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KULICKE & SOFFA INDUSTRIES, INC. REPORTS RESULTS FOR ITS FIRST QUARTER FISCAL 2011

Kulicke & Soffa Industries, Inc. Reports Results for Its First Quarter Fiscal 2011

February 1, 2011 at 12:00 AM EST
Kulicke & Soffa Industries, Inc. Reports Results for Its First Quarter Fiscal 2011SINGAPORE, Feb 01, 2011 (BUSINESS WIRE) -- Kulicke & Soffa Industries, Inc. (NASDAQ: KLIC) ("K&S" or the "Company")today announced results for its first fiscal quarter ended January 1, 2011. All information included in this press release relates to GAAP results.

For its first quarter of fiscal 2011, the Company reported net revenue of $148.9 million and net income of $15.1 million, or $0.21 per diluted share.

Quarterly GAAP Results

Change vs. Change vs.

Fiscal Q1 2011

Fiscal Q1 2010 Fiscal Q4 2010
Net Revenue $148.9 million 15.9% (42.6%)
Gross Profit $72.1 million 27.9% (35.8%)
Gross Margin 48.4% 450 basis points 510 basis points
Income from Operations $22.1 million 22.7% (61.1%)
Operating Margin 14.8% 80 basis points (710) basis points
Net Income $15.1 million (4.7%) (73.1%)
Net Margin 10.1% (220) basis points (1150) basis points
EPS - Diluted $0.21 0.0% (73.1%)

Commenting on the results, Bruno Guilmart, President and Chief Executive Officer, said, "Revenue in the December quarter came in better than expected, with the sequential decline in ball bonder shipments significantly less than anticipated.

"We continue to see strong momentum in the gold to copper transition and have shipped initial volume orders of our newly introduced IConnPS ProCuTM machine. Given the proven productivity advantage of our ProCu machine we expect to see increased demand as we gain market share and benefit from replacement orders.

"Our wedge bonder equipment line continued to perform very well, with revenue increasing 66% in the December quarter compared to the September quarter. The increase was driven primarily by higher sales from the power semiconductor market but also continued demand in the automotive and renewable energy markets. The higher volume shipments of wedge bonder equipment during the December quarter contributed to the higher overall gross margin for the company."

Key Product Trends

  • Ball bonder net revenue decreased 58.1% over the September quarter. This sequential decrease was predominantly driven by reduced OSAT customer demand.
  • The first volume orders of the newly released IConnPS ProCu wire bonder have been recognized in the December quarter.
  • Sustained volumes of wedge bonder shipments are anticipated to continue through the March quarter.

Financial Highlights

  • Net revenue decreased sequentially although less than anticipated, exceeding the high end of guidance.
  • Gross margin increased 5.1% from the prior quarter to 48.4%.
  • Operating margin was 14.8%.
  • Net income was $15.1 million.
  • Diluted EPS was $0.21.
  • Operations generated $25.3 million of net cash.

Second Quarter Fiscal 2011 Outlook

The Company expects net revenue for the second quarter fiscal 2011 to be approximately $175 million to $195 million.

Looking forward, Bruno Guilmart, President and Chief Executive Officer, commented, "We expect our ball bonder business to benefit from our technology leadership as customers continue to transition from gold to copper wire bonding, replacement demand and improving OSAT volumes as well as continued strength in our wedge bonder business."

Earnings Conference Call Details

A conference call to discuss these results will be held today, February 1, 2011 beginning at 8:00 am (ET). To access the conference call, interested parties may call (877) 407-8037 or (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 February 8, 2011 by calling toll-free (877) 660-6853 or internationally (201) 612-7415 and using the following replay access codes: 5521 (account number) and 364696 (replay ID number). A webcast replay will also be available 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, increasing market share, 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

January 1, January 2,
2011 2010
Net revenue:
Equipment $ 132,698 $ 111,597
Expendable Tools 16,165 16,818
Total net revenue 148,863 128,415
Cost of sales:
Equipment 70,238 65,145
Expendable Tools 6,513 6,897
Total cost of sales 76,751 72,042
Gross profit:
Equipment 62,460 46,452
Expendable Tools 9,652 9,921
Total gross profit 72,112 56,373
Operating expenses:
Selling, general and administrative 30,672 22,639
Research and development 15,195 13,161
Amortization of intangible assets 2,386 2,388
Restructuring 1,792 199
Total operating expenses 50,045 38,387
Income from operations:
Equipment 19,184 14,847
Expendable Tools 2,883 3,139
Total income from operations 22,067 17,986
Other income (expense):
Interest income 105 97
Interest expense (242 ) (371 )
Interest expense: non-cash (1,772 ) (1,712 )
Income from operations before income taxes 20,158 16,000
Provision for income taxes 5,059 160
Net income $ 15,099 $ 15,840
Net income per share:
Basic $ 0.21 $ 0.23
Diluted $ 0.21 $ 0.21
Weighted average shares outstanding:
Basic 70,881 69,684
Diluted 71,706 73,687
Three months ended
January 1, January 2,
Supplemental financial data: 2011 2010
Depreciation and amortization $ 4,407 $ 4,509
Capital expenditures $ 2,705 $ 1,096
Equity-based compensation expense:
Cost of sales $ 48 $ 46
Selling, general and administrative 963 714
Research and development 276 344
Total equity-based compensation expense $ 1,287 $ 1,104
As of
January 1, January 2,
2011 2010
Backlog of orders $ 193,000 $ 36,000
Number of employees 2,628 2,574
KULICKE & SOFFA INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)

January 1, October 2,
2011 2010
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 197,551 $ 178,112
Restricted cash - 237
Short-term investments 6,074 2,985

Accounts and notes receivable, net of allowance for doubtful accounts of $1,261 and $980, respectively

161,045

196,035

Inventories, net 74,661 73,893
Prepaid expenses and other current assets 13,224 15,985
Deferred income taxes 5,445 5,443
TOTAL CURRENT ASSETS 458,000 472,690
Property, plant and equipment, net 30,766 30,059
Goodwill 26,698 26,698
Intangible assets 36,726 39,111
Other assets 11,641 11,611
TOTAL ASSETS $ 563,831 $ 580,169
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 41,567 $ 82,353
Accrued expenses and other current liabilities 40,781 41,498
Income taxes payable 3,904 1,279
TOTAL CURRENT LIABILITIES 86,252 125,130
Long term debt 100,110 98,475
Deferred income taxes 20,896 20,355
Other liabilities 14,657 13,729
TOTAL LIABILITIES 221,915 257,689
SHAREHOLDERS' EQUITY
Common stock, no par value 427,397 423,715
Treasury stock, at cost (46,356 ) (46,356 )
Accumulated deficit (40,571 ) (55,670 )
Accumulated other comprehensive income 1,446 791
TOTAL SHAREHOLDERS' EQUITY 341,916 322,480

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$ 563,831 $ 580,169
KULICKE & SOFFA INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)

Three months ended
January 1, 2011 January 2, 2010
Net cash provided by operations $ 25,310 $ 34,125
Net cash used in discontinued operations (524 ) (496 )
Net cash provided by operating activities $ 24,786 $ 33,629
Net cash used in investing activities, continuing operations (5,648 ) (1,031 )
Net cash used in investing activities, discontinued operations - (1,838 )
Net cash used in investing activities $ (5,648 ) $ (2,869 )
Net cash used in financing activities, continuing operations 125 (23 )
Effect of exchange rate changes on cash and cash equivalents 176 (90 )
Changes in cash and cash equivalents $ 19,439 $ 30,647
Cash and cash equivalents, beginning of period 178,112 144,560
Cash and cash equivalents, end of period $ 197,551 $ 175,207
Short-term investments & restricted cash 6,074 216
Total Cash, cash equivalents, restricted cash and short-term investments $ 203,625 $ 175,423

SOURCE: Kulicke & Soffa Industries, Inc.

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