<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 FEBRUARY 25, 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
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FSI INTERNATIONAL, INC.
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
MINNESOTA 41-1223238
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
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
COMMON STOCK, NO PAR VALUE - 8,522,961 SHARES OUTSTANDING AS OF MARCH 31, 1995
This report, including all exhibits and attachments, contains 22 pages.
<PAGE>
FSI INTERNATIONAL, INC.
QUARTERLY REPORT ON FORM 10-Q
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION PAGE NO.
--------------------- --------
<C> <S> <C>
Item 1. Consolidated Condensed Financial
Statements:
Consolidated condensed balance sheets
as of February 25, 1995 (Unaudited) and
August 27, 1994 3
Consolidated condensed statements of
operations (Unaudited) for the quarters
ended February 25, 1995 and
February 26, 1994 5
Consolidated condensed statements of
operations (Unaudited) for the six
months ended February 25, 1995 and
February 26, 1994 6
Consolidated condensed statements of
cash flows (Unaudited) for the six
months ended February 25, 1995 and
February 26, 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 14
-----------------
Item 4. Submission of Matters to a Vote of Security Holders 14
Item 6. Exhibits and Reports on Form 8-K 15
SIGNATURES 18
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</TABLE>
2
<PAGE>
PART 1. FINANCIAL INFORMATION
FSI INTERNATIONAL, INC. AND SUBSIDIARY
CONSOLIDATED CONDENSED BALANCE SHEETS
FEBRUARY 25, 1995 AND AUGUST 27, 1994
ASSETS
<TABLE>
<CAPTION>
February 25, August 27,
1995 1994
(Unaudited) (Audited)
------------ ------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 56,958,416 $ 10,493,172
Trade accounts receivable, net of
allowance for doubtful accounts of
$800,000 and $500,000, respectively 24,322,065 14,587,999
Trade accounts receivable from
affiliates 6,592,744 5,378,164
Inventories 20,536,078 16,114,632
Deferred income tax benefit 1,832,000 1,832,000
Other current assets 4,863,313 3,539,469
------------ ------------
Total current assets 115,104,616 51,945,436
------------ ------------
Buildings, leasehold improvements and
equipment, at cost 21,220,301 17,480,270
Less accumulated depreciation and
amortization (13,324,928) (12,441,406)
------------ ------------
7,895,373 5,038,864
Other assets:
Investment in affiliates 5,817,599 4,494,699
Deposits and other assets 5,162,385 4,540,543
------------ ------------
10,979,984 9,035,242
------------ ------------
$133,979,973 $ 66,019,542
============ ============
</TABLE>
See accompanying notes to consolidated condensed financial statements.
3
<PAGE>
FSI INTERNATIONAL, INC. AND SUBSIDIARY
CONSOLIDATED CONDENSED BALANCE SHEETS
FEBRUARY 25, 1995 AND AUGUST 27, 1994
(continued)
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
February 25, August 27,
1995 1994
(Unaudited) (Audited)
------------- ------------
<S> <C> <C>
Current liabilities:
Current maturities of long-term debt $ 57,844 $ 148,834
Trade accounts payable 14,842,923 9,324,355
Accrued expenses 11,298,800 8,606,925
Customer deposits 3,655,750 3,143,435
Deferred revenue 3,773,380 2,675,142
------------ -----------
Total current liabilities 33,628,697 23,898,691
------------ -----------
Long-term debt, less current maturities 11,365 33,228
Stockholders' Equity:
Preferred stock, no par value;
10,000,000 shares authorized,
none issued and outstanding -- --
Common stock, no par value;
25,000,000 shares authorized;
issued and outstanding,
7,970,508 and 6,081,338 shares
at February 25, 1995 and
August 27, 1994, respectively 78,581,826 27,062,004
Retained earnings 21,758,085 15,025,619
------------ -----------
Total stockholders' equity 100,339,911 42,087,623
------------ -----------
$133,979,973 $66,019,542
============ ===========
</TABLE>
See accompanying notes to consolidated condensed financial statements.
4
<PAGE>
FSI INTERNATIONAL, INC. AND SUBSIDIARY
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
FOR THE QUARTERS ENDED FEBRUARY 25, 1995 AND FEBRUARY 26, 1994
(Unaudited)
<TABLE>
<CAPTION>
February 25, February 26,
1995 1994
------------ ------------
<S> <C> <C>
Sales (including sales to affiliates of
$12,163,459 and $5,500,205,
respectively) $39,873,964 $20,660,149
Cost of sales 22,449,851 11,392,709
----------- -----------
Gross profit 17,424,113 9,267,440
Selling, general and administrative
expenses 6,957,800 4,150,024
Research and development expenses 5,907,937 3,688,480
----------- -----------
Operating income 4,558,376 1,428,936
Interest expense (7,304) (111,578)
Other income (expense), net 172,314 99,567
----------- -----------
Income before income taxes 4,723,386 1,416,925
Income tax expense 1,176,300 300,000
----------- -----------
Income before equity in earnings of
affiliates 3,547,086 1,116,925
Equity in earnings of affiliates 322,500 367,800
----------- -----------
Net income $ 3,869,586 $ 1,484,725
=========== ===========
Earnings per share of common stock:
Net income per common share $0.57 $0.23
=========== ===========
Weighted average common shares
and common share equivalents 6,777,261 6,353,798
=========== ===========
</TABLE>
See accompanying notes to consolidated condensed financial statements.
5
<PAGE>
FSI INTERNATIONAL, INC. AND SUBSIDIARY
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
FOR THE SIX-MONTHS ENDED FEBRUARY 25, 1995 AND FEBRUARY 26, 1994
(Unaudited)
<TABLE>
<CAPTION>
February 25, February 26,
1995 1994
------------ ------------
<S> <C> <C>
Sales (including sales to affiliates of
$18,502,462 and $10,271,851,
respectively) $67,945,865 $41,698,850
Cost of sales 37,436,150 23,769,425
----------- -----------
Gross profit 30,509,715 17,929,425
Selling, general and administrative
expenses 12,800,559 8,262,955
Research and development expenses 10,680,548 7,029,770
----------- -----------
Operating income 7,028,608 2,636,700
Interest expense (13,030) (312,892)
Other income (expense), net 294,588 104,914
----------- -----------
Income before income taxes 7,310,166 2,428,722
Income tax expense 1,900,600 485,000
----------- -----------
Income before equity in earnings of
affiliates 5,409,566 1,943,722
Equity in earnings of affiliates 1,322,900 781,600
----------- -----------
Net income $ 6,732,466 $ 2,725,322
=========== ===========
Earnings per share of common stock:
Net income per common share $1.00 $0.48
=========== ===========
Weighted average common shares and
common share equivalents 6,699,275 5,647,930
=========== ===========
</TABLE>
See accompanying notes to consolidated condensed financial statements.
6
<PAGE>
FSI INTERNATIONAL, INC. AND SUBSIDIARY
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED FEBRUARY 25, 1995 AND FEBRUARY 26, 1994
(Unaudited)
<TABLE>
<CAPTION>
February 25, February 26,
1995 1994
------------ ------------
<S> <C> <C>
OPERATING ACTIVITIES: $ 6,732,466 $ 2,725,322
Net income
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 1,304,433 1,420,325
Equity in earnings of affiliates (1,322,900) (781,600)
Gain on sale of equipment (8,000) (19,254)
Changes in operating assets and
liabilities:
Accounts receivable (10,948,646) 79,829
Inventories (4,421,446) (1,696,759)
Prepaid expenses and other
current assets (1,323,844) (288,420)
Trade accounts payable 5,518,568 (246,607)
Accrued expenses 3,425,752 287,849
Customer deposits 512,315 566,008
Deferred revenue 1,098,238 (452,529)
------------ -----------
Net cash provided by operating
activities 566,936 1,594,164
------------ -----------
INVESTING ACTIVITIES:
Acquisition of buildings leasehold
improvements and equipment (3,882,952) (1,068,930)
Increase in deposits and other assets (899,832) (2,468,038)
Proceeds from sale of equipment 8,000 19,254
------------ -----------
Net cash used in investing
activities (4,774,784) (3,517,714)
------------ -----------
FINANCING ACTIVITIES:
Principal payments on long-term debt (112,853) (325,656)
Notes payable to bank 0 (12,954)
Net proceeds from issuance of common
stock 50,785,945 13,568,260
------------ -----------
Net cash provided by financing
activities 50,673,092 13,229,650
------------ -----------
Increase in cash and cash equivalents 46,465,244 11,306,100
Cash and cash equivalents at beginning
of period 10,493,172 2,038,541
------------ -----------
Cash and cash equivalents at end of
period $ 56,958,416 $13,344,641
------------ -----------
</TABLE>
See accompanying notes to consolidated condensed financial statements.
7
<PAGE>
FSI INTERNATIONAL, INC.
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>
February 25, August 27,
1995 1994
(Unaudited) (Audited)
------------ -----------
<S> <C> <C>
Finished products $ 1,319,065 $ 1,560,325
Work in process 6,770,756 5,744,701
Subassemblies 2,113,495 2,195,364
Raw materials and
purchased parts 10,332,762 6,614,242
----------- -----------
$20,536,078 $16,114,632
=========== ===========
</TABLE>
8
<PAGE>
FSI INTERNATIONAL, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONT.)
(Unaudited)
(4) SUPPLEMENTARY CASH FLOW INFORMATION
<TABLE>
<CAPTION>
Six Months Ended
--------------------------
February 25, February 26,
1995 1994
------------ ------------
<S> <C> <C>
Schedule of interest and income
taxes paid:
Interest $ 18,316 $ 315,172
Income Taxes, net of
refunds received $956,013 $1,050,748
</TABLE>
(5) SUPPLEMENTAL DISCLOSURE OF NONCASH FINANCING ACTIVITIES
<TABLE>
<S> <C> <C>
Tax Benefit of Dispositions of
Stock Options $733,877 $335,782
</TABLE>
(6) INCOME TAXES
The Company's income tax expense for the second quarter of fiscal 1995 was
$1,176,300 and was $1,900,600 for the six month period ended February 25,
1995. The income tax expense in the second quarter and first half of
fiscal 1995 is approximately $524,000 and $731,000, 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 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.
9
<PAGE>
FSI INTERNATIONAL, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
(7) ACQUISITION OF APPLIED CHEMICAL SOLUTIONS (ACS)
On March 8, 1995, the Company acquired ACS. In connection with the
acquisition, which will be accounted for as a pooling of interests, the
Company issued 530,736 shares of its common stock. In addition, the
Company issued options covering, in the aggregate, 107,379 shares of the
Company's common stock in substitution of previously outstanding options to
acquire shares of ACS's common stock.
Although the acquisition of ACS did not occur until after the end of fiscal
1995's second quarter, on a pro forma basis, assuming the acquisition
occurred immediately prior to the beginning of the respective periods, the
financial results are as follows:
<TABLE>
<CAPTION>
Quarters Ended Six Months Ended
-------------------------- --------------------------
February 25, February 26, February 25, February 26,
1995 1994 1995 1994
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Sales $42,468,283 $20,875,834 $73,207,724 $42,131,459
Net income $ 4,071,831 $ 1,220,246 $ 7,238,816 $ 2,260,281
Net income per share $ .55 $ .18 $ .99 $ .36
</TABLE>
For purposes of the pro forma results, there were adjustments to conform
ACS's revenue recognition policy to the Company's recognition policy. The
Company's revenue recognition policy for its chemical management systems is
to recognize revenue upon successful completion of a project's phases and
milestones. ACS recognizes revenue for its chemical management systems
based upon costs incurred to date as a percentage of estimated total costs.
Adjustments made to the unaudited pro forma combined statements of
operations for the fiscal 1995 second quarter increased net income by
$197,408 and for the first half of fiscal 1995 increased net income by
$91,647, as a result of the different policies. No other periods presented
were affected by the difference in policy and as such no adjustments were
made in the unaudited pro forma combined financial information for such
periods.
10
<PAGE>
FSI INTERNATIONAL, INC.
Management's Discussion and Analysis of
Financial Condition and Results of Operations
RESULTS OF OPERATIONS
SECOND QUARTER AND FIRST SIX MONTHS OF FISCAL 1995 COMPARED WITH THE SECOND
QUARTER AND FIRST SIX MONTHS OF FISCAL 1994
Sales in the second quarter ended February 25, 1995 increased $19.2 million, or
approximately 93%, from the comparable prior fiscal year quarter. Sales for the
six months ended February 25, 1995 increased $26.2 million, or approximately
63%, from the six months ended February 26, 1994. The increase in sales
occurred in all product lines and was generally attributable to increased unit
sales and to a lesser extent to increases in the average selling price of FSI's
products resulting from additional features added. Based upon the current
backlog and new order expectations, total sales in the second half of fiscal
1995 are expected to increase from the sales level in the first half of fiscal
1995; however, there can be no assurances that orders currently in the backlog
will not be canceled or rescheduled or that order expectations will ultimately
be achieved.
Gross profit margins were approximately 43.7% of sales in the second quarter of
fiscal 1995 as compared to approximately 44.9% of sales in the prior year's
comparable period. Gross margins for the six months ended February 25, 1995
were 44.9% as compared to approximately 43.0% for the six months ended February
26, 1994. The decrease in the gross margin for the fiscal 1995 second quarter
was due to decreased margins in the ChemFill/(R)/ product line. The increase in
gross margin year-to-date is due to overall improved margins in the
microlithography and surface conditioning 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. Based upon current backlog and anticipated
shipments, the Company expects its gross profit percentage to decrease during
the remainder of fiscal 1995 due to the mix of products to be sold.
Selling, general and administrative expenses were 17% and 19% of sales,
respectively, for the second quarter and for the six months ended February 25,
1995, as compared to 20% of sales for the second quarter and for the six months
ended February 26, 1994. The dollar increases of approximately $2.8 million for
the second quarter of fiscal 1995 and $4.5 million for the first six months of
fiscal 1995 as compared to prior fiscal periods are due primarily to costs
associated with personnel additions and expanded customer support and marketing
(approximately $1.5 million and $2.0 million, respectively, of such increase),
and to a lesser extent to increased management incentive bonuses and employee
profit sharing. The Company expects the amount of selling, general and
administrative expenses to increase during the remainder of fiscal 1995;
however, as a percentage of sales, selling, general and administrative may
decrease over the same periods.
Research and development expense was approximately 15% of sales, or $5.9
million, for the second quarter of fiscal 1995 as compared to 18% or $3.7
million for second quarter of fiscal 1994. For the first six months of fiscal
1995, research and development expenses were 16%, of net sales or $10.7 million,
as compared to 17% or $7.0 million for the first half of fiscal 1994. The
increase of approximately $2.2 million for the second quarter of fiscal 1995 and
$3.7 million for the first half 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, certain ChemFill models and the ORION/(TM)/ vacuum-
based gas phase (dry) cleaning system. Certain of the Company's research and
development projects are partially funded through arrangements with third
parties. For the second quarter of fiscal 1995 and 1994, the Company recognized
approximately $183,000 and $338,000, respectively, from third parties as a
reduction in research and development expenses. For the first half of fiscal
1995 and 1994, the Company recognized approximately $523,000 and $597,000,
respectively, from third parties as a reduction in research and development
expenses. While the Company expects the quarterly amount of research and
development expenses to increase during the remainder of fiscal 1995, research
and development expenses may decrease as a percentage of sales during such
periods.
11
<PAGE>
Interest expense decreased $104,000 and $300,000, respectively, for the second
quarter and the first half 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 first half of fiscal 1994, the Company recognized approximately $140,000 of
expenses associated with the early termination such credit facility.
Other income, net increased approximately $73,000 in the second quarter of
fiscal 1995 as compared to the second quarter of fiscal 1994 and increased
approximately $190,000 for the first half of fiscal 1995 as compared to the
first half of fiscal 1994. The increases are primarily due to an increase in
interest earned by the Company on short-term investments and a $65,000 foreign
currency exchange gain that was recognized during second quarter of fiscal 1995.
In the second quarter of fiscal 1995, the Company recorded an income tax
provision of $1,176,300, or 25% of pretax profit, as compared to a tax provision
of $300,000, or 21% of pretax profit, for the comparable prior fiscal year
quarter. For the first half of fiscal 1995, the Company recorded an income tax
provision of $1,900,600, or 26% of pretax profit as compared to $485,000, or
20%, for the comparable prior fiscal period. The income tax provision in the
second quarter and first half of fiscal 1995 is approximately $524,000 and
$731,000, 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 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 $323,000 for second quarter
of fiscal 1995 as compared to $368,000 for second quarter of fiscal 1994. For
the first half of fiscal 1995, earnings in equity of affiliates was
approximately $1,323,000 as compared to $782,000 for the first half of fiscal
1994. The increase in earnings for the first half of fiscal 1995 is attributed
to increased earnings of the Metron Asia group, which resulted from the
continued growth taking place in the Asia-Pacific market.
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash and cash equivalents approximated $57.0 million as of
February 25, 1995, an increase of $46.5 million from the end of fiscal year
1994. The increase in cash and cash equivalents reflects the net proceeds of
approximately $50.8 million from a secondary stock offering completed by the
Company during February 1995.
The Company's accounts receivable increased approximately 55%, or $10.9 million,
from the end of fiscal 1994. This increase is due to the second quarter sales.
Sales for the second quarter of fiscal 1995 were approximately $39.9 million as
compared to $26.6 million for the fourth quarter of fiscal 1994. The Company's
inventory increased approximately $4.4 million from the end of fiscal 1994. The
majority of the increase is in raw materials and work-in-process relating to the
increased sales and order activity. As of February 25, 1995, the Company's ratio
of current assets to current liabilities was 3.4 to 1.0 and working capital was
$81.5 million.
The Company had acquisitions of leasehold improvements and equipment of $3.8
million for the first half of fiscal 1995 as compared to $1.1 million for the
first half 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 entered into commitments to construct 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 systems is expected
to total $7.0 million over fiscal years 1995 and 1996.
12
<PAGE>
During second quarter of 1995, the Company purchased a 50% equity interest for
approximately $1.2 million in Vinylglass Limited, a United Kingdom company.
This equity investment is targeted at providing a broader range of chemical
management products to existing and future customers.
The Company completed the acquisition of Applied Chemical Solutions (ACS) in
March 1995, which is also targeted at expanding the Company's chemical
management products line. The acquisition of ACS will be accounted for as a
pooling of interests. The Company expects to record approximately an $800,000
charge to earnings relating to ACS acquisition costs in the fiscal 1995 third
quarter.
The Company does not have a credit facility, but is negotiating the terms of a
new credit facility. 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 both for the
short-term and through at least the end of fiscal 1996.
13
<PAGE>
FSI INTERNATIONAL, INC.
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
At the Company's Annual Meeting of Shareholders held on January 26,
1995, the shareholders approve the following: (i) Election of three
class II directors to serve a three-year term. Each nominated
director was elected as follows:
<TABLE>
<CAPTION>
Director-Nominee Votes For Votes Abstentions
---------------- --------- -----------------
<S> <C> <C>
Neil R. Bonke 5,647,391 1,530
Joel A. Elftmann 5,647,184 1,737
Robert E. Lorenzini 5,647,391 1,530
</TABLE>
James A. Bernards and William M. Marcy, as Class I Directors, and
Terrence W. Glarner and Charles R. Wofford, as Class III Directors,
continue to serve as directors after the meeting. (ii) Proposal to
adopt the amendments to the Company's Directors' Nonstatutory Stock
Option Plan. The proposal received 4,480,148 shares for and 1,107,791
votes against. There were 60,982 abstentions. (iii) Proposal to
ratify the appointment of KPMG Peat Marwick LLP as independent
auditors of the Company for the fiscal year ending August 26, 1995.
The proposal received 5,642,128 votes for and 1,508 votes against.
There were 5,285 abstentions.
ITEM 5. OTHER INFORMATION
None
14
<PAGE>
FSI INTERNATIONAL, INC.
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>
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)
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
Exhibit
No. Exhibit Description Page
- ------- ------------------- ----
<C> <S> <C>
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)
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 Schedule electronically filed
</TABLE>
- -----------------
(1) Filed as an Exhibit to the Company's Report on Form 8-K dated January
5, 1995, 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.
16
<PAGE>
FSI INTERNATIONAL, INC.
(b) During the quarter ended February 25, 1994, there was an 8-K filed on
January 5, 1995 regarding the acquisition of Applied Chemical
Solutions. This 8-K was amended on February 17, 1995. The following
financial statements were included in the Form 8-K, as amended.
(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
17
<PAGE>
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: April 11, 1995
By: /s/Benno Sand
-------------------------------
Benno Sand
Executive Vice President and
Chief Financial Officer
on behalf of the
Registrant and as
Principal Financial Officer
18
<PAGE>
FSI INTERNATIONAL, INC.
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>
19
<PAGE>
EXHIBIT INDEX
<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 Schedule electronically filed
- ------------------
(1) Filed as an Exhibit to the Company's Report on Form 8-K dated January 5,
1995, 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.
</TABLE>
20
<PAGE>
Exhibit 11.1
------------
FSI INTERNATIONAL, INC.
COMPUTATION OF INCOME PER COMMON SHARE
<TABLE>
<CAPTION>
QUARTERS ENDED: SIX MONTHS ENDED:
----------------------------------------------------------
FEB. 25, 1995 FEB. 26, 1994 FEB. 25, 1995 FEB. 26, 1994
----------------------------------------------------------
<S> <C> <C> <C> <C>
PRIMARY:
AVERAGE SHARES OUTSTANDING 6,230,000 5,951,156 6,170,282 5,246,663
NET EFFECT OF DILUTIVE STOCK
OPTIONS AND WARRANTS -- BASED
ON THE TREASURY STOCK METHOD 547,261 402,642 528,993 401,267
----------------------------------------------------------
TOTAL 6,777,261 6,353,798 6,699,275 5,647,930
==========================================================
NET INCOME $3,869,586 $1,484,725 $6,732,466 $2,725,322
==========================================================
PRIMARY PER SHARE AMOUNTS $0.57 $0.23 $1.00 $0.48
==========================================================
FULLY DILUTED:
AVERAGE SHARES OUTSTANDING 6,230,000 5,951,156 6,170,282 5,246,663
NET EFFECT OF DILUTIVE STOCK
OPTIONS AND WARRANTS -- BASED ON THE
TREASURY STOCK METHOD 601,991 425,615 574,250 438,443
----------------------------------------------------------
TOTAL 6,831,991 6,376,771 6,744,532 5,685,106
==========================================================
NET INCOME $3,869,586 $1,484,725 $6,732,466 $2,725,322
==========================================================
FULLY DILUTED PER SHARE AMOUNTS $0.57 $0.23 $1.00 $0.48
==========================================================
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND> This schedule contains summary financial information extracted from
FSI International's Quarterly Report on Form 10-Q for the quarterly period ended
February 25, 1995 and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> AUG-26-1995
<PERIOD-START> AUG-28-1994
<PERIOD-END> FEB-25-1995
<CASH> 56,958,416
<SECURITIES> 0
<RECEIVABLES> 30,914,809
<ALLOWANCES> 800,000
<INVENTORY> 20,536,078
<CURRENT-ASSETS> 115,104,616
<PP&E> 21,220,301
<DEPRECIATION> 13,324,928
<TOTAL-ASSETS> 133,979,973
<CURRENT-LIABILITIES> 33,628,697
<BONDS> 0
<COMMON> 78,581,826
0
0
<OTHER-SE> 21,758,085
<TOTAL-LIABILITY-AND-EQUITY> 133,979,973
<SALES> 67,945,865
<TOTAL-REVENUES> 67,945,865
<CGS> 37,436,150
<TOTAL-COSTS> 37,436,150
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 13,030
<INCOME-PRETAX> 7,310,166
<INCOME-TAX> 1,900,600
<INCOME-CONTINUING> 6,732,466
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,732,466
<EPS-PRIMARY> 1.00
<EPS-DILUTED> 1.00
</TABLE>
