Kulicke & Soffa Reports Third Quarter 2014 Results

SINGAPORE--(BUSINESS WIRE)--

Kulicke and Soffa Industries, Inc. KLIC (“Kulicke & Soffa”, “K&S” or the “Company”) today announced results for its third fiscal quarter ended June 28, 2014.

Quarterly Results
			Fiscal Q3 2014			Change vs. Fiscal Q3 2013			Change vs. Fiscal Q2 2014
Net Revenue			$180.5 million			27.9%			58.1%
Gross Profit			$85.2 million			29.2%			47.7%
Gross Margin			47.2%			50 bps			(330) bps
Income from Operations			$31.6 million			67.4%			212.4%
Operating Margin			17.5%			410 bps			860 bps
Net Income			$26.6 million			40.9%			193.5%
Net Margin			14.7%			137 bps			680 bps
EPS – Diluted			$0.34			36.0%			183.3%

Bruno Guilmart, Kulicke & Soffa's President and Chief Executive Officer, said, “The 58% revenue increase, over the March Quarter, was driven by increased demand for our market-leading equipment solutions. While these offerings individually serve targeted segments, they collectively cover a wide-range of the industry's interconnect requirements. We expect to drive further enhancements to the diversity and breadth of our equipment portfolio as our ongoing Advanced Packaging investments come to fruition."

Third Quarter Fiscal 2014 Key Product Trends

• Ball bonder equipment net revenue increased 74.7% over the March quarter.
• 68.8% of ball bonder equipment was sold as copper capable.
• Wedge bonder equipment net revenue increased 82.4% over the March quarter.

Third Quarter Fiscal 2014 Financial Highlights

• Net revenue of $180.5 million.
• Gross margin of 47.2%.
• Net income of $26.6 million or $0.34 per share.
• Cash, cash equivalents and short-term investments were $600.1 million as of June 28, 2014.

Fourth Quarter Fiscal 2014 Outlook

The Company currently expects net revenue in the fourth fiscal quarter of 2014, ending September 27, 2014, to be in the range of approximately $185 million to $195 million.

Looking forward, Bruno Guilmart commented, “The improved demand for our offerings combined with positive macro trends, such as the rapid growth in price-sensitive mobile devices, anticipated improvements in the PC market, and expansion of new opportunities such as the Internet-of-Things and Advanced Packaging, all add support to our longer-term value proposition. In addition to trends we currently participate in, we continue to actively seek supplemental opportunities to further enhance shareholder value."

Earnings Conference Call Details

A conference call to discuss these results will be held today, July 29, 2014, beginning at 8:00 am (EDT). To access the conference call, interested parties may call +1-877-407-8037 or internationally +1-201-689-8037. The call will also be available by live webcast at investor.kns.com.

A replay will be available from approximately one hour after the completion of the call through August 5, 2014 by calling toll-free +1-877-660-6853 or internationally +1-201-612-7415 and using the replay ID number of 13586285. A webcast replay will also be available at investor.kns.com.

About Kulicke & Soffa

Kulicke & Soffa KLIC is a global leader in the design and manufacture of semiconductor and LED assembly equipment. As a pioneer in this industry, K&S has provided customers with market leading packaging solutions for decades. In recent years, K&S has expanded its product offerings through strategic acquisitions, adding wedge bonding and a broader range of expendable tools to its core ball bonding products. Combined with its extensive expertise in process technology, K&S is well positioned to help customers meet the challenges of assembling the next-generation semiconductor and LED devices. (www.kns.com)

Caution Concerning Results and Forward Looking Statements

In addition to historical statements, this press release contains statements relating to future events and our future results. These statements are “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995, and include, but are not limited to, statements that relate to our future revenue, sustained, increasing, continuing or strengthening demand for our products, the continuing transition from gold to copper wire bonding, replacement demand, our research and development efforts, our ability to identify and realize new growth opportunities and our ability to control costs. While these forward-looking statements represent our judgments and future expectations concerning our business, a number of risks, uncertainties and other important factors could cause actual developments and results to differ materially from our expectations. These factors include, but are not limited to: the risk that customer orders already received may be postponed or canceled, generally without charges; the risk that anticipated customer orders may not materialize; the risk that our suppliers may not be able to meet our demands on a timely basis; the volatility in the demand for semiconductors and our products and services; a slowdown of transition from gold to copper wire bonding by our customers and the industry, volatile global economic conditions, which could result in, among other things, sharply lower demand for products containing semiconductors and for the Company's products, and disruption of capital and credit markets; the risk of failure to successfully manage our operations; acts of terrorism and violence; risks, such as changes in trade regulations, currency fluctuations, political instability and war, which may be associated with a substantial non-U.S. customer and supplier base and substantial non-U.S. manufacturing operations; and the factors listed or discussed in Kulicke and Soffa Industries, Inc. 2013 Annual Report on Form 10-K and our other filings with the Securities and Exchange Commission. Kulicke and Soffa Industries, Inc. is under no obligation to (and expressly disclaims any obligation to) update or alter its forward-looking statements whether as a result of new information, future events or otherwise.

KULICKE & SOFFA INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share and employee data)
(Unaudited)
		Three months ended								Nine months ended
		June 28, 2014				June 29, 2013				June 28, 2014				June 29, 2013
Net revenue:
Equipment		$	165,013			$	125,103			$	325,770			$	316,088
Expendable Tools		15,504				16,078				48,066				45,242
Total net revenue		180,517				141,181				373,836				361,330
Cost of sales:
Equipment		88,749				67,632				173,933				175,204
Expendable Tools		6,611				7,635				18,709				19,867
Total cost of sales		95,360				75,267				192,642				195,071
Gross profit:
Equipment		76,264				57,471				151,837				140,884
Expendable Tools		8,893				8,443				29,357				25,375
Total gross profit		85,157				65,914				181,194				166,259
Operating expenses:
Selling, general and administrative		28,600				28,095				76,303				80,329
Research and development		23,480				15,783				60,277				46,243
Amortization of intangible assets		1,329				2,296				3,988				6,883
Restructuring		164				873				1,139				1,542
Total operating expenses		53,573				47,047				141,707				134,997
Income from operations:
Equipment		27,804				16,474				26,217				22,647
Expendable Tools		3,780				2,393				13,270				8,615
Total income from operations		31,584				18,867				39,487				31,262
Other income (expense):
Interest income		256				267				878				629
Interest expense		(316		)		—				(732		)		(1		)
Income from operations before income taxes		31,524				19,134				39,633				31,890
Provision for income taxes		4,908				247				5,904				2,063
Net income		$	26,616			$	18,887			$	33,729			$	29,827
Net income per share:
Basic		$	0.35			$	0.25			$	0.44			$	0.40
Diluted		$	0.34			$	0.25			$	0.44			$	0.39
Weighted average shares outstanding:
Basic		76,596				75,231				76,308				75,083
Diluted		77,605				76,473				77,086				76,204

		Three months ended								Nine months ended
Supplemental financial data:		June 28, 2014				June 29, 2013				June 28, 2014				June 29, 2013
Depreciation and amortization		$	3,509			$	4,798			$	9,995			$	14,302
Capital expenditures		1,022				2,554				9,596				5,957
Equity-based compensation expense:
Cost of sales		82				53				269				275
Selling, general and administrative		2,182				2,125				6,924				6,375
Research and development		471				418				1,624				1,438
Total equity-based compensation expense		$	2,735			$	2,596			$	8,817			$	8,088

					As of
					June 28, 2014				June 29, 2013
Backlog of orders 1					$	130,500			$	125,000
Number of employees					2,643				2,437

1. Represents customer purchase commitments. While the Company believes these orders are firm, they are generally cancellable by customers without penalty.

KULICKE & SOFFA INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
		As of
		June 28, 2014				September 28, 2013
ASSETS
CURRENT ASSETS
Cash and cash equivalents		$	597,457			$	521,788
Short-term investments		2,600				3,252
Accounts and notes receivable, net of allowance for doubtful accounts of $239 and $504 respectively		154,410				162,714
Inventories, net		53,922				38,135
Prepaid expenses and other current assets		19,153				24,012
Deferred income taxes		4,063				4,487
TOTAL CURRENT ASSETS		831,605				754,388
Property, plant and equipment, net		52,231				47,541
Goodwill		41,546				41,546
Intangible assets		7,221				11,209
Other assets		7,260				8,310
TOTAL ASSETS		$	939,863			$	862,994
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable		$	66,222			$	37,030
Accrued expenses and other current liabilities		41,406				38,868
Income taxes payable		4,076				1,504
TOTAL CURRENT LIABILITIES		111,704				77,402
Financing obligation		19,618				19,396
Deferred income taxes		40,115				40,709
Other liabilities		8,957				8,822
TOTAL LIABILITIES		180,394				146,329
SHAREHOLDERS' EQUITY
Common stock, no par value		476,547				467,525
Treasury stock, at cost		(46,356		)		(46,356		)
Accumulated income		325,607				291,878
Accumulated other comprehensive income		3,671				3,618
TOTAL SHAREHOLDERS' EQUITY		759,469				716,665
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY		$	939,863			$	862,994

KULICKE & SOFFA INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
		Three months ended								Nine months ended
		June 28, 2014				June 29, 2013				June 28, 2014				June 29, 2013
Net cash provided by operating activities		$	5,919			$	11,348			$	84,189			$	68,180
Net cash provided by (used in) investing activities, continuing operations		4,657				(2,554		)		(8,672		)		(647		)
Net cash (used in) provided by financing activities, continuing operations		(274		)		328				205				868
Effect of exchange rate changes on cash and cash equivalents		45				752				(53		)		(152		)
Changes in cash and cash equivalents		10,347				9,874				75,669				68,249
Cash and cash equivalents, beginning of period		587,110				498,619				521,788				440,244
Cash and cash equivalents, end of period		$	597,457			$	508,493			$	597,457			$	508,493