Document


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
____________________________________________________
 
FORM 8-K
 
____________________________________________________
 
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
 
Date of report (Date of earliest event reported): January 31, 2018
 
____________________________________________________
KULICKE AND SOFFA INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
 
 ____________________________________________________
 
Pennsylvania
 
000-00121
 
23-1498399
(State or Other Jurisdiction
of Incorporation)
 
(Commission File Number)
 
(I.R.S. Employer
Identification No.)
 
23A Serangoon North Avenue 5, #01-01 K&S Corporate Headquarters, Singapore
 
554369
(Address of Principal Executive Offices)
 
(Zip Code)
 
Registrant’s telephone number, including area code: (215) 784-6000
  
N/A
(Former Name or Former Address, if Changed Since Last Report)
____________________________________________________
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
 
¨
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
 
¨
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
 
¨
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
 
¨
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company [ ]

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]





Item 2.02     Results of Operations and Financial Condition.
On January 31, 2018, Kulicke and Soffa Industries, Inc. (the “Company”) issued a press release announcing its financial results for its first fiscal quarter ended December 30, 2017. A copy of this press release is furnished as Exhibit 99.1 to this report, and is incorporated by reference into this Item 2.02 as if fully set forth herein.
The information in this report, furnished under “Item 2.02 Results of Operations and Financial Condition,” shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
Item 9.01
Financial Statements and Exhibits.
(d)
Exhibits.
 
 
Exhibit No.
Description
99.1
Press Release dated January 31, 2018






SIGNATURE
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
 
KULICKE AND SOFFA INDUSTRIES, INC.
 
 
 
 
Date: January 31, 2018
By:
/s/ LESTER WONG
 
 
Name:
Lester Wong
 
 
Title:
Senior Vice President, Interim Chief Financial Officer and General Counsel
 
 
 
 
 






EXHIBIT INDEX
 
 
Exhibit No.
Description
99.1



Exhibit
Exhibit 99.1
http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12014906&doc=3
K&S Corporate Headquarters
Kulicke & Soffa Pte Ltd
23A Serangoon North Ave 5
#01-01, Singapore 554369
 
+65-6880-9600 main
+65-6880-9580 fax
www.kns.com
Co. Regn. No. 199902120H
 
Kulicke & Soffa Reports First Quarter 2018 Results

Reports $213.7 million of December quarters sales, up 43% over the same period last year
Delivers $38.6 million of December quarter operating profit, up 123% over the same period last year
Guides record first fiscal half 2018 revenue between $419 and $429 million

Singapore – January 31, 2018 – Kulicke and Soffa Industries, Inc. (NASDAQ: KLIC) (“Kulicke & Soffa”, “K&S” or the “Company”) today announced results for its first fiscal quarter ended December 30, 2017. The Company reported first quarter net revenue of $213.7 million, a diluted EPS of $(0.98) and a non-GAAP diluted EPS was $0.54.
 
Quarterly Results - U.S. GAAP
 
 
Fiscal Q1 2018
 
Change vs.
Fiscal Q1 2017
Change vs.
Fiscal Q4 2017
Net Revenue
$213.7 million
up 42.8%
down 1.0%
Gross Profit
$99.0 million
up 44.9%
down 5.4%
Gross Margin
46.3%
up 60 bps
down 220 bps
Income from Operations
$38.6 million
up 123.1%
up 4.6%
Operating Margin
18.1%
up 650 bps
up 100 bps
Net Loss
$(69.3) million
down 544.2%
down 289.3%
Net Margin
(32.4)%
down 4280 bps
down 4940 bps
EPS – Diluted(a)
$(0.98)
down 545.5%
down 292.2%
(a)
GAAP diluted net earnings per share reflects any dilutive effect of outstanding restricted stock units and stock options, but that effect is excluded when calculating GAAP diluted net (loss) per share because it would be anti-dilutive. For the three months ended December 30, 2017, 1.2 million shares of restricted stock units and stock options were excluded due to the Company's net loss.
Quarterly Results - Non-GAAP
 
Fiscal Q1 2018
Change vs.
Fiscal Q1 2017
Change vs.
Fiscal Q4 2017
Income from Operations
$41.8 million
up 122.3%
up 3.5%
Operating Margin
19.6%
up 700 bps
up 90 bps
Net Income
$38.8 million
up 126.9%
down 3.2%
Net Margin
18.2%
up 680 bps
down 40 bps
EPS - Diluted
$0.54
up 125.0%
down 3.6%
* A reconciliation of the GAAP and non-GAAP adjusted results is provided in the financial tables included in this release. See also “Use of Non-GAAP Financial Results” section.



1


Dr. Fusen Chen, Kulicke & Soffa's President and Chief Executive Officer, stated, “Strength during the December quarter was driven by our competitive automotive, LED, memory and image sensor solutions in addition to the ongoing strong business environment."

During the December quarter the Company incurred a charge of $105 million due to the impact of the Tax Cuts and Reform Act of 2017. On a non-GAAP basis, diluted earnings per share increased by 125% over the same period in the prior year.

First Quarter Fiscal 2018 Financial Highlights
 
Net revenue of $213.7 million.    
Gross margin of 46.3%.
Non-GAAP net income of $38.8 million or $0.54 per share.
Cash, cash equivalents, and short-term investments were $649.7 million as of December 30, 2017.

Second Quarter Fiscal 2018 Outlook

The Company currently expects net revenue in the second fiscal quarter of 2018 ending March 31, 2018 to be approximately $205 million to $215 million. For the first fiscal half of 2018, this guidance represents an increase of 21% over the same period in the prior year.

Looking forward, Dr. Fusen Chen commented, "Our competitive positions and exposure to higher-growth segments provides additional upside beyond the already favorable semiconductor unit growth rate of 8.9%, calendar 2017 through 2021. In addition, we remain focused to further enhance these long-term growth prospects through traction with our growing advanced packaging offerings and share gains within our recurring revenue business."

Use of Non-GAAP Financial Results
In addition to U.S. GAAP results, this press release also contains non-GAAP financial results. The Company's non-GAAP results exclude amortization related to intangible assets acquired through business combinations, goodwill impairment, costs associated with restructuring, income tax expense related to the Tax Cuts and Jobs Act of 2017 as well as tax benefits or expense associated with the foregoing non-GAAP items. These non-GAAP measures are consistent with the way management analyzes and assesses the Company’s operating results.  The Company believes these non-GAAP measures enhance investors’ understanding of the Company’s underlying operational performance, as well as their ability to compare the Company’s period-to-period financial results and the Company’s overall performance to that of its competitors.

Management uses both U.S. GAAP metrics as well as non-GAAP operating income, operating margin, net income, net margin and net income per diluted share to evaluate the Company's operating and financial results. Non-GAAP financial measures may not provide information that is directly comparable to that provided by other companies in the Company’s industry, as other companies in the industry may calculate non-GAAP financial results differently. In addition, there are limitations in using non-GAAP financial measures because the non-GAAP financial measures are not prepared in accordance with GAAP, may be different from non-GAAP financial measures used by other companies and exclude expenses that may have a material impact on the Company’s reported financial results. The presentation of non-GAAP items is meant to supplement, but not substitute for, GAAP financial measures or information. The Company believes the presentation of non-GAAP results in combination with GAAP results provides better transparency to the investment community when analyzing business trends, providing meaningful comparisons with prior period performance and enhancing investors' ability to view the Company's results from management's perspective. A reconciliation of each available GAAP to non-GAAP financial measure discussed in this press release is contained in the attached exhibit.

Earnings Conference Call Details
  
A conference call to discuss these results will be held today, January 31, 2018, beginning at 6:00 pm (EST). 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 February 14, 2018 by calling toll-free +1-877-660-6853 or internationally +1-201-612-7415 and using the replay ID number of 13675324. A webcast replay will also be available at investor.kns.com.

2


 
About Kulicke & Soffa
 
Kulicke & Soffa (NASDAQ: KLIC) is a leading provider of semiconductor packaging and electronic assembly solutions supporting the global automotive, consumer, communications, computing and industrial segments. As a pioneer in the semiconductor space, 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 and organic development, adding advanced packaging, electronics assembly, wedge bonding and a broader range of expendable tools to its core offerings. Combined with its extensive expertise in process technology and focus on development, K&S is well positioned to help customers meet the challenges of packaging and assembling the next-generation of electronic 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, replacement demand, our research and development efforts, our ability to control costs, and our ability to identify and realize new growth opportunities within segments, such as automotive and industrial as well as surrounding technology adoption such as system in package and advanced packaging techniques. 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; the risk that identified market opportunities may not grow or developed as we anticipated; 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; the possibility that we may need to impair the carrying value of goodwill and/or intangibles established in connection with one or more of our prior acquisitions; 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; the impact of changes in tax law; and the factors listed or discussed in Kulicke and Soffa Industries, Inc. 2017 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.

Contacts:
Kulicke & Soffa Industries, Inc.
 
Joseph Elgindy
 
Investor Relations & Strategic Initiatives
 
P: +1-215-784-7518
 
F: +1-215-784-6180
 
 
 

3


KULICKE & SOFFA INDUSTRIES, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(In thousands, except per share and employee data)
(Unaudited)
 
Three months ended
 
December 30, 2017
 
December 31, 2016
Net revenue
$
213,691

 
$
149,639

Cost of sales
114,652

 
81,321

Gross profit
99,039

 
68,318

 
 
 
 
Operating expenses:
 
 
 
Selling, general and administrative
26,961

 
28,009

Research and development
30,250

 
21,505

Amortization of intangible assets
1,943

 
1,523

Restructuring
1,314

 

Total operating expenses
60,468

 
51,037

Income from operations
38,571

 
17,281

Other income (expense):
 
 
 
Interest income
1,975

 
1,172

Interest expense
(266
)
 
(262
)
Income before income taxes
40,280

 
18,191

Income tax expense
109,633

 
2,608

Share of results of equity-method investee, net of tax
(16
)
 

Net (loss)/income
$
(69,337
)
 
$
15,583

 
 
 
 
Net (loss)/income per share:
 
 
 
Basic
$
(0.98
)
 
$
0.22

Diluted
$
(0.98
)
 
$
0.22

 
 
 
 
Weighted average shares outstanding:
 
 
 
Basic
70,577

 
70,854

Diluted
70,577

 
71,763


 
Three months ended
Supplemental financial data:
December 30, 2017
 
December 31, 2016
Depreciation and amortization
$
4,468

 
$
3,944

Capital expenditures
6,257

 
2,229

Equity-based compensation expense:


 


Cost of sales
132

 
141

Selling, general and administrative
2,323

 
2,734

Research and development
654

 
727

Total equity-based compensation expense
$
3,109

 
$
3,602


 
As of
 
December 30, 2017
 
December 31, 2016
Backlog of orders 1
$
164,968

 
$
86,676

Number of employees
3,181

 
2,827

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

4



KULICKE & SOFFA INDUSTRIES, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(In thousands)
(Unaudited)
 
As of
 
December 30, 2017
 
September 30, 2017
ASSETS
CURRENT ASSETS
 
 
 
Cash and cash equivalents
$
390,661

 
$
392,410

Restricted cash
528

 
530

Short-term investments
259,000

 
216,000

Accounts and other receivable, net of allowance for doubtful accounts of $354 and $79 respectively
173,777

 
198,480

Inventories, net
106,683

 
122,023

Prepaid expenses and other current assets
22,686

 
23,939

TOTAL CURRENT ASSETS
953,335

 
953,382

 
 
 
 
Property, plant and equipment, net
71,720

 
67,762

Goodwill
57,063

 
56,318

Intangible assets, net
60,586

 
62,316

Deferred income taxes
12,276

 
27,771

Equity investments
1,518

 
1,502

Other assets
2,088

 
2,056

TOTAL ASSETS
$
1,158,586

 
$
1,171,107

 
 
 
 
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
 

 
 

Accounts payable
$
68,370

 
$
51,354

Accrued expenses and other current liabilities
80,147

 
132,314

Income taxes payable
18,137

 
16,780

TOTAL CURRENT LIABILITIES
166,654

 
200,448

 
 
 
 
Financing obligation
16,130

 
16,074

Deferred income taxes
26,940

 
26,779

Income taxes payable
89,491

 
6,438

Other liabilities
9,000

 
8,432

TOTAL LIABILITIES
308,215

 
258,171

 
 
 
 
SHAREHOLDERS' EQUITY
 

 
 

Common stock, no par value
510,736

 
506,515

Treasury stock, at cost
(160,884
)
 
(157,604
)
Retained earnings
496,655

 
561,986

Accumulated other comprehensive income
3,864

 
2,039

TOTAL SHAREHOLDERS' EQUITY
850,371

 
912,936

 
 
 
 
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
$
1,158,586

 
$
1,171,107

 

5



KULICKE & SOFFA INDUSTRIES, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 
Three months ended
 
December 30, 2017
 
December 31, 2016
Net cash provided by operating activities
$
50,333

 
$
30,049

Net cash used in investing activities, continuing operations
(48,183
)
 
(2,659
)
Net cash (used in) / provided by financing activities, continuing operations
(3,391
)
 
142

Effect of exchange rate changes on cash, cash equivalents and restricted cash
(510
)
 
1,987

Changes in cash, cash equivalents and restricted cash
(1,751
)
 
29,519

Cash, cash equivalents and restricted cash, beginning of period*
392,940

 
423,907

Cash, cash equivalents and restricted cash, end of period
$
391,189

 
$
453,426

 
 
 
 
Short-term investments
259,000

 
124,000

Total cash, cash equivalents, restricted cash and short-term investments
$
650,189

 
$
577,426

*Certain time deposits as at October 1, 2016 were previously reclassified from cash equivalents to short-term investments for comparative purposes.
 
 
 


6



Reconciliation of U.S. GAAP Income from Operating
to Non-GAAP Income from Operation and Operating Margin
(in thousands, except percentages)
(unaudited)
 
 
Three months ended
 
 
December 30, 2017
 
December 31, 2016
 
September 30, 2017
Net revenue
 
213,691

 
149,639

 
215,892

U.S. GAAP Income from operations
 
38,571

 
17,281

 
36,904

U.S. GAAP operating margin
 
18.0
%
 
11.5
%
 
17.1
%
 
 
 
 
 
 
 
Pre-tax non-GAAP items:
 
 
 
 
 
 
Amortization related to intangible assets acquired through business combination- selling, general and administrative
 
1,943

 
1,523

 
1,989

Restructuring
 
1,314

 

 
1,531

Non-GAAP Income from operations
 
41,828

 
18,804

 
40,424

Non-GAAP operating margin
 
19.6
%
 
12.6
%
 
18.7
%

Reconciliation of U.S. GAAP Net Income to Non-GAAP Net Income and
U.S. GAAP net income per share to Non-GAAP net income per share
(in thousands, except per share data)
(unaudited)
 
 
Three months ended
 
 
December 30, 2017
 
December 31, 2016
 
September 30, 2017
Net revenue
 
213,691

 
149,639

 
215,892

U.S. GAAP net (loss)/income
 
(69,337
)
 
15,583

 
36,576

U.S. GAAP net margin
 
(32.4
)%
 
10.4
%
 
16.9
%
 
 
 
 
 
 
 
Pre-tax non-GAAP adjustments:
 
 
 
 
 
 
Amortization related to intangible assets acquired through business combination- selling, general and administrative
 
1,943

 
1,523

 
1,989

Restructuring
 
1,314

 

 
1,531

Income tax expense- Tax Reform
 
104,955

 

 

Net income tax benefit on non-GAAP items
 
(36
)
 
(22
)
 
(44
)
Total non-GAAP adjustments
 
108,176

 
1,501

 
3,476

Non-GAAP net income
 
38,839

 
17,084

 
40,052

Non-GAAP net margin
 
18.2
 %
 
11.4
%
 
18.6
%
 
 
 
 
 
 
 
U.S. GAAP net (loss)/income per share:
 
 
 
 
 
 
Basic
 
(0.98
)
 
0.22

 
0.52

Diluted (a)
 
(0.98
)
 
0.22

 
0.51

 
 
 
 
 
 
 
Non-GAAP adjustments per share:
 
 
 
 
 
 
Basic
 
1.53

 
0.02

 
0.05

Diluted
 
1.51

 
0.02

 
0.05

 
 
 
 
 
 
 
Non-GAAP net income per share:
 
 
 
 
 
 
Basic
 
0.55

 
0.24

 
0.57

Diluted (b)
 
0.54

 
0.24

 
0.56

(a)
GAAP diluted net earnings per share reflects any dilutive effect of outstanding restricted stock units and stock options, but that effect is excluded when calculating GAAP diluted net (loss) per share because it would be anti-dilutive. For the three months ended December 30, 2017, 1.2 million shares of restricted stock units and stock options were excluded due to the Company's net loss.
(b)
Non-GAAP diluted net earnings per share reflects any dilutive effect of outstanding restricted stock units and stock options.

7