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FSI International (ticker: FSII,
exchange: NASDAQ) News Release - 6/21/05
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FSI International, Inc. Announces Third Quarter
and First Nine Months Fiscal 2005 Financial Results
Third Quarter Fiscal 2005 Orders Increased 43 percent to $24.6
million as Compared to the Second Quarter Level
MINNEAPOLIS (June 21, 2005)--FSI International, Inc. (Nasdaq:
FSII), a manufacturer of capital equipment for the microelectronics
industry, today reported financial results for the third quarter
of fiscal 2005 and for the first nine months ended May 28, 2005.
Fiscal 2005 Third Quarter and First Nine Months
Sales for the third quarter of fiscal 2005 were $19.1 million,
compared to $36.3 million for the same period in fiscal 2004.
The Company’s net loss for the third quarter of fiscal 2005
was $2.0 million, or $0.07 per share, compared to a net income
of $4.0 million, or $0.13 per share, for the third quarter of
fiscal 2004.
Sales for the first nine months of fiscal 2005 were $62.7 million,
compared to $81.1 million for the same period of fiscal 2004.
The Company’s net loss for the first nine months of fiscal
2005 was $1.4 million, or $0.05 per share, compared to a net loss
of $3.1 million, or $0.10 per share, for the first nine months
of fiscal 2004.
In the first nine months of fiscal 2005, the Company accrued
$250,000, or $0.01 per share, of litigation judgment loss; recorded
a $7.0 million, or $0.23 per share, gain on the sale of its Allen,
Texas facility; and recorded a $4.2 million, or $0.14 per share,
gain on the initial distribution associated with Applied Materials’
acquisition of Metron Technology N.V. In the first nine months
of fiscal 2004, the Company accrued $3.4 million, or $0.11 per
share, of patent litigation settlement costs and recorded a $2.0
million, or $0.07 per share, gain on the sale of Metron Technology
N.V. stock. The litigation-related costs were included in selling,
general and administrative expenses in both periods, and the Metron
distribution and stock sales gains were recorded in interest and
other income in both periods.
“Despite the weak industry conditions during the first
nine months of fiscal 2005, we made good progress on the strategies
established at the beginning of the year,” said, Don Mitchell,
FSI chairman and CEO, “including:
- selling our Allen, Texas facility;
- expanding the process capabilities for our flagship products;
- expanding our intellectual property portfolio through new
patents and a technology license;
- gaining customer acceptance for our flagship products that
were under evaluation; and
- receiving follow-on orders from several leading semiconductor
manufacturers.
As a result of these accomplishments, it is with optimism that
we are now finalizing our fiscal 2006 strategic plan,” concluded
Mitchell.
Cash Position
The Company’s cash, restricted cash and marketable securities
were $35.7 million at the end of the third quarter of fiscal 2005,
representing a $6.5 million decrease from the beginning of fiscal
2005. The change included $19.1 million of cash used in operations
and $14.4 million in net proceeds from the sale of the Allen,
Texas facility. The cash used in operations reflected the use
of $6.3 million to pay a litigation judgment.
In February 2005, the California Court of Appeals issued an opinion
affirming in substantial part a judgment in litigation arising
out of the Company’s 1996 acquisition of Semiconductor Systems,
Inc. (“SSI”), the Company’s wholly owned subsidiary.
The total judgment, together with post-judgment interest and attorneys’
fees as of the date of the Court of Appeal’s decision, was
approximately $7.9 million.
Since the 1996 acquisition of Semiconductor Systems, Inc. was
originally accounted for as a pooling of interest, the former
SSI shareholders returned the 250,000 shares of FSI common stock
in escrow and the Company retired the stock in the third quarter
of fiscal 2005 at a value of $12.125 per share, the per-share
price of the Company’s common stock at the time of the acquisition.
As a result, the Company recorded $250,000 of litigation judgment
costs in the second quarter. In the third quarter of fiscal 2005,
the Company used approximately $7.9 million of cash to satisfy
the judgment, including escrow funds totaling approximately $1.6
million placed by the former SSI shareholders to pay the judgment
amount.
On December 14, 2004, Applied Materials closed on the acquisition
of substantially all of the assets of Metron Technology N.V. As
of May 28, 2005, the Company owned 1.5 million shares of Nortem
N.V. (formerly Metron Technology) common stock. The Metron stock
had an original cost basis of $0.94 per share, or $1.4 million
in the aggregate.
At the beginning of the third quarter of fiscal 2005, the Company
carried its investment in Nortem N.V. as a marketable security
valued at $6.9 million. The Company received an initial cash distribution
in the third quarter of fiscal 2005 of approximately $5.6 million
as Nortem N.V. was being liquidated and recorded a gain of approximately
$4.2 million. In June 2005, the Company received the final distribution
of approximately $1.5 million and expects to record an additional
gain of approximately $1.4 to $1.6 million in the fourth quarter
of fiscal 2005.*
Balance Sheet
As of the end of the fiscal 2005 third quarter, the Company had
approximately $121.8 million in assets, including the $35.7 million
in cash, restricted cash, cash equivalents and marketable securities.
This included $1.5 million of marketable securities associated
with the Company’s investment in Nortem N.V. At the end
of the third quarter of fiscal 2005, the Company had a current
ratio of 4.5 to 1.0, no debt and a book value of $3.44 per share.
Outlook
Based on backlog and deferred revenue levels at the end of the
third quarter and expected fourth quarter orders, the Company
expects fourth quarter fiscal 2005 revenues to be approximately
$20 to $23 million.* Based upon anticipated gross profit margins,
the operating expense run rate and the anticipated $1.4 to $1.6
million gain on the Nortem N.V. final distribution, the Company
expects a net loss of approximately $3.5 to $4.5 million for the
fourth quarter.*
Conference Call Details
Investors will have the opportunity to listen to the conference
call at 3:30 p.m. CDT over the Internet. The webcast is being
distributed over CCBN's Investor Distribution Network to both
institutional and individual investors. Individual investors can
listen to the call through CCBN's individual investor center at
www.fulldisclosure.com or by visiting any of the investor sites
in CCBN's Individual Investor Network. Institutional investors
can access the call via CCBN's password-protected event management
site, StreetEvents (www.streetevents.com). For those who cannot
listen to the live broadcast, a replay will be available shortly
after the call.
About FSI
FSI International, Inc. is a global supplier of surface conditioning
equipment technology and support services for microelectronics
manufacturing. Using the Company’s broad portfolio of batch
and single-wafer cleaning products which include process technologies
for immersion, spray, vapor and CryoKinetic, customers are able
to achieve their process performance, flexibility and productivity
goals.
The Company’s support services programs provide product
and process enhancements to extend the life of installed FSI equipment,
enabling worldwide customers to realize a higher return on their
capital investment.
FSI maintains a web site at http://www.fsi-intl.com.
“Safe Harbor” Statement Under the Private Securities
Litigation Reform Act of 1995
This press release contains certain “forward-looking”
statements (*), including, but not limited to, the anticipated
gain on the final Nortem N.V. distribution and the expected fourth
quarter revenue and net loss. Except for the historical information
contained herein, the matters discussed in this news release are
forward-looking statements involving risks and uncertainties,
both known and unknown, that could cause actual results to differ
materially from those in such forward-looking statements. Such
risks and uncertainties include, but are not limited to, the change
in industry conditions; order delays or cancellations; general
economic conditions; changes in customer capacity requirements
and demand for microelectronics; the extent of demand for the
Company’s products and its ability to meet demand; global
trade policies; worldwide economic and political stability; the
Company’s successful execution of internal performance plans;
the cyclical nature of the Company’s business; volatility
of the market for certain products; performance issues with key
suppliers and subcontractors; the transition to 300mm products;
the level of new orders; the timing and success of current and
future product and process development programs; the success of
the Company’s affiliated distributor; the success of the
Company’s direct distribution organization; and the potential
impairment of long-lived assets; as well as other factors listed
from time to time in the Company’s Securities and Exchange
Commission reports including, but not limited to, the Company’s
Annual Report on Form 10-K for the 2004 fiscal year and the Company’s
quarterly report on Form 10-Q for the second quarter of fiscal
2005. The Company assumes no duty to update the information in
this press release.
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