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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 NOVEMBER 28, 1998
---------------------------------------------
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission File Number: 0-17276
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FSI INTERNATIONAL, INC.
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(Exact name of registrant as specified in its charter)
MINNESOTA 41-1223238
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
322 LAKE HAZELTINE DRIVE, CHASKA, MINNESOTA 55318
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(Address of principal executive offices) (Zip Code)
612-448-5440
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(Registrant's telephone number, including area code)
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(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
/X/ YES / / NO
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practical date:
COMMON STOCK, NO PAR VALUE - 23,052,673 SHARES OUTSTANDING AS OF DECEMBER 18,
1998
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FSI INTERNATIONAL, INC. AND SUBSIDIARIES
QUARTERLY REPORT ON FORM 10-Q
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION PAGE NO.
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<S> <C> <C>
Item 1. Consolidated Condensed Financial Statements:
Consolidated Condensed Balance Sheets as of
November 28, 1998 (Unaudited) and August 29, 1998 3
Consolidated Condensed Statements of Operations
(Unaudited) for the quarters ended November 28, 1998
and November 29, 1997 5
Consolidated Condensed Statements of Cash Flows (Unaudited)
for the quarters ended November 28, 1998 and November 29, 1997 6
Notes to the Consolidated Condensed Financial Statements (Unaudited) 7
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 9
Item 3. Quantitative and Qualitative Disclosures About Market Risk 18
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 20
SIGNATURE 22
</TABLE>
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PART I. Item 1. FINANCIAL INFORMATION
FSI INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
NOVEMBER 28, 1998 AND AUGUST 29, 1998
ASSETS
<TABLE>
<CAPTION>
November 28, August 29,
1998 1998
(Unaudited) (Audited)
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<S> <C> <C>
Current assets:
Cash and cash equivalents $ 79,650,733 $75,384,024
Marketable securities 25,366,307 13,495,411
Trade accounts receivable, net of allowance for
doubtful accounts of $3,071,000 and
$3,113,000, respectively 22,605,940 33,818,525
Trade accounts receivable from affiliates 11,062,569 12,644,219
Inventories 46,615,784 50,152,429
Deferred income tax benefit 13,499,119 13,499,119
Refundable income taxes 3,911,303 10,637,318
Prepaid expenses and other current assets 8,029,469 8,414,318
------------ ------------
Total current assets 210,741,224 218,045,363
------------ ------------
Property, plant and equipment, at cost 114,646,322 112,248,529
Less accumulated depreciation and amortization (46,640,657) (43,460,736)
------------ ------------
68,005,665 68,787,793
------------ ------------
Investment in affiliates 14,897,448 15,408,400
Deposits and other assets 3,607,006 3,832,467
Deferred income tax benefit 4,383,558 4,383,558
------------ ------------
$301,634,901 $310,457,581
============ ============
</TABLE>
See accompanying notes to consolidated condensed financial statements.
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FSI INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
NOVEMBER 28, 1998 AND AUGUST 29, 1998
(continued)
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
November 28, August 29,
1998 1998
(Unaudited) (Audited)
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<S> <C> <C>
Current liabilities:
Current maturities of long-term debt $ 59,815 $ 65,418
Trade accounts payable 17,278,465 18,999,777
Accrued expenses 25,671,506 25,226,720
Customer deposits 8,883,834 4,969,645
Deferred revenue 8,483,902 12,739,504
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Total current liabilities 60,377,522 62,001,064
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Long-term debt, less current maturities 42,054,489 42,064,496
Deferred income taxes 24,377 24,016
Minority interest 1,981,614 1,991,738
Stockholders' equity:
Preferred stock, no par value; 9,700,000 shares
authorized, none issued and outstanding - -
Series A Junior Participating Preferred Stock, no par
value: 300,000 shares authorized; none issued and
outstanding. - -
Common stock, no par value; 50,000,000 shares
authorized; issued and outstanding, 23,052,673
and 23,034,562 shares at November 28, 1998
and August 29, 1998, respectively 163,365,701 163,307,107
Retained earnings 35,470,647 43,033,192
Cumulative translation adjustment (1,639,449) (1,964,032)
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Total stockholders' equity 197,196,899 204,376,267
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$ 301,634,901 $ 310,457,581
============= =============
</TABLE>
See accompanying notes to consolidated condensed financial statements.
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FSI INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
FOR THE QUARTERS ENDED NOVEMBER 28, 1998 AND NOVEMBER 29, 1997
(Unaudited)
<TABLE>
<CAPTION>
November 28, November 29,
1998 1997
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<S> <C> <C>
Sales (including sales to affiliates of
$8,970,000 and $18,902,000, respectively) $34,193,184 $64,914,894
Cost of goods sold 24,519,328 38,731,022
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Gross profit 9,673,856 26,183,872
Selling, general and administrative expenses 11,724,041 14,388,564
Research and development expenses 9,285,188 10,650,836
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Operating (loss) income (11,335,373) 1,144,472
Interest expense (785,084) (797,836)
Interest income 1,278,573 1,247,358
Other income (expense), net (40,370) 23,910
------------ ------------
Income (loss) before income taxes (10,882,254) 1,617,904
Income tax (benefit) expense (4,051,153) 517,730
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Income (loss) before minority interest
and equity in earnings (loss) of affiliates (6,831,101) 1,100,174
Minority interest 50,763 226,711
Equity in earnings (loss) of affiliates (298,382) 558,452
------------ ------------
Net (loss) income ($7,078,720) $ 1,885,337
============ ============
Net (loss) income per common share - basic ($0.31) $0.08
Net (loss) income per common share - diluted ($0.31) $0.08
Weighted average common shares 23,047,629 22,614,865
Weighted average common shares
and potential common shares 23,047,629 23,757,229
</TABLE>
See accompanying notes to consolidated condensed financial statements.
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FSI INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
FOR THE QUARTERS ENDED NOVEMBER 28, 1998 AND NOVEMBER 29, 1997
(Unaudited)
<TABLE>
<CAPTION>
November 28, November 29,
1998 1997
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<S> <C> <C>
OPERATING ACTIVITIES:
Net (loss) income ($7,078,720) $ 1,885,337
Adjustments to reconcile net (loss) income to net cash
provided by (used in) operating activities:
Minority interest (50,763) (226,711)
Depreciation and amortization 3,566,202 3,898,694
Provision for deferred income taxes 361 (343)
Provision for allowance for doubtful accounts (42,528) (68,931)
Provision for inventory reserves (25,008) (399,870)
Equity in earnings (loss) of affiliates 298,382 (558,452)
Changes in operating assets and liabilities:
Trade accounts receivable 12,836,763 (8,450,836)
Inventories 3,561,653 (1,127,188)
Refundable income taxes 6,726,015 -
Prepaid expenses and current assets 384,850 601,059
Trade accounts payable (1,721,312) (6,363,395)
Accrued expenses 475,753 855,535
Customer deposits 3,914,189 (493,859)
Deferred revenue (4,255,602) 4,895,295
Other 93,966 (61,851)
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Net cash provided by (used in) operating activities 18,684,201 (5,615,516)
------------ ------------
INVESTING ACTIVITIES:
Acquisition of property, plant and equipment (3,110,984) (1,437,921)
Proceeds from sale of equipment 470,500 -
Purchases of marketable securities (19,709,236) (2,746,096)
Sales of marketable securities - 32,594
Maturities of marketable securities 7,838,340 1,971,428
Decrease in deposits and other assets 81,871 97,748
------------ ------------
Net cash used in investing activities (14,429,509) (2,082,247)
------------ ------------
FINANCING ACTIVITIES:
Minority interests' investment in CME - 500,335
Principal payments on long-term debt (15,610) (43,410)
Net proceeds from issuance of common stock 27,627 276,839
------------ ------------
Net cash provided by financing activities 12,017 733,764
------------ ------------
Increase (decrease) in cash and cash equivalents 4,266,709 (6,963,999)
Cash and cash equivalents at beginning of period $75,384,024 $79,186,746
------------ ------------
Cash and cash equivalents at end of period $79,650,733 $72,222,747
============ ============
</TABLE>
See accompanying notes to consolidated condensed financial statements.
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FSI INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
(1) 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 10-K Report for the fiscal year ended August 29, 1998
previously filed with the Securities and Exchange Commission.
(2) INVENTORIES
<TABLE>
<CAPTION>
Inventories are summarized as follows:
November 28, August 29,
1998 1998
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<S> <C> <C>
Finished products $ 3,651,143 $4,220,843
Work-in-process 14,632,960 11,347,129
Subassemblies 6,855,936 11,214,265
Raw materials and purchased parts 21,475,745 23,370,192
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$46,615,784 $50,152,429
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</TABLE>
(3) SUPPLEMENTARY CASH FLOW INFORMATION
<TABLE>
<CAPTION>
Quarters Ended
---------------------------------
November 28, November 29,
1998 1997
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<S> <C> <C>
Schedule of interest paid and income taxes paid
(refunds received):
Interest $ 20,533 $33,286
Income taxes ($10,830,825) $76,001
</TABLE>
The Company realized in the first quarter of fiscal 1999 and 1998, a
tax benefit from disqualifying dispositions of stock options of
$30,967 and $0, respectively.
(4) RECONCILIATION OF EARNINGS AND SHARE AMOUNTS USED IN EPS CALCULATION
Effective December 31, 1997, the Company adopted SFAS No. 128,
"Earnings per Share." Basic earnings per common share were computed by
dividing net income by the weighted average number of shares of common
stock outstanding during the year. Diluted earnings per common share
for the quarters ended November 28, 1998 and November 29, 1997 were
calculated using the treasury stock method to compute the weighted
average common stock outstanding assuming the conversion of dilutive
common stock equivalents. As a result, the Company's reported earnings
per share for prior periods were restated. There was no material impact
on reported earnings per share (EPS) data when compared to basic and
diluted earnings per share calculated under the provisions of SFAS No.
128 for the quarter ended November 29, 1997.
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<TABLE>
<CAPTION>
Basic Dilutive
Earnings Earnings (Loss)
(Loss) Per Share Effect of Per Share
Income (Loss) Dilutive Income (Loss)
Net Available Securities* Available To
Income To Common Stock Common
FOR THE QUARTERS ENDED (Loss) Stockholders Options Stockholders
- ---------------------- ------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
NOVEMBER 28, 1998
Loss ($7,078,720) ($7,078,720) - ($7,078,720)
Shares - 23,047,629 - 23,047,629
Per share amount - ($0.31) - ($0.31)
NOVEMBER 29, 1997
Income $1,885,337 $1,885,337 - $1,885,337
Shares - 22,614,865 1,142,364 23,757,229
Per share amount - $0.08 $0.00 $0.08
</TABLE>
* The effect of stock options were not included in the calculation of dilutive
earnings per share for the quarter ended November 28, 1998 because their
inclusion would have been anti-dilutive.
(5) COMPREHENSIVE INCOME (LOSS)
Effective August 30, 1998, the Company adopted FASB Statement No. 130
(SFAS No. 130), "Reporting Comprehensive Income." SFAS No. 130 requires
that an entity report a total for comprehensive income (loss) in
condensed financial statements of interim periods issued to
shareholders. For the quarters ended November 28, 1998 and November 29,
1997 net income (loss), items of other comprehensive income and
comprehensive income (loss) are as follows:
<TABLE>
<CAPTION>
November 28, 1998 November 29, 1997
------------------- -----------------
<S> <C> <C>
Net income (loss) ($7,078,720) $1,885,337
Items of other comprehensive income (loss):
Foreign currency translation 324,583 (385,121)
------------ -----------
Comprehensive income (loss)
($6,754,137) $1,500,216
============ ===========
</TABLE>
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FSI INTERNATIONAL, INC. AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
FIRST QUARTER OF FISCAL 1999 COMPARED WITH THE FIRST QUARTER OF FISCAL 1998.
The information in this report, 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. Actual results may be materially different from these forward
looking statements. Factors that could cause actual results to differ include
overall economic and financial conditions in our industry; general economic
conditions; the demand and price for semiconductors; the level of new orders;
and order delays or cancellation. Competitive pricing pressures; the timing and
success of current and future product and process development programs; the
success of the Company's affiliated distributors, the timing and extent of any
industry upturn or downturn and the successful implementation of the new
business systems. Readers are directed to the Risk Factors discussion found in
the Company's Report on Form 10-K for the year ended August 29, 1998. In
addition, readers are also directed to the Risk Factors discussion found below
under "Risk Factors". 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 (*).
FSI International, Inc., ("FSI" or the "Company"), designs, develops,
manufactures, markets and supports microlithography, surface conditioning and
chemical management equipment used in the fabrication of microelectronics, such
as advanced semiconductor devices, thin film heads and multichip modules.
Overall industry softness continues due to pricing pressures, a faster than
expected move to smaller line widths, low utilization of foundry capacity,
delays in the transition to 300mm wafers and the increased availability of used
equipment.
However, it appears DRAM pricing has stabilized somewhat and that the disk drive
manufacturers are experiencing modestly better order rates. This may be
occurring because of the strong PC unit demand related to holiday season buying
practices, along with Year 2000 upgrade requirements.
The industry has seen some minor signs of improvement in recent months in
equipment bookings, however, the Company remains cautious and is managing its
business to reflect expected lower revenues as compared to fiscal 1998*. The
Company's goal is to effectively manage its assets during the industry downturn
while continuing to invest in key strategic programs.
During October 1998, the Company implemented additional cost control measures
including a reduction of force of approximately 150 employees and contractors.
In addition, the Company initiated three weeks of scheduled plant shutdowns
during the first half of fiscal 1999. The Company had a charge of approximately
$800,000 for severance and outplacement costs in the first quarter of fiscal
1999.
The Company has four segments, Surface Conditioning Division (SCD), Chemical
Management Division (CMD), Microlithography Division (MLD) and Shared Services
(SS).
Due to the similarity of production processes, distribution methods, customer
base and products/services, the reporting of segment information is aggregated
for the Surface Conditioning and Microlithography Divisions.
The Surface Conditioning segment sells products, processes and services using
wet, vapor and cryogenic techniques to prepare the surfaces of silicon wafers
for subsequent processing and the Microlithography segment
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supplies photoresist processing equipment and services for the semiconductor,
thin film head and multichip module markets.
The Chemical Management segment supplies a wide range of chemical management
systems for microelectronics manufacturers. These systems generate, blend and
deliver chemicals to all points of use in a manufacturing facility.
The Shared Services segment consists of legal, marketing, finance, information
services, human resources and other administrative activities. None of the
Shared Service costs are allocated to the other segments.
The following table sets forth on a consolidated basis, for the fiscal quarter
indicated, certain income and expense items as a percent of total sales.
<TABLE>
<CAPTION>
Percent of Sales
-----------------------------------------
November 28, November 29,
First quarter ended: 1998 1997
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<S> <C> <C>
Sales 100.0% 100.0%
Cost of goods sold 71.7 59.7
Gross profit 28.3 40.3
Selling, general and administrative 34.3 22.1
Research and development 27.2 16.4
Operating (loss) income (33.2) 1.8
Other income (expense), net 1.3 0.7
Income (loss) before income taxes (31.9) 2.5
Income tax (benefit) expense (11.9) 0.8
Minority interest 0.2 0.3
Equity in earnings (loss) of affiliates (0.9) 0.9
---------- ---------
Net income (loss) (20.7%) 2.9%
========== =========
Segment information is as follows:
<CAPTION>
November 28, November 29,
First quartered ended: 1998 1997
------------ -------------
<S> <C> <C>
MLD & SCD
- ----------------------------------------------------------
Revenue from external customers $24,016,101 $50,598,198
Depreciation and amortization 1,388,460 1,371,949
Segment operating profit (loss) ($4,376,393) $ 7,535,729
CMD
- ----------------------------------------------------------
Revenue from external customers $10,177,083 $14,316,696
Depreciation and amortization 289,210 282,370
Segment operating profit (loss) ($2,062,606) $ 440,760
Shared Services
- ----------------------------------------------------------
Revenue from external customers $ --- $ ---
Depreciation and amortization 1,888,532 2,244,375
Segment operating loss ($ 4,896,374) ($ 6,832,017)
</TABLE>
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SALES:
Sales were $34.2 million for the first quarter of fiscal 1999 as compared to
$64.9 million for the first quarter of fiscal 1998. Fourth quarter sales for
fiscal 1998 were approximately $37.7 million. Due to the current industry
conditions, sales decreased across all product lines for the first quarter of
fiscal 1999 as compared to prior year comparable period with MLD and SCD
experiencing the most significant reduction.
International sales were $11.0 million and $21.6 million for the first quarter
of fiscal 1999 and 1998, respectively, and represented approximately 32% and
33%, respectively of sales during these periods. International sales were
approximately 41% of total sales for fiscal 1998. The decrease in international
sales in first quarter fiscal 1999 as compared to first quarter of fiscal 1998
was primarily in Europe and Japan.
During the first quarter of fiscal 1999, the Company did add new customers for
certain products and bookings increased from the fourth quarter of fiscal 1998
level, resulting in a book-to-bill ratio considerably above 1.0. Currently, the
Company is anticipating an improvement in sales in the second quarter of fiscal
1999 as compared to the first quarter of 1999.* However, with the significantly
lower fiscal 1999 beginning backlog and the uncertain industry conditions, the
Company has limited visibility into the second half of fiscal 1999. The Company
expects annual sales to decrease in fiscal 1999 from fiscal 1998 levels.* With
the expected lower sales revenues, the Company is anticipating a loss in fiscal
1999.*
GROSS PROFIT:
Gross profit as a percentage of sales for the first quarter of fiscal 1999 was
28.3% as compared to 40.3% for the first quarter of fiscal 1998. The decrease in
the gross margin percentage for the first quarter of fiscal 1999 as compared to
the first quarter of fiscal 1998 is primarily due to the lower revenue levels,
pricing pressures for MLD and CMD products and excess 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, OEM
systems content, competitive pricing pressures and utilization of manufacturing
capacity.
With the excess capacity and continuing pricing pressures for CMD and MLD
products, the Company expects overall gross margins to remain below 40 percent
for fiscal 1999.*
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES:
Selling, general and administrative expenses decreased 18.8% to $11.7 million
for the first quarter of fiscal 1999 as compared to $14.4 million for the first
quarter of fiscal 1998. The decrease in the amount of SG&A expenses in the first
quarter of fiscal 1999 as compared to the first quarter of 1998 was primarily
due to the reduction in force and the overall cost controls implemented during
the fourth quarter of fiscal 1998 and the first quarter of 1999. The Company
expects the amount of SG&A expenses to decrease in fiscal 1999 as compared to
fiscal 1998.* The Company will continue investing in worldwide sales and support
capability, continue expanding the Company's business system applications and
completing the year 2000 hardware and software changes.*
RESEARCH AND DEVELOPMENT EXPENSES:
Research and development expenses decreased 13.1% to $9.3 million for the first
quarter of fiscal 1999 as compared to $10.7 million for the same period in
fiscal 1998. The Company's reduction in force and other cost controls
implemented during fiscal 1998 and the first quarter of fiscal 1999 did impact
research and development expenses. However, the cost reductions implemented were
strategic in nature to ensure there was minimal impact on key research and
development programs. The successful introduction of new products is important
to the long-term growth of the Company.* The Company expects the amount of R&D
expenses to decrease in fiscal 1999 as
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compared to fiscal 1998*. Overall, the Company's goal is to invest approximately
13% to 15% of sales annually on new product and process development.*
OTHER INCOME (EXPENSE), NET:
Other income (expense), net was approximately $453,000 for the first quarter of
fiscal 1999 as compared to $473,000 for the first quarter of fiscal 1998. The
slight decrease is due to an increase of approximately $64,000 in other
miscellaneous expenses. In addition, the average rate of return on the Company's
investments is being impacted by the overall lower interest rates.
INCOME TAX (BENEFIT) EXPENSE:
Income tax (benefit) expense for the first quarter of fiscal 1999 was
approximately $4.1 million income tax benefit or 37% of pre-tax loss compared to
approximately $518,000 of income tax expense or 32% of pre-tax profit for the
first quarter of fiscal 1998.
On November 28, 1998, the Company had recorded net deferred tax assets of
approximately $17.9 million. Based on an assessment of the Company's taxable
earnings' history and prospective future taxable income, as well as tax planning
strategies available to management which includes the sale or disposal of assets
to produce current taxable income, management has determined it to be more
likely than not that its net deferred tax asset will be realized in future
periods. The Company may be required to provide a valuation allowance for this
asset in the future if it does not generate sufficient taxable income as
planned.
EQUITY IN EARNINGS (LOSS) OF AFFILIATES:
The equity in earnings (loss) of affiliates was approximately a $298,000 loss
for the first quarter of fiscal 1999, compared to approximately $558,000 of
income for the first quarter of fiscal 1998. The decrease is due to lower
earnings at both affiliates (Metron Technology B.V. and m-FSI, Ltd.),
particularly Metron Technology. The Company does not anticipate significant
improvements in its affiliates performance during fiscal 1999.
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash and cash equivalents and marketable securities were
approximately $105.0 million as of November 28, 1998, an increase of $16.1
million from the end of fiscal 1998. The increase in cash, cash equivalents, and
marketable securities is due to approximately $18.7 million in cash flow from
operations offset by approximately $3.1 million of capital expenditures.
The Company's accounts receivable decreased by approximately 28%, or $12.8
million, from the end of fiscal 1998. The decrease in accounts receivable is due
to lower sales revenues along with additional resources being dedicated to
collection efforts.
The Company's inventory decreased approximately $3.6 million to $46.6 million at
November 28, 1998 compared to $50.2 million at the end of fiscal 1998. The
decrease in inventory is due to the Company's emphasis on inventory management
and reduction in inventory purchases. As of November 28, 1998, the Company's
current ratio of current assets to current liabilities was 3.5 to 1.0 and
working capital was $150.4 million.
The Company had acquisitions of property, plant and equipment of approximately
$3.1 million and $1.4 million for the first quarter of fiscal 1999 and fiscal
1998, respectively. The continuing acquisitions reflect investments in
information systems and other strategic programs. It is anticipated the Company
will invest less than $10.0 million in fiscal 1999 in property, plant and
equipment.*
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The Company believes that with existing cash and cash equivalents, marketable
securities and internally generated funds, there will be sufficient funds to
meet the Company's currently projected working capital and other cash
requirements through at least fiscal 1999.*
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.
NEW ACCOUNTING PRONOUNCEMENTS
In February 1998, the FASB issued SFAS No. 132 "Employers' Disclosures about
Pensions and Other Postretirement Benefits" which requires companies to disclose
certain information about pensions and other postretirement benefits. SFAS No.
132 must be adopted for financial statements issued for fiscal years beginning
after December 15, 1997. The Company will adopt SFAS No. 132 in fiscal 1999.
In June 1998, the FASB issued SFAS No. 133 "Accounting for Derivative
Instruments and Hedging Activities" which establishes appropriate accounting for
derivative instruments and hedging activities. SFAS No. 133 must be adopted for
financial statements issued for fiscal years beginning after June 15, 1999. It
is anticipated that the Company will adopt SFAS No. 133 in fiscal 2000, and is
currently studying the expected impact.
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.
CYCLICALITY 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 microelectronics industry has been cyclical in nature
and has experienced periodic downturns. The industry is currently experiencing a
downturn and it is unclear at this point in time as to how long this downturn
may last. Certain semiconductor device manufacturers have experienced slowdowns
in terms of product demand and volatility in terms of product pricing. Industry
slowdowns and volatility have 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 delay of delivery dates for the
Company's products. No assurance can be given that the Company's sales and
operating results will not continue to be adversely affected during the current
slowdown or will not be adversely affected by future slowdowns 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.
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 products that conform to evolving industry standards. The success
of the Company
13
<PAGE> 14
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 AND RELATED INFRASTRUCTURE COSTS
The Company added manufacturing capacity with new facilities during fiscal 1997.
This additional manufacturing capacity is having a negative impact on gross
profit margins due to lower revenue levels. These additional facilities and
related infrastructure costs have also increased the overall operating expenses
of the Company. The potential impact of idle manufacturing capacity on gross
margins and related infrastructure costs will have an adverse impact on the
Company's future financial results until the Company is able to increase its
utilization rates.*
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.*
FLUCTUATIONS IN QUARTERLY OPERATING RESULTS
The Company's operating results in the past have been, and may continue in the
future to be, subject to quarterly fluctuations due to a number of factors. The
Company may experience significant fluctuations in its quarterly sales, gross
profits, operating results and net income. Factors which may influence the
Company's operating results in a given quarter include specific economic
conditions in the microelectronics industry, the financial results of the
Company's affiliates, the timing of the receipt of orders from major customers,
the mix of products sold by the Company, competitive pricing pressures, the
proportion of international sales, product modifications requested by customers,
utilization of manufacturing capacity and production ability. During a specific
quarter, a significant portion of the Company's revenue may be derived from the
sale of a relatively small number of systems. Accordingly, a small change in the
numbers of such systems sold in a quarter may cause significant changes in
operating results. Moreover, customers may cancel or reschedule shipments and
parts availability could delay shipments. These factors also could significantly
affect annual results of operations.
SUCCESS OF COMPANY'S AFFILIATED DISTRIBUTORS
The majority of the Company's international sales are made through its
affiliated distributors, Metron Technology B.V., ("Metron") and m-FSI Ltd.
("m-FSI"). 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.*
The earnings or losses of the Company's affiliated distributors can
significantly affect the financial results of the Company. The affiliated
distributors distribute not only the Company's products but also distribute or
represent those of other companies serving the microelectronics industry. Over
the past several years, a majority of
14
<PAGE> 15
Metron's revenues have been attributable to sales of products of equipment and
consumable suppliers other than FSI. Thus, the financial results of Metron and
their impact on the Company's financial results are dependent not only upon the
ability of Metron to successfully market the Company's products, but also on
their ability to maintain relationships with and market the products of other
equipment and consumables suppliers. While sales of the Company's products by
Metron (and of certain other manufacturers for whom they distribute) are
generally in U.S. dollars, the expenses of Metron are generally denominated in
foreign currencies and, accordingly, Metron's operating results may be affected
by fluctuations in interest and currency exchange rates. In addition, sales by
m-FSI are denominated in yen and, accordingly, the Company's equity interest in
the earnings of m-FSI are affected by U.S. dollar/yen exchange rates.
The Company's affiliated distributors periodically engage in hedging
transactions in an effort to lessen the potentially negative effect of foreign
currency devaluation in relation to the U.S. dollar. This typically occurs in
those instances where a sale by an affiliated distributor has been both in a
foreign currency (usually at the request of a foreign-domiciled customer) and of
a size to justify the costs of engaging in hedging activity. The Company's
affiliated distributors generally have hedged such transactions by buying
forward U.S. dollars and selling forward the applicable local currency. If the
order that is the subject of a hedging transaction is subsequently canceled by
the customer, the affiliated distributor may be required to satisfy its hedging
obligations by buying and/or selling the applicable currencies at market prices
that could result in losses to the affiliated distributor. To date, the Company
has not experienced any material adverse effect as a result of the hedging
activities of its affiliated distributors. There can be no assurance that Metron
or m-FSI will continue to distribute, or to distribute successfully, the
Company's products or the products of other microelectronics and consumables
companies, and in such an event the Company's results of operations and earnings
could be adversely affected. The Company is not aware of any financial
difficulties being experienced by any of its affiliated distributors that could
materially adversely affect the Company's financial condition or results of
operations.
INTERNATIONAL BUSINESS
Approximately 41%, 36% and 35% of the Company's sales for fiscal 1998, 1997 and
fiscal 1996, respectively, were attributable to sales outside the United States,
including sales through the Company's affiliated international distributors
which accounted for 89%, 82% and 71% respectively, of such international sales.
See "Success of the Company's affiliated distributors" above. The Company
expects that international sales will continue to represent a significant
portion of its total sales. Sales to customers outside the United States are
subject to risks, including the imposition of governmental controls, the need to
comply with a wide variety of foreign and U.S. export laws, political and
economic instability, trade restrictions, changes in tariffs and taxes, longer
payment cycles typically associated with international sales, and the greater
difficulty of administering business overseas as well as general economic
conditions. The Japan and Asia Pacific markets have been extremely competitive
and the semiconductor device manufacturers located there have been very
aggressive in seeking price concessions from suppliers.
Although substantially all of the Company's direct international sales are
denominated in U.S. dollars, both direct sales by the Company and sales through
its affiliated international distributors may be affected by changes in demand
resulting from fluctuations in interest and currency exchange rates. Moreover,
while sales by Metron are also generally denominated in U.S. dollars, their
expenses are denominated in foreign currencies and, consequently, their
operating results may be directly affected by changes in exchange rates. Sales
by m-FSI are denominated in yen and, accordingly, the Company's equity interest
in the earnings of m-FSI are affected by fluctuations in U.S. dollar/yen
exchange rates. Furthermore, although the Company endeavors to meet technical
standards established by foreign regulatory bodies, there can be no assurance
that the Company will be able to comply with changes in foreign standards in the
future. The inability of the Company to design products to comply with foreign
standards could have a material adverse effect on the Company. In addition, the
laws of certain foreign countries may not protect the Company's intellectual
property to the same extent as the laws of the United States.
15
<PAGE> 16
LITIGATION
The Company settled a patent infringement lawsuit in fiscal 1998. The Company
could in the future become involved in additional litigation or be the subject
of patent infringement inquiries. There can be no assurance about the outcome of
any future litigation or patent infringement inquiries and whether they will
adversely impact the Company's business or results of operations.
In the normal course of business, the Company from time to time becomes involved
in litigation that may ultimately result in a liability to the Company. It is
the opinion of management that facts known at the present time do not indicate
that there is a probability that any such litigation would have a material
effect on the Company's operations or its financial position. As of November 28,
1998, the Company believes it is not involved in any litigation that will have a
material impact on the Company.
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 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.*
DEPENDENCE ON KEY CUSTOMERS
Although the composition of the Company's largest customers has changed from
year to year, direct sales to the Company's top five customers in each of fiscal
1998, 1997 and 1996 have accounted for approximately 40%, 40% and 41%,
respectively, of the Company's total sales. Direct sales to the Company's top
two customers in each of fiscal 1998, 1997, and 1996 accounted for approximately
20%, 25% and 23%, respectively, of the Company's total sales. The Company
currently has no long-term sales commitments with any of its customers and sales
are generally made pursuant to purchase orders. A reduction, delay or
cancellation of orders from one or more of its significant customers, or the
loss of one or more of such customers, could have a material adverse effect on
the Company's operating results.
INDUSTRY CONSOLIDATION
There has been a trend toward industry consolidation for several years. During
fiscal 1998 and 1997, the Company saw this trend continue with the completion of
two large industry mergers. The Company expects this trend toward industry
consolidation to continue as companies attempt to strengthen or hold their
market positions in a rapidly changing industry. The Company believes that the
industry consolidation may result in competitors that are better able to
compete. This could have a material adverse affect on the Company's business
operating results and financial condition.
FUTURE ACQUISITIONS
A portion of the Company's historical growth has been from acquisitions. In the
future the Company may pursue acquisitions of additional product lines,
technologies or businesses. Future acquisitions by the Company may result in
potentially dilutive issuance of equity securities, incurrence of debt and
amortization expenses related to
16
<PAGE> 17
goodwill and other intangible assets, which could materially adversely affect
the Company's financial conditions and results of operations. In addition,
acquisitions involve numerous risks, including difficulties in the assimilation
of the operations, technologies and products of the acquired company, the
diversion of management's attention from other business concerns, risks of
entering markets in which the Company has no or limited direct prior experience,
and the potential loss of key employees of the acquired company. In the event
that an acquisition does occur, there can be no assurance to the effect thereof
on the Company's business, financial conditions or operating results.
VOLATILITY OF GLOBAL MARKETS
The Company and its affiliates operate in a global market. Global operations are
subject to risks, including political and economic instability, general economic
conditions, imposition of government controls, fluctuations of exchange rates,
the need to comply with a wide variety of foreign and U.S. export laws, trade
restrictions and the greater difficulty of administering business overseas.
Although substantially all the Company's direct international sales are
denominated in U.S. dollars, both direct sales by the Company and sales through
its affiliated international distributors may be affected by these factors and
thus may adversely affect the operations and financial results of the Company.
DEPENDENCE ON KEY PERSONNEL
The Company's success depends to a significant extent upon management and
technical personnel. The loss of the services of several or more of these key
persons could have an adverse effect on the Company's operations. Competition
for such personnel in the Company's industry in all geographic locations is
high. There can be no assurance that the Company will continue to be successful
in attracting and retaining the personnel it requires to continue to grow and
operate profitably.
INTELLECTUAL PROPERTY RIGHTS
Although the Company attempts to protect its intellectual property rights
through patents, copyrights, trade secrets and other measures, it believes that
its financial performance will depend more upon the innovation, technological
expertise and marketing abilities of its employees than upon such protection.
There can be no assurance that any of the Company's pending patent applications
will be issued or that foreign intellectual property laws will protect the
Company's intellectual property rights. There can be no assurance that any
patent issued to the Company will not be challenged, invalidated or circumvented
or that the rights granted thereunder will provide competitive advantages to the
Company. Furthermore, there can be no assurance that others will not
independently develop similar products, duplicate the Company's products or, if
patents are issued to the Company, design around the patents issued to the
Company.
As is typical in the semiconductor industry, the Company occasionally receives
notices from third parties alleging infringement claims. Although there are
currently no pending lawsuits against the Company regarding any possible
infringement claims, there can be no assurance that infringement claims by third
parties or claims for indemnification resulting from infringement claims will
not be asserted or that such assertions, if proven to have merit, will not
materially adversely affect the Company's business, financial condition and
results of operations. If any such claims are asserted against the Company, the
Company may seek to obtain a license under the third party's intellectual
property rights if available on reasonable terms or at all. The Company could
decide, in the alternative, to resort to litigation to challenge such claims or
enforce its proprietary rights. Such challenges could be extremely expensive and
time consuming and could materially adversely affect the Company's business,
financial condition and results of operations.
YEAR 2000
The Company is addressing the issue associated with the programming code in
existing computer systems as the millennium (Year 2000) approaches. The "year
2000" problem is pervasive and complex as virtually every
17
<PAGE> 18
computer operation will be affected in some way. The Company is aware of the
computing difficulties that the millennium issue presents for the Year 2000.
The Company has identified teams to address the information technology (IT)
systems used for internal purposes at the Company and to also address the non-IT
systems. Each of the Company's divisions have also identified teams to address
the potential software and hardware issues associated with the division's
individual product lines.
It is anticipated that all reprogramming and Year 2000 testing efforts for
internally used IT systems will be complete by July 1, 1999, allowing adequate
time for testing.* The non-IT systems generally require third-party assurances
as to compliance with year 2000. To date, confirmations have not been received
from all of the Company's vendors indicating that plans are being developed to
address processing of transactions in the Year 2000. Availability of resources,
unexpected delays as well as coding issues may impact the Company's ability to
complete the reprogramming by March 31, 1999 or of our vendors ability to become
Year 2000 compliant.* There can be no assurance that the Company will not
experience serious unanticipated negative consequences and/or material costs
caused by undetected errors or defects in the technology used in its internal
operating systems, which are composed predominantly of third party software and
hardware technology or by the inability of vendors to correct their Year 2000
issues.
Each of the Business Segments have completed the analysis of each of their
product lines to determine if hardware and software are Year 2000 compliant. The
majority of the Company's current standard product lines are believed to be Year
2000 compliant. It is the Company's goal to have all of their products Year 2000
compliant by early June 1999.*
There can be no assurance that the Company's current products do not contain
undetected errors or defects associated with Year 2000 date functions that may
result in material costs to the Company, including repair and replacement costs
and costs incurred in litigation due to any such defects. Many commentators have
stated that a significant amount of litigation will arise out of Year 2000
compliance issues. Because of the unprecedented nature of such litigation, and
the Company's current lack of knowledge as to whether its products are Year 2000
compliant, there can be no assurance that the Company will not be materially
adversely affected by claims related to Year 2000 compliance.
The Company incurred approximately $400,000 to address the Year 2000 problem
during fiscal 1998 and expects to incur approximately $900,000 in fiscal 1999.*
The Company is in the process of establishing a contingency plan if the
Company's IT and non-IT systems are not Year 2000 compliant. It is anticipated
that the contingency plan will be completed by June 1999.*
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
MARKET RISKS
The Company is exposed to certain market risks based on outstanding debt
obligations of $42 million as of November 28, 1998. The fixed interest rates of
these debt obligations range from 7.15% to 7.27% and have maturity dates through
December 2006. The Company does not have investments in derivative financial
instruments.
18
<PAGE> 19
FSI INTERNATIONAL, INC. AND SUBSIDIARIES
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGE IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None
19
<PAGE> 20
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 by and Among FSI
International, Inc., Spectre Acquisition Corp.,
and Semiconductor Systems, Inc. (1)
3.1 Restated Articles of Incorporation of the Company. (2)
3.2 Restated By-Laws. (3)
3.3 Amendment to Restated By-Laws. (4)
4.1 Note Purchase Agreement between FSI International, Inc. and
Metropolitan Life Insurance Company and other certain
purchasers. (Schedule A omitted) (5)
4.2 Form of Rights Agreement dated as of May 22, 1997 between
FSI International, Inc. and Harris Trust and Savings Bank,
National Association, as Rights Agent (6)
4.3 Amendment dated March 26, 1998 to Rights Agreement dated
May 22, 1997 by and between FSI International, Inc. and
Harris Trust and Saving Bank, National Association as Rights
Agent (7)
*10.1 FSI International, Inc. 1997 Omnibus Stock Plan (5)
*10.2 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 Dale A.
Courtney, Patricia M. Hollister, Luke R. Komarek, Benno G.
Sand and Benjamin J. Sloan, have been omitted, but will be
filed if requested in writing by the Commission):(8)
10.3 Lease dated June 27, 1985, between the Company and Lake
Hazeltine Properties. (3)
10.4 Lease dated September 1, 1985, between the Company and
Elftmann, Wyers, Blackwood Partnership. (3)
10.5 Lease dated September 1, 1985, between the Company and
Elftmann, Wyers Partnership. (3)
*10.6 1989 Stock Option Plan. (4)
*10.7 Amended and Restated Employees Stock Purchase Plan. (14)
10.8 Shareholders Agreement among FSI International, Inc. and
Mitsui & Co., Ltd. and Chlorine Engineers Corp. Ltd. dated
as of August 14, 1991. (8)
10.9 FSI Exclusive Distributorship Agreement dated as of
August 14, 1991 between FSI International, Inc. and m-FSI,
Ltd. (8)
10.10 FSI Licensing Agreement dated as of August 14, 1991, between
FSI International, Inc. and m-FSI, Ltd. (8)
10.11 License Agreement, dated October 15, 1991, between the
Company and Texas Instruments Incorporated. (9)
10.12 Amendment No. 1, dated April 10, 1992, to the License
Agreement, dated October 15, 1991, between the Company and
Texas Instruments Incorporated. (9)
10.13 Amendment effective October 1, 1993 to the License Agreement,
dated October 15, 1991 between the Company and Texas
Instruments Incorporated (10)
*10.14 Amended and Restated Directors' Nonstatutory Stock Option
Plan. (11)
*10.15 Management Agreement between FSI International, Inc. and
Joel A. Elftmann, effective as of June 5, 1998 (Similar
agreements between the Company and its executive officers
have been omitted but will be filed if requested in writing
by the commission.) (14)
*10.16 FSI International, Inc. 1994 Omnibus Stock Plan. (12)
*10.17 FSI International, Inc. 1998 Incentive Plan. (14)
10.18 First Amendment to Lease made and entered into October 31,
1995 by and between Lake Hazeltine Properties and FSI
International, Inc. (13)
10.19 Distribution Agreement made and entered into as of March 31,
1998 by and between FSI International, Inc. and Metron
Technology B.V. (Exhibits to Agreement omitted) (14)
20
<PAGE> 21
10.20 Lease dated August 9, 1995 between Skyline Builders, Inc.
and FSI International, Inc. (13)
10.21 Lease Rider dated August 9, 1995 between Skyline Builders,
Inc. and FSI International, Inc. (13)
10.29 Lease Amendment dated November, 1995 between Roland A.
Stinski and FSI International, Inc. (Exhibits to Amendment
omitted) (13)
27.0 Financial Data Schedule (filed herewith)
(1) Filed as an Exhibit to the Company's Registration Statement on Form S-4 (as
amended) dated March 21, 1996, SEC File No. 333-1509 and incorporated by
reference.
(2) 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.
(3) Filed as an Exhibit to the Company's Registration Statement on Form S-1,
SEC File No. 33-25035, and incorporated by reference.
(4) 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.
(5) Filed as an Exhibit to the Company's Report on Form 10-Q for the fiscal
quarter ended March 1, 1997, SEC File No. 0-17276, and incorporated by
reference.
(6) Filed as an Exhibit to the Company's Report on Form 8-K, filed by the
Company on June 5, 1997, SEC File No. 0-17276, and incorporated by
reference.
(7) Filed as an Exhibit to the Company's Report on Form 8-A/A-1, filed by the
Company on April 16, 1998, Sec File No. 0-17276 and incorporated by
reference.
(8) Filed as an Exhibit to the Company's Report on Form 10-K for the fiscal
year ended August 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-K for the fiscal
year ended August 29, 1992, 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 28, 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 Report on Form 10-K for the fiscal
year ended August 29, 1998, 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 first quarter ended
November 28, 1998.
21
<PAGE> 22
FSI INTERNATIONAL, INC. AND SUBSIDIARIES
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
FSI INTERNATIONAL, INC.
. . . . . . . . . . . . .
[Registrant]
DATE: January 11, 1999
By: /s/Patricia M. Hollister
-----------------------------
Chief Financial Officer
and Corporate Controller
on behalf of the
Registrant and as
Principal Financial Officer
22
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<FN>
Earnings per share have been restated to reflect the implementation of the
FASB Statement of Financial Accounting Standards (SFAS) No. 128, Earnings
per share.
</FN>
</TABLE>
