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KULICKE & SOFFA THIRD QUARTER FISCAL 2011 RESULTS EXCEED HIGH-END OF GUIDANCE

Kulicke & Soffa Third Quarter Fiscal 2011 Results Exceed High-End of Guidance

August 2, 2011 at 12:00 AM EDT
Kulicke & Soffa Third Quarter Fiscal 2011 Results Exceed High-End of Guidance

SINGAPORE, Aug 02, 2011 (BUSINESS WIRE) --

Kulicke & Soffa Industries, Inc. (NASDAQ: KLIC) ("K&S" or the "Company")today announced results for its third fiscal quarter ended July 2, 2011.

For its third quarter of fiscal 2011, the Company reported net revenue of $294.4 million and net income of $70.7 million, or $0.95 per diluted share.

Quarterly Results

Fiscal Q3 2011

Change vs.

Fiscal Q3 2010

Change vs.

Fiscal Q2 2011

Net Revenue $294.4 million 33.1% 42.4%
Gross Profit $134.1 million 35.2% 35.5%
Gross Margin 45.5% 70 bps (240) bps
Income from Operations $81.7 million 63.1% 87.1%
Operating Margin 27.7% 510 bps 660 bps
Net Income $70.7 million 44.1% 77.3%
Net Margin 24.0% 180 bps 470 bps
EPS - Diluted $0.95 46.2% 75.9%

Bruno Guilmart, Kulicke & Soffa's President and Chief Executive Officer, said, "Our results again exceeded the high-end of guidance, with revenue increasing approximately 42% sequentially and net income surpassing the Company's historic record. At the high level, our June quarter results reflect the strong demand generated from our market leadership positions, specifically within our Ball and Wedge bonder equipment lines. The continued success of our copper capable solutions affirms our customers' ongoing adoption of incremental copper capacity and highlights our leadership in the significant transition. Our flexible and efficient manufacturing model enabled us to increase production and meet our customers' record demand, while balancing inventory and maximizing profitability."

Key Product Trends

  • Ball bonder equipment net revenue increased 70% over the March quarter.
  • 70% of ball bonder equipment shipments were sold as copper capable bonders.
  • Wedge bonder equipment net revenue decreased 32% over the March quarter.

Financial Highlights

  • Net revenue increased sequentially to $294.4 million, exceeding the high end of guidance.
  • Gross margin remained robust at 45.5%.
  • Operating margin was up 660 bps from the prior quarter to 27.7%.
  • Net income was $70.7 million.
  • Diluted EPS was $0.95.
  • Cash, cash equivalents and investments increased to $335.5 million up $53.7 million from the prior quarter.

Fourth Quarter Fiscal 2011 Outlook

The Company expects net revenue for the fourth quarter of fiscal 2011 to be approximately $155 million to $175 million, mainly due to a softening of OSAT demand. On a full year basis, this would represent revenue growth of approximately 6% to 8% for fiscal year 2011 compared to fiscal year 2010.

Looking forward, Bruno Guilmart, commented, "Our growth has outpaced expectations for the past few quarters given our market leadership and the world class solutions we provide customers. We expect to benefit from longer-term trends, including the copper transition, for the next few years. Our prior efforts to improve efficiency, while increasing the capacity of our supply chain, will enable us to maximize profitability, as we maintain our focus on new and existing market opportunities while leveraging our manufacturing model."

Earnings Conference Call Details

A conference call to discuss these results will be held today, August 2, 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 www.kns.com/investors/events.

A replay will be available from approximately one hour after the completion of the call through August 9, 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 375366 (replay ID number). A webcast replay will also be available at www.kns.com/investors/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 Nine months ended
July 2, July 3, July 2, July 3,
2011 2010 2011 2010
Net revenue:
Equipment $ 275,398 $ 202,185 $ 598,106 $ 450,135
Expendable Tools 19,040 19,069 51,924 53,372
Total net revenue 294,438 221,254 650,030 503,507
Cost of sales:
Equipment 152,493 114,169 323,564 258,780
Expendable Tools 7,851 7,901 21,303 21,398
Total cost of sales 160,344 122,070 344,867 280,178
Gross profit:
Equipment 122,905 88,016 274,542 191,355
Expendable Tools 11,189 11,168 30,621 31,974
Total gross profit 134,094 99,184 305,163 223,329
Operating expenses:
Selling, general and administrative 31,715 31,015 97,800 81,332
Research and development 16,595 14,686 48,314 41,827
Amortization of intangible assets 2,391 2,386 7,163 7,160
Restructuring 1,740 1,045 4,516 1,650
Total operating expenses 52,441 49,132 157,793 131,969
Income from operations:
Equipment 77,348 46,768 137,879 81,809
Expendable Tools 4,305 3,284 9,491 9,551
Total income from operations 81,653 50,052 147,370 91,360
Other income (expense):
Interest income 185 104 445 290
Interest expense (241 ) (385 ) (724 ) (1,106 )
Interest expense: non-cash (1,877 ) (1,768 ) (5,429 ) (5,235 )
Income from operations before income taxes 79,720 48,003 141,662 85,309
Provision (benefit) for income taxes 9,006 (1,080 ) 15,964 (772 )
Net income $ 70,714 $ 49,083 $ 125,698 $ 86,081
Net income per share:
Basic $ 0.97 $ 0.69 $ 1.75 $ 1.22
Diluted $ 0.95 $ 0.65 $ 1.71 $ 1.15
Weighted average shares outstanding:
Basic 72,199 70,131 71,531 69,873
Diluted 74,130 74,960 73,082 74,494
Three months ended Nine months ended
July 2, July 3, July 2, July 3,
Supplemental financial data: 2011 2010 2011 2010
Depreciation and amortization $ 4,470 $ 4,339 $ 13,274 $ 13,258
Capital expenditures $ 1,226 $ 1,265 $ 5,815 $ 3,371
Equity-based compensation expense:
Cost of sales $ 55 $ 44 $ 159 $ 140
Selling, general and administrative 1,673 1,231 4,784 3,218
Research and development 340 334 970 1,064
Total equity-based compensation expense $ 2,068 $ 1,609 $ 5,913 $ 4,422
As of
July 2, July 3,
2011 2010
Backlog of orders $ 176,000 $ 264,000
Number of employees 3,005 2,953
KULICKE & SOFFA INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
July 2, October 2,
2011 2010
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 329,281 $ 178,112
Restricted cash - 237
Short-term investments 6,253 2,985
Accounts and notes receivable, net of allowance for doubtful
accounts of $705 and $980, respectively 215,410 196,035
Inventories, net 86,290 73,893
Prepaid expenses and other current assets 16,535 15,985
Deferred income taxes 5,461 5,443
TOTAL CURRENT ASSETS 659,230 472,690
Property, plant and equipment, net 29,782 30,059
Goodwill 39,196 26,698
Intangible assets 31,953 39,111
Other assets 12,049 11,611
TOTAL ASSETS $ 772,210 $ 580,169
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Current portion of long term debt $ 103,483 $ -
Accounts payable 97,011 82,353
Accrued expenses and other current liabilities 52,244 41,498
Earnout agreement payable 12,498 -
Income taxes payable - 1,279
TOTAL CURRENT LIABILITIES 265,236 125,130
Long term debt - 98,475
Deferred income taxes 28,523 20,355
Other liabilities 13,123 13,729
TOTAL LIABILITIES 306,882 257,689
SHAREHOLDERS' EQUITY
Common stock, no par value 439,618 423,715
Treasury stock, at cost (46,356 ) (46,356 )
Accumulated income (deficit) 70,028 (55,670 )
Accumulated other comprehensive income 2,038 791
TOTAL SHAREHOLDERS' EQUITY 465,328 322,480
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 772,210 $ 580,169
KULICKE & SOFFA INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Three months ended Nine months ended
July 2, 2011 July 3, 2010 July 2, 2011 July 3, 2010
Net cash provided by continuing operations $ 50,300 $ 27,658 $ 152,087 $ 67,977
Net cash used in discontinued operations (579 ) (582 ) (1,547 ) (1,488 )
Net cash provided by operating activities $ 49,721 $ 27,076 $ 150,540 $ 66,489
Net cash provided by (used in) investing activities, continuing operations (1,420 ) (1,275 ) (9,057 ) 642
Net cash used in investing activities, discontinued operations - - - (1,838 )
Net cash used in investing activities $ (1,420 ) $ (1,275 ) $ (9,057 ) $ (1,196 )
Net cash provided by (used in) financing activities 4,805 (47,304 ) 8,836 (47,121 )
Effect of exchange rate changes on cash and cash equivalents 499 262 850 108
Changes in cash and cash equivalents $ 53,605 $ (21,241 ) $ 151,169 $ 18,280
Cash and cash equivalents, beginning of period 275,676 184,081 178,112 144,560
Cash and cash equivalents, end of period $ 329,281 $ 162,840 $ 329,281 $ 162,840
Short-term investments & restricted cash 6,253 226 6,253 226
Total cash, cash equivalents, restricted cash and short-term investments $ 335,534 $ 163,066 $ 335,534 $ 163,066

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