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Technology Stocks : FSII - The Worst is Over? -- Ignore unavailable to you. Want to Upgrade?

To: Kent Sarikaya who wrote (2497)	6/22/1999 4:24:00 PM
From: Duker	Respond to of 2754

FSI International, Inc. Announces Third Quarter Fiscal 1999 Financial Results, Including a $16.6 Million Non-Cash Charge for a Tax Valuation Reserve MINNEAPOLIS--(BUSINESS WIRE)--June 22, 1999--FSI International, Inc. (Nasdaq:FSII - news), a manufacturer of capital equipment for the microelectronics industry, today reported financial results for the fiscal 1999 third quarter ended May 29, 1999. Sales for the quarter were $50.6 million, compared to $55.8 million in the third quarter of fiscal 1998. The Company's net loss for the third quarter was $20.4 million or $0.88 per share, including the non-cash charge described below, compared to a net loss of $2.0 million or $0.09 per share in the fiscal 1998 third quarter. For the first nine months of fiscal 1999, sales were $117.8 million compared to $180.2 million in the same period of fiscal 1998. The net loss for the period was $35.0 million, or $1.51 per share, compared to a net loss of $4.7 million, or $0.21 per share for the same period of fiscal 1998. The Company's loss in the third quarter and first nine months was significantly impacted by a non-cash charge for a valuation reserve against the Company's deferred tax assets of $16.6 million or $0.71 per share. The valuation reserve was required as a result of continued losses in fiscal 1999. The Company will not be recording any tax benefit or expense in the future, except for taxes related to the Chemical Management divestiture, until the Company is consistently profitable on a quarterly basis.(a) The loss for the quarter was due in large part to the valuation reserve discussed above, to margin deterioration resulting from pricing pressures for all product lines and additional inventory reserves due to the cancellation of $12 million of orders for microlithography products. The U.S. customer canceled the microlithography orders when it decided to exit the microprocessor business and sell its interest in the fab where the microlithography products were to be used. The Company ended the third quarter of fiscal 1999 with more than $81 million in cash, cash equivalents and marketable securities, a current ratio of 3.2 to 1.0, and working capital of approximately $126 million. The Company's book value at May 29, 1999 was $171 million or $7.36 per share. Joel Elftmann, chief executive officer, stated, ''The equipment industry is definitely seeing improvement in order activity, with May marking the eighth consecutive month of increased orders.(a) Total orders for FSI products have also increased in the past two quarters and are expected to increase again in the fourth quarter.(a) However, with the increased quote and order activity, we are seeing some intense pricing pressures from our competition.(a) ''During the next few months, the Company will be working on completing the divestiture of its Chemical Management Division, implementing a new SAP information system, focusing on product cost reduction programs, completing the acquisition of YieldUP International and introducing certain new products.(a) We will also be completing our strategic and financial planning for fiscal 2000, with a focus on process technology,'' concluded Elftmann.(a) Based upon analysts' forecasts for continued improvement in industry conditions, the Company anticipates bookings to increase in fiscal 2000 as compared to fiscal 1999.(a) The sales level for fourth quarter of fiscal 1999 is expected to be relatively flat to third quarter of fiscal 1999 and anticipated fiscal 2000 sales levels are expected to increase over fiscal 1999 levels for the remaining two divisions.(a) In the near term, the Company expects gross profit margins to be relatively flat.(a) Elftmann commented, ''Fiscal 1999 was a year of change for the Company. Fiscal 2000 will be a rebuilding year for us as we focus on growing our market share in microlithography and surface conditioning technologies.(a) However, we do not expect to return to profitability before the fourth quarter of fiscal 2000,''(a) concluded Elftmann. FSI International, Inc. is a leading global supplier of processing equipment used at key production steps to manufacture microelectronics, including semiconductor devices and thin film heads. The Company develops, manufactures, markets and supports products used in the technology areas of microlithography, surface conditioning and chemical management. FSI International's customers include microelectronics manufacturers located throughout North America, Europe, Japan and the Asia-Pacific region. Additional information on FSI International can be obtained by accessing its homepage at fsi-intl.com. SAFE HARBOR Certain statements contained above are forward-looking statements (marked with an (a)) that involve risks and uncertainties. Actual results may be materially different from these forward-looking statements. Factors that could cause actual results to differ include overall industry conditions including general economic conditions; the demand and price for semiconductors; the level of new orders and order delays or cancellations; product pricing pressures; the timing and success of current and future product and process development programs; the success of the Company's affiliated distributors; expenses associated with the pending YieldUP acquisition including a potential in process research and development write-off; the expenses associated with the pending divestiture of the Chemical Management Division; 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 new business systems. The completion of the YieldUP acquisition and CMD divestiture are subject to certain conditions; the inability to satisfy or delays in satisfying these conditions could impact the ultimate outcome or timing of these transactions. Other factors that could cause the results of the Company to differ materially from those contained in any forward-looking statements of the Company are included in the Company's Annual Report on Form 10-K for the 1998 fiscal year and other documents recently filed by the Company with the Securities and Exchange Commission.

To: Kent Sarikaya who wrote (2497)	6/22/1999 4:24:00 PM
From: Duker	Read Replies (1) \| Respond to of 2754

Financials ... FSI INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data) Third Quarter Ended Nine Months Ended --------------------- --------------------- May 29, May 30, May 29, May 30, 1999 1998 1999 1998 -------- -------- -------- -------- (unaudited) (unaudited) Sales $50,570 $55,836 $117,797 $180,182 Cost of goods sold 35,434 34,426 85,895 111,916 ---------------------- -------- -------- -------- -------- Gross profit 15,136 21,410 31,902 68,266 Selling, general and administrative expenses 11,648 14,947 34,250 46,711 Research and develop- ment expenses 9,213 10,497 26,620 32,376 ---------------------- -------- -------- -------- -------- Operating loss (5,725) (4,034) (28,968) (10,821) Interest and other income (expense) net 364 505 1,743 1,280 ---------------------- -------- -------- -------- -------- Loss before income taxes (5,361) (3,529) (27,225) (9,541) Income tax expense (benefit) 14,149 (1,196) 5,816 (3,721) ---------------------- -------- -------- -------- -------- Loss before equity in earnings (loss) of affiliates and minority interest (19,510) (2,333) (33,041) (5,820) Minority interest --- 202 (41) 555 Equity in earnings (loss) of affiliates (877) 144 (1,957) 567 ---------------------- -------- -------- -------- -------- Net loss $(20,387) $(1,987) $(35,039) $ (4,698) ---------------------- ======== ======== ======== ======== Net loss per common share Basic ( $0.88) ($0.09) ($1.51) ($0.21) Diluted ( $0.88) ($0.09) ($1.51) ($0.21) ---------------------- -------- -------- -------- -------- Weighted average common shares Basic 23,251 22,849 23,156 22,738 Diluted 23,251 22,849 23,156 22,738 ---------------------- -------- -------- -------- -------- Other Information --------------------------------------- Capital expenditures $ 3,567 $ 1,801 $ 9,070 $ 4,275 Depreciation and amortization 3,185 4,128 10,633 11,969 FSI INTERNATIONAL, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in thousands) May 29, August 29, 1999 1998 ----------- ----------- (unaudited) (audited) Assets --------------------------------------- Current assets: Cash, cash equivalents and marketable securities $ 81,597 $ 88,879 Receivables, net 40,791 46,463 Inventories 44,098 50,152 Other current assets 16,886 32,551 --------------------------------------- ----------- ----------- Total current assets 183,372 218,045 Property, plant and equipment, net 67,032 68,788 Investment in affiliates 13,615 15,409 Other assets 6,245 8,216 --------------------------------------- ----------- ----------- Total assets $270,264 $310,458 --------------------------------------- =========== =========== Liabilities and Stockholders' Equity --------------------------------------- Current liabilities: Current maturities of long-term debt $ 60 $ 65 Trade accounts payable 20,672 19,000 Accrued expenses 22,025 25,227 Other current liabilities 14,288 17,709 --------------------------------------- ----------- ----------- Total current liabilities 57,045 62,001 --------------------------------------- ----------- ----------- Long-term debt, less current maturities 42,015 42,065 Long-term deferred income taxes 24 24 Minority interest --- 1,992 Total stockholders' equity 171,180 204,376 --------------------------------------- ----------- ----------- Total liabilities and stockholders' equity $270,264 $310,458 --------------------------------------- =========== =========== Other Information --------------------------------------- Book value per share $ 7.36 $ 8.87 Shares outstanding 23,269 23,035 -------------------------------------------------------------------------------- Contact: FSI International, Minneapolis Benno Sand--Investor and Financial Media (612) 448-8936 or Laurie Walker--Trade Media (612) 448-8066