27, 1995 AND MAY 28, 1994
(Unaudited)
<TABLE>
<CAPTION>
May 27, May 28,
1995 1994
------------ -----------
<S> <C> <C>
Sales (including sales to affiliates of
$35,638,000 and $17,701,000,
respectively) $126,414,960 $68,209,757
Cost of sales 72,159,943 39,796,743
------------ -----------
Gross profit 54,255,017 28,413,014
Selling, general and administrative
expenses 24,089,985 13,476,242
Research and development expenses 17,378,245 10,998,898
------------ -----------
Operating income 12,786,787 3,937,874
Interest expense (21,895) (402,828)
Other income, net 1,053,197 115,492
------------ -----------
Income before income taxes 13,818,089 3,650,538
Income tax expense 3,799,847 847,000
------------ -----------
Income before equity in earnings of
affiliates 10,018,242 2,803,538
Equity in earnings of affiliates 2,127,402 1,159,900
------------ -----------
Net income $ 12,145,644 $ 3,963,438
============ ===========
Earnings per share of common stock:
Net income per common share $0.76 $0.31
===== =====
Weighted average common shares and
common share equivalents 15,916,174 12,968,498
============ ===========
</TABLE>
See accompanying notes to consolidated condensed financial statements.
Page 6 of 18
<PAGE>
FSI INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED MAY 25, 1995 AND MAY 28, 1994
(Unaudited)
<TABLE>
<CAPTION>
May 27, May 28,
1995 1994
------------ -----------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 12,145,644 $ 3,963,438
Adjustments to reconcile net income
to net cash used in operating
activities:
Depreciation and amortization 2,106,263 2,019,553
Stock issued for services 65,643 105,418
Provision for deferred income
taxes (238,222) ---
Equity in earnings of affiliates (2,127,402) (1,159,900)
Gain on sale of equipment (8,000) (19,254)
Changes in operating assets and
liabilities:
Accounts receivable (29,460,567) (7,777,934)
Inventories (8,533,840) (3,587,631)
Prepaid expenses and other
current assets (2,689,981) (676,799)
Trade accounts payable 4,635,868 1,728,063
Accrued expenses 5,545,437 635,093
Customer deposits 250,439 940,238
Deferred revenue 2,955,796 717,030
------------ -----------
Net cash used in operating activities (15,352,922) (3,112,685)
------------ -----------
INVESTING ACTIVITIES:
Acquisition of building, leasehold
improvements and equipment (7,165,688) (1,646,592)
Increase in deposits and other assets (598,260) (2,452,077)
Proceeds from sale of equipment 8,000 19,254
------------ -----------
Net cash used in investing activities (7,755,948) (4,079,415)
------------ -----------
FINANCING ACTIVITIES:
Restricted cash --- 1,370,891
Principal payments on long-term debt (134,856) (848,018)
Notes payable to bank --- (1,989,497)
Net proceeds from issuance of common
stock 51,470,744 14,375,562
------------ -----------
Net cash provided by financing
activities 51,335,888 12,908,938
------------ -----------
Increase in cash and cash equivalents 28,227,018 5,716,838
Cash and cash equivalents at beginning
of period 10,724,729 781,661
------------ -----------
Cash and cash equivalents at end of
period $ 38,951,747 $ 6,498,499
============ ===========
</TABLE>
See accompanying notes to consolidated condensed financial statements.
Page 7 of 18
<PAGE>
FSI INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
(1) RECLASSIFICATIONS
Certain 1994 amounts have been reclassified to conform to the 1995
presentation.
(2) CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
The accompanying consolidated condensed financial statements have been
prepared by the Company without audit and reflect all adjustments
(consisting of only normal and recurring adjustments) which are, in the
opinion of management, necessary to present a fair statement of the results
for the interim periods. The statements have been prepared in accordance
with the regulations of the Securities and Exchange Commission, but omit
certain information and footnote disclosures necessary to present the
statements in accordance with generally accepted accounting principles. For
further information, refer to the Consolidated Financial Statements and
footnotes thereto included in the Company's Annual Report on Form 10-K, as
amended for the fiscal year ended August 27, 1994 previously filed with the
Securities and Exchange Commission. Results of interim periods are not
necessarily indicative of the results that may be achieved for the entire
year.
(3) INVENTORIES
Inventories are summarized as follows:
<TABLE>
<CAPTION>
May 25, August 27,
1995 1994
(Unaudited) (Audited)
------------ -----------
<S> <C> <C>
Finished products $ 4,213,258 $ 1,675,041
Work in process 6,433,900 5,965,322
Subassemblies 2,767,924 2,195,364
Raw materials and
purchased parts 11,571,423 6,616,938
----------- -----------
$24,986,505 $16,452,665
=========== ===========
</TABLE>
Page 8 of 18
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FSI INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONT.)
(Unaudited)
(4) SUPPLEMENTARY CASH FLOW INFORMATION
<TABLE>
<CAPTION>
Nine Months Ended
----------------------
May 27, May 28,
1995 1994
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<S> <C> <C>
Schedule of interest and income
taxes paid:
Interest $ 27,485 $ 432,131
Income Taxes, net of
funds received $3,734,490 $1,312,281
</TABLE>
(5) SUPPLEMENTAL DISCLOSURE OF NONCASH FINANCING ACTIVITIES
<TABLE>
<CAPTION>
<S> <C> <C>
Tax Benefit of Dispositions of
Stock Options $733,877 $365,410
Stock issued for Services $ 65,643 $105,418
</TABLE>
(6) INCOME TAXES
The Company's income tax expense for the third quarter of fiscal 1995 was
approximately $1,756,000 and was approximately $3,800,000 for the nine
month period ended May 27, 1995. The income tax expense in the third
quarter and for the nine months of fiscal 1995 is approximately $389,000
and $1,175,000, respectively, lower than what would be expected using a 36%
"statutory" effective tax rate, reflecting the Company's ability to utilize
current and prior year tax credits associated with its research and
development expenses and its foreign sales corporation as well as its
ability under FAS 109 to reinstate a portion of its deferred taxes, which
were previously limited by FAS 109.
Page 9 of 18
<PAGE>
FSI INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONT.)
(Unaudited)
(7) ACQUISITION OF APPLIED CHEMICAL SOLUTIONS
On March 8, 1995, the Company completed its merger with Applied Chemical
Solutions ("ACS"). The Company issued 1,061,472 shares of common stock in
connection with the merger. This transaction was accounted for as a pooling
of interests; therefore, all financial statements have been restated to
reflect the merger. ACS prepared its financial statements on a July 31
fiscal year end. ACS's fiscal year has been changed to the last Saturday in
August to conform to the Company's year end. The restated fiscal and
interim financial statements include ACS amounts as of August 27, 1994, and
as of May 27, 1995 and for the quarter and nine month periods ended May 27,
1995 and May 28, 1994, respectively.
Sales and net income (loss) included in the Company's consolidated
statements of operations are as follows:
<TABLE>
<CAPTION>
QUARTERS ENDED NINE MONTHS ENDED
-------------------------- -------------------------
MAY 27, MAY 28, MAY 27, MAY 28,
1995 1994 1995 1994
----------- ----------- ------------ -----------
<S> <C> <C> <C> <C>
Sales
ACS $ 1,405,753 $ 362,500 $ 6,371,686 $ 786,064
FSI 52,097,409 25,724,843 120,043,274 67,423,693
----------- ----------- ------------ -----------
$53,503,162 $26,087,343 $126,414,960 $68,209,757
=========== =========== ============ ===========
Net income (loss):
ACS $ (255,642) $ (177,668) $ 151,552 $ (584,052)
FSI 5,261,626 1,822,168 11,994,092 4,547,490
----------- ----------- ------------ -----------
$ 5,005,984 $ 1,644,500 $ 12,145,644 $ 3,963,438
=========== =========== ============ ===========
</TABLE>
In connection with the merger, approximately $800,000 of merger costs and
expenses were incurred and have been charged to selling, general and
administrative expenses in the Company's third quarter of fiscal 1995. The
charge includes professional fees and other direct transaction costs
associated with the merger.
(8) COMMON STOCK
On June 1, 1995, the Company's Board of Directors declared a two-for-one
stock split to its stockholders of record on June 13, 1995. All share
information and per share information have been restated to reflect this
stock split.
Page 10 of 18
<PAGE>
FSI INTERNATIONAL, INC. AND SUBSIDIARIES
Management's Discussion and Analysis of
Financial Condition and Results of Operations
RESULTS OF OPERATIONS
THIRD QUARTER AND FIRST NINE MONTHS OF FISCAL 1995 COMPARED WITH THE THIRD
QUARTER AND FIRST NINE MONTHS OF FISCAL 1994
Sales in the third quarter ended May 27, 1995 increased $27.4 million, or
approximately 105.1% from the comparable prior fiscal year quarter. Sales for
the nine months ended May 27, 1995 increased $58.2 million, or approximately
85.3% from the nine months ended May 28, 1994. The increase in sales occurred
in all product lines and was generally attributable to increased unit sales and
to a lessor extent to increases in the average selling price of FSI's products
resulting from additional features added.
Gross profit margins were approximately 41.1% of sales in the third quarter of
fiscal 1995 as compared to approximately 39.9% of sales in the prior year's
comparable period. Gross margins for the nine months ended May 27, 1995 were
42.9% as compared to approximately 41.7% for the nine months ended May 28, 1994.
The increase in the gross margin for the fiscal 1995 third quarter and year-to-
date is due to overall improved margins in the microlithography and surface
conditioning lines which is offset by decreased margins in the chemical
management product lines. The Company's gross profit margin may fluctuate from
quarter to quarter as a result of a number of factors, including the mix of
products sold, the proportion of international sales, and competitive pricing
pressures.
Selling, general and administrative expenses were 19.2% and 19.1% of sales,
respectively, for the third quarter and for the nine months ended May 27, 1995,
as compared to 18.6% and 19.8% of sales for the third quarter and for the nine
months ended May 28, 1994. The dollar increases of approximately $5.4 million
for the third quarter of fiscal 1995 and $10.6 million for the first nine months
of fiscal 1995 as compared to prior fiscal periods are due primarily to
increased costs related to expanded customer support (approximately $1.0 million
and $2.0 million, respectively), increased management incentive bonuses and
employee profit sharing ($.6 million and $1.4 million, respectively), increased
commission related to higher sales volume ($.9 million and $1.5 million,
respectively), fees and expenses associated with the ACS acquisition of $.8
million that was recognized in the third quarter of fiscal 1995, increased
allowance for doubtful accounts and costs associated with the computer system
upgrade. The Company expects the amount of selling, general and administrative
expenses to increase during the remainder of fiscal 1995.
Research and development expense was approximately 12.1% of sales, or $6.5
million, for the third quarter of fiscal 1995 as compared to 14.8%, or $3.9
million, for the third quarter of fiscal 1994. For the first nine months of
fiscal 1995, research and development expenses were 13.7% of sales, or $17.4
million, as compared to 16.1%, or $11.0 million for the first nine months of
fiscal 1994. The increase of approximately $2.6 million for the third quarter
of fiscal 1995 and $6.4 million for the first nine months of fiscal 1995 as
compared to the prior fiscal periods resulted primarily from the Company's
continued development efforts on new and existing products, including the
POLARIS/(R)/ 2000 cluster, the EXCALIBUR/(R)/ MVP system, ORION/TM/ vacuum-based
gas phase (dry) cleaning system and certain chemical management systems.
Certain of the Company's research and development projects are partially funded
through arrangements with third parties. For the third quarter of fiscal 1995
and 1994, the Company recognized approximately $23,000 and $328,000,
respectively, from third parties, as a reduction in research and development
expenses. For the first nine months of fiscal 1995 and 1994, the Company
recognized approximately $546,000 and $925,000, respectively, from third parties
as a reduction in research and development expenses. The Company expects the
amount of research and development expenses to increase, and does not expect any
funding for research and development from third parties during the remainder
of fiscal 1995.
Page 11 of 18
<PAGE>
Interest expense decreased approximately $78,000 and $381,000, respectively, for
the third quarter and the first nine months of fiscal 1995 as compared to prior
year fiscal periods. This decrease was due to the early termination of the
Company's revolving credit facility in fiscal 1994, thereby reducing average
borrowings. In the first half of fiscal 1994, the Company recognized
approximately $140,000 of expenses associated with the early termination of such
credit facility.
Other income, net increased approximately $740,000 in the third quarter of
fiscal 1995 as compared to the third quarter of fiscal 1994 and increased
approximately $938,000 for the first nine months of fiscal 1995 as compared to
the first nine months of fiscal 1994. The increases are primarily due to an
increase earned by the Company on short-term investments of approximately
$743,000 in the third quarter of 1995 compared to $109,000 in the third quarter
of fiscal 1994 and $994,000 for the first nine months of fiscal 1995 as compared
to $216,000 for the first nine months of fiscal 1994.
In the third quarter of fiscal 1995, the Company recorded an income tax expense
of approximately $1,756,000, or 29.5% of pretax profit, as compared to a tax
expense of $362,000, or 22.2% of pretax profit, for the comparable prior fiscal
year quarter. For the first nine months of fiscal 1995, the Company recorded an
income tax expense of approximately $3,800,000, or 27.5% pretax profit, as
compared to $847,000, or 23.2%, for the comparable prior fiscal period. The
income tax expense in the third quarter and nine months of fiscal 1995 is
approximately $389,000 and $1,175,000, respectively, lower than what would be
expected using a 36% "statutory" effective tax rate, reflecting the Company's
ability to utilize current and prior year tax credits associated with its
research and development expenses and its foreign sales corporation as well as
its ability under FAS 109 to reinstate a portion of its deferred taxes which
were previously limited by FAS 109.
Equity in earnings of affiliates was approximately $805,000 for the third
quarter of fiscal 1995 as compared to $378,000 for the third quarter of fiscal
1994. For the first nine months of fiscal 1995, earnings in equity of
affiliates was approximately $2,127,000, as compared to $1,160,000 for the first
nine months of fiscal 1994. The increase in earnings for the third quarter and
for the first nine months of fiscal 1995 is attributed to increased earnings of
the Metron Semiconductors Europa B.V. and the Metron Asia Group, which resulted
from recent expansions by several semiconductor device manufacturers located in
Europe and the continued growth taking place in the Asia-Pacific market.
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash and cash equivalents approximated $39.0 million as of May 27,
1995, an increase of $28.2 million from the end of fiscal year 1994. The
increase in cash and cash equivalents reflects the net proceeds of approximately
$50.0 million from a secondary stock offering completed by the Company during
February 1995.
The Company's accounts receivable increased approximately 136.3%, or $29.5
million, from the end of fiscal 1994. This increase is due to increased sales
levels and certain delayed customer payments at the end of the 1995 third
quarter which were subsequently received. The Company's inventory increased
approximately $8.5 million from the end of fiscal 1994. The majority of the
increase is in raw materials and finished goods relating to the increased sales
and order activity. As of May 27, 1995, the Company's ratio of current assets
to current liabilities was 3.1 to 1.0 and working capital was $84.4 million.
The Company had acquisitions of buildings, leasehold improvements and equipment
of approximately $7.2 million for the first nine months of fiscal 1995 as
compared to $1.6 million for the first nine months of fiscal 1994. The increase
in acquisitions reflects the investments in computer equipment and facilities
expansion. The Company expects to increase its investment in its manufacturing
facilities, Surface Conditioning Division Demonstration and Development
Laboratory, and computer systems in fiscal 1995 and 1996. FSI recently
commenced construction of a new 100,000 square foot manufacturing facility in
Chaska, Minnesota. The costs of purchasing the land for and of constructing and
equipping the new facility is expected to total $11.5 million and the cost of
upgrading the computer system is expected to total $7.0 million over fiscal
years 1995 and 1996.
On January 31, 1995, the Company purchased for approximately $1.2 million, a
50% equity interest, in FME a United Kingdom company.
Page 12 of 18
<PAGE>
The Company completed the acquisition of Applied Chemical Solutions ("ACS") on
March 8, 1995, and was accounted for as a pooling of interests. The Company
recorded a charge to earnings of approximately $800,000 related to ACS
acquisition costs in the fiscal 1995 third quarter. These acquisitions are
intended to enhance and broaden the Company's chemical management product
offerings and establish a manufacturing capability for the Company's chemical
management systems in Europe.
The Company does not have a credit facility but has negotiated the terms of a
new credit facility, which should be in place by fiscal year end. The Company
believes that existing cash, cash equivalents and internally generated funds
will be sufficient to meet the Company's currently projected working capital and
other cash requirements. However, to meet anticipated future requirements, the
Company is pursuing additional financing. The Company is filing a Registration
Statement on Form S-3 to sell 2.5 million of its Common Stock pursuant to a
public offering (subject to an over allotment option of an additional 412,500
shares granted to the underwriters). The timing and amount of such financing
will depend on a variety of factors.
The Company believes that success in its industry requires substantial capital
in order to maintain the flexibility to take advantage of opportunities as they
may arise. The Company may, from time to time, as market and business
conditions warrant, invest in or acquire complementary businesses, products or
technologies. The Company may effect additional equity or debt financing to
fund such activities. The sale of additional equity or convertible debt
securities could result in additional dilution to the Company's stockholders.
Page 13 of 18
<PAGE>
FSI INTERNATIONAL, INC. AND SUBSIDIARIES
PART II. OTHER INFORMATION
-----------------
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGE IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None
Page 14 of 18
<PAGE>
FSI INTERNATIONAL, INC. AND SUBSIDIARIES
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
* An asterisk next to an exhibit indicates that it is a management
contract or compensatory plan or arrangement required to be filed
pursuant to Item 14(c) of Form 10-K.
<TABLE>
<CAPTION>
No. Exhibit Description Page
- ------- ------------------- ----
<C> <S> <C>
2.1 Agreement and Plan of Reorganization dated December 23, 1994 by
and among the Company, ACS Acquisition Corp., Applied Chemical
Solutions, and certain significant shareholders of Applied
Chemical Solutions. (1)
2.2 Share Purchase Agreement dated December 14, 1994 by and among
the Company, Metron Semiconductors Europa B.V., Christopher
Springall, Anthony Springall, Roger Springall, David Springall
and Michael Springall. (2)
3.1 Restated Articles of Incorporation of the Company. (3)
3.2 Restated By-Laws. (4)
3.3 Amendment to Restated By-Laws. (5)
4.1 FSI Corporation Stock Purchase Agreement dated March 20,
1981. (4)
4.2 Stock Purchase Agreement dated September 15, 1982. (4)
4.3 Common Stock and Common Stock Purchase Warrants Agreement dated
October 15, 1985. (4)
4.4 Second Amendment, dated as of January 9, 1989, to Common Stock
and Common Stock Warrants Purchase Agreement dated as of
October 15, 1985.(5)
4.5 Registration and Preemptive Rights Agreement dated October 15,
1985. (4)
*10.1 1983 Incentive Stock Option Plan. (4)
*10.2 1982 Nonqualified Stock Option Plan. (4)
*10.3 Medical Reimbursement Plan. (4)
*10.4 Split Dollar Insurance Agreement and Collateral Assignment
Agreement dated December 28, 1989, between the Company and Joel
A. Elftmann. (Similar agreements between the Company and each of
Robert E. Cavins, Benjamin J. Sloan, Dale A. Courtney, Peter A.
Pope, Benno G. Sand and Timothy D. Krieg have been omitted, but
will be filed upon the request of the Commission.) (6)
10.5 Lease dated June 27, 1985, between the Company and Lake
Hazeltine Properties. (4)
10.6 Lease dated September 1, 1985, between the Company and
Elftmann, Wyers, Blackwood Partnership. (4)
10.7 Lease dated September 1, 1985, between the Company and
Elftmann, Wyers Partnership. (4)
10.8 Distributor Agreement dated October 9, 1987, between the
Company and Metron Semiconductors Europa B.V. (4)
10.9 Guaranty Agreement dated June 27, 1985, among the Company,
Northwestern National Life Insurance Company, Northern Life
Insurance Company, North Atlantic Life Insurance Company of
America and Ministers Life. (4)
*10.10 1989 Stock Option Plan. (5)
*10.11 Amended and Restated Employees Stock Purchase Plan. (3)
*10.12 Directors Nonstatutory Stock Option Plan. (3)
10.13 $500,000 promissory note in favor of the Company issued by
Metron Semiconductors Asia Ltd. (7)
10.14 Shareholders Agreement among FSI International, Inc. and
Mitsui & Co., Ltd. and Chlorine Engineers Corp. Ltd. dated as
of August 14, 1991. (7)
10.15 FSI Exclusive Distributorship Agreement dated as of August 14,
1991 between FSI International, Inc. and m.FSI, Ltd. (7)
10.16 FSI Licensing Agreement dated as of August 14, 1991, between
FSI International, Inc. and m.FSI, Ltd. (7)
10.17 License Agreement, dated October 15, 1991, between the Company
and Texas Instruments Incorporated. (8)
</TABLE>
Page 15 of 18
<PAGE>
FSI INTERNATIONAL, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
Exhibit
No. Exhibit Description Page
- ------- ------------------- ----
<C> <S> <C>
10.18 Amendment No. 1, dated April 10, 1992, to the License
Agreement, dated October 15, 1991, between the Company and
Texas Instruments Incorporated. (8)
10.19 Amendment effective October 1, 1993 to the License Agreement,
dated October 15, 1991 between the Company and Texas
Instruments Incorporated. (9)
*10.20 Amended and Restated Directors' Nonstatutory Stock Option
Plan. (10)
*10.21 Management Agreement between FSI International, Inc. and Robert
E. Cavins, effective as of March 28, 1994. (11)
*10.22 Management Agreement between FSI International, Inc. and Dale
A. Courtney, effective as of March 28, 1994. (10)
*10.23 Management Agreement between FSI International, Inc. and Joel
A. Elftmann, effective as of March 28, 1994. (10)
*10.24 Management Agreement between FSI International, Inc. and
Timothy D. Krieg, effective as of March 28, 1994. (10)
*10.25 Management Agreement between FSI International, Inc. and Peter
A. Pope, effective as of March 28, 1994. (10)
*10.26 Management Agreement between FSI International, Inc. and Benno
G. Sand, effective as of March 31, 1994. (10)
*10.27 Management Agreement between FSI International, Inc. and
Benjamin J. Sloan, effective as of March 28, 1994. (10)
*10.28 Management Agreement between FSI International, Inc. and J.
Wayne Stewart, effective as of March 28, 1994. (10)
*10.29 FSI International, Inc. 1994 Omnibus Stock Plan. (11)
11.1 Computation of Per Share Earnings of FSI International, Inc. -
electronically filed
27 Financial Data Schedules - electronically filed
</TABLE>
- --------------------
(1) Filed as an Exhibit to the Company's Report on Form 8-K, as amended, File
No.0-17276, and incorporated by reference.
(2) Filed as an Exhibit to the Company's Registration Statement on Form S-3
dated January 5, 1995, SEC File No. 33-88250 and incorporated by
reference.
(3) Filed as an Exhibit to the Company's Report on Form 10-Q for the fiscal
quarter ended February 24, 1990, SEC File No. 0-17276, and incorporated by
reference.
(4) Filed as an Exhibit to the Company's Registration Statement on Form S-1,
SEC File No. 33-25035, and incorporated by reference.
(5) Filed as an Exhibit to the Company's Report on Form 10-K for the fiscal
year ended August 26, 1989, SEC File No. 0-17276, and incorporated by
reference.
(6) Filed as an Exhibit to the Company's Report on Form 10-K for the fiscal
year ended August 25, 1990, as amended by Form 8 dated December 20, 1990,
and by Form 8 dated February 5, 1991, SEC File No. 0-17276, and
incorporated by reference. Similar agreements between the Company and each
of Robert E. Cavins, J. Wayne Stewart, Benjamin J. Sloan, Dale A.
Courtney, Peter A. Pope, Benno G. Sand and Timothy D. Krieg have been
omitted, but will be filed upon the request of the Commission.
(7) Filed as an Exhibit to the Company's Report on Form 10-K for the fiscal
year ended August 31, 1991, as amended by Form 8 dated January 7, 1992,
SEC File No. 0-17276, and incorporated by reference.
(8) Filed as an Exhibit to the Company's Report on Form 10-K for the fiscal
year ended August 29, 1992, SEC File No. 0-17276, and incorporated by
reference.
(9) Filed as an Exhibit to the Company's Report on Form 10-K for the fiscal
year ended August 27, 1993, SEC File No. 0-17276, and incorporated by
reference.
(10) Filed as an Exhibit to the Company's Report on Form 10-Q for the fiscal
quarter ended May 28, 1994, SEC File No. 0-17276, and incorporated by
reference.
(11) Filed as an Exhibit to the Company's Report on Form 10-K for the fiscal
year ended August 27, 1994, SEC File No. 0-17276, and incorporated by
reference.
Page 16 of 18
<PAGE>
FSI INTERNATIONAL, INC. AND SUBSIDIARIES
(b) The Company filed an 8-K on March 22, 1995 regarding the acquisition
of Applied Chemical Solutions. The following financial statements
were included in the Form 8-K.
(i) Financial Statements of Business Acquired
-----------------------------------------
Financial Statements of Applied Chemical Solutions
Independent Auditors' Report
Statement of Operations for the fiscal years ended
July 31, 1993 and 1994 and for the quarters ended
October 31, 1993 and 1994 (unaudited)
Balance Sheets as of July 31, 1993 and 1994 and
October 31, 1994 (unaudited)
Statements of Cash Flows for the fiscal years ended
July 31, 1993 and 1994 and for the quarters ended
October 31, 1993 and 1994 (unaudited)
Statements of Stockholders' (Deficit) Equity for the
fiscal years ended July 31, 1993 and 1994 and for the
three months ended October 31, 1994 (unaudited)
Notes to Financial Statements
(ii) Description of the Pro Forma Combined Financial Information
-----------------------------------------------------------
Unaudited Pro Forma Combined Statements of Operations
for the fiscal years ended August 29, 1992, August 28, 1993
and August 27, 1994 and for the quarters ended
November 27, 1993 and November 26, 1994.
Unaudited Pro Forma Combined Balance Sheet as of
November 26, 1994
Notes to Unaudited Pro Forma Combined Financial Information
Page 17 of 18
<PAGE>
FSI INTERNATIONAL, INC. AND SUBSIDIARIES
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.
FSI INTERNATIONAL, INC.
. . . . . . . . . . . . .
[Registrant]
DATE: June 15, 1995
By: /s/Benno Sand
---------------------------
Benno Sand
Executive Vice President and
Chief Financial Officer
on behalf of the
Registrant and as
Principal Financial Officer
Page 18 of 18
<PAGE>
FSI INTERNATIONAL, INC. AND SUBSIDIARIES
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
No. Exhibit Description Page
- ------- ------------------- ----
<C> <S> <C>
2.1 Agreement and Plan of Reorganization dated December 23, 1994 by
and among the Company, ACS Acquisition Corp., Applied Chemical
Solutions, and certain significant shareholders of Applied
Chemical Solutions. (1)
2.2 Share Purchase Agreement dated December 14, 1994 by and among
the Company, Metron Semiconductors Europa B.V., Christopher
Springall, Anthony Springall, Roger Springall, David Springall
and Michael Springall. (2)
3.1 Restated Articles of Incorporation of the Company. (3)
3.2 Restated By-Laws. (4)
3.3 Amendment to Restated By-Laws. (5)
4.1 FSI Corporation Stock Purchase Agreement dated March 20,
1981. (4)
4.2 Stock Purchase Agreement dated September 15, 1982. (4)
4.3 Common Stock and Common Stock Purchase Warrants Agreement dated
October 15, 1985. (4)
4.4 Second Amendment, dated as of January 9, 1989, to Common Stock
and Common Stock Warrants Purchase Agreement dated as of October
15, 1985.(5)
4.5 Registration and Preemptive Rights Agreement dated October 15,
1985. (4)
10.1 1983 Incentive Stock Option Plan. (4)
10.2 1982 Nonqualified Stock Option Plan. (4)
10.3 Medical Reimbursement Plan. (4)
10.4 Split Dollar Insurance Agreement and Collateral Assignment
Agreement dated December 28, 1989, between the Company and Joel
A. Elftmann. (Similar agreements between the Company and each of
Robert E. Cavins, Benjamin J. Sloan, Dale A. Courtney, Peter A.
Pope, Benno G. Sand and Timothy D. Krieg have been omitted, but
will be filed upon the request of the Commission.) (6)
10.5 Lease dated June 27, 1985, between the Company and Lake
Hazeltine Properties. (4)
10.6 Lease dated September 1, 1985, between the Company and
Elftmann, Wyers, Blackwood Partnership. (4)
10.7 Lease dated September 1, 1985, between the Company and
Elftmann, Wyers Partnership. (4)
10.8 Distributor Agreement dated October 9, 1987, between the
Company and Metron Semiconductors Europa B.V. (4)
10.9 Guaranty Agreement dated June 27, 1985, among the Company,
Northwestern National Life Insurance Company, Northern Life
Insurance Company, North Atlantic Life Insurance Company of
America and Ministers Life. (4)
10.10 1989 Stock Option Plan. (5)
10.11 Amended and Restated Employees Stock Purchase Plan. (3)
10.12 Directors Nonstatutory Stock Option Plan. (3)
10.13 $500,000 promissory note in favor of the Company issued by
Metron Semiconductors Asia Ltd. (7)
10.14 Shareholders Agreement among FSI International, Inc. and Mitsui
& Co., Ltd. and Chlorine Engineers Corp. Ltd. dated as of August
14, 1991. (7)
10.15 FSI Exclusive Distributorship Agreement dated as of August 14,
1991 between FSI International, Inc. and m.FSI, Ltd. (7)
10.16 FSI Licensing Agreement dated as of August 14, 1991, between
FSI International, Inc. and m.FSI, Ltd. (7)
10.17 License Agreement, dated October 15, 1991, between the Company
and Texas Instruments Incorporated. (8)
10.18 Amendment No. 1, dated April 10, 1992, to the License Agreement,
dated October 15, 1991, between the Company and Texas Instruments
Incorporated. (8)
</TABLE>
<PAGE>
EXHIBIT INDEX AND SUBSIDIARIES
<TABLE>
<CAPTION>
Exhibit
No. Exhibit Description Page
- ------- ------------------- ----
<C> <S> <C>
10.19 Amendment effective October 1, 1993 to the License Agreement,
dated October 15, 1991 between the Company and Texas Instruments
Incorporated. (9)
10.20 Amended and Restated Directors' Nonstatutory Stock Option
Plan. (10)
10.21 Management Agreement between FSI International, Inc. and Robert
E. Cavins, effective as of March 28, 1994. (11)
10.22 Management Agreement between FSI International, Inc. and Dale A.
Courtney, effective as of March 28, 1994. (10)
10.23 Management Agreement between FSI International, Inc. and Joel A.
Elftmann, effective as of March 28, 1994. (10)
10.24 Management Agreement between FSI International, Inc. and Timothy
D. Krieg, effective as of March 28, 1994. (10)
10.25 Management Agreement between FSI International, Inc. and Peter
A. Pope, effective as of March 28, 1994. (10)
10.26 Management Agreement between FSI International, Inc. and Benno
G. Sand, effective as of March 31, 1994. (10)
10.27 Management Agreement between FSI International, Inc. and
Benjamin J. Sloan, effective as of March 28, 1994. (10)
10.28 Management Agreement between FSI International, Inc. and J.
Wayne Stewart, effective as of March 28, 1994. (10)
10.29 FSI International, Inc. 1994 Omnibus Stock Plan. (11)
11.1 Computation of Per Share Earnings of FSI International, Inc. -
electronically filed
27 Financial Data Schedules - electronically filed
</TABLE>
- --------------------
(1) Filed as an Exhibit to the Company's Report on Form 8-K, as amended, File
No. 0-17276, and incorporated by reference.
(2) Filed as an Exhibit to the Company's Registration Statement on Form S-3
dated January 5, 1995, SEC File No. 33-88250 and incorporated by
reference.
(3) Filed as an Exhibit to the Company's Report on Form 10-Q for the fiscal
quarter ended February 24, 1990, SEC File No. 0-17276, and incorporated by
reference.
(4) Filed as an Exhibit to the Company's Registration Statement on Form S-1,
SEC File No. 33-25035, and incorporated by reference.
(5) Filed as an Exhibit to the Company's Report on Form 10-K for the fiscal
year ended August 26, 1989, SEC File No. 0-17276, and incorporated by
reference.
(6) Filed as an Exhibit to the Company's Report on Form 10-K for the fiscal
year ended August 25, 1990, as amended by Form 8 dated December 20, 1990,
and by Form 8 dated February 5, 1991, SEC File No. 0-17276, and
incorporated by reference. Similar agreements between the Company and each
of Robert E. Cavins, J. Wayne Stewart, Benjamin J. Sloan, Dale A.
Courtney, Peter A. Pope, Benno G. Sand and Timothy D. Krieg have been
omitted, but will be filed upon the request of the Commission.
(7) Filed as an Exhibit to the Company's Report on Form 10-K for the fiscal
year ended August 31, 1991, as amended by Form 8 dated January 7, 1992,
SEC File No. 0-17276, and incorporated by reference.
(8) Filed as an Exhibit to the Company's Report on Form 10-K for the fiscal
year ended August 29, 1992, SEC File No. 0-17276, and incorporated by
reference.
(9) Filed as an Exhibit to the Company's Report on Form 10-K for the fiscal
year ended August 27, 1993, SEC File No. 0-17276, and incorporated by
reference.
(10) Filed as an Exhibit to the Company's Report on Form 10-Q for the fiscal
quarter ended May 28, 1994, SEC File No. 0-17276, and incorporated by
reference.
(11) Filed as an Exhibit to the Company's Report on Form 10-K for the fiscal
year ended August 27, 1994, SEC File No. 0-17276, and incorporated by
reference.
<PAGE>
EXHIBIT 11
FSI INTERNATIONAL, INC.
COMPUTATION OF INCOME/(LOSS) PER COMMON SHARE
<TABLE>
<CAPTION>
QUARTER ENDED: NINE MONTHS ENDED:
-------------------------- --------------------------
MAY 27, 1995 MAY 28, 1994 MAY 27, 1995 MAY 28, 1994
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
PRIMARY:
Average shares outstanding 17,061,380 13,045,722 14,621,818 12,020,136
Net effective of dilutive stock options and warrants --
based on the treasury stock method 1,412,166 950,772 1,294,356 948,362
---------- ----------- ----------- -----------
Total 18,473,546 13,996,494 15,916,174 12,968,498
=========== =========== =========== ===========
Net income $ 5,005,984 $ 1,644,500 $12,145,644 $ 3,963,438
=========== =========== =========== ===========
Primary per share amounts $ 0.27 $ 0.12 $ 0.76 $ 0.31
=========== =========== =========== ===========
FULLY DILUTED:
Average shares outstanding 17,061,380 13,045,722 14,621,818 12,020,136
Net effect of dilutive stock options and warrants --
based on the treasury stock method 1,457,082 425,615 1,366,262 438,443
----------- ----------- ----------- -----------
Total 18,518,462 13,471,337 15,988,080 12,458,579
=========== =========== =========== ===========
Net income $ 5,005,984 $ 1,644,560 $12,145,644 $ 3,963,438
=========== =========== =========== ===========
Fully diluted per share amounts $ 0.27 $ 0.12 $ 0.76 $ 0.32
=========== =========== =========== ===========
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FSI
INTERNATIONAL INC.'S QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTERLY PERIOD
ENDED MAY 27, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED> <F1>
<S> <C> <C>
<PERIOD-TYPE> 9-MOS 9-MOS
<FISCAL-YEAR-END> AUG-26-1995 AUG-27-1994
<PERIOD-START> AUG-28-1994 AUG-29-1993
<PERIOD-END> MAY-27-1995 MAY-28-1994
<CASH> 38,951,747 6,498,499
<SECURITIES> 0 0
<RECEIVABLES> 52,098,671 22,487,874
<ALLOWANCES> 1,025,000 395,000
<INVENTORY> 24,986,505 16,707,821
<CURRENT-ASSETS> 8,872,441 3,818,713
<PP&E> 24,638,838 17,516,702
<DEPRECIATION> 14,129,158 12,907,347
<TOTAL-ASSETS> 145,930,192 60,597,114
<CURRENT-LIABILITIES> 39,506,717 20,422,069
<BONDS> 0 0
<COMMON> 80,989,682 28,396,319
0 0
0 0
<OTHER-SE> 25,431,860 11,603,520
<TOTAL-LIABILITY-AND-EQUITY> 145,930,192 60,597,114
<SALES> 126,414,960 68,209,757
<TOTAL-REVENUES> 126,414,960 68,209,757
<CGS> 72,159,943 39,796,743
<TOTAL-COSTS> 72,159,943 39,796,743
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 21,895 402,828
<INCOME-PRETAX> 13,818,089 3,650,538
<INCOME-TAX> 3,799,847 847,000
<INCOME-CONTINUING> 12,145,644 3,963,438
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 12,145,644 3,963,438
<EPS-PRIMARY> .76 .31
<EPS-DILUTED> .76 .32
<FN>
<F1> All financial statements are restated to reflect the Merger with ACS which
was accounted for as a pooling of interests. All share and per share
amounts are restated to reflect a 2-for-1 stock split to holders of record
on June 13, 1995.
</FN>
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FSI
INTERNATIONAL INC.'S QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTERLY PERIOD
ENDED MAY 27, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<RESTATED> <F1>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> AUG-27-1994
<PERIOD-START> AUG-29-1993
<PERIOD-END> AUG-27-1994
<CASH> 10,724,729
<SECURITIES> 0
<RECEIVABLES> 22,138,104
<ALLOWANCES> 525,000
<INVENTORY> 16,452,665
<CURRENT-ASSETS> 5,944,238
<PP&E> 17,616,072
<DEPRECIATION> 12,472,828
<TOTAL-ASSETS> 68,995,477
<CURRENT-LIABILITIES> 26,956,615
<BONDS> 0
<COMMON> 28,719,418
0
0
<OTHER-SE> 13,286,216
<TOTAL-LIABILITY-AND-EQUITY> 68,995,477
<SALES> 96,437,653
<TOTAL-REVENUES> 96,437,653
<CGS> 55,788,375
<TOTAL-COSTS> 55,788,375
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 417,521
<INCOME-PRETAX> 5,100,384
<INCOME-TAX> 1,254,000
<INCOME-CONTINUING> 5,646,134
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,646,134
<EPS-PRIMARY> .43
<EPS-DILUTED> .43
<FN>
<F1> All financial statements are restated to reflect the Merger with ACS which
was accounted for as a pooling of interests. All share and per share
amounts are restated to reflect a 2-for-1 stock split to holders of record
on June 13, 1995.
</FN>
</TABLE>
