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KULICKE & SOFFA FISCAL 2Q 2011 RESULTS EXCEED HIGH-END OF GUIDANCE

Kulicke & Soffa Fiscal 2Q 2011 Results Exceed High-End of Guidance

May 3, 2011 at 12:00 AM EDT
Kulicke & Soffa Fiscal 2Q 2011 Results Exceed High-End of GuidanceSINGAPORE, May 03, 2011 (BUSINESS WIRE) -- Kulicke & Soffa Industries, Inc. (NASDAQ: KLIC) ("K&S" or the "Company")today announced results for its second fiscal quarter ended April 2, 2011.

For its second quarter of fiscal 2011, the Company reported net revenue of $206.7 million and net income of $39.9 million, or $0.54 per diluted share.

Quarterly Results

Fiscal Q2 2011

Change vs.

Fiscal Q2 2010

Change vs.

Fiscal Q1 2011

Net Revenue $206.7 million 34.4% 38.9%
Gross Profit $99.0 million 46.0% 37.2%
Gross Margin 47.9% 380 bps (50) bps
Income from Operations $43.6 million 87.2% 97.8%
Operating Margin 21.1% 590 bps 630 bps
Net Income $39.9 million 88.5% 164.2%
Net Margin 19.3% 550 bps 920 bps
EPS - Diluted $0.54 92.9% 157.1%

Bruno Guilmart, Kulicke & Soffa's President and Chief Executive Officer, said, "Our results exceeded the high-end of prior guidance, with revenue increasing approximately 39% compared to the prior quarter led by our OSAT customers. We continue to benefit from strong demand from both our ball and wedge bonder equipment lines from a wide range of customers.

"Momentum continued in the gold to copper transition, with approximately 71% of our ball bonder shipments in the most recent quarter sold as copper capable bonders. We also continue to benefit from ongoing replacement demand for our latest generation of gold only ball bonders. We have also seen an increased demand for large area bondable options, which enable our customers to gain added efficiencies and reduce the cost of packaging. We believe we are maintaining our leadership position by offering the best equipment and tools solutions available on the market, backed by a flexible and efficient manufacturing model that allows us to ramp up production to meet customer demand."

Key Product Trends

  • Ball bonder equipment net revenue increased 57.7% over the December quarter. This sequential change was predominantly driven by increased OSAT customer demand.
  • 71% of ball bonder equipment shipments were sold as copper capable bonders.
  • Wedge bonder equipment net revenue increased 19.4% over the December quarter.

Financial Highlights

  • Net revenue increased sequentially to $206.7 million, exceeding the high end of guidance.
  • Gross margin remained strong at 47.9%.
  • Operating margin was up 630 bps from the prior quarter to 21.1%.
  • Net income was $39.9 million.
  • Diluted EPS was $0.54.
  • Cash and cash equivalents increased to $275.7 million up $78.1 million from the prior quarter.

Third Quarter Fiscal 2011 Outlook

The Company expects net revenue for the third quarter of fiscal 2011 to be approximately $255 million to $275 million.

Looking forward, Bruno Guilmart, commented, "We continue to position our business to leverage our R&D leadership and innovation and to focus our efforts to mitigate volatility, improve profitability and ensure our longer-term growth. We expect our overall ball and wedge bonding businesses to remain strong through the third quarter."

Earnings Conference Call Details

A conference call to discuss these results will be held today, May 3, 2011 beginning at 8:00 am (ET). To access the conference call, interested parties may call +1-877-407-8037 or internationally +1-201-689-8037, or can access the live webcast at Investor Events.

A replay will be available from approximately one hour after the completion of the call through May 10, 2011 by calling toll-free +1-877-660-6853 or internationally +1-201-612-7415 and using the following replay access codes: 5521 (account number) and 370466 (replay ID number). A webcast replay will also be available at Investor Events .

About Kulicke & Soffa

Kulicke & Soffa (NASDAQ: 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 die and wedge bonders 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 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 and improving OSAT volumes. 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; 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. 2010 Annual Report on Form 10-K and our other filings with the Securities and Exchange Commission. Kulicke & 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 Six months ended
April 2, April 3, April 2, April 3,
2011 2010 2011 2010
Net revenue:
Equipment $ 190,010 $ 136,353 $ 322,708 $ 247,950
Expendable Tools 16,719 17,485 32,884 34,303
Total net revenue 206,729 153,838 355,592 282,253
Cost of sales:
Equipment 100,833 79,466 171,071 144,611
Expendable Tools 6,939 6,600 13,452 13,497
Total cost of sales 107,772 86,066 184,523 158,108
Gross profit:
Equipment 89,177 56,887 151,637 103,339
Expendable Tools 9,780 10,885 19,432 20,806
Total gross profit 98,957 67,772 171,069 124,145
Operating expenses:
Selling, general and administrative 35,415 27,678 66,087 50,317
Research and development 16,524 13,980 31,719 27,141
Amortization of intangible assets 2,386 2,386 4,772 4,774
Restructuring 983 406 2,775 605
Total operating expenses 55,308 44,450 105,353 82,837
Income from operations:
Equipment 41,346 20,194 60,530 35,041
Expendable Tools 2,303 3,128 5,186 6,267
Total income from operations 43,649 23,322 65,716 41,308
Other income (expense):
Interest income 156 89 261 186
Interest expense (241 ) (359 ) (483 ) (730 )
Interest expense: non-cash (1,780 ) (1,746 ) (3,552 ) (3,458 )
Income from operations before income taxes 41,784 21,306 61,942 37,306
Provision for income taxes 1,899 148 6,958 308
Net income $ 39,885 $ 21,158 $ 54,984 $ 36,998
Net income per share:
Basic $ 0.55 $ 0.30 $ 0.77 $ 0.52
Diluted $ 0.54 $ 0.28 $ 0.75 $ 0.50
Weighted average shares outstanding:
Basic 71,512 69,806 71,196 69,745
Diluted 73,120 74,371 72,410 74,143
Three months ended Six months ended
April 2, April 3, April 2, April 3,
Supplemental financial data: 2011 2010 2011 2010
Depreciation and amortization $ 4,397 $ 4,410 $ 8,804 $ 8,919
Capital expenditures $ 1,884 $ 1,010 $ 4,589 $ 2,106
Equity-based compensation expense:
Cost of sales $ 56 $ 50 $ 104 $ 96
Selling, general and administrative 2,148 1,273 3,111 1,987
Research and development 354 386 630 730
Total equity-based compensation expense $ 2,558 $ 1,709 $ 3,845 $ 2,813
As of
April 2, April 3,
2011 2010
Backlog of orders $ 217,000 $ 132,000
Number of employees 2,884 2,749
KULICKE & SOFFA INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
April 2, October 2,
2011 2010
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 275,676 $ 178,112
Restricted cash - 237
Short-term investments 6,139 2,985

Accounts and notes receivable, net of allowance for doubtful accounts of $870 and $980, respectively

163,631 196,035
Inventories, net 82,939 73,893
Prepaid expenses and other current assets 12,232 15,985
Deferred income taxes 5,454 5,443
TOTAL CURRENT ASSETS 546,071 472,690
Property, plant and equipment, net 30,604 30,059
Goodwill 43,898 26,698
Intangible assets 34,340 39,111
Other assets 11,902 11,611
TOTAL ASSETS $ 666,815 $ 580,169
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 76,030 $ 82,353
Accrued expenses and other current liabilities 48,193 41,498
Earnout agreement payable 17,200 -
Income taxes payable 1,349 1,279
TOTAL CURRENT LIABILITIES 142,772 125,130
Long term debt 101,749 98,475
Deferred income taxes 21,388 20,355
Other liabilities 13,129 13,729
TOTAL LIABILITIES 279,038 257,689
SHAREHOLDERS' EQUITY
Common stock, no par value 433,176 423,715
Treasury stock, at cost (46,356 ) (46,356 )
Accumulated deficit (686 ) (55,670 )
Accumulated other comprehensive income 1,643 791
TOTAL SHAREHOLDERS' EQUITY 387,777 322,480

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$ 666,815 $ 580,169
KULICKE & SOFFA INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Three months ended Six months ended

April 2, 2011

April 3, 2010

April 2, 2011

April 3, 2010

Net cash provided by operating activities, continuing operations $ 76,477 $ 6,194 $ 101,787 $ 40,319
Net cash used in operating activities, discontinued operations (444 ) (410 ) (968 ) (906 )
Net cash provided by operating activities $ 76,033 $ 5,784 $ 100,819 $ 39,413
Net cash provided by (used in) investing activities, continuing operations (1,989 ) 2,948 (7,637 ) 1,917
Net cash used in investing activities, discontinued operations - - - (1,838 )
Net cash provided by (used in) investing activities $ (1,989 ) $ 2,948 $ (7,637 ) $ 79
Net cash provided by financing activities 3,906 206 4,031 183
Effect of exchange rate changes on cash and cash equivalents 175 (64 ) 351 (154 )
Changes in cash and cash equivalents $ 78,125 $ 8,874 $ 97,564 $ 39,521
Cash and cash equivalents, beginning of period 197,551 175,207 178,112 144,560
Cash and cash equivalents, end of period $ 275,676 $ 184,081 $ 275,676 $ 184,081
Short-term investments & restricted cash 6,139 216 6,139 216
Total cash, cash equivalents, restricted cash and short-term investments $ 281,815 $ 184,297 $ 281,815 $ 184,297

SOURCE: Kulicke & Soffa Industries, Inc.

Kulicke & Soffa Industries, Inc.
Joseph Elgindy
Investor Relations
P: +1-215-784-7518
F: +1-215-784-6180
jelgindy@kns.com
or
Global IR Partners
David Pasquale
P: +1-914-337-8801
klic@globalirpartners.com