<PAGE> 1
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 MARCH 1, 1997
------------------------------------------------
or
[] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
<TABLE>
<S><C>
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
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(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
322 LAKE HAZELTINE DRIVE, CHASKA, MINNESOTA 55318
- --------------------------------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
612-448-5440
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(Registrant's telephone number, including area code)
N/A
- --------------------------------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last report)
</TABLE>
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 date:
COMMON STOCK, NO PAR VALUE - 22,506,516 SHARES OUTSTANDING AS OF MARCH 28, 1997
1
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FSI INTERNATIONAL, INC. AND SUBSIDIARIES
QUARTERLY REPORT ON FORM 10-Q
<TABLE>
PART I. FINANCIAL INFORMATION PAGE NO.
<S> <C> <C>
Item 1. Consolidated Condensed Financial Statements:
Consolidated Condensed Balance Sheets as of March 1, 1997
(Unaudited) and August 31, 1996 3
Consolidated Condensed Statements of Operations
(Unaudited) for the quarters ended March 1, 1997
and February 24, 1996 5
Consolidated Condensed Statements of Operations (Unaudited)
for the six months ended March 1, 1997 and February 24, 1996 6
Consolidated Condensed Statements of Cash Flows (Unaudited)
for the six months ended March 1, 1997 and February 24, 1996 7
Notes to Consolidated Condensed Financial Statements (Unaudited) 8
Item 2. Management's Discussion and Analysis of Financial Condition and 10
Results of Operations
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders 18
SIGNATURES
22
</TABLE>
2
<PAGE> 3
PART I. Item 1. FINANCIAL INFORMATION
FSI INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
MARCH 1, 1997 AND AUGUST 31, 1996
ASSETS
<TABLE>
<CAPTION>
March 1, August 31,
1997 1996
(Unaudited) (Audited)
------------- -------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 74,349,217 $ 48,804,158
Marketable securities 35,477,167 23,116,484
Trade accounts receivable, net of allowance for
doubtful accounts of $1,933,000 and $1,843,000,
respectively 50,824,598 60,532,701
Trade accounts receivable from affiliates 10,318,573 20,228,673
Inventories 58,351,660 64,075,294
Deferred income tax benefit 9,262,861 8,262,861
Prepaid expenses and other current assets 5,284,863 4,974,079
------------ ------------
Total current assets 243,868,939 229,994,250
------------ ------------
Property, plant and equipment, at cost 89,780,066 68,227,403
Less accumulated depreciation and amortization (27,264,983) (22,632,786)
------------ ------------
62,515,083 45,594,617
------------ ------------
Investment in affiliates 14,593,202 12,765,401
Deposits and other assets 3,794,423 4,395,595
Deferred income tax benefit 533,518 533,518
------------ ------------
$325,305,165 $293,283,381
============ ============
</TABLE>
See accompanying notes to consolidated condensed financial statements.
3
<PAGE> 4
FSI INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
MARCH 1, 1997 AND AUGUST 31, 1996
(continued)
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
March 1, August 31,
1997 1996
(Unaudited) (Audited)
------------ -----------
<S> <C> <C>
Current liabilities:
Current maturities of long-term debt $ 175,300 $ 207,000
Trade accounts payable 17,246,657 30,834,470
Accrued expenses 25,387,360 29,069,279
Customer deposits 3,526,631 3,710,547
Deferred revenue 9,514,003 9,824,693
------------ ------------
Total current liabilities 55,849,951 73,645,989
------------ ------------
Long-term debt, less current maturities 42,206,964 290,948
Deferred income taxes 94,979 92,021
Minority interest 1,526,224 1,127,058
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, 22,504,183
and 22,362,056 shares at March 1, 1997
and August 31, 1996, respectively 159,117,848 157,731,828
Retained earnings 66,323,908 60,345,308
Cumulative translation adjustment 185,291 50,229
------------ ------------
Total stockholders' equity 225,627,047 218,127,365
------------ ------------
$325,305,165 $293,283,381
============ ============
</TABLE>
See accompanying notes to consolidated condensed financial statements.
4
<PAGE> 5
FSI INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
FOR THE QUARTERS ENDED MARCH 1, 1997 AND FEBRUARY 24, 1996
(Unaudited)
<TABLE>
<CAPTION>
March 1, February 24,
1997 1996
---------- -----------
<S> <C> <C>
Sales (including sales to affiliates of
$20,977,000 and $17,129,000, respectively) $60,157,375 $75,432,414
Cost of sales 38,865,173 42,443,278
----------- -----------
Gross profit 21,292,202 32,989,136
Selling, general and administrative expenses 12,247,047 14,235,371
Research and development expenses 8,917,409 9,473,017
----------- -----------
Operating income 127,746 9,280,748
Interest expense (195,125) (111,349)
Interest income 1,227,478 1,274,785
Other income (expense), net (180,692) (9,919)
----------- -----------
Income before income taxes 979,407 10,434,265
Income tax (benefit) expense (303,400) 3,624,202
----------- -----------
Income before minority interest
and equity in earnings of affiliates 1,282,807 6,810,063
Minority interest (149,344) (116,334)
Equity in earnings of affiliates 804,213 1,894,577
----------- -----------
Net income $ 1,937,676 $ 8,588,306
=========== ===========
Net income per common share $ 0.08 $ 0.37
Weighted average common shares
and common share equivalents 23,201,862 23,146,610
Pro forma information:
Income tax (benefit) expense $ (303,400) $ 3,799,202
Net income $ 1,937,676 $ 8,413,306
Net income per common share $ 0.08 $ 0.36
</TABLE>
See accompanying notes to consolidated condensed financial statements.
5
<PAGE> 6
FSI INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
FOR THE SIX-MONTHS ENDED MARCH 1, 1997 AND FEBRUARY 24, 1996
(Unaudited)
<TABLE>
<CAPTION>
March 1, February 24,
1997 1996
---------- ------------
<S> <C> <C>
Sales (including sales to affiliates of
$42,817,000 and $31,552,000, respectively) $127,148,370 $145,776,139
Cost of sales 79,091,343 82,986,646
------------ ------------
Gross profit 48,057,027 62,789,493
Selling, general and administrative expenses 25,465,886 26,989,172
Research and development expenses 18,595,322 18,004,925
------------ ------------
Operating income 3,995,819 17,795,396
Interest expense (230,933) (234,464)
Interest income 1,958,631 2,703,857
Other income (expense), net (204,885) (73,571)
------------ ------------
Income before income taxes 5,518,632 20,191,218
Income tax expense 1,103,726 7,050,267
------------ ------------
Income before minority interest
and equity in earnings of affiliates 4,414,906 13,140,951
Minority interest (264,107) (278,164)
Equity in earnings of affiliates 1,827,801 3,450,676
------------ ------------
Net income $ 5,978,600 $ 16,313,463
============ ============
Net income per common share $ 0.26 $ 0.70
Weighted average common shares
and common share equivalents 23,108,173 23,234,581
Pro forma information:
Income tax expense $ 1,103,726 $ 7,296,267
Net income $ 5,978,600 $ 16,067,463
Net income per common share $ 0.26 $ 0.69
</TABLE>
See accompanying notes to consolidated condensed financial statements.
6
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FSI INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED MARCH 1, 1997 AND FEBRUARY 24, 1996
(Unaudited)
<TABLE>
<CAPTION>
March 1, February 24,
1997 1996
--------- ------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 5,978,600 $ 16,313,463
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Minority interest 264,107 278,164
Provision for deferred income taxes 2,958 18,520
Depreciation and amortization 4,800,062 2,143,907
Equity in earnings of affiliates (1,827,801) (3,450,676)
Loss on sale of equipment 11,901 -
Changes in operating assets and liabilities:
Trade accounts receivable 19,618,203 (16,887,794)
Inventories 5,723,634 (9,893,364)
Prepaid and other current assets (310,784) 1,025,679
Trade accounts payable (13,587,813) (2,981,821)
Accrued expenses (4,611,639) 5,048,640
Customer deposits (183,916) (598,132)
Deferred revenue (310,690) 1,258,552
Other 270,121 (45,471)
------------ ------------
Net cash provided by (used in) operating activities 15,836,943 (7,770,333)
------------ ------------
INVESTING ACTIVITIES:
Acquisition of property, plant and equipment (21,586,568) (12,678,767)
Purchase of marketable securities (15,065,983) (16,221,907)
Sales of marketable securities - 3,488,411
Maturities of marketable securities 2,705,300 10,027,867
Decrease (Increase) in deposits and other assets 455,311 (390,454)
------------ ------------
Net cash used in investing activities (33,491,940) (15,774,850)
------------ ------------
FINANCING ACTIVITIES:
Principal payments on long-term debt (115,684) (9,189)
Increase in long-term debt 42,000,000 -
Payments on notes payable to bank - (8,433,500)
Advances on notes payable to bank - 8,702,800
S Corporation distribution payments - (491,700)
Net proceeds from issuance of common stock 1,315,740 1,303,560
------------ ------------
Net cash provided by financing activities 43,200,056 1,071,971
------------ ------------
Increase (decrease) in cash and cash equivalents 25,545,059 (22,473,212)
Cash and cash equivalents at beginning of period 48,804,158 97,010,076
------------ ------------
Cash and cash equivalents at end of period $ 74,349,217 $ 74,536,864
============ ============
</TABLE>
See accompanying notes to consolidated condensed financial statements.
7
<PAGE> 8
FSI INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
(1) RECLASSIFICATIONS
Certain fiscal 1996 amounts have been reclassified to conform to the
fiscal 1997 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 only of normal and recurring adjustments) which are, in the
opinion of management, necessary to present a fair statement of the
results for the interim periods presented. 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. The results of operations for the interim periods presented
are not necessarily indicative of the results to be expected for the full
fiscal year. These consolidated condensed financial statements should be
read in conjunction with the Consolidated Financial Statements and
footnotes thereto included in the Company's Annual Report on Form 10-K for
the fiscal year ended August 31, 1996 previously filed with the Securities
and Exchange Commission.
(3) INVENTORIES
Inventories are summarized as follows:
<TABLE>
<CAPTION>
March 1, 1997 August 31, 1996
(Unaudited) (Audited)
------------- ---------------
<S> <C> <C>
Finished products $ 6,549,240 $10,715,376
Work-in-process 14,473,353 16,329,239
Subassemblies 5,377,865 4,689,549
Raw materials and purchased parts 31,951,202 32,341,130
----------- -----------
$58,351,660 $64,075,294
----------- -----------
</TABLE>
(4) SUPPLEMENTARY CASH FLOW INFORMATION
<TABLE>
<CAPTION>
Six Months Ended
------------------------------------
March 1, 1997 February 24,1996
------------- ---------------------
<S> <C> <C>
Schedule of interest and income taxes paid:
Interest $ 85,533 $ 236,660
Income taxes $3,816,630 $3,769,378
</TABLE>
Capital leases entered into for financing purchases of equipment during the
first six months of fiscal 1997 and 1996 were $0 and $241,610, respectively.
In addition, the Company realized a tax benefit from the exercise of stock
options of $70,280 and $2,426,802 in the first half of fiscal 1997 and 1996,
respectively.
8
<PAGE> 9
FSI INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
(5) PRIVATE DEBT PLACEMENT
On December 19, 1996, the Company completed a private debt placement for
$30.0 million of 7.15% senior unsecured notes due 2004 and $12.0 million of
7.27% senior unsecured notes due 2006. The notes are subject to certain
affirmative and negative convenants, including financial ratio tests such
as an indebtedness ratio and a tangible net worth test.
(6) PRO FORMA INFORMATION
On April 4, 1996, the Company completed the acquisition of Semiconductor
Systems, Inc. (Semiconductor Systems). The acquisition of Semiconductor
Systems was accounted for as a pooling of interest. Accordingly, all
historical information for FSI International, Inc. and subsidiaries has
been restated to include the operations of Semiconductor Systems as though
the two entities have always been combined.
Pro forma data shown on the consolidated statements of operations reflect
the impact on income tax expense as if Semiconductor Systems was a C
Corporation versus an S Corporation prior to the acquisition of
Semiconductor Systems on April 4, 1996.
9
<PAGE> 10
FSI INTERNATIONAL, INC. AND SUBSIDIARIES
ITEM 2.
RESULTS OF OPERATIONS
SECOND QUARTER AND FIRST SIX MONTHS OF FISCAL 1997 COMPARED WITH THE SECOND
QUARTER AND FIRST SIX MONTHS OF FISCAL 1996
The information in this discussion, except for the historical information
contained herein, contains forward-looking statements within the meaning of
Section 21E of the Securities Exchange Act of 1934, as amended, and is subject
to the safe harbor created by that statute. Such statements are subject to
various risks and uncertainties, including those described below under "Risk
Factors". In addition, readers are also directed to the Risk Factors
discussion found in the Company's Report on Form 10-K for the year ended August
31, 1996 and the Company's Report on Form 10-Q for the quarter ended Novenber
30, 1996. Readers also are cautioned not to place undue reliance on these
forward-looking statements as actual results could differ materially. The
Company assumes no obligation to publicly release any revisions or updates to
these forward-looking statements to reflect future events or unanticipated
occurrences. Such forward-looking statements are marked with an asterisk (*).
In the first half of fiscal 1996, the microelectronics industry, primarily
semiconductor device manufacturers began a slowdown in growth. As a result,
certain of the Company's customers delayed orders and/or canceled expansion
plans. Due to the difficult industry conditions, which are expected to last at
least until the second half of calendar 1997, the Company adopted certain cost
control measures in first quarter of fiscal 1997 in an attempt to align
spending with expected sales decreases.*
Cost control measures, including mandatory furlough days, a reduction in
executive compensation, and a 9% reduction in the work force were implemented
in September 1996. The Company recorded a pretax charge of approximately
$300,000 in the first quarter of fiscal 1997 relating to the reduction in
force.
SALES:
<TABLE>
<CAPTION>
Second Quarters Ended Six Months Ended
---------------------------------- -----------------------------------
March 1, February 24, March 1, February 24,
1997 Change 1996 1997 Change 1996
---------------------------------- ------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Sales $60,157,375 (20.3%) $75,432,414 $127,148,370 (12.8%) $145,776,139
</TABLE>
Sales decreased to $60.2 million for the second quarter ended March 1, 1997 as
compared to $75.4 million for the second quarter of fiscal 1996. Sales for the
six months ended March 1, 1997 decreased $18.6 million to $127.2 million as
compared to $145.8 million for the first six months of fiscal 1996. The
decrease in sales occurred in the Surface Conditioning and Microlithography
product lines. The decrease in unit sales is largely due to a decreased demand
for equipment resulting from the delays and cancellations of construction of
new and the expansion of existing semiconductor manufacturing facilities by our
customers. It is anticipated that the third quarter fiscal 1997 sales and net
income levels will be lower than the second quarter fiscal 1997 sales and net
income levels.* Sales levels are expected to increase in the fourth quarter of
fiscal 1997 as compared to the third quarter of fiscal 1997.*
International sales were $25.5 million, and $20.8 million for the second
quarter of fiscal 1997 and 1996, respectively, and represented approximately
42.3% and 27.6% of sales during these periods. International sales were $48.2
million and $49.1 million for the first half of fiscal 1997 and 1996,
respectively, and represented 37.9% and 33.7% of sales during these periods.
International sales were approximately 35% of total sales for fiscal 1996. The
increase in international sales in second quarter fiscal 1997 as compared to
second quarter fiscal 1996 occurred in both the European and Asia-Pacific
Regions.
10
<PAGE> 11
The microelectronics industry has been experiencing volatility in product
demand and pricing, which has caused semiconductor device manufacturers to
exercise caution in making capital equipment purchasing decisions. Certain
semiconductor device manufacturers announced their intent to delay expansion of
current facilities and/or the construction, facilitization or equipping of new
manufacturing facilities. The Company has experienced some cancellations and
delays of orders and delays in shipping of orders. Based upon current industry
trends, the Company is expecting a sales decline of approximately 15% to 20% in
fiscal 1997 as compared to fiscal 1996 sales of $304 million.* Further order
cancellations or delays by customers are possible and could have a further
adverse effect on the Company's financial results for fiscal 1997.*
If industry conditions continue to improve at the modest rate forecasted by
analysts, the Company expects fiscal 1998 sales to increase to the fiscal 1996
level.* Sales could grow beyond this level if POLARIS(R) clusters are
accepted by a few new customers.*
GROSS PROFIT:
<TABLE>
<CAPTION>
Second Quarter Six Months Ended
---------------------------------- ----------------------------------
1997 Change 1996 1997 Change 1996
---------------------------------- ----------------------------------
<S> <C> <C> <C> <C> <C> <C>
Gross Profit $21,292,202 (35.5%) $32,989,136 $48,057,027 (23.5%) $62,789,493
As a % of sales 35.4% 43.7% 37.8% 43.1%
</TABLE>
Gross profit as a percentage of sales for second quarter of fiscal 1997 was
35.4% as compared to approximately 43.7% for second quarter of fiscal 1996.
Gross profit as a percentage of sales for the first six months of fiscal 1997
was 37.8% as compared to approximately 43.1% for the first six months of fiscal
1996. The decrease in gross profit margin for the second quarter of fiscal
1997 as compared to the second quarter of fiscal 1996 was primarily due to
foreign/domestic sales mix, product sales mix, product warranty costs, pricing
pressures and lower utilization of manufacturing capacity. The decrease
related to product mix is due to an increase in the percentage of total sales
of the Company's lower margin products. The decrease in gross margins for the
first half of fiscal 1997 as compared to the first half of fiscal 1996 is
primarily due to product sales mix, pricing pressures and lower utilization of
manufacturing capacity.
The Company's gross profit margin fluctuates as a result of a number of
factors, including the mix of products sold, the proportion of international
sales, competitive pricing pressures and the utilization of manufacturing
capacity. The Company made a final payment to the licensor and now has a fully
paid up, nonexclusive, worldwide license for its POLARIS(R) product. This
should improve the Company's gross profit margin on this product.* The
Company does expect gross profit margins to increase as a percentage of sales
in the third and fourth quarter of fiscal 1997 as compared to second quarter of
fiscal 1997 due to product mix changes and lower warranty costs.* However, the
Company expects overall gross margins to decrease in fiscal 1997 as compared to
fiscal 1996 due to the industry slow-down, expected lower sales levels,
start-up of the Company's new manufacturing facility in Allen, Texas, lower
margins on new product introductions (primarily due to the high original
equipment manufacturer content of such products), and increased pricing
pressure from competitors.*
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES:
<TABLE>
<CAPTION>
Second Quarter Six Months Ended
----------------------------------- ---------------------------------
1997 Change 1996 1997 Change 1996
----------------------------------- ---------------------------------
<S> <C> <C> <C> <C> <C> <C>
SG&A $12,247,047 (14.0%) $14,235,371 $25,465,886 (5.6%) $26,989,172
As a % of sales 20.4% 18.9% 20.0% 18.5%
</TABLE>
11
<PAGE> 12
Selling, general and administrative expenses were $12.2 million and $14.2
million or 20.4% and 18.9% of sales during the second quarter of fiscal 1997
and 1996, respectively. For the first six months of fiscal 1997 and 1996, SG&A
expenses were $25.5 million and $27.0 million or 20.0% and 18.5% of sales,
respectively. The decrease in the amount of SG&A expenses in the second
quarter and first half of fiscal 1997 was due to savings relating to the cost
controls implemented early in fiscal 1997 including the shut down of the
Company's operations during the weeks of Christmas and New Years. SG&A is
also down due to reduced commission and incentive compensation expense due to
lower sales and operating profit. Certain reductions of SG&A expense were
offset by increased costs for information systems and customer service as our
new business systems were implemented in January 1997 and the continued
investment in our global customer support organization. Overall, the Company
expects that SG&A expenses will increase slightly in the third and fourth
quarters of fiscal 1997 on a dollar to dollar basis due to continued
investments in customer support, computer systems implementation, and an
expanded sales, marketing and support focus in the Asia-Pacific region.*
RESEARCH AND DEVELOPMENT EXPENSES:
<TABLE>
<CAPTION>
Second Quarter Six Months Ended
-------------------------------- ---------------------------------
1997 Change 1996 1997 Change 1996
-------------------------------- ---------------------------------
<S> <C> <C> <C> <C> <C> <C>
R&D Expense $8,917,409 (5.9%) $9,473,017 $18,595,322 3.3% $18,004,925
As a % of sales 14.8% 12.6% 14.6% 12.4%
</TABLE>
Research and development expenses for the second quarter of fiscal 1997 were
$8.9 million, or 14.8% of sales, as compared to $9.5 million, or 12.6% of
sales, for second quarter of fiscal 1996. For the first six months of fiscal
1997, research and development expenses were 14.6% of sales or $18.6 million as
compared to 12.4% or $18.0 million for the first half of fiscal 1996. R&D
dollars remain relatively constant as the Company continues product and process
development efforts on new and existing products, including the ARIES(TM)
CryoKinetic(TM) cleaning system, ZETA(TM) automated surface conditioning
system, new POLARIS(R) cluster models and certain new chemical management
products. The successful introduction of new products is important to the
long-term growth of the Company.* The Company expects R&D expenses to increase
on a dollar to dollar basis in the coming quarters as it accelerates certain
programs in an effort to shorten the cycle time to get new products and
processes into the market.* Overall, the Company's goal is to invest
approximately 13% to 15% of sales in research and development programs.* The
Company expects to be at the high end of this range during fiscal 1997 as it
continues to invest in new product and process development programs.*
OTHER INCOME (EXPENSE), NET:
<TABLE>
<CAPTION>
Second Quarter Six Months Ended
------------------------------- --------------------------------
1997 Change 1996 1997 Change 1996
------------------------------- ---------- ------- -----------
<S> <C> <C> <C> <C> <C> <C>
Other income,
(expense), net $851,661 (26.2%) $1,153,517 $1,522,813 (36.4%) $2,395,822
As a % of sales 1.4% 1.5% 1.2% 1.6%
</TABLE>
Other income, (expense) was approximately $852,000 and $1.5 million,
respectively, of income for the second quarter and first six months of fiscal
1997 as compared to $1.2 million and $2.4 million, respectively, of income for
the second quarter and first half of fiscal 1996. The majority of the change
for the second quarter comparison was due to increased foreign currency
transaction losses and lower interest income due to lower average cash and cash
equivalents and marketable securities balances for the second quarter of fiscal
1997 as compared to second quarter of fiscal 1996. The decrease in other
income (expense) for the first half of fiscal 1997 as compared to the first
half of fiscal 1996 was due to lower average cash and cash equivalents and
marketable securities balances for the first half of fiscal 1997 as compared to
the first half of fiscal 1996.
12
<PAGE> 13
INCOME TAX (BENEFIT) EXPENSE:
Income tax (benefit) expense for second quarter and first six months of fiscal
1997 was approximately ($303,000) tax benefit and $1.1 million tax expense,
respectively, compared to approximately $3.6 million and $7.1 million of tax
expense, respectively for second quarter and first six months of fiscal 1996.
The tax rate for fiscal 1996 was 30% versus fiscal 1997 revised estimate of
20%.* The tax rate for fiscal 1997 was reduced to 20% due to expected lower
earnings and the related impact on these expected earnings for certain tax
differences such as R&D credit and tax exempt interest for fiscal 1997.
EQUITY IN EARNINGS OF AFFILIATES:
<TABLE>
<CAPTION>
Second Quarter Six Months Ended
------------------------------- ---------------------------------
1997 Change 1996 1997 Change 1996
------------------------------- ---------------------------------
<S> <C> <C> <C> <C> <C> <C>
Equity in
Earnings of
Affiliates $804,213 (57.6%) $1,894,577 $1,827,801 (47.0%) $3,450,676
As a % of sales 1.3% 2.5% 1.4% 2.4%
</TABLE>
The equity in earnings of affiliates was $804,000 for the second quarter of
fiscal 1997, compared to $1.9 million for the second quarter of fiscal 1996.
For the first six months of fiscal 1997, equity in earnings of affiliates was
$1.8 million compared to $3.5 million for the first half of fiscal 1996. The
decrease is due to lower earnings at both affiliates (Metron Technology B.V.
and m-FSI Ltd.) due to current industry conditions.
Due to current industry conditions, equity in earnings of affiliates is
expected to range between $400,000 and $600,000 in each of the next two
quarters for fiscal 1997.* However, as in the past, there may be significant
quarter to quarter fluctuations.*
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash and cash equivalents and marketable securities approximated
$109.8 million as of March 1, 1997, an increase of $37.9 million from the end
of fiscal year 1996. The increase in cash, cash equivalents and marketable
securities is a result of cash flow from operations of approximately $15.8
million, and the proceeds from the private debt placement of $42 million offset
by the continued funding of facilities expansions.
The Company's accounts receivable decreased by approximately 24.3%, or $19.6
million, at March 1, 1997 as compared to $80.8 million at the end of fiscal
1996. The decrease in accounts receivable is mainly due to decreased sales
levels.
The Company's inventory decreased approximately $5.7 million to $58.4 million
at March 1, 1997 compared to $64.1 million at the end of fiscal 1996. This was
mainly due to decreased levels of finished goods and work-in-process parts due
to lower sales activity. As of March 1, 1997, the Company's current ratio of
current assets to current liabilities was 4.4 to 1.0 and working capital was
$188 million.
The Company had acquisitions of property, plant and equipment of approximately
$21.6 million and $12.7 million for the first half of fiscal 1997 and fiscal
1996, respectively. The continuing acquisitions reflect the investments in
computer equipment and facilities expansions. It is anticipated the Company
will invest $45 to $50 million in fiscal 1997 on the facilities expansion
projects and the computer systems conversion.*
The Company is in the process of constructing and equipping a new 80,000
square-foot laboratory and engineering facility at a cost of approximately
$27.0 million, for the Surface Conditioning Division in Chaska, Minn. The
Company expects to move the Surface Conditioning Division into the new facility
in the middle of calendar 1997.
13
<PAGE> 14
The laboratory facility will be equipped with certain new advanced surface
conditioning products which were introduced in late fiscal 1996 or are expected
to be introduced in fiscal 1997.*
In March, 1997, the Company completed the building and equipping of a 150,000
square-foot engineering, manufacturing and laboratory facility in Allen, Texas,
for the purpose of expanding the manufacturing and development capabilities of
the Company's Microlithography Division. The new facility cost approximately
$21.0 million.
The Company completed a private debt placement on December 19, 1996 for
approximately $30.0 million of 7.15% senior unsecured notes due 2004 and $12.0
million of 7.27% senior unsecured notes due 2006. The proceeds from the
private debt placement will be used to acquire equipment for the Company's
demonstration and product and process development laboratories, other capital
expenditure and general corporate purposes. The Company believes that with
existing cash, cash equivalents, marketable securities, internally generated
funds and proceeds from the private debt placement, there will be sufficient
funds to meet the Company's currently projected working capital and other cash
requirements through at least mid-fiscal 1998.*
The Company believes that success in its industry requires substantial capital
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 fund such activities with additional equity or
debt financings.* The sale of additional equity or debt securities could
result in additional dilution to the Company's shareholders.*
RISK FACTORS
Due to the nature of business and the industry in which the Company operates,
the following risk factors should be considered in addition to others described
above.
CURRENT SLOWDOWN AND VOLATILITY IN THE MICROELECTRONICS INDUSTRY:
The Company's business depends upon the capital equipment expenditures of
microelectronics manufacturers, which in turn depend on the current and
anticipated market demand for semiconductor devices and products utilizing
semiconductor devices. The microelectronic industry has been cyclical in
nature and historically experienced periodic downturns. The semiconductor
device manufacturers are presently experiencing a slowdown in terms of product
demand and volatility in terms of product pricing. During 1995 many of the
semiconductor device manufacturers announced plans to expand existing or build
new semiconductor device manufacturing facilities. In early 1996, the average
selling price of memory chips and certain other semiconductor devices
significantly decreased. This has resulted in semiconductor device
manufacturers announcing delays in their expansion plans. This slowdown and
volatility has caused the semiconductor device manufacturers to reduce their
demand for semiconductor processing equipment and, in some instances, to delay
capital equipment decisions. In some cases this has resulted in order
cancellations or delays of orders and delays of delivery dates for the
Company's products. No assurance can be given that the Company's sales and
operating results will not be adversely affected during this and possible
future downturns in the semiconductor industry. In addition, the need for
continued investments in research and development, substantial capital
equipment requirements and extensive ongoing worldwide customer service and
support capability will limit the Company's ability to reduce expenses.
Accordingly, there is no assurance that the Company will be able to remain
profitable in the future.
RISK OF DELAYS IN INTRODUCING NEW PRODUCTS AND THE MARKET'S ACCEPTANCE OF SUCH
PRODUCTS:
Microelectronics manufacturing equipment and processes are subject to rapid
technological change and new product introductions, as well as evolving
industry standards. The Company believes microelectronics manufacturers are
increasingly relying on equipment manufacturers to design and develop more
efficient equipment, to design and implement improved processes for the benefit
of microelectronics manufacturers and to integrate their equipment
with that of other equipment manufacturers. The Company must continue to
develop, manufacture and market new
14
<PAGE> 15
products which conform to evolving industry standards. The success of the
Company in developing, introducing and selling new and enhanced equipment
depends upon a variety of factors including product selection, timely and
efficient completion of product design and development, timely and efficient
implementation of manufacturing and assembly processes, product performance in
the field, and effective sales and marketing. The Company must also manage
product transitions successfully, as introductions of new products could
adversely affect the sales of existing products. The Company's failure to
develop and successfully introduce new products or enhancements to its existing
products and processes or achieve market acceptance of the new products or
enhancements could adversely affect the Company's business and results of
operations.
NEW FACILITIES CONSTRUCTION:
The Company added manufacturing capacity during fiscal 1997. This additional
manufacturing capacity will have a negative impact on gross profit margins if
the Company's anticipated revenue levels are not met. The potential impact of
idle manufacturing capacity on gross margins could also have an adverse impact
on the Company's future financial results.
VOLATILITY OF STOCK PRICE:
The Company's common stock has experienced in the past, and could experience in
the future, substantial price volatility as a result of a number of factors,
including quarter-to-quarter variations in the actual or anticipated financial
results of the Company, announcements by the Company, its competitors or
customers, government regulations and developments in the industry. In
addition, the stock market has experienced extreme price and volume
fluctuations which have affected the market price of many technology companies
in particular and which have at times been unrelated to the operating
performance of the specific companies whose stock is traded. Broad market
fluctuations, as well as economic conditions generally and, in the
microelectronics industry specifically, may adversely affect the market price
of the Company's common stock.
SUCCESS OF COMPANY'S AFFILIATED DISTRIBUTORS:
The majority of the Company's international sales are made through its
affiliated distributors, Metron Technology B.V., and m-FSI Ltd. These
affiliated distributors also provide service and support to many of the
Company's international customers. The affiliated distributors also sell other
principals' products. A reduction in the sales efforts or financial viability
of such distributors or a loss of a significant principal by a distributor
could affect the Company's results of operations.
IMPLEMENTATION OF NEW BUSINESS SYSTEM:
The Company is in the post-implementation phase of a new Company-wide
integrated business system. If the new system is not successful, there may be
an adverse impact on the Company's business and results of operations.
HIGHLY COMPETITIVE INDUSTRY:
The microelectronics processing equipment industry is highly competitive. The
Company faces substantial competition throughout the world. The Company
believes that to remain competitive, it will require significant financial
resources to offer a broad range of products, to maintain customer service and
support centers worldwide, and to invest in product and process research and
development. The Company believes that the microelectronics industry is
becoming increasingly dominated by large manufacturers who have the resources
to support customers on a worldwide basis. Certain of the Company's
competitors have substantially greater financial, marketing, and customer
service and support capabilities than the Company. There is the possibility of
large equipment companies entering the market areas in which the Company
competes. In addition, there are smaller emerging microelectronics equipment
companies that provide innovative technology. The Company expects its
competitors to continue to improve the design and performance of their current
products and processes and to introduce new products and
15
<PAGE> 16
processes with improved price and performance characteristics. No assurance can
be given that the Company will continue to compete successfully in the United
States or elsewhere.
16
<PAGE> 17
FSI INTERNATIONAL, INC. AND SUBSIDIARIES
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
During the second quarter of fiscal 1996, Eric C. and Angie L. Hsu
(the "plaintiffs") filed a lawsuit in the Superior Court of
California, County of Alameda, Southern Division, against
Semiconductors Systems, Inc. ("Semiconductor Systems"), a
wholly-owned subsidiary of the Company that was acquired in
April 1996, and the former shareholders of Semiconductor Systems.
In the fall of 1995, pursuant to the Employee Stock Purchase and
Shareholder Agreement dated November 30, 1990 between Mr. Hsu and
Semiconductor Systems (the "Shareholder Agreement") and in
connection with Mr. Hsu's termination of his employment with
Semiconductor Systems in August 1995, the former shareholders of
Semiconductor Systems purchased the shares of Semiconductor Systems
common stock then held by Mr. Hsu. The plaintiffs are claiming,
among other things, that such purchase breached the Shareholder
Agreement and violated the California Corporations Code, breached
the fiduciary duty owed plaintiffs by the individual defendants and
constituted fraud. The plaintiffs are seeking, among other things,
damages in an amount to be proven at trial, punitive damages,
attorneys' fees and a constructive trust over the shares held in the
escrow mentioned below. Discovery in this case is at a very
preliminary stage. Semiconductor Systems intends to vigorously
defend the lawsuit.
The Company, on behalf of Semiconductor Systems, has made a claim
with respect to the lawsuit under the escrow created at the time of
the Company's acquisition of Semiconductor Systems. The escrow was
established to secure certain indemnification obligations of the
former shareholders of Semiconductor Systems. The former
shareholders have agreed to hold the Company and Semiconductor
Systems harmless from any claim arising out of any securities
transactions between the shareholders or former shareholders of
Semiconductor Systems and Semiconductor Systems. The escrow
consists of an aggregate of 250,000 shares of Company Common Stock
paid to the former shareholders of Semiconductors Systems as
consideration in the acquisition.
ITEM 2. CHANGE IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
17
<PAGE> 18
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At the Company's Annual Meeting of Shareholders held on January 22,
1997, the shareholders approved the following:
(1) Election of two Class I Directors to serve a
three-year term. Each nominated director was elected as
follows:
DIRECTOR-NOMINEE VOTES FOR VOTES ABSTENTIONS
---------------- --------- -----------------
James A. Bernards 20,213,833 105,134
Joanna T. Lau 20,213,533 105,434
Neil R. Bonke, Joel A. Elftmann and Robert E. Lorenzini,
as Class II Directors, and Terrence W. Glarner and
Charles R. Wofford, as Class III Directors, continue to
serve as directors of the Company.
(2) Proposal to adopt the FSI International, Inc. 1997
Omnibus Stock Plan. The proposal received 16,602,126
votes for and 3,614,397 votes against. There were
102,444 abstentions.
(3) Proposal to ratify the appointment of KPMG Peat
Marwick LLP as independent auditors of the Company for
the fiscal year ending August 30, 1997. The proposal
received 20,204,164 votes for and 64,759 votes against.
There were 50,444 abstentions.
ITEM 5. OTHER INFORMATION
None
18
<PAGE> 19
FSI INTERNATIONAL, INC. AND SUBSIDIARIES
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
(a)(3) Exhibits
* An asterisk next to a listed Exhibit indicates it is an executive
compensation plan or arrangement
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)
2.3 Agreement and Plan of Reorganization by and among FSI International,
Inc., Spectre Acquisition Corp. and Semiconductor Systems, Inc. (14)
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)
4.6 Note Purchase Agreement between FSI International, Inc. and
Metropolitan Life Insurance Company and other certain purchasers.
(Schedule A omitted) (16)
*10.1 1983 Incentive Stock Option Plan. (4)
*10.2 1982 Nonqualified Stock Option Plan. (4)
*10.3 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, J.
Wayne Stewart and Timothy D. Krieg have been omitted, but will be filed
upon the request of the Commission). (4)
10.4 Lease dated June 27, 1985, between the Company and Lake Hazeltine
Properties. (7)
10.5 Lease dated September 1, 1985, between the Company and Elftmann, Wyers,
Blackwood Partnership. (7)
10.6 Lease dated September 1, 1985, between the Company and Elftmann, Wyers
Partnership. (7)
*10.7 1989 Stock Option Plan. (5)
*10.8 Amended and Restated Employees Stock Purchase Plan. (3)
10.9 Omitted
10.10 Shareholders Agreement among FSI International, Inc. and Mitsui & Co.,
Ltd. and Chlorine Engineers Corp. Ltd. dated as of August 14, 1991. (8)
10.11 FSI Exclusive Distributorship Agreement dated as of August 14, 1991
between FSI International, Inc. and moFSI, Ltd. (8)
10.12 FSI Licensing Agreement dated as of August 14, 1991, between FSI
International, Inc. and moFSI, Ltd. (8)
10.13 License Agreement, dated October 15, 1991, between the Company and Texas
Instruments Incorporated. (9)
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<PAGE> 20
10.14 Amendment No. 1, dated April 10, 1992, to the License Agreement,
dated October 15, 1991, between the Company and Texas Instruments
Incorporated. (9)
10.15 Amendment effective October 1, 1993 to the License Agreement, dated
October 15, 1991 between the Company and Texas Instruments
Incorporated. (10)
*10.16 Amended and Restated Directors' Nonstatutory Stock Option Plan. (11)
*10.17 Management Agreement between FSI International, Inc. and Robert E.
Cavins, effective as of March 28, 1994. (11)
*10.18 Management Agreement between FSI International, Inc. and Dale A.
Courtney, effective as of March 28, 1994. (11)
*10.19 Management Agreement between FSI International, Inc. and Joel A.
Elftmann, effective as of March 28, 1994. (11)
*10.20 Management Agreement between FSI International, Inc. and Timothy D.
Krieg, effective as of March 28, 1994. (11)
*10.21 Management Agreement between FSI International, Inc. and Peter A.
Pope, effective as of March 28, 1994. (11)
*10.22 Management Agreement between FSI International, Inc. and Benno G.
Sand, effective as of March 31, 1994. (11)
*10.23 Management Agreement between FSI International, Inc. and Benjamin
J. Sloan, effective as of March 28, 1994. (11)
*10.24 Management Agreement between FSI International, Inc. and J. Wayne
Stewart, effective as of March 28, 1994. (11)
*10.25 Management Agreement between FSI International, Inc. and Charles R.
Wofford effective as of February 5, 1996. (15)
*10.26 FSI International, Inc. 1994 Omnibus Stock Plan. (12)
*10.27 FSI International, Inc. 1996 Incentive Plan (13)
10.28 First Amendment to Lease made and entered into October 31, 1995 by
and between Lake Hazeltine Properties and FSI International, Inc.
(13)
10.29 Distribution Agreement made and entered into as of July 6, 1995 by
and between FSI International, Inc. and Metron Semiconductors
Europa B.V. (Exhibits to Agreement omitted) (13)
10.30 Lease dated August 9, 1995 between Skyline Builders, Inc. and FSI
International, Inc. (13)
10.31 Lease Rider dated August 9, 1995 between Skyline Builders, Inc. and
FSI International, Inc. (13)
10.32 Lease Amendment dated November 15, 1995 between Roland A. Stinski
and FSI International, Inc. (Exhibits to Amendment omitted) (13)
10.33 FSI International, Inc. 1997 Omnibus Stock Plan*
11.1 Computation of Per Share Earnings of FSI International, Inc.
27.0 Financial Data Schedule
- ---------------
(1) Filed as an Exhibit to the Company's Report on Form 8-K dated January 5,
1995, as amended, SEC 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 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.
20
<PAGE> 21
(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 Registration Statement on Form S-1,
SEC File No. 33-25035, and incorporated by reference.
(8) 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.
(9) Filed as an Exhibit to the Company's Report on Form 10-Q for the fiscal
quarter ended February 29, 1992, SEC File No. 0-17276, and incorporated by
reference.
(10) 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.
(11) 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.
(12) 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.
(13) Filed as an Exhibit to the Company's Report on Form 10-K for the fiscal
year ended August 26, 1995, SEC File No. 0-17276, and incorporated by
reference.
(14) Filed as an Exhibit to the Company's Registration Statement on Form S-4
(as amended) dated March 21, 1996, SEC File No. 333-01509, and
incorporated by reference.
(15) Filed as an Exhibit to the Company's Report on Form 10-K for the fiscal
year ended August 31, 1996, SEC File No. 0-17276 and incorporated by
reference.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the second quarter ending
March 1, 1997.
21
<PAGE> 22
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: April 14, 1997
By: /s/Benno Sand
----------------------------
Benno Sand
Executive Vice President and
Chief Financial Officer
on behalf of the
Registrant and as
Principal Financial Officer
22
<PAGE> 1
EXHIBIT 10.33
FSI INTERNATIONAL, INC.
1997 OMNIBUS STOCK PLAN
1. Purpose. The purpose of the FSI International, Inc. 1997
Omnibus Stock Plan (the "Plan") is to motivate key personnel to produce a
superior return to the shareholders of the Company by offering such personnel an
opportunity to realize Stock appreciation, by facilitating Stock ownership and
by rewarding them for achieving a high level of corporate financial performance.
The Plan is also intended to facilitate recruiting and retaining key personnel
of outstanding ability by providing an attractive capital accumulation
opportunity. Additionally, the Plan is intended to provide Outside Directors
with an opportunity to acquire a proprietary interest in the Company, to
compensate Outside Directors for their contribution to the Company and to aid in
attracting and retaining Outside Directors.
2. Definitions.
2.1 The terms defined in this Section are used (and capitalized)
elsewhere in the Plan.
(a) "Affiliate" means any corporation that is a "parent
corporation" or "subsidiary corporation" of the Company, as those
terms are defined in Code Section 424(e) and (f), or any successor
provisions.
(b) "Agreement" means (i) a written contract consistent with
the terms of the Plan entered into between the Company or an
Affiliate and a Participant, (ii) containing the terms and
conditions of an Award in such form and not inconsistent with this
Plan as the Committee shall approve from time to time, together
with all amendments thereto, which amendments may be unilaterally
made by the Company (with the approval of the Committee) unless
such amendments are deemed by the Committee to be materially
adverse to the Participant and not required as a matter of law.
(c) "Award" or "Awards" means a grant made under this Plan in
the form of Restricted Stock, Options, Stock Appreciation Rights,
Performance Units, Stock or any other stock-based award.
(d) "Board" means the Board of Directors of the Company.
(e) "Code" means the Internal Revenue Code of 1986, as amended
and in effect from time to time or any successor statute.
(f) "Committee" means the two or more Non-Employee Directors
designated by the Board to administer the Plan under Plan Section
3.1 and constituted so as to permit grants thereby to comply with
Exchange Act Rule 16b-3.
(g) "Company" means FSI International, Inc., a Minnesota
corporation, or the successor to all or substantially all of its
businesses by merger, consolidation, purchase of assets or
otherwise.
(h) "Effective Date" means the date specified in Plan Section
12.1.
(i) "Employee" means an employee (including an officer or
director who is also an employee) of the Company or an Affiliate.
(j) "Event" means any of the following:
<PAGE> 2
(1) The acquisition by any individual, entity or group (within the
meaning of Exchange Act Sections 13(d)(3) or 14(d)(2)) of beneficial
ownership (within the meaning of Exchange Act Rule 13d-3) of 30% or more of
either (i) the then outstanding shares of common stock of the Company (the
"Outstanding Company Common Stock") or (ii) the combined voting power of
the then outstanding voting securities of the Company entitled to vote
generally in the election of the Board (the "Outstanding Company Voting
Securities"); provided, however, that the following acquisitions shall not
constitute an Event:
(A) any acquisition of common stock or voting securities of the
Company directly from the Company,
(B) any acquisition of common stock or voting securities of the
Company by the Company or any of its wholly-owned Subsidiaries,
(C) any acquisition of common stock or voting securities of the
Company by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any of its Subsidiaries, or
(D) any acquisition by any corporation with respect to which,
immediately following such acquisition, more than 70% of,
respectively, the then outstanding shares of common stock of such
corporation and the combined voting power of the then outstanding
voting securities of such corporation entitled to vote generally in
the election of directors is then beneficially owned, directly or
indirectly, by all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the
Outstanding Company Common Stock and Outstanding Company Voting
Securities immediately prior to such acquisition in substantially the
same proportions as was their ownership, immediately prior to such
acquisition, of the Outstanding Company Common Stock and Outstanding
Company Voting Securities, as the case may be;
(2) Individuals who, as of the Effective Date, constitute the Board
(the "Incumbent Board") cease for any reason to constitute at least a
majority of the Board; provided, however, that any individual becoming a
director of the Board subsequent to the Effective Date whose election, or
nomination for election by the Company's shareholders, was approved by a
vote of at least a majority of the directors then comprising the Incumbent
Board shall be considered a member of the Incumbent Board, but excluding,
for this purpose, any such individual whose initial assumption of office
occurs as a result of an actual or threatened election contest that was
(or, if threatened, would have been) subject to Exchange Act Rule 14a-11 or
its successor provision;
(3) Approval by the shareholders of the Company of a reorganization,
merger, consolidation or statutory exchange of Outstanding Company Voting
Securities, unless immediately following such reorganization, merger,
consolidation or exchange, all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the Outstanding
Company Common Stock and Outstanding Company Voting Securities immediately
prior to such reorganization, merger, consolidation or exchange
beneficially own, directly or indirectly, more than 70% of, respectively,
the then outstanding shares of common stock and the combined voting power
of the then outstanding voting securities entitled to vote generally in the
election of directors, as the case may be, of the corporation resulting
from such reorganization, merger, consolidation or exchange in
substantially the same proportions as was their ownership, immediately
prior to such reorganization, merger, consolidation or exchange, of the
2
<PAGE> 3
Outstanding Company Common Stock and Outstanding Company
Voting Securities, as the case may be; or
(4) Approval by the shareholders of the Company of (i) a
complete liquidation or dissolution of the Company or (ii) the
sale or other disposition of all or substantially all of the
assets of the Company, other than to a corporation with respect
to which, immediately following such sale or other disposition,
more than 70% of, respectively, the then outstanding shares of
common stock of such corporation and the combined voting power of
the then outstanding voting securities of such corporation
entitled to vote generally in the election of directors is then
beneficially owned, directly or indirectly, by all or
substantially all of the individuals and entities who were the
beneficial owners, respectively, of the Outstanding Company
Common Stock and Outstanding Company Voting Securities
immediately prior to such sale or other disposition in
substantially the same proportion as was their ownership,
immediately prior to such sale or other disposition, of the
Outstanding Company Common Stock and Outstanding Company Voting
Securities, as the case may be.
Notwithstanding the above, an Event shall not be deemed to occur with
respect to a recipient of an Award if the acquisition of the 30% or greater
interest referred to in paragraph (1) is by a group, acting in concert, that
includes that recipient of an Award or if at least 30% of the then outstanding
common stock or combined voting power of the then outstanding voting securities
(or voting equity interests) of the surviving corporation or of any corporation
(or other entity) acquiring all or substantially all of the assets of the
Company shall be beneficially owned, directly or indirectly, immediately after a
reorganization, merger, consolidation, statutory share exchange or disposition
of assets referred to in paragraphs (3) or (4) by a group, acting in concert,
that includes that recipient of an Award.
(k) "Exchange Act" means the Securities Exchange Act of 1934, as
amended and in effect from time to time, or any successor statute.
(l) "Exchange Act Rule 16b-3" means Rule 16b-3 promulgated by the
Securities and Exchange Commission under the Exchange Act as now in
force and in effect from time to time or any successor regulation.
(m) "Fair Market Value" as of any date means, unless otherwise
expressly provided in the Plan:
(i) the closing price of a Share on the date immediately
preceding that date or, if no sale of Shares shall have occurred
on that date, on the next preceding day on which a sale of Shares
occurred
(A) on the composite tape for New York Stock Exchange
listed shares, or
(B) if the Shares are not quoted on the composite tape
for New York Stock Exchange listed shares, on the principal
United States Securities Exchange registered under the
Exchange Act on which the Shares are listed, or
(C) if the Shares are not listed on any such exchange,
on the National Association of Securities Dealers, Inc.
Automated Quotations National Market System, or
(ii) if clause (i) is inapplicable, the mean between the
closing "bid" and the closing "asked" quotation of a Share on the
date immediately preceding that date, or, if no closing bid or
asked quotation is made on that date, on the next preceding day
on
3
<PAGE> 4
which a closing bid and asked quotation is made, on the
National Association of Securities Dealers, Inc. Automated
Quotations System or any system then in use, or
(iii) if clauses (i) and (ii) are inapplicable, what the
Committee determines in good faith to be 100% of the fair
market value of a Share on that date, using such criteria as
it shall determine, in its sole discretion, to be appropriate
for valuation.
However, if the applicable securities exchange or system has
closed for the day at the time the event occurs that triggers a determination of
Fair Market Value, whether the grant of an Award, the exercise of an Option or
Stock Appreciation Right or otherwise, all references in this paragraph to the
"date immediately preceding that date" shall be deemed to be references to "that
date". In the case of an Incentive Stock Option, if this determination of Fair
Market Value is not consistent with the then current regulations of the
Secretary of the Treasury, Fair Market Value shall be determined in accordance
with those regulations. The determination of Fair Market Value shall be subject
to adjustment as provided in Plan Section 16.
(n) "Fundamental Change" shall mean a dissolution or
liquidation of the Company, a sale of substantially all of the
assets of the Company, a merger or consolidation of the Company
with or into any other corporation, regardless of whether the
Company is the surviving corporation, or a statutory share exchange
involving capital stock of the Company.
(o) "Incentive Stock Option" means any Option designated as
such and granted in accordance with the requirements of Code
Section 422 or any successor provision.
(p) "Insider" as of a particular date means any person who, as
of that date is an officer of the Company as defined under Exchange
Act Rule 16a-1(f) or its successor provision.
(q) "Non-Employee Director" means a member of the Board who is
considered a non-employee director within the meaning of Exchange
Act Rule 16b-3(b)(3) or its successor provision.
(r) "Non-Statutory Stock Option" means an Option other than an
Incentive Stock Option.
(s) "Option" means a right to purchase Stock, including both
Non-Statutory Stock Options and Incentive Stock Options.
(t) "Outside Director" means a director who is not an
Employee.
(u) "Participant" means a person or entity to whom an Award is
or has been made in accordance with the Plan.
(v) "Performance Cycle" means the period of time as specified
in an Agreement over which Performance Units are to be earned.
(w) "Performance Units" means an Award made pursuant to Plan
Section 11.
(x) "Plan" means this FSI International, Inc. 1997 Omnibus
Stock Plan, as may be amended and in effect from time to time.
(y) "Restricted Stock" means Stock granted under Plan Section
7 so long as such Stock remains subject to one or more
restrictions.
(z) "Section 16" or "Section 16(b)" means Section 16 or
Section 16(b), respectively, of the Exchange Act or any successor
statute and the rules and regulations
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promulgated thereunder as in effect and as amended from time to
time.
(aa) "Share" means a share of Stock.
(bb) "Stock" means the common stock, no designated par value,
of the Company.
(cc) "Stock Appreciation Right" means a right, the value of
which is determined in relation to the appreciation in value of
Shares pursuant to an Award granted under Plan Section 10.
(dd) "Subsidiary" means a "subsidiary corporation", as that
term is defined in Code Section 424(f), or any successor provision.
(ee) "Successor" with respect to a Participant means the legal
representative of an incompetent Participant, and if the
Participant is deceased the estate of the Participant or the person
or persons who may, by bequest or inheritance, or pursuant to the
terms of an Award, acquire the right to exercise an Option or Stock
Appreciation Right or to receive cash and/or Shares issuable in
satisfaction of an Award in the event of the Participant's death.
(ff) "Term" means the period during which an Option or Stock
Appreciation Right may be exercised or the period during which the
restrictions or terms and conditions placed on Restricted Stock or
any other Award are in effect.
(gg) "Transferee" means any member of the Participant's
immediate family (i.e., his or her children, step-children,
grandchildren and spouse) or to one or more trusts for the benefit
of such family members or partnerships in which such family members
are the only partners.
2.2 Gender and Number. Except when otherwise indicated by the
context, reference to the masculine gender shall include, when used, the
feminine gender and any term used in the singular shall also include the plural.
3. Administration and Indemnification.
3.1 Administration.
(a) The Committee shall administer the Plan. The Committee
shall have exclusive power to (i) make Awards, (ii) determine when
and to whom Awards will be granted, the form of each Award, the
amount of each Award (except as to the amount of the Initial
Outside Director Option and the Annual Outside Director Option, as
provided in Plan Section 9.3), and any other terms or conditions of
each Award consistent with the Plan, and (iii) determine whether,
to what extent and under what circumstances, Awards may be settled,
paid or exercised in cash, Shares or other Awards, or other
property or canceled, forfeited or suspended. Each Award shall be
subject to an Agreement which has been authorized by the Committee.
(b) Solely for purposes of determining and administering
Awards to Participants who are not Insiders, the Committee may
delegate all or any portion of their authority under the Plan to
one or more persons who are not Non-Employee Directors.
(c) To the extent within its discretion and subject to Plan
Sections 15 and 16, other than price, the Committee may amend the
terms and conditions of any outstanding Award.
(d) It is the intent that the Plan and all Awards granted
pursuant to it shall be administered by the Committee so as to
permit the Plan and Awards to comply with Exchange Act Rule 16b-3,
except in such instances as the Committee, in its discretion, may
so provide. If
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<PAGE> 6
any provision of the Plan or of any Award would otherwise
frustrate or conflict with the intent expressed in this Section
3.1(d), that provision to the extent possible shall be interpreted
and deemed amended in the manner determined by the Committee so as
to avoid the conflict. To the extent of any remaining
irreconcilable conflict with this intent, the provision shall be
deemed void as applicable to Insiders to the extent permitted by
law and in the manner deemed advisable by the Committee.
(e) The Committee's interpretation of the Plan and of any
Award or Agreement made under the Plan and all related decisions or
resolutions of the Board or Committee shall be final and binding on
all parties with an interest therein. Consistent with its terms,
the Committee shall have the power to establish, amend or waive
regulations to administer the Plan. In carrying out any of its
responsibilities, the Committee shall have discretionary authority
to construe the terms of the Plan and any Award or Agreement made
under the Plan.
3.2 Indemnification. Each person who is or shall have been a
member of the Committee, or of the Board, and any other person to whom the
Committee delegates authority under the Plan, shall be indemnified and held
harmless by the Company, to the extent permitted by law, against and from any
loss, cost, liability or expense that may be imposed upon or reasonably incurred
by such person in connection with or resulting from any claim, action, suit or
proceeding to which such person may be a party or in which such person may be
involved by reason of any action taken or failure to act, made in good faith,
under the Plan and against and from any and all amounts paid by such person in
settlement thereof, with the Company's approval, or paid by such person in
satisfaction of any judgment in any such action, suit or proceeding against such
person, provided such person shall give the Company an opportunity, at the
Company's expense, to handle and defend the same before such person undertakes
to handle and defend it on such person's own behalf. The foregoing right of
indemnification shall not be exclusive of any other rights of indemnification to
which such person or persons may be entitled under the Company's Articles of
Incorporation or By-laws, as a matter of law, or otherwise, or any power that
the Company may have to indemnify them or hold them harmless.
4. Shares Available Under the Plan.
(a) The number of Shares available for distribution under
this Plan shall not exceed 1,000,000 (subject to adjustment
pursuant to Plan Section 16).
(b) Any Shares subject to the terms and conditions of an
Award under this Plan that are not used because the terms and
conditions of the Award are not met may again be used for an Award
under the Plan. But Shares with respect to which a Stock
Appreciation Right has been exercised whether paid in cash and/or
in Shares may not again be awarded under this Plan.
(c) Any unexercised or undistributed portion of any
terminated, expired, exchanged, or forfeited Award, or any Award
settled in cash in lieu of Shares (except as provided in Plan
Section 4(b)) shall be available for further Awards.
(d) For the purposes of computing the total number of Shares
granted under the Plan, the following rules shall apply to Awards
payable in Shares where appropriate:
(i) each Option shall be deemed to be the equivalent of
the maximum number of Shares that may be issued upon exercise
of the particular Option;
(ii) an Award (other than an Option) payable in some
other security shall be deemed to be equal to the number of
Shares to which it relates;
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<PAGE> 7
(iii) where the number of Shares available under the
Award is variable on the date it is granted, the number of
Shares shall be deemed to be the maximum number of Shares
that could be received under that particular Award; and
(iv) where two or more types of Awards (all of which are
payable in Shares) are granted to a Participant in tandem
with each other, such that the exercise of one type of Award
with respect to a number of Shares cancels at least an equal
number of Shares of the other, each such joint Award shall be
deemed to be the equivalent of the maximum number of Shares
available under the largest single Award.
Additional rules for determining the number of Shares granted under the
Plan may be made by the Committee, as it deems necessary or desirable.
(e) No fractional Shares may be issued under the Plan;
however, cash shall be paid in lieu of any fractional Share in
settlement of an Award.
(f) The maximum number of Shares that may be awarded to a
Participant in any calendar year in the form of Options is 100,000
and the maximum number of Shares that may be awarded to a
Participant in any calendar year in the form of Stock Appreciation
Rights is 100,000.
5. Eligibility. Participation in the Plan shall be limited to Employees
and to individuals or entities who are not Employees but who provide services
to the Company or an Affiliate, including services provided in the capacity of
a consultant, advisor or director. The granting of Awards is solely at the
discretion of the Committee, except that Incentive Stock Options may only be
granted to Employees and Awards to Outside Directors are subject to the limits
of Section 9.3(g).
6. General Terms of Awards.
6.1 Amount of Award. Each Agreement shall set forth the number of
Shares of Restricted Stock, Stock or Performance Units subject to the Agreement,
or the number of Shares to which the Option subject to the Agreement applies or
with respect to which payment upon the exercise of the Stock Appreciation Right
subject to the Agreement is to be determined, as the case may be, together with
such other terms and conditions applicable to the Award as determined by the
Committee acting in its sole discretion.
6.2 Term. Each Agreement, other than those relating solely to Awards of
Shares without restrictions, shall set forth the Term of the Option, Stock
Appreciation Right, Restricted Stock or other Award or the Performance Cycle
for the Performance Units, as the case may be. Acceleration of the expiration
of the applicable Term is permitted, upon such terms and conditions as shall be
set forth in the Agreement, which may, but need not, include without
limitation, acceleration resulting from the occurrence of an Event or in the
event of the Participant's death or retirement. Acceleration of the
Performance Cycle of Performance Units shall be subject to Plan Section 11.2.
6.3 Transferability. Except as provided in this Section, during the
lifetime of a Participant to whom an Award is granted, only that Participant
(or that Participant's legal representative) may exercise an Option or Stock
Appreciation Right, or receive payment with respect to Performance Units or any
other Award. No Award of Restricted Stock (prior to the expiration of the
restrictions), Options, Stock Appreciation Rights or Performance Units or other
Award may be sold, assigned, transferred, exchanged or otherwise encumbered
other than pursuant to a qualified domestic relations order as defined in the
Code or Title 1 of the Employee Retirement Income Security Act ("ERISA") or the
rules thereunder; any attempted transfer in violation of this Section 6.3 shall
be of no effect. Notwithstanding the immediately preceding sentence, the
Committee, in an Agreement or otherwise at its discretion, may provide (i) that
the Award subject to the Agreement shall be transferable to a Successor in the
event of a Participant's death, or (ii) that the Award (other than Incentive
Stock Options) may be
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<PAGE> 8
transferable to a Transferee. Any Award held by a Transferee shall continue to
be subject to the same terms and conditions that were applicable to that Award
immediately prior to the transfer thereof to the Transferee.
6.4 Termination of Employment. No Option or Stock Appreciation Right may
be exercised by a Participant, all Restricted Stock held by a Participant or
any other Award then subject to restrictions shall be forfeited, and no payment
with respect to Performance Units for which the applicable Performance Cycle
has not been completed shall be made, if the Participant's employment or other
relationship with the Company and its Affiliates shall be voluntarily
terminated or involuntarily terminated with or without cause prior to the
expiration of the Term of the Option, Stock Appreciation Right, Restricted
Stock or other Award, or the completion of the Performance Cycle, as the case
may be, except as, and to the extent, provided in the Agreement applicable to
that Award. An Award may be exercised by, or paid to, a Transferee or the
Successor of a Participant following the death of the Participant to the
extent, and during the period of time, if any, provided in the applicable
Agreement.
6.5 Rights as Shareholder. Each Agreement shall provide that a
Participant shall have no rights as a shareholder with respect to any
securities covered by an Award if and until the date the Participant becomes
the holder of record of the Stock, if any, to which the Award relates.
7. Restricted Stock Awards.
(a) An Award of Restricted Stock under the Plan shall consist
of Shares subject to restrictions on transfer and conditions of
forfeiture, which restrictions and conditions shall be included in
the applicable Agreement. The Committee may provide for the lapse
or waiver of any such restriction or condition based on such
factors or criteria as the Committee, in its sole discretion, may
determine.
(b) Except as otherwise provided in the applicable Agreement,
each Stock certificate issued with respect to an Award of
Restricted Stock shall either be deposited with the Company or its
designee, together with an assignment separate from the
certificate, in blank, signed by the Participant, or bear such
legends with respect to the restricted nature of the Restricted
Stock evidenced thereby as shall be provided for in the applicable
Agreement.
(c) The Agreement shall describe the terms and conditions by
which the restrictions and conditions of forfeiture upon awarded
Restricted Stock shall lapse. Upon the lapse of the restrictions
and conditions, Shares free of restrictive legends, if any,
relating to such restrictions shall be issued to the Participant or
a Successor or Transferee.
(d) A Participant or a Transferee with a Restricted Stock
Award shall have all the other rights of a shareholder including,
but not limited to, the right to receive dividends and the right to
vote the Shares of Restricted Stock.
(e) No more than 100,000 of the total number of Shares
available for Awards under the Plan shall be issued during the term
of the Plan as Restricted Stock. This limitation shall be
calculated pursuant to the applicable provisions of Plan Sections 4
and 16.
8. Other Awards. The Committee may from time to time grant Stock and
other Awards under the Plan including without limitations those Awards pursuant
to which Shares are or may in the future be acquired, Awards denominated in
Stock units, securities convertible into Stock and phantom securities. The
Committee, in its sole discretion, shall determine the terms and conditions of
such Awards provided that such Awards shall not be inconsistent with the terms
and purposes of this Plan. The Committee may, at its sole discretion, direct
the Company to issue Shares subject to restrictive legends and/or stop transfer
instructions that are consistent with the terms and conditions of the Award to
which the Shares relate.
No more than 25,000 of the total number of Shares available for Awards
under the Plan shall be issued during the term of the Plan in the form of Stock
without restrictions.
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<PAGE> 9
9. Stock Options.
9.1 Terms of All Options.
(a) An Option shall be granted pursuant to an Agreement as
either an Incentive Stock Option or a Non-Statutory Stock Option.
The purchase price of each Share subject to an Option shall be
determined by the Committee and set forth in the Agreement, but
shall not be less than 100% of the Fair Market Value of a Share as
of the date the Option is granted (except as provided in Plan
Section 19).
(b) The purchase price of the Shares with respect to which an
Option is exercised shall be payable in full at the time of
exercise, provided that to the extent permitted by law, the
Agreement may permit some or all Participants to simultaneously
exercise Options and sell the Shares thereby acquired pursuant to a
brokerage or similar relationship and use the proceeds from the
sale as payment of the purchase price of the Shares. The purchase
price may be payable in cash, in Shares having a Fair Market Value
as of the date the Option is exercised equal to the purchase price
of the Shares being purchased pursuant to the Option, or a
combination thereof, as determined by the Committee and provided in
the Agreement but no fractional Shares will be issued or accepted.
(c) The Committee may provide, in an Agreement or otherwise,
that a Participant who exercises an Option and pays the Option
price in whole or in part with Shares then owned by the Participant
will be entitled to receive another Option covering the same number
of shares tendered and with a price of no less than Fair Market
Value on the date of grant of such additional Option ("Reload
Option"). Unless otherwise provided in the Agreement, a
Participant, in order to be entitled to a Reload Option, must pay
with Shares that have been owned by the Participant for at least
the preceding 180 days.
(d) Each Option shall be exercisable in whole or in part on
the terms provided in the Agreement. In no event shall any Option
be exercisable at any time after the expiration of its Term. When
an Option is no longer exercisable, it shall be deemed to have
lapsed or terminated.
9.2 Incentive Stock Options. In addition to the other terms and
conditions applicable to all Options:
(i) the aggregate Fair Market Value (determined as of the date
the Option is granted) of the Shares with respect to which
Incentive Stock Options held by an individual first become
exercisable in any calendar year (under this Plan and all other
incentive stock option plans of the Company and its Affiliates)
shall not exceed $100,000 (or such other limit as may be required
by the Code) if this limitation is necessary to qualify the Option
as an Incentive Stock Option and to the extent an Option or Options
granted to a Participant exceed this limit the Option or Options
shall be treated as a Non-Statutory Stock Option;
(ii) an Incentive Stock Option shall not be exercisable more
than 10 years after the date of grant (or such other limit as may
be required by the Code) if this limitation is necessary to qualify
the Option as an Incentive Stock Option;
(iii) the Agreement covering an Incentive Stock Option shall
contain such other terms and provisions that the Committee
determines necessary to qualify this Option as an Incentive Stock
Option; and
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<PAGE> 10
(iv) notwithstanding any other provision of this Plan to the
contrary, no Participant may receive an Incentive Stock Option
under the Plan if, at the time the Award is granted, the
Participant owns (after application of the rules contained in Code
Section 424(d), or its successor provision), Shares possessing more
than ten percent of the total combined voting power of all classes
of stock of the Corporation or its subsidiaries, unless (i) the
option price for that Incentive Stock Option is at least 110
percent of the Fair Market Value of the Shares subject to that
Incentive Stock Option on the date of grant and (ii) that Option is
not exercisable after the date five years from the date that
Incentive Stock Option is granted.
9.3 Terms and Conditions of Outside Directors' Options.
(a) Initial Outside Directors' Options. Subject to the terms
and conditions of this Plan, any Outside Director first elected or
appointed to the Board on or after January 22, 1997 (the "Approval
Date") shall receive, by virtue of serving as a director of the
Company, a single grant of a Non-Statutory Stock Option to purchase
10,000 Shares (an "Initial Outside Director Option").
(b) Vesting of Initial Outside Directors' Options. Subject to
the provisions of Plan Section 9.3(e), Initial Outside Directors'
Options granted pursuant to this Plan shall vest and become
exercisable six months after the date of grant. Each Initial
Outside Directors' Option, to the extent exercisable, shall be
exercisable in whole or in part
(c) Annual Outside Director Option Grants. For the Annual
Meeting of Shareholders for fiscal year 1997 (to be held on
January 22, 1997) and for each Annual Meeting of Shareholders
thereafter during the term of this Plan, each Outside Director
serving as an Outside Director of the Company immediately
following the Annual Meeting shall be granted, by virtue of
serving as an Outside Director of the Company, a Non-Statutory
Stock Option to purchase 4,000 Shares (an "Annual Outside Director
Option"). Each Annual Outside Director Option shall be deemed to
be granted to each Outside Director immediately after an Annual
Meeting and shall be granted regardless of whether or not an
Outside Director previously received, or simultaneously receives,
an Initial Outside Director Option. Initial Outside Director
Options and Annual Outside Director Options together are sometimes
referred to as "Outside Director Options."
(d) Vesting of Annual Director Options. Subject to the
provisions of Plan Section 9.3(e), Annual Outside Director Options
shall vest and become exercisable cumulatively on an annual basis,
as follows: one-third of the total number of Shares subject to
each Option shall become exercisable on each of the first and
second anniversaries of the date of grant and the remaining Shares
subject to the Option shall become exercisable on the third
anniversary of the date of grant. Each Option, to the extent
exercisable, shall be exercisable in whole or in part.
(e) Termination of Initial and Annual Outside Directors'
Options. Each Outside Director Option granted pursuant to this
Plan and all rights to purchase Shares thereunder shall terminate
on the earliest of:
(i) ten years after the date that the
Outside Director Option was granted;
(ii) the expiration of the period
specified in the Agreement after the death or permanent
disability of an Outside Director;
(iii) February 28, 1997, if the
shareholders of the Company shall not have approved this
Plan as of or prior to that date at a duly held
shareholders' meeting; or
(iv) ninety days after the date the
Outside Director ceases to be a director of the
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Company, provided, however, that the option shall be
exercisable during this 90-day period only to the
extent the option was exercisable as of the date the
person ceases to be an Outside Director unless the
cessation results from the director's death or
permanent disability. Notwithstanding the preceding
sentence, if an Outside Director who resigns or whose
term expires then becomes a consultant or Employee of
the Company within ninety days of such resignation or
term expiration, the Outside Director Options of such
person shall continue in full force and effect.
In no event shall an Option be exercisable at any time after
its original expiration date. When an Option is no longer
exercisable, it shall be deemed to have lapsed or terminated and
will no longer be outstanding.
(f) Allocation of Common Shares. If as of a date on which an
Option or Options are to be awarded pursuant to the provisions of
this Section 9.3, the number of Shares available for issuance
under the Plan as of this date are less than the number of options
to purchase Shares that otherwise would be awarded, then the
following formula shall determine how the remaining number of
Shares are to be allocated:
(i) if only one Outside Director is to
receive an Option on the date, then that Outside
Director shall receive an Option to purchase Shares
equal to the number of Shares remaining;
(ii) if two or more Outside Directors are
to receive Options on the date:
(1) all Initial Outside Director Options shall first
be awarded; if, however, the number of Shares
available is less than the number of options to
purchase Shares that would otherwise be awarded as
Initial Outside Director Options then each Outside
Director eligible to receive an Initial Outside
Director Option shall receive the number of Options
that results from the following equation: the
whole number of Shares available divided by the
number of Outside Directors eligible to receive
such an Option, provided, however, that no
fractional shares shall be awarded; and if such
allocation occurs, any remaining Shares shall not
be awarded and shall be deemed not subject to
distribution for purposes of Plan Section 4; and
(2) If on that date all Initial Outside Director
Options to be awarded are awarded in the full
amount or if no Initial Outside Director Options
are to be awarded, then each Outside Director
eligible for an Annual Outside Director Option
shall receive an Annual Outside Director Option to
purchase Shares in the amount that results from the
following equation: the whole number of Shares
available divided by the number of Outside
Directors eligible for an Annual Outside Director
Option, provided, however, that no fractional
shares shall be awarded; and any remaining Shares
shall not be awarded and shall be deemed not
subject to distribution for purposes of Plan
Section 4.
(g) Non-exclusivity of Section 9.3. The provisions of this
Section 9.3 are not intended to be exclusive; however, the
Committee, in its discretion, may grant Options or other Awards to
an Outside Director, but only in substitution for Outside Director
Options held by that director.
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10. Stock Appreciation Rights. An Award of a Stock Appreciation Right
shall entitle the Participant (or a Successor or Transferee), subject to terms
and conditions determined by the Committee, to receive upon exercise of the
Stock Appreciation Right all or a portion of the excess of (i) the Fair Market
Value of a specified number of Shares as of the date of exercise of the Stock
Appreciation Right over (ii) a specified price that shall not be less than 100%
of the Fair Market Value of such Shares as of the date of grant of the Stock
Appreciation Right. A Stock Appreciation Right may be granted in connection
with part or all of, in addition to, or completely independent of an Option or
any other Award under this Plan. If issued in connection with a previously or
contemporaneously granted Option, the Committee may impose a condition that
exercise of a Stock Appreciation Right cancels a pro rata portion of the Option
with which it is connected and vice versa. Each Stock Appreciation Right may
be exercisable in whole or in part on the terms provided in the Agreement.
Notwithstanding anything to the contrary stated in the Plan, no Stock
Appreciation Right shall be exercisable by a Participant or Successor or
Transferee prior to six months from the date of grant except in the event of
the death or disability of the Participant. No Stock Appreciation Right shall
be exercisable at any time after the expiration of its Term. When a Stock
Appreciation Right is no longer exercisable, it shall be deemed to have lapsed
or terminated. Upon exercise of a Stock Appreciation Right, payment to the
Participant or a Successor or Transferee shall be made at such time or times as
shall be provided in the Agreement in the form of cash, Shares or a combination
of cash and Shares as determined by the Committee and provided in the
Agreement. The Agreement may provide for a limitation upon the amount or
percentage of the total appreciation on which payment (whether in cash and/or
Shares) may be made in the event of the exercise of a Stock Appreciation Right.
11. Performance Units.
11.1 Initial Award.
(a) An Award of Performance Units under the Plan shall entitle
the Participant or a Successor or Transferee to future payments of
cash, Shares or a combination of cash and Shares, as determined by
the Committee and provided in the Agreement, based upon the
achievement of pre-established performance targets. These
performance targets may, but need not, include without limitation
targets relating to one or more of the Company's or a group's,
unit's, Affiliate's or an individual's performance. The Agreement
may establish that a portion of the total potential of a
Participant's Award will be paid for performance that exceeds the
minimum target but falls below the maximum target applicable to the
Award. The Agreement shall also provide for the timing of the
payment.
(b) Following the conclusion or acceleration of each
Performance Cycle, the Committee shall determine the extent to which
(i) performance targets have been attained, (ii) any other terms and
conditions with respect to an Award relating to the Performance Cycle
have been satisfied and (iii) payment is due with respect to an Award
of Performance Units.
11.2 Acceleration and Adjustment. The Agreement may permit an
acceleration of the Performance Cycle and an adjustment of performance targets
and payments with respect to some or all of the Performance Units awarded to a
Participant, upon such terms and conditions as shall be set forth in the
Agreement, upon the occurrence of certain events, which may, but need not
include without limitation an Event, a Fundamental Change, a recapitalization,
a change in the accounting practices of the Company, a change in the
Participant's title or employment responsibilities, the Participant's death or
retirement or, with respect to payments in Shares with respect to Performance
Units, a reclassification, stock dividend, stock split or stock combination as
provided in Plan Section 16. The Agreement also may provide for a limitation
on the value of an Award of Performance Units that a Participant may receive.
12. Effective Date and Duration of the Plan.
12.1 Effective Date. The Plan shall become effective as of January 22,
1997, provided that the Plan is approved by the affirmative vote of the holders
of a majority of the outstanding Shares present or represented and entitled to
vote in person or by proxy at a meeting of the shareholders of the Company to
be held
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on January 22, 1997 and any and all adjournments thereof.
12.2 Duration of the Plan. The Plan shall remain in effect until all
Stock subject to it shall be distributed or until all Awards have expired or
lapsed, or the Plan is terminated pursuant to Plan Section 15 or until January
23, 2007 (the "Termination Date"); provided, however, Awards made prior to the
Termination Date may be exercised, vested or otherwise effectuated beyond the
Termination Date unless limited in the Agreement or otherwise. No Award of an
Incentive Stock Option shall be made more than 10 years after the Effective
Date (or such other limit as may be required by the Code) if this limitation is
necessary to qualify the Option as an Incentive Stock Option. The date and
time of approval by the Committee of the granting of an Award (or such other
time as the Committee may designate) shall be considered the date and time at
which the Award is made or granted.
13. Plan Does Not Affect Employment Status.
(a) Status as an eligible Employee shall not be construed as a
commitment that any Award will be made under the Plan to that
eligible Employee or to eligible Employees generally.
(b) Nothing in the Plan or in any Agreement or related
documents shall confer upon any Employee or Participant any right
to continue in the employment of the Company or any Affiliate or
constitute any contract of employment or affect any right that the
Company or any Affiliate may have to change such person's
compensation, other benefits, job responsibilities, or title, or to
terminate the employment of such person with or without cause.
14. Tax Withholding. The Company shall have the right to withhold from
any cash payment under the Plan to a Participant or other person (including a
Successor or a Transferee) an amount sufficient to cover any required
withholding taxes. The Company shall have the right to require a Participant
or other person receiving Shares under the Plan to pay the Company a cash
amount sufficient to cover any required withholding taxes before actual receipt
of those Shares. In lieu of all or any part of a cash payment from a person
receiving Shares under the Plan, the Committee may permit the individual to
cover all or any part of the required withholdings, and to cover any additional
withholdings up to the amount needed to cover the individual's full FICA and
federal, state and local income taxes with respect to income arising from
payment of the Award, through a reduction of the number of Shares delivered or
a subsequent return to the Company of Shares held by the Participant or other
person, in each case valued in the same manner as used in computing the
withholding taxes under the applicable laws.
15. Amendment, Modification and Termination of the Plan.
(a) The Board may at any time and from time to time terminate,
suspend or modify the Plan. Except as limited in (b) below, the
Committee may at any time alter or amend any or all Agreements under the
Plan to the extent permitted by law. However, no such action may,
without further approval of the shareholders of the Company, be effective
if such approval is required in order that the Plan conform to the
requirements of Code Section 422.
(b) No termination, suspension, or modification of the Plan will
materially and adversely affect any right acquired by any Participant or
Successor or Transferee under an Award granted before the date of
termination, suspension, or modification, unless otherwise agreed to by
the Participant in the Agreement or otherwise, or required as a matter of
law; but it will be conclusively presumed that any adjustment for changes
in capitalization provided for in Plan Sections 11.2 or 16 does not
adversely affect these rights.
16. Adjustment for Changes in Capitalization. Subject to any required
action by the Company's shareholders, appropriate adjustments, so as to prevent
enlargement of rights or inappropriate dilution - (i) in the aggregate number
and type of Shares available for Awards under the Plan, (ii) in the limitations
on the number of Shares that may be issued to an individual Participant as an
Option or a Stock Appreciation Right in any calendar year or that may be issued
in the form of Restricted Stock or Shares without restrictions, (iii) in the
number and
13
<PAGE> 14
type of Shares and amount of cash subject to Awards then outstanding, (iv) in
the Option price as to any outstanding Options and, (v) subject to Plan Section
11.2, in outstanding Performance Units and payments with respect to outstanding
Performance Units - may be made by the Committee in its sole discretion to give
effect to adjustments made in the number or type of Shares through a Fundamental
Change (subject to Plan Section 17), recapitalization, reclassification, stock
dividend, stock split, stock combination or other relevant change, provided that
fractional Shares shall be rounded to the nearest whole Share.
17. Fundamental Change. In the event of a proposed Fundamental Change,
the Committee may, but shall not be obligated to:
(a) if the Fundamental Change is a merger or consolidation or
statutory share exchange, make appropriate provision for the protection
of the outstanding Options and Stock Appreciation Rights by the
substitution of options, stock appreciation rights and appropriate voting
common stock of the corporation surviving any merger or consolidation or,
if appropriate, the parent corporation of the Company or such surviving
corporation to be issuable upon the exercise of Options or used to
calculate payments upon the exercise of Stock Appreciation Rights, in
lieu of options, stock appreciation rights and capital stock of the
Company; or
(b) at least 30 days prior to the occurrence of the Fundamental
Change, declare, and provide written notice to each holder of an Option
or Stock Appreciation Right of the declaration, that each outstanding
Option and Stock Appreciation Right, whether or not then exercisable,
shall be canceled at the time of, or immediately prior to the occurrence
of the Fundamental Change in exchange for payment to each holder of an
Option or Stock Appreciation Right, within ten days after the Fundamental
Change, of cash equal to (i) for each Share covered by the canceled
Option, the amount, if any, by which the Fair Market Value (as
hereinafter defined in this Section) per Share exceeds the exercise price
per Share covered by such Option or (ii) for each Stock Appreciation
Right, the price determined pursuant to Section 10, except that Fair
Market Value of the Shares as of the date of exercise of the Stock
Appreciation Right, as used in clause (i) of Plan Section 10, shall be
deemed to mean Fair Market Value for each Share with respect to which the
Stock Appreciation Right is calculated determined in the manner
hereinafter referred to in this Section. At the time of the declaration
provided for in the immediately preceding sentence, each Stock
Appreciation Right that has been outstanding for at least six months and
each Option shall immediately become exercisable in full and each person
holding an Option or a Stock Appreciation Right shall have the right,
during the period preceding the time of cancellation of the Option or
Stock Appreciation Right, to exercise the Option as to all or any part of
the Shares covered thereby or the Stock Appreciation Right in whole or in
part, as the case may be. In the event of a declaration pursuant to this
Plan Section 17(b), each outstanding Option and Stock Appreciation Right
granted pursuant to the Plan that shall not have been exercised prior to
the Fundamental Change shall be canceled at the time of, or immediately
prior to, the Fundamental Change, as provided in the declaration.
Notwithstanding the foregoing, no person holding an Option or a Stock
Appreciation Right shall be entitled to the payment provided for in this
Section 17(b) if such Option or Stock Appreciation Right shall have
expired pursuant to the Agreement. For purposes of this Section only,
"Fair Market Value" per Share shall mean the cash plus the fair market
value, as determined in good faith by the Committee, of the non-cash
consideration to be received per Share by the shareholders of the Company
upon the occurrence of the Fundamental Change, notwithstanding anything
to the contrary provided in the Plan.
18. Forfeitures. An Agreement may provide that in the event a Participant
has received or been entitled to payment of cash, delivery of Shares, or a
combination thereof pursuant to an Award within six months prior to the
Participant's termination of employment with the Company and its Affiliates,
the Committee, in its sole discretion, may require the Participant to return or
forfeit the cash and/or Shares received with respect to the Award (or its
economic value as of (i) the date of the exercise of Options or Stock
Appreciation Rights, (ii) the date of, and immediately following, the lapse of
restrictions on Restricted Stock or the receipt of Shares without restrictions,
or (iii) the date on which the right of the Participant to payment with respect
to Performance Units vests, as the case may be) in the event of certain
occurrences specified in the Agreement. The Committee's right to require
forfeiture must be exercised within 90 days after discovery of such an
occurrence but in no event later than
14
<PAGE> 15
15 months after the Participant's termination of employment with the Company and
its Affiliates. The occurrences may, but need not, include competition with the
Company or any Affiliate, unauthorized disclosure of material proprietary
information of the Company or any Affiliate, a violation of applicable business
ethics policies of the Company or Affiliate or any other occurrence specified in
the Agreement within the period or periods of time specified in the Agreement.
19. Corporate Mergers, Acquisitions, Etc. The Committee may also grant
Options, Stock Appreciation Rights, Restricted Stock or other Awards under the
Plan having terms, conditions and provisions that vary from those specified in
this Plan provided that any such awards are granted in substitution for, or in
connection with the assumption of, existing options, stock appreciation rights,
restricted stock or other award granted, awarded or issued by another
corporation and assumed or otherwise agreed to be provided for by the Company
pursuant to or by reason of a transaction involving a corporate merger,
consolidation, acquisition of property or stock, separation, reorganization or
liquidation to which the Company or a subsidiary is a party.
20. Unfunded Plan. The Plan shall be unfunded and the Company shall not
be required to segregate any assets that may at any time be represented by
Awards under the Plan. Neither the Company, its Affiliates, the Committee, nor
the Board of Directors shall be deemed to be a trustee of any amounts to be
paid under the Plan nor shall anything contained in the Plan or any action
taken pursuant to its provisions create or be construed to create a fiduciary
relationship between the Company and/or its Affiliates, and a Participant or
Successor or Transferee. To the extent any person acquires a right to receive
an Award under the Plan, this right shall be no greater than the right of an
unsecured general creditor of the Company.
21. Limits of Liability.
(a) Any liability of the Company to any Participant with respect to
an Award shall be based solely upon contractual obligations created by
the Plan and the Award Agreement.
(b) Except as may be required by law, neither the Company nor any
member of the Board of Directors or of the Committee, nor any other
person participating in any determination of any question under the Plan,
or in the interpretation, administration or application of the Plan,
shall have any liability to any party for any action taken, or not taken,
in good faith under the Plan.
22. Compliance with Applicable Legal Requirements. No certificate for
Shares distributable pursuant to this Plan shall be issued and delivered unless
the issuance of the certificate complies with all applicable legal requirements
including, without limitation, compliance with the provisions of applicable
state securities laws, the Securities Act of 1933, as amended and in effect
from time to time or any successor statute, the Exchange Act and the
requirements of the exchanges on which the Company's Shares may, at the time,
be listed.
23. Deferrals and Settlements. The Committee may require or permit
Participants to elect to defer the issuance of Shares or the settlement of
Awards in cash under such rules and procedures as it may establish under the
Plan. It may also provide that deferred settlements include the payment or
crediting of interest on the deferral amounts.
24. Other Benefit and Compensation Programs. Payments and other benefits
received by a Participant under an Award made pursuant to the Plan shall not be
deemed a part of a Participant's regular, recurring compensation for purposes
of the termination, indemnity or severance pay laws of any country and shall
not be included in, nor have any effect on, the determination of benefits under
any other employee benefit plan, contract or similar arrangement provided by
the Company or an Affiliate unless expressly so provided by such other plan,
contract or arrangement, or unless the Committee expressly determines that an
Award or portion of an Award should be included to accurately reflect
competitive compensation practices or to recognize that an Award has been made
in lieu of a portion of competitive cash compensation.
25. Beneficiary Upon Participant's Death. To the extent that the
transfer of a Participant's Award at his or her death is permitted under an
Agreement, a Participant's Award shall be transferable at death to the estate
15
<PAGE> 16
or to the person who acquires the right to succeed to the Award by bequest or
inheritance.
26. Change in Control Payments.
(a) Notwithstanding the provisions of Plan Section 17 above, if any
Award, either alone or together with other payments in the nature of
compensation to a Participant that are contingent on a change in the
ownership or effective control of the Company or in the ownership of a
substantial portion of the assets of the Company or otherwise, would
result in any portion thereof being subject to an excise tax imposed
under Code Section 4999, or any successor provision, or would not be
deductible in whole or in part by the Company, an affiliate of the
Company (as defined in Code Section 1504, or any successor provision), or
other person making such payments as a result of Code Section 280G, or
any successor provision, such Award and/or such other benefits and
payments shall be reduced (but not below zero) to the largest aggregate
amount as will result in no portion thereof being subject to such an
excise tax or being not so deductible.
(b) For purposes of Plan Section 26(a), (i) no portion of payments
the receipt or enjoyment of which a Participant shall have effectively
waived in writing prior to the date of distribution of an Award shall be
taken into account; (ii) no portion of such Award, benefits and other
payments shall be taken into account that in the opinion of tax counsel
selected by the Company's independent auditors and acceptable to the
Participant does not constitute a "parachute payment" within the meaning
of Code Section 280G(b)(2), or any successor provision; and (iii) the
value of any non-cash benefit or any deferred payment or benefit included
in such payment shall be determined by the Company's independent auditors
in accordance with the principles of Code Sections 280G(d)(3) and (4) or
any successor provisions;
(c) Any Award not paid as a result of this Plan Section 26 or
reduced to zero as a result of the limitations imposed hereby, shall
remain outstanding in full force and effect in accordance with the other
terms and provisions of this Plan.
27. Requirements of Law.
(a) To the extent that Federal laws do not otherwise control, the
Plan and all determinations made and actions taken pursuant to the Plan
shall be governed by the laws of Minnesota without regard to its
conflicts of law principles and construed accordingly.
(b) In the event any provision of the Plan shall be held illegal or
invalid for any reason, the illegality or invalidity shall not effect the
remaining parts of the Plan, and the Plan shall be construed and enforced
as if the illegal or invalid provision had not been included.
28. Termination of Other Plan. Effective upon the approval of the Plan
by the Company's shareholders, the Company's 1994 Omnibus Stock Plan and the
Company's Directors' Nonstatutory Stock Option Plan ("Prior Plans") shall
terminate. Thereafter, all grants and awards made under the Prior Plans prior
to the approval by the shareholders shall continue in accordance with the terms
of the Prior Plans.
16
<PAGE> 1
FSI INTERNATIONAL, INC.
COMPUTATION OF INCOME PER COMMON SHARE
<TABLE>
<CAPTION>
QUARTER ENDED: SIX MONTHS ENDED:
---------------------------------- --------------------------------------
MARCH 1, 1997 FEB 24, 1996 MARCH 1, 1997 FEB 24, 1996
---------------------------------- --------------------------------------
PRIMARY:
<S> <C> <C> <C> <C>
AVERAGE SHARES OUTSTANDING 22,461,822 22,132,623 22,412,576 22,084,613
NET EFFECT OF DILUTIVE STOCK OPTIONS
AND WARRANTS - BASED ON THE TREASURY
STOCK METHOD 740,040 1,013,987 695,597 1,149,968
----------- ----------- ----------- -----------
TOTAL 23,201,862 23,146,610 23,108,173 23,234,581
=========== =========== =========== ===========
NET INCOME $ 1,937,676 $ 8,588,306 5,978,600 $16,313,463
=========== =========== =========== ===========
PRIMARY PER SHARE AMOUNTS $0.08 $0.37 $0.26 $0.70
=========== =========== =========== ===========
FULLY DILUTED:
AVERAGE SHARES OUTSTANDING 22,461,822 22,132,623 22,412,576 22,084,613
NET EFFECT OF DILUTIVE STOCK OPTIONS
AND WARRANTS - BASED ON THE TREASURY
STOCK METHOD 730,296 940,901 739,201 1,024,859
=========== =========== =========== ===========
TOTAL 23,192,118 23,073,524 23,151,777 23,109,472
=========== =========== =========== ===========
NET INCOME $ 1,937,676 $ 8,588,306 $ 5,978,600 $16,313,463
=========== =========== =========== ===========
FULLY DILUTED PER SHARE AMOUNTS $ 0.08 $ 0.37 $ 0.26 $ 0.71
=========== =========== =========== ===========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
All financial statements have been restated to reflect the merger with
Semiconductor Systems, Inc. on April 4, 1996. The merger was accounted for as a
pooling of interests.
</LEGEND>
<S> <C> <C> <C> <C>
<PERIOD-TYPE> 3-MOS 3-MOS 6-MOS 6-MOS
<FISCAL-YEAR-END> AUG-30-1997 AUG-31-1996 AUG-30-1997 AUG-31-1996
<PERIOD-START> DEC-01-1996 NOV-26-1995 SEP-01-1996 AUG-27-1995
<PERIOD-END> MAR-01-1997 FEB-24-1996 MAR-01-1997 FEB-24-1996
<CASH> 74,349,217 74,536,864 74,349,217 74,536,864
<SECURITIES> 35,477,167 18,528,911 35,477,167 18,528,911
<RECEIVABLES> 63,076,171 71,881,502 63,076,171 71,881,502
<ALLOWANCES> 1,933,000 1,650,000 1,933,000 1,650,000
<INVENTORY> 58,351,660 50,470,799 58,351,660 50,470,799
<CURRENT-ASSETS> 243,868,939 223,238,467 243,868,939 223,238,467
<PP&E> 89,780,066 49,259,391 89,780,066 49,259,391
<DEPRECIATION> 27,264,983 18,046,286 27,264,983 18,046,286
<TOTAL-ASSETS> 325,305,165 272,172,473 325,305,165 272,172,473
<CURRENT-LIABILITIES> 55,849,951 64,614,211 55,849,951 64,614,211
<BONDS> 0 0 0 0
42,000,000 0 42,000,000 0
0 0 0 0
<COMMON> 159,117,848 148,118,246 159,117,848 148,118,246
<OTHER-SE> 66,509,199 58,077,727 66,509,199 58,077,727
<TOTAL-LIABILITY-AND-EQUITY> 325,305,165 272,172,473 325,305,165 272,172,473
<SALES> 60,157,375 75,432,414 127,148,370 145,776,139
<TOTAL-REVENUES> 60,157,375 75,432,414 127,148,370 145,776,139
<CGS> 38,865,173 42,443,278 79,091,343 82,986,646
<TOTAL-COSTS> 38,865,173 42,443,278 79,091,343 82,986,646
<OTHER-EXPENSES> 0 0 0 0
<LOSS-PROVISION> (4,400) 263,200 90,000 416,000
<INTEREST-EXPENSE> 195,125 111,349 230,933 234,464
<INCOME-PRETAX> 979,407 10,434,265 5,518,632 20,191,218
<INCOME-TAX> (303,400) 3,624,202 1,103,726 7,050,267
<INCOME-CONTINUING> 1,937,676 8,588,306 5,978,600 16,313,463
<DISCONTINUED> 0 0 0 0
<EXTRAORDINARY> 0 0 0 0
<CHANGES> 0 0 0 0
<NET-INCOME> 1,937,676 8,588,306 5,978,600 16,313,463
<EPS-PRIMARY> 0.08 0.37 0.26 0.70
<EPS-DILUTED> 0.08 0.37 0.26 0.71
</TABLE>
