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KULICKE & SOFFA INDUSTRIES, INC. REPORTS RESULTS FOR ITS SECOND FISCAL QUARTER 2010

Kulicke & Soffa Industries, Inc. Reports Results for its Second Fiscal Quarter 2010

May 5, 2010 at 12:00 AM EDT
Kulicke & Soffa Industries, Inc. Reports Results for its Second Fiscal Quarter 2010

FORT WASHINGTON, Pa., May 05, 2010 (BUSINESS WIRE) --Kulicke & Soffa Industries, Inc. (NASDAQ: KLIC) ("K&S" or the "Company")today announced results for its second fiscal quarter ended April 3, 2010. This press release contains both GAAP results and non-GAAP measures.

For its second fiscal quarter of 2010, the Company reported net revenue of $153.8 million and net income of $21.2 million, or $0.28 per diluted share. On a non-GAAP basis* for its second quarter, the Company reported net revenue of $153.8 million and net income of $27.2 million, or $0.36 per diluted share.

Quarterly GAAP Results

From Continuing
Operations

Fiscal Q2 2010

Change vs.
Fiscal Q2 2009**

Change vs.
Fiscal Q1 2010**

Net Revenue $153.8 million 510% 20%
Gross Profit $67.8 million 742% 20%
Gross Margin 44.1% 1,217 basis points 16 basis points
Net Income $21.2 million N/M *** 34%
Net Margin 13.8% 15,059 basis points 142 basis points
EPS - Diluted $0.28 N/M *** 33%
Quarterly Non-GAAP Measures*

From Continuing
Operations

Fiscal Q2 2010

Change vs.
Fiscal Q2 2009**

Change vs.
Fiscal Q1 2010**

Net Revenue $153.8 million 510% 20%
Gross Profit $67.8 million 740% 20%
Gross Margin 44.1% 1,209 basis points 15 basis points
Net Income $27.2 million N/M *** 28%
Net Margin 17.7% 11,932 basis points 118 basis points
EPS - Diluted $0.36 N/M *** 24%
*Non-GAAP measures exclude: equity-based compensation; severance; amortization of intangibles; impairment of goodwill; gain on extinguishment of debt; non-cash interest expense; and related tax effects on non-GAAP adjustments (see reconciliations of GAAP results to Non-GAAP measures in the following financial schedules).

** As adjusted for ASC No. 470.20, Debt, Debt With Conversion Options.

*** Not meaningful as comparable period was a loss.

Commenting on the results, Scott Kulicke, CEO, said, "We are obviously pleased with the March quarter's revenue, profitability, and cash flow. These results reflect the current, unprecedented demand for semiconductor assembly capacity, and for K&S's wire bonders in particular. That demand is broad based, coming from both IDMs and subcontractors, and across all application spaces including logic, memory, linear and analog, discrete and LED. It also includes both gold and copper wire applications. We are especially pleased with our success in LED as well as the initial demand we are seeing for our iStack die bonders as these markets are key to future incremental growth.

"While it is important that investors keep in mind both the volatility and unpredictability of the semiconductor industry, based on orders already in hand, our current forecast is for demand to continue at least through the summer and into the fall, giving us unusual visibility and the confidence to commit to continue to ramp up wire bonder production through this period."

Key Product Trends

  • Ball bonder unit volumes increased approximately 21% over the previous quarter levels.
    • Increasing and broad-based demand continues from all market segments.
    • The copper transition continues, with increasing demand for both copper kits and copper-configured bonders: 63% of ball bonders shipped in the second quarter were configured for copper.
    • LED market penetration continues to advance revenue growth.
  • Heavy wire wedge bonder demand increased during the March quarter, with equipment sales up 39% from the December quarter, and we expect this demand to strengthen through the current quarter.
  • We received our first iStackPSTM die bonder order in January and have received additional iStackPSTM orders into the current quarter.

Financial Highlights

  • Revenue increased 20% sequentially, exceeding previous guidance.
  • Non-GAAP diluted EPS of $0.36, up 24% from the previous quarter.
  • Total cash and cash equivalents of $184.1 million as of April 3, 2010.
  • Return on Invested Capital+ of 41.0%.
  • Net revenue for the June quarter is expected to be approximately $205 million.

+See Reconciliation of Return on Invested Capital table.

Earnings Conference Call Details

A conference call to discuss these results will be held tomorrow, May 6, 2010 beginning at 9:00 am (ET). To access the conference call, interested parties may call (877) 407-8037 or (201) 689-8037, or log on to Investor Events for listen-only mode. A replay will be available approximately one hour after the completion of the call by calling toll-free (877) 660-6853 or internationally (201) 612-7415 and using the following replay access codes: 5521 (account number) and 347810 (replay ID number). A replay will also be available on the K&S website at Investor Events. The replay will be available via phone and website for a limited time.

Discussion of Non-GAAP Measures

This press release contains non-GAAP measures as a supplement to the consolidated financial results presented in accordance with GAAP. The Company believes certain non-GAAP measures provide investors with an additional, useful perspective on the Company's performance as seen through the eyes of management. Management uses non-GAAP measures along with GAAP financial results for: analyzing the performance of the Company's businesses; strategic and tactical decision making; and determining compensation. The Company does not consider non-GAAP measures to be a substitute for, or superior to, financial results presented in accordance with GAAP. All of the non-GAAP measures included herein are reconciled to the most directly comparable GAAP results in the following financial statements. These non-GAAP measures may be calculated differently from non-GAAP measures used by other companies. In addition, these non-GAAP measures are not based on a comprehensive set of accounting rules or principles and some of the adjustments reflect the exclusion of items that are recurring and will be reflected in the Company's GAAP financial results for the foreseeable future.

Exclusions from GAAP Results

The Company excludes the following from its GAAP results in presenting non-GAAP measures:

- Equity-based compensation expenses The Company recognizes the fair value of its equity-based compensation in expense. Equity-based compensation consists of common stock, stock options and performance-based, market-based and time-based restricted stock granted under the Company's equity compensation plans. Equity-based compensation is a non-cash expense that can vary significantly in amount from period to period.

- Other The exclusion of certain other non-GAAP amounts allows for improved comparisons of the Company's results to both prior periods and other companies. The Company excludes the following other items from non-GAAP measures as these items are not reflective of the performance of the Company's ongoing businesses:

  • Severance plan
  • Impairment of goodwill
  • Amortization of intangibles
  • Gain on extinguishment of debt
  • Non-cash interest expense

- Tax Adjustment Non-GAAP measures are tax adjusted using the GAAP tax rate associated with each quarterly period. The tax rate is calculated by dividing each quarter's GAAP tax expense (benefit), adjusted for discrete quarterly items, by the GAAP operating income (loss) for that quarter. Non-GAAP year-to-date measures are calculated by summing the associated quarterly non-GAAP measures, without further tax adjustments.

Non-GAAP Measures

The specific non-GAAP measures included herein are gross profit, gross margin, net income (loss), net margin, and earnings per share ("EPS"). The Company calculates these measures as follows:

--Gross Profit K&S non-GAAP gross profit excludes the effects of equity-based compensation expense recorded within cost of sales.

--Gross Margin K&S non-GAAP gross margin excludes the impact of equity-based compensation expense recorded within cost of sales.

--Net Income (Loss) and EPS K&S non-GAAP net income (loss) and EPS exclude equity-based compensation; severance; impairment of goodwill; amortization of intangibles; gain on extinguishment of debt; non-cash interest expense; and related tax effects on non-GAAP adjustments.

--Net Margin K&S non-GAAP net margin reflects the Company's net margin excluding equity-based compensation; severance; amortization of intangibles; impairment of goodwill; gain on extinguishment of debt; non-cash interest expense; and related tax effects on non-GAAP adjustments.

About Kulicke & Soffa Industries, Inc.

Kulicke & Soffa Industries, Inc. (NASDAQ: KLIC) is a global leader in the design and manufacture of semiconductor assembly equipment. As one of the pioneers of the 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 bonding, 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 devices. (http://cts.businesswire.com/ct/CT?id=smartlink&url=http%3A%2F%2Fwww.kns.com&esheet=6279578&lan=en_US&anchor=www.kns.com&index=3&md5=c5bc263c22f4a607304f61158cd056d9)

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 increasing or strengthening demand for our products, and our future growth, revenue, profitability and cash flow. 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 during periods of historically high demand for our products; 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, associated with a substantial foreign customer and supplier base and substantial foreign manufacturing operations;and the factors listed or discussed in Kulicke and Soffa Industries, Inc. 2009 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
March 28, April 3, March 28, April 3,
2009 * 2010 2009 * 2010
Net revenue $ 25,232 $ 153,838 $ 62,648 $ 282,253
Cost of sales 17,187 86,066 40,675 158,108
Gross profit 8,045 67,772 21,973 124,145
Selling, general and administrative 27,836 30,470 57,688 55,696
Research and development 13,258 13,980 28,658 27,141
Impairment of goodwill 2,709 - 2,709 -
Total operating expenses 43,803 44,450 89,055 82,837
Income (loss) from operations (35,758 ) 23,322 (67,082 ) 41,308
Interest income 193 89 947 186
Interest expense (2,024 ) (2,105 ) (4,103 ) (4,188 )
Gain on extinguishment of debt 2,786 - 3,965 -
Income (loss) from continuing operations, before tax (34,803 ) 21,306 (66,273 ) 37,306
Provision (benefit) for income taxes (276 ) 148 (12,158 ) 308
Income (loss) from continuing operations (34,527 ) 21,158 (54,115 ) 36,998
Income from discontinued operations, net of tax - - 22,727 -
Net income (loss) $ (34,527 ) $ 21,158 $ (31,388 ) $ 36,998
Income (loss) per share from continuing operations:
Basic $ (0.57 ) $ 0.30 $ (0.89 ) $ 0.52
Diluted $ (0.57 ) $ 0.28 $ (0.89 ) $ 0.50
Income from share of discontinued operations:
Basic $ - $ - $ 0.37 $ -
Diluted $ - $ - $ 0.37 $ -
Net income (loss) per share:
Basic $ (0.57 ) $ 0.30 $ (0.52 ) $ 0.52
Diluted $ (0.57 ) $ 0.28 $ (0.52 ) $ 0.50
Weighted average shares outstanding:
Basic 61,054 69,806 60,752 69,745
Diluted 61,054 74,371 60,752 74,143
Equity-based compensation expense included in continuing operations:
Cost of sales $ 28 $ 50 $ (1 ) $ 96
Selling, general and administrative 416 1,273 (251 ) 1,987
Research and development 214 386 238 730
Total $ 658 $ 1,709 $ (14 ) $ 2,813
Three months ended Six months ended
March 28, April 3, March 28, April 3,
Additional financial data: 2009 2010 2009 2010
Depreciation and amortization
Continuing operations $ 5,447 $ 4,409 $ 10,715 $ 8,922
Capital expenditures
Continuing operations $ 913 $ 1,010 $ 3,346 $ 2,106
March 28, April 3,
2009 2010
Backlog of orders
Continuing operations $ 15,000 $ 132,000
Number of employees
Continuing operations 2,047

2,749

(1)

* As adjusted for ASC No. 470.20, Debt, Debt With Conversion Options.
(1) - Increase primarily due to manufacturing headcount
KULICKE & SOFFA INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
October 3, April 3,
2009 * 2010
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 144,560 $ 184,081
Restricted cash 281 216

Accounts and notes receivable, net of allowance for doubtful accounts of $1,378 and $999, respectively

95,779 108,015
Inventories, net 41,489 57,100
Prepaid expenses and other current assets 11,566 13,090
Deferred income taxes 1,786 1,798
TOTAL CURRENT ASSETS 295,461 364,300
Property, plant and equipment, net 36,046 30,385
Goodwill 26,698 26,698
Intangible assets 48,656 43,884
Other assets 5,774 7,130
TOTAL ASSETS $ 412,635 $ 472,397
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Current portion of long term debt $ 48,964 $ 48,964
Accounts payable 39,908 58,602
Accrued expenses and other current liabilities 32,576 31,737
Income taxes payable 1,612 630
TOTAL CURRENT LIABILITIES 123,060 139,933
Long term debt 92,217 95,287
Deferred income taxes 16,282 16,742
Other liabilities 10,273 9,673
TOTAL LIABILITIES 241,832 261,635
SHAREHOLDERS' EQUITY
Common stock, no par value 413,092 416,699
Treasury stock, at cost (46,356 ) (46,356 )
Accumulated deficit (197,812 ) (160,814 )
Accumulated other comprehensive income 1,879 1,233
TOTAL SHAREHOLDERS' EQUITY 170,803 210,762
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 412,635 $ 472,397
* As adjusted for ASC No. 470.20, Debt, Debt With Conversion Options.
KULICKE & SOFFA INDUSTRIES, INC.
OPERATING RESULTS BY BUSINESS SEGMENT
(In thousands)
(Unaudited)
Fiscal 2010:
Expendable
Equipment Tools
Three months ended April 3, 2010 Segment Segment Consolidated
Net revenue $ 136,353 $ 17,485 $ 153,838
Cost of sales 79,466 6,600 86,066
Gross profit 56,887 10,885 67,772
Operating expenses 36,693 7,757 44,450
Income from continuing operations $ 20,194 $ 3,128 $ 23,322
Six months ended April 3, 2010
Net revenue $ 247,950 $ 34,303 $ 282,253
Cost of sales 144,611 13,497 158,108
Gross profit 103,339 20,806 124,145
Operating expenses 68,298 14,539 82,837
Income from continuing operations $ 35,041 $ 6,267 $ 41,308
Fiscal 2009:
Expendable
Equipment Tools
Three months ended March 28, 2009 Segment Segment Consolidated
Net revenue $ 16,977 $ 8,255 $ 25,232
Cost of sales 12,564 4,623 17,187
Gross profit 4,413 3,632 8,045
Operating expenses 34,981 6,113 41,094
Impairment of goodwill 2,709 - 2,709
Loss from continuing operations $ (33,277 ) $ (2,481 ) $ (35,758 )
Six months ended March 28, 2009
Net revenue $ 40,636 $ 22,012 $ 62,648
Cost of sales 29,221 11,454 40,675
Gross profit 11,415 10,558 21,973
Operating expenses 73,714 12,632 86,346
Impairment of goodwill 2,709 - 2,709
Loss from continuing operations $ (65,008 ) $ (2,074 ) $ (67,082 )
KULICKE & SOFFA INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Three months ended Six months ended

March 28, 2009

April 3, 2010

March 28, 2009

April 3, 2010

Net cash provided by (used in) continuing operations $ (31,845 ) $ 6,194 $ (29,833 ) $ 40,319
Net cash used in discontinued operations (439 ) (410 ) (1,218 ) (906 )
Net cash provided by (used in) operating activities $ (32,284 ) $ 5,784 $ (31,051 ) $ 39,413
Net cash provided by (used in) investing activities (3,009 ) 2,948 (51,889 ) 1,917
Net cash provided by (used in) investing activities, discontinued operations - - 149,857 (1,838 )
Net cash provided by (used in) investing activities $ (3,009 ) $ 2,948 $ 97,968 $ 79
Net cash provided by (used in) financing activities (10,168 ) 206 (84,355 ) 183
Effect of exchange rate changes on cash and cash equivalents 22 (64 ) 113 (154 )
Changes in cash and cash equivalents $ (45,439 ) $ 8,874 $ (17,325 ) $ 39,521
Cash and cash equivalents, beginning of period 173,046 175,207 144,932 144,560
Cash and cash equivalents, end of period $ 127,607 $ 184,081 $ 127,607 $ 184,081
Short-term investments 2,354 - 2,354 -
Restricted cash 281 216 281 216
Total Cash, cash equivalents, restricted cash and short-term investments $ 130,242 $ 184,297 $ 130,242 $ 184,297
KULICKE & SOFFA INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS - SUMMARY
COMPARISON OF GAAP RESULTS TO NON-GAAP MEASURES
(In thousands, except share amounts)
(Unaudited)
Three months ended Three months ended Six months ended Six months ended
March 28, April 3, March 28, April 3,
2009 * 2010 2009 * 2010

(GAAP results)

Net revenue $ 25,232 $ 153,838 $ 62,648 $ 282,253
Gross profit 8,045 67,772 21,973 124,145
Income (loss) from operations (35,758 ) 23,322 (67,082 ) 41,308
Income (loss) from continuing operations (34,527 ) 21,158 (54,115 ) 36,998
Weighted average shares outstanding
Basic 61,054 69,806 60,752 69,745
Diluted 61,054 74,371 60,752 74,143
Income (loss) per share from continuing operations
Basic $ (0.57 ) $ 0.30 (0.89 ) $ 0.52
Diluted $ (0.57 ) $ 0.28 (0.89 ) $ 0.50

(Non-GAAP measures)

Net revenue $ 25,232 $ 153,838 $ 62,648 $ 282,253
Gross profit 8,073 67,822 21,972 124,241
Income (loss) from operations (25,647 ) 27,823 (47,484 ) 49,500
Income (loss) from continuing operations (25,645 ) 27,210 (47,523 ) 48,406
Weighted average shares outstanding, continuing operations
Basic 61,054 69,806 60,752 69,745
Diluted 61,054 74,371 60,752 74,143
Income (loss) per share from continuing operations
Basic $ (0.42 ) $ 0.39 $ (0.78 ) $ 0.69
Diluted $ (0.42 ) $ 0.36 $ (0.78 ) $ 0.65
* As adjusted for ASC No. 470.20, Debt, Debt With Conversion Options.
KULICKE & SOFFA INDUSTRIES, INC.
OPERATING RESULTS BY BUSINESS SEGMENT - SUMMARY
COMPARISON OF GAAP RESULTS TO NON-GAAP MEASURES
(In thousands)
(Unaudited)
Expendable
Equipment Tools
Segment Segment Consolidated
Fiscal 2010:
Three months ended April 3, 2010

(GAAP results)

Net revenue $ 136,353 $ 17,485 $ 153,838
Gross profit 56,887 10,885 67,772
Income from operations 20,194 3,128 23,322

(Non-GAAP measures)

Net revenue $ 136,353 $ 17,485 $ 153,838
Gross profit 56,927 10,895 67,822
Income from operations 23,632 4,191 27,823
Six months ended April 3, 2010

(GAAP results)

Net revenue $ 247,950 $ 34,303 $ 282,253
Gross profit 103,339 20,806 124,145
Income from operations 35,041 6,267 41,308

(Non-GAAP measures)

Net revenue $ 247,950 $ 34,303 $ 282,253
Gross profit 103,416 20,825 124,241
Income from operations 41,145 8,355 49,500
Fiscal 2009:
Three months ended March 28, 2009

(GAAP results)

Net revenue $ 16,977 $ 8,255 $ 25,232
Gross profit 4,413 3,632 8,045
Loss from operations (33,277 ) (2,481 ) (35,758 )

(Non-GAAP measures)

Net revenue $ 16,977 $ 8,255 $ 25,232
Gross profit 4,433 3,640 8,073
Loss from operations (24,455 ) (1,192 ) (25,647 )
Six months ended March 28, 2009

(GAAP results)

Net revenue $ 40,636 $ 22,012 $ 62,648
Gross profit 11,415 10,558 21,973
Loss from operations (65,008 ) (2,074 ) (67,082 )

(Non-GAAP measures)

Net revenue $ 40,636 $ 22,012 $ 62,648
Gross profit 11,450 10,522 21,972
Income (loss) from operations (50,692 ) 3,208 (47,484 )
KULICKE & SOFFA INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
RECONCILIATION OF GAAP RESULTS TO NON-GAAP MEASURES
(In thousands, except share amounts)
(Unaudited)
Three months ended Three months ended Six months ended Six months ended
March 28, % of April 3, % of March 28, % of April 3, % of
2009 * Revenue 2010 Revenue 2009 * Revenue 2010 Revenue
Net revenue (GAAP results) $ 25,232 $ 153,838 $ 62,648 $ 282,253
Net revenue (Non-GAAP measures) 25,232 153,838 62,648 282,253
Gross profit (GAAP results) 8,045 31.9 % 67,772 44.1 % 21,973 35.1 % 124,145 44.0 %
- Equity-based compensation expense 28 50 (1 ) 96
Gross profit (Non-GAAP measures) 8,073 32.0 % 67,822 44.1 % 21,972 35.1 % 124,241 44.0 %
Income (loss) from operations (GAAP results) (35,758 ) -141.7 % 23,322 15.2 % (67,082 ) -107.1 % 41,308 14.6 %
- Equity-based compensation expense 658 1,709 (14 ) 2,813
- Severance plan 3,969 406 6,555 605
- Impairment of goodwill 2,709 - 2,709 -
- Facilities contractual commitments - - 2,608 -
- Tax settlement expense - - 2,212 -
- Amortization of intangibles 2,775 2,386 5,528 4,774
Income (loss) from operations (Non-GAAP measures) (25,647 ) -101.6 % 27,823 18.1 % (47,484 ) -75.8 % 49,500 17.5 %
Income (loss) (GAAP results) (34,527 ) -136.8 % 21,158 13.8 % (54,115 ) -86.4 % 36,998 13.1 %
- Equity-based compensation expense 658 1,709 (14 ) 2,813
- Severance plan 3,969 406 6,555 605
- Impairment of goodwill 2,709 - 2,709 -
- Facilities contractual commitments - - 2,608 -
- Tax settlement expense - - 2,212 -
- Amortization of intangibles 2,775 2,386 5,528 4,774
- Gain on extinguishment of debt (2,786 ) - (3,965 ) -
- Non cash interest expense 1,628 1,747 3,270 3,467
- Tax settlement benefit - - (12,154 ) -
- Tax effect of non-GAAP adjustments (71 ) (196 ) (157 ) (251 )
Income (loss) (Non-GAAP measures) (25,645 ) -101.6 % 27,210 17.7 % (47,523 ) -75.9 % 48,406 17.2 %
Weighted average shares outstanding (GAAP & Non-GAAP)
Basic 61,054 69,806 60,752 69,745
Diluted 61,054 74,371 60,752 74,143
Income (loss) per share from continuing operations (GAAP results)
Basic $ (0.57 ) $ 0.30 $ (0.89 ) $ 0.52
Diluted $ (0.57 ) $ 0.28 $ (0.89 ) $ 0.50
Adjustments to net income per share
Basic $ 0.15 $ 0.09 $ 0.11 $ 0.17
Diluted $ 0.15 $ 0.08 $ 0.11 $ 0.15
Income (loss) per share from continuing operations (Non-GAAP measures)
Basic $ (0.42 ) $ 0.39 $ (0.78 ) $ 0.69
Diluted $ (0.42 ) $ 0.36 $ (0.78 ) $ 0.65

* As adjusted for ASC No. 470.20, Debt, Debt With Conversion Options.

KULICKE & SOFFA INDUSTRIES, INC.
OPERATING RESULTS BY BUSINESS SEGMENT
RECONCILIATION OF GAAP RESULTS TO NON-GAAP MEASURES
(In thousands)
(Unaudited)
Expendable
Equipment % of Tools % of
Segment Revenue Segment Revenue Consolidated
Fiscal 2010:
Three months ended April 3, 2010
Net revenue (GAAP results) $ 136,353 $ 17,485 $ 153,838
Net revenue (Non-GAAP measures) 136,353 17,485 153,838
Gross profit (GAAP results) 56,887 41.7 % 10,885 62.3 % 67,772
- Equity-based compensation expense 40 10 50
Gross profit (Non-GAAP measures) 56,927 41.7 % 10,895 62.3 % 67,822
Income from operations (GAAP results) 20,194 14.8 % 3,128 17.9 % 23,322
- Equity-based compensation expense 1,357 352 1,709
- Severance plan 268 138 406
- Amortization of intangibles 1,813 573 2,386
Income from operations (Non-GAAP measures) 23,632 17.3 % 4,191 24.0 % 27,823
Six months ended April 3, 2010
Net revenue (GAAP results) $ 247,950 $ 34,303 $ 282,253
Net revenue (Non-GAAP measures) 247,950 34,303 282,253
Gross profit (GAAP results) 103,339 41.7 % 20,806 60.7 % 124,145
- Equity-based compensation expense 77 19 96
Gross profit (Non-GAAP measures) 103,416 41.7 % 20,825 60.7 % 124,241
Income from operations (GAAP results) 35,041 14.1 % 6,267 18.3 % 41,308
- Equity-based compensation expense 2,234 579 2,813
- Severance plan 242 363 605
- Amortization of intangibles 3,628 1,146 4,774
Income from operations (Non-GAAP measures) 41,145 16.6 % 8,355 24.4 % 49,500
Fiscal 2009:
Three months ended March 28, 2009
Net revenue (GAAP results) $ 16,977 $ 8,255 $ 25,232
Net revenue (Non-GAAP measures) 16,977 8,255 25,232
Gross profit (GAAP results) 4,413 26.0 % 3,632 44.0 % 8,045
- Equity-based compensation expense 20 8 28
Gross profit (Non-GAAP measures) 4,433 26.1 % 3,640 44.1 % 8,073
Loss from operations (GAAP results) (33,277 ) -196.0 % (2,481 ) -30.1 % (35,758 )
- Equity-based compensation expense 461 197 658
- Severance plan 3,534 435 3,969
- Impairment of goodwill 2,709 - 2,709
- Amortization of intangibles 2,118 657 2,775
Loss from operations (Non-GAAP measures) (24,455 ) -144.0 % (1,192 ) -14.4 % (25,647 )
Six months ended March 28, 2009
Net revenue (GAAP results) $ 40,636 $ 22,012 $ 62,648
Net revenue (Non-GAAP measures) 40,636 22,012 62,648
Gross profit (GAAP results) 11,415 28.1 % 10,558 48.0 % 21,973
- Equity-based compensation expense 35 (36 ) (1 )
Gross profit (Non-GAAP measures) 11,450 28.2 % 10,522 47.8 % 21,972
Loss from operations (GAAP results) (65,008 ) -160.0 % (2,074 ) -9.4 % (67,082 )
- Equity-based compensation expense 94 (108 ) (14 )
- Severance plan 5,134 1,421 6,555
- Impairment of goodwill 2,709 - 2,709
- Facilities contractual commitments 2,165 443 2,608
- Tax settlement expense - 2,212 2,212
- Amortization of intangibles 4,214 1,314 5,528
Income (loss) from operations (Non-GAAP measures) (50,692 ) -124.7 % 3,208 14.6 % (47,484 )
KULICKE & SOFFA INDUSTRIES, INC.
ADJUSTED RETURN ON INVESTED CAPITAL
(In thousands)
(Unaudited)
Three months ended
April 3, 2010
Income from operations $ 23,322
Adjustment: Depreciation and amortization (1) 4,409
Adjusted income from operations 27,731
Adjusted income from operations, annualized (4) $ 110,924
Cash, cash equivalents, restricted cash and investments $ 184,297
Adjustment: cash, cash equivalents, restricted cash and investments (2) (109,297 )
Adjusted cash, cash equivalents and investments $ 75,000
Total assets excluding cash, cash equivalents and investments 288,100
Adjusted total assets 363,100
Total current liabilities $ 139,933
Less: current portion of long-term debt (48,964 )
Add: taxes payable (3) 1,552
Adjusted current liabilities 92,521
Adjusted net invested capital $ 270,579
ROIC (4) 41.0 %
(1) Depreciation and amortization are excluded from the ROIC calculation.
(2) Management estimates minimum cash requirement is $75.0 million.

(3) Adjusted current liabilities includes tax liabilities classified as current in prior periods but reclassed to long term liabilities as a result of our adoption of ASC 740.10 during the first quarter of fiscal 2008.

(4) ROIC calculated as adjusted income from operations, annualized through multiplying the current quarter's income from operations by 4, then divided by adjusted net invested capital. Adjusted income from operations is not intended to forecast the Company's future income from operations.

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
Headgate Partners LLC
Claire E. McAdams
P: 530-265-9899
F: 530-265-9699
claire@headgatepartners.com