FSII FS Development Corporation II

FSI International, Inc. (Nasdaq: FSII), a manufacturer of capital equipment for the microelectronics industry, today reported financial results for its fiscal 2012 first quarter ended November 26, 2011.

First Quarter Financial ResultsFirst quarter fiscal 2012 sales increased 22 percent to $13.3 million, as compared to $10.9 million for the same period of fiscal 2011. The company’s net loss for the first quarter of fiscal 2012 was $3.0 million, or $0.08 per share, compared to a net loss of $2.5 million, or $0.06 per share for the first quarter last year. The first quarter financial results included $352,000 and $187,000 of stock-based compensation in fiscal 2012 and 2011, respectively.

Orders for the first quarter of fiscal 2012 increased 48 percent to $22.9 million, as compared to $15.5 million in the prior quarter and decreased 29 percent as compared to $32.3 million in the first quarter of fiscal 2011.

Balance SheetOn November 26, 2011, the company maintained a strong balance sheet with approximately $109 million in assets, including $20 million in cash, restricted cash, cash equivalents and long-term marketable securities. At the end of the first quarter, the company had a current ratio of 5.0 to 1.0, no debt and a book value of $2.33 per share.

Company OutlookBased upon the backlog and deferred revenue at the beginning of the quarter and quarter-to-date announced orders, fiscal 2012 second quarter sales are expected to be between $30.0 and $35.0 million, representing a significant increase from the $13.3 million first quarter level.* A portion of the expected revenue is subject to the receipt of purchase orders and the shipment and recognition of revenue occurring in the quarter.*

Based upon the anticipated gross profit margin and operating expense level, the company expects to report between $2.0 and $3.0 million of net income for the second quarter of fiscal 2012.*

Conference Call DetailsFSI investors have the opportunity to listen to management’s discussion of its financial results on a conference call at 3:30 p.m. CT today. The company invites all those interested to join the call by dialing 888.989.5162 and entering access code 6859863. For those who cannot listen to the live broadcast, a replay will be available shortly after the call by dialing 800.685.0912.

About FSIFSI International, Inc. is a global supplier of surface conditioning equipment, technology and support services for microelectronics manufacturing. Using the company’s broad portfolio of cleaning products, which include batch and single-wafer platforms for immersion, spray and cryogenic aerosol technologies, 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. For more information, visit FSI’s website at http://www.fsi-intl.com.

“Safe Harbor” Statement Under the Private Securities Litigation Reform Act of 1995This press release contains certain “forward-looking” statements (*), including, but not limited to second quarter beginning backlog and deferred revenue, second quarter-to-date announced orders, expected second quarter sales, anticipated second quarter gross margin and operating expense levels and expected second quarter net income. 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, changes 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 level of new orders; the timing and success of current and future product and process development programs; the success of the company’s direct distribution organization; legal proceedings; the potential impairment of long-lived assets; and the potential adverse financial impacts resulting from declines in the fair value and liquidity of investments the company presently holds; the impact of natural disasters on parts supply and demand for products; as well as other factors listed herein or from time to time in the company’s SEC reports, including our latest 10-K annual report. The company assumes no duty to update the information in this press release.

    FSI INTERNATIONAL, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data) (unaudited)       First Quarter Ended Nov. 26,     Nov. 27, 2011 2010 Sales $ 13,282 $ 10,880 Cost of goods sold   7,744     5,709   Gross margin 5,538 5,171   Selling, general and administrative expenses 5,269 4,671 Research and development expenses   3,696     3,000     Operating loss (3,427 ) (2,500 ) Interest and other (expense) income, net   314     (8 )   Loss before income taxes (3,113 ) (2,508 ) Income tax benefit   (69 )   (6 )   Net loss $ (3,044 ) $ (2,502 )   Net loss per share – basic $ (0.08 ) $ (0.06 ) Net loss per share – diluted $ (0.08 ) $ (0.06 )   Weighted average common shares Basic 38,862 38,544 Diluted 38,862 38,544     FSI INTERNATIONAL, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share data) (unaudited)       Nov. 26,     Aug. 27, 2011 2011 Assets   Current assets Cash, restricted cash and cash equivalents $ 17,843 $ 20,693 Receivables, net 12,149 23,196 Inventories, net 55,330 48,630 Other current assets   4,630   4,241 Total current assets 89,952 96,760   Property, plant and equipment, net 14,994 14,805   Marketable securities 1,907 1,907 Investment 460 460 Other assets   1,628   1,677 Total assets $ 108,941 $ 115,609     Liabilities and Stockholders’ Equity   Current liabilities Trade accounts payable $ 8,594 $ 11,226 Deferred profit* 2,550 2,997 Accrued expenses   6,851   7,473 Total current liabilities 17,995 21,696   Long-term accrued expenses 359 392   Total stockholders’ equity 90,587 93,521       Total liabilities and stockholders’ equity $ 108,941 $ 115,609  

*Deferred profit reflects deferred revenue less manufacturing and other related costs.

    FSI INTERNATIONAL, INC. AND SUBSIDIARIES MISCELLANEOUS FINANCIAL INFORMATION (in thousands, except percentages, per share and total employee data) (unaudited)       First Quarter Ended Nov. 26,     Nov. 27, 2011 2010 Sales by Area   United States 17 % 23 % International 83 % 77 %   Cash Flow Statement   Capital expenditures $ 1,973 $ 476 Depreciation $ 591 $ 585   Miscellaneous Data   Total employees, including contract 367 304 Book value per share $ 2.33 $ 2.10 Shares outstanding 38,865 38,544