8-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) March 31, 2009

FSI International, Inc.

(Exact name of registrant as specified in its charter)

Minnesota	0-17276	41-1223238
(State or other jurisdiction) of incorporation	(Commission File Number)	(IRS Employer Identification No.)

3455 Lyman Boulevard
Chaska, Minnesota	55318
(Address of principal executive offices)	(Zip Code)

Telephone Number: (952) 448-5440

(Registrant’s Telephone Number, Including Area Code)

     Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o     Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o     Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o     Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o     Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02. Results of Operations and Financial Condition.

     On March 31, 2009, FSI International, Inc. issued a press release, a copy of which is being furnished as an exhibit to this report and is incorporated herein by reference.

Item 9.01. Financial Statements and Exhibits.

     (c) Exhibits

The following exhibit is being furnished pursuant to Item 2.02 “Results of Operations and Financial Condition” of this Form 8-K:

Exhibit 99  Press Release dated March 31, 2009.

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.
By	/s/ Patricia M. Hollister
	Patricia M. Hollister
	Chief Financial Officer

Date: March 31, 2009

Exhibit Index

Exhibit	Description
99	Press release dated March 31, 2009

EX-99

Exhibit 99

NEWS                              

For additional information contact: Benno Sand-Investor and Financial Media (952) 448-8936

FOR IMMEDIATE RELEASE

FSI International, Inc. Announces Second Quarter and First Half Fiscal 2009 Financial Results

Fiscal 2009 third quarter cash burn rate expected to be less than $1.0 million following March 2009 cost reductions

     MINNEAPOLIS (March 31, 2009)—FSI International, Inc. (Nasdaq: FSII), a manufacturer of capital equipment for the microelectronics industry, today reported financial results for the second quarter of fiscal 2009 and for the six months ended February 28, 2009.

Fiscal 2009 Second Quarter and First Half

     Sales for the first half of fiscal 2009 were $20.9 million, compared to $43.9 million for the same period of fiscal 2008. The Company’s net loss for the first half of fiscal 2009 was $14.7 million, or $0.48 per share, compared to a net loss of $3.1 million, or $0.10 per share, for the first half of fiscal 2008.

     Second quarter fiscal 2009 sales were $8.6 million, compared to $21.4 million for the same period in fiscal 2008. The Company’s net loss for the second quarter of fiscal 2009 was $9.4 million, or $0.30 per share, compared to a net loss of $1.0 million, or $0.03 per share, for the second quarter of fiscal 2008.

     In the second quarter of fiscal 2009, we recorded approximately $2.8 million of severance costs associated with the March restructuring and headcount and cost reduction initiatives and a $500,000 increase in the Company’s inventory obsolescence reserve. We recorded severance cost of; $700,000 in cost of goods; $1,170,000 in selling, general and administrative expenses and $970,000 in research and development expenses. There was no severance or obsolescence cost recorded in the second quarter of fiscal 2008.

-more-

always thinking // better^®

FSI International, Inc.
March 31, 2009
Page Two

     Second quarter revenues were below the Company’s previously provided guidance range, as the Company was unable to recognize revenue for an ORION^® system that was accepted by a customer and paid for in full during the second quarter. Since the same customer ordered an expansion module shortly after placing the initial system order, the two transactions are viewed as one arrangement and a single unit of accounting, in accordance with U.S. generally accepted accounting principles. Therefore revenue recognition for this transaction has been deferred until the expansion module is accepted. The Company anticipates recognizing revenue for this transaction in the third quarter.

Cost Control Initiatives

     “The global economic downturn is continuing to adversely impact credit availability, consumer confidence and technology spending,” said Don Mitchell, FSI chairman and chief executive officer. “As a result, most semiconductor manufacturers are experiencing low factory utilization levels and have reduced or delayed their capital investments. Even though it is reported that several device producers have recently started to experience improved utilization levels, we anticipate that this situation will persist until at least early calendar 2010.”*

     “In response, in March we implemented a further reduction in management salaries, established two shutdown weeks, reduced our headcount and enacted other cost reduction initiatives. As industry conditions improve, we will align our cost structure to support the anticipated revenue run rate while funding the programs that provide the most significant opportunity for near term revenue and future market share gains,” continued Mitchell.

     Since the start of fiscal 2009, the Company has implemented headcount and other cost reductions that are expected to reduce the Company’s annual operating cost by approximately $11.0 to $12.0 million.* At the anticipated lower cost run rate, the Company’s quarterly breakeven revenue level is expected to be between $14 and $17 million and the operating cash flow neutral revenue level should be reduced to $12 to $14 million depending on the gross margin rate and shipment/accounts receivable collection timing.* The Company intends to manage its operations with a goal to end fiscal 2009 with greater than $10 million in cash, restricted cash, cash equivalents and marketable securities.*

-more-

always thinking // better^®

FSI International, Inc.
March 31, 2009
Page Three

Balance Sheet

     Cash, cash equivalents, restricted cash and marketable securities at the end of the second quarter were $11.2 million. The Company used $6.6 million in operations during the second quarter of fiscal 2009. At the end of the second quarter, the Company had a current ratio of 2.8 to 1.0 and a book value of $1.71 per share.

Outlook

     Given the quarter-to-date orders, the Company expects third quarter orders between $10.0 and $12.0 million as compared to $11.5 million in the second quarter of fiscal 2009.* Based on the backlog and deferred revenue levels at the end of the second quarter and expected additional third quarter orders, the Company expects third quarter fiscal 2009 revenues of $13 to $15 million.*

     Based upon the anticipated gross profit margin and the operating expense run rate, the Company expects a net loss of $2.0 to $3.0 million for the third quarter of fiscal 2009.* The Company expects to use less than $1.0 million of net cash in operating activities in the third quarter, as we manage accounts receivable and inventory levels.*

     To address the future needs of its customers, the Company plans to continue allocating resources to key product development and application expansion programs at the 45nm and below technology nodes.*

Conference Call Details

     FSI 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 888.950.7568 and entering access code 1955509. The webcast is also being distributed through the Thomson ONE StreetEvents Network to both institutional and individual investors. Individual investors can listen to the call at www.earnings.com, Thomson/CCBN’s individual investor portal, powered by StreetEvents. Institutional investors can access the call via Thomson’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 by dialing 866.463.4955.

-more-

always thinking // better^®

FSI International, Inc.
March 31, 2009
Page Four

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 cleaning products, which include batch and single-wafer platforms for immersion, spray, vapor and CryoKinetic 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 1995

     This press release contains certain “forward-looking” statements (*), including, but not limited to, expected revenue recognition, expected annual cost savings, expected breakeven revenue level, expected operating cash flow revenue level, expected year end cash, expected orders, expected revenues, expected financial results, expected cash usage, other expected financial performance for the third quarter of fiscal 2009. 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 financial condition of the Company’s customers and their ability to pay; 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; 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 and our 10-Q quarterly reports. The Company assumes no duty to update the information in this press release.

-more-

always thinking // better^®

FSI INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF OPERATIONS

(in thousands, except per share data)

(unaudited)

	Second Quarter Ended						Six Months Ended
	Feb. 28,						Feb. 28,
	2009			Mar. 1, 2008			2009			Mar. 1, 2008
Sales	$	8,640		$	21,423		$	20,884		$	43,862
Cost of goods		7,433			11,213			15,050			25,050
Gross margin		1,207			10,210			5,834			18,812
Selling, general and administrative expenses		6,071			6,888			11,728			13,622
Research and development expenses		4,631			4,804			9,024			9,090
Operating loss		(9,495	)		(1,482	)		(14,918	)		(3,900	)
Interest and other income, net		107			389			202			687
Loss before income taxes		(9,388	)		(1,093	)		(14,716	)		(3,213	)
Income tax expense (benefit)		39			(77	)		28			(65	)
Net loss	$	(9,427	)	$	(1,016	)	$	(14,744	)	$	(3,148	)
Loss per share — basic	$	(0.30	)	$	(0.03	)	$	(0.48	)	$	(0.10	)
Loss per share — diluted	$	(0.30	)	$	(0.03	)	$	(0.48	)	$	(0.10	)
Weighted average common shares
Basic		31,050			30,615			30,945			30,581
Diluted		31,050			30,615			30,945			30,581

-more-

FSI INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

(in thousands)

(unaudited)

	Feb. 28,
	2009		Aug. 30, 2008
Assets
Current assets
Cash, restricted cash, cash equivalents and marketable securities	$	6,564	$	15,913
Receivables, net		10,226		9,614
Inventories		25,920		27,169
Other current assets		5,882		8,152
Total current assets		48,592		60,848
Property, plant and equipment, net		16,475		18,266
Marketable securities		4,621		6,447
Restricted cash		—		500
Investment		460		460
Intangible assets, net		—		61
Other assets		1,071		1,071
Total assets	$	71,219	$	87,653
Liabilities and Stockholders’ Equity
Current liabilities
Trade accounts payable	$	3,406	$	4,305
Current portion of long-term debt		391		841
Deferred profit*		4,176		3,867
Customer deposits		46		7
Accrued expenses		9,512		10,392
Total current liabilities		17,531		19,412
Long-term liabilities		526		583
Total stockholders’ equity		53,162		67,658
Total liabilities and stockholders’ equity	$	71,219	$	87,653

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

-more-

FSI INTERNATIONAL, INC. AND SUBSIDIARIES

MISCELLANEOUS FINANCIAL INFORMATION

(in thousands, except percentages, per share and total employee data)

(unaudited)

	Six Months Ended
	Feb. 28, 2009			Mar. 1, 2008
Sales by Area
United States		25	%		20	%
International		75	%		80	%
Cash Flow Statement
Capital expenditures	$	12		$	892
Depreciation	$	1,803		$	1,867
Amortization	$	61		$	218
Miscellaneous Data
Total employees, including contract		332			423
Book value per share	$	1.71		$	2.54
Shares outstanding		31,160			30,656

###