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): August 1, 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 August 1, 2018, Kulicke and Soffa Industries, Inc. (the “Company”) issued a press release with respect to its financial results for its third fiscal quarter ended June 30, 2018. 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 August 1, 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: August 1, 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=12383740&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 Finalizes Third Quarter 2018 Results
Delivers Strong Results

Singapore – August 1, 2018 – Kulicke and Soffa Industries, Inc. (NASDAQ: KLIC) (“Kulicke & Soffa”, “K&S” or the “Company”), today announced financial results of its third fiscal quarter ended June 30, 2018. The Company reported third quarter net revenue of $268.8 million, and reported diluted EPS of $0.86 and a non-GAAP diluted EPS of $0.89.
During its third fiscal quarter, K&S repurchased $42.6 million of common stock in open market transactions at an average price of $23.75 per share. The Company also recorded a quarterly dividend equivalent to $0.12 per share during its third fiscal quarter.
Quarterly Results - U.S. GAAP
 
 
Fiscal Q3 2018
 
Change vs.
Fiscal Q3 2017
(As Restated)
Change vs.
Fiscal Q2 2018
Net Revenue
$268.8 million
up 10.2%
up 21.2%
Gross Profit
$127.0 million
up 11.4%
up 27.8%
Gross Margin
47.2%
up 50 bps
up 240 bps
Income from Operations
$64.5 million
up 310.8%
up 68.0%
Operating Margin
24.0%
up 1760 bps
up 670 bps
Net Income
$60.3 million
up 73.3%
up 66.1%
Net Margin
22.4%
up 810 bps
up 600 bps
EPS – Diluted
$0.86
up 79.2%
up 68.6%

Quarterly Results - Non-GAAP
 
 
Fiscal Q3 2018
 
Change vs.
Fiscal Q3 2017
(As Restated)
Change vs.
Fiscal Q2 2018
Income from Operations
$66.4 million
up 21.6%
up 64.0%
Operating Margin
24.7%
up 230 bps
up 650 bps
Net Income
$62.3 million
down 15.2%
up 63.1%
Net Margin
23.2%
down 690 bps
up 600 bps
EPS - Diluted
$0.89
down 11.9%
up 64.8%
* 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.


Dr. Fusen Chen, Kulicke & Soffa's President and Chief Executive Officer, stated, “Strong June quarter results were due to a sequential increase in sales of high-volume Ball and Wedge bonding tools. Improved margins were due to a relative increase in demand from high-performance Automotive and Semiconductor markets."


1


Third Quarter Fiscal 2018 Financial Highlights
 
Net revenue of $268.8 million.    
Gross margin of 47.2%.
Net income of $60.3 million or $0.86 per share; Non-GAAP net income of $62.3 million or $0.89 per share.
Cash, cash equivalents, and short-term investments were $620.7 million as of June 30, 2018.

Fourth Quarter Fiscal 2018 Outlook

The Company currently expects net revenue in the fourth fiscal quarter of 2018 ending September 29, 2018 to be approximately $180 million to $190 million. The midpoint of this guidance would represent an increase of approximately 10% over fiscal year 2017.

Looking forward, Dr. Fusen Chen commented, "We continue to execute towards further increasing market opportunities, enhancing revenue and delivering profitability. Ongoing progress, evident in recent results, supports our long-term targets. Market relevance of our product portfolio combined with wide range of growing opportunities further increases our long-term confidence."

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.
 
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 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).

2


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 expected dividend payouts and growth opportunities. 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 the Company fails to meet its operational and financial targets in order to adhere to its dividend policy; 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; the risk that the Company will not identify suitable acquisition opportunities or that any acquisitions will not be successful; the risk that the Company fails to timely remediate the material weaknesses identified in the Company’s internal controls over financial reporting or that new material weaknesses or significant deficiencies emerge; 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
 
Nine months ended
 
June 30, 2018
 
July 1, 2017
As Restated
 
June 30, 2018
 
July 1, 2017
As Restated
Net revenue
$
268,834

 
$
243,897

 
$
704,297

 
$
593,149

Cost of sales
141,865

 
129,894

 
380,679

 
318,456

Gross profit
126,969

 
114,003

 
323,618

 
274,693

 
 
 
 
 
 
 
 
Operating expenses:
 
 
 
 
 
 
 
Selling, general and administrative
30,609

 
33,453

 
85,484

 
88,900

Research and development
29,974

 
25,980

 
88,881

 
72,505

Impairment charges

 
35,207

 

 
35,207

Amortization of intangible assets
1,962

 
1,521

 
5,927

 
4,565

Restructuring
(39
)
 
2,170

 
1,268

 
2,282

Total operating expenses
62,506

 
98,331

 
181,560

 
203,459

Income from operations
64,463

 
15,672

 
142,058

 
71,234

Other income (expense):
 
 
 
 
 
 
 
Interest income
3,459

 
1,751

 
8,420

 
4,502

Interest expense
(263
)
 
(264
)
 
(799
)
 
(787
)
Income before income taxes
67,659

 
17,159

 
149,679

 
74,949

Income tax expense/(benefit)
7,282

 
(17,657
)
 
122,494

 
(9,933
)
Share of results of equity-method investee, net of tax
121

 
7

 
144

 
7

Net income
$
60,256

 
$
34,809

 
$
27,041

 
$
84,875

 
 
 
 
 
 
 
 
Net income per share:
 
 
 
 
 
 
 
Basic
$
0.87

 
$
0.49

 
$
0.39

 
$
1.20

Diluted
$
0.86

 
$
0.48

 
$
0.38

 
$
1.18

 
 
 
 
 
 
 
 
Cash dividends declared per share
$
0.12

 
$

 
$
0.12

 
$

 
 
 
 
 
 
 
 
Weighted average shares outstanding:
 
 
 
 
 
 
 
Basic
69,125

 
71,063

 
70,019

 
70,960

Diluted
70,302

 
72,483

 
71,113

 
72,169

 
Three months ended
 
Nine months ended
Supplemental financial data:
June 30, 2018
 
July 1, 2017
 
June 30, 2018
 
July 1, 2017
Depreciation and amortization
$
4,951

 
$
3,963

 
$
14,163

 
$
11,739

Capital expenditures
4,071

 
3,803

 
16,481

 
21,909

Equity-based compensation expense:


 


 


 


Cost of sales
126

 
97

 
384

 
344

Selling, general and administrative
2,111

 
2,179

 
5,877

 
7,363

Research and development
656

 
514

 
1,963

 
1,763

Total equity-based compensation expense
$
2,893

 
$
2,790

 
$
8,224

 
$
9,470

 
As of
 
June 30, 2018
 
July 1, 2017
Backlog of orders 1
$
146,578

 
$
198,592

Number of employees
3,109

 
3,299

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
 
June 30, 2018
 
September 30, 2017
ASSETS
CURRENT ASSETS
 
 
 
Cash and cash equivalents
$
362,686

 
$
392,410

Restricted cash
514

 
530

Short-term investments
258,000

 
216,000

Accounts and other receivable, net of allowance for doubtful accounts of $675 and $79 respectively
256,694

 
198,480

Inventories, net
123,293

 
122,023

Prepaid expenses and other current assets
21,255

 
23,939

TOTAL CURRENT ASSETS
1,022,442

 
953,382

 
 
 
 
Property, plant and equipment, net
76,064

 
67,762

Goodwill
56,649

 
56,318

Intangible assets, net
55,131

 
62,316

Deferred income taxes
11,781

 
27,771

Equity investments
1,358

 
1,502

Other assets
2,500

 
2,056

TOTAL ASSETS
$
1,225,925

 
$
1,171,107

 
 
 
 
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
 

 
 

Accounts payable
$
78,777

 
$
51,354

Accrued expenses and other current liabilities
106,193

 
124,847

Income taxes payable
18,608

 
16,780

TOTAL CURRENT LIABILITIES
203,578

 
192,981

 
 
 
 
Financing obligation
15,437

 
16,074

Deferred income taxes
27,316

 
27,152

Income taxes payable
88,571

 
6,438

Other liabilities
8,941

 
8,432

TOTAL LIABILITIES
343,843

 
251,077

 
 
 
 
SHAREHOLDERS' EQUITY
 

 
 

Common stock, no par value
516,208

 
506,515

Treasury stock, at cost
(224,938
)
 
(157,604
)
Retained earnings
591,951

 
569,080

Accumulated other comprehensive (loss) / income
(1,139
)
 
2,039

TOTAL SHAREHOLDERS' EQUITY
$
882,082

 
$
920,030

 
 
 
 
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
$
1,225,925

 
$
1,171,107

 

5



KULICKE & SOFFA INDUSTRIES, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 
Three months ended
 
Nine months ended
 
June 30, 2018
 
July 1, 2017
 
June 30, 2018
 
July 1, 2017
Net cash provided by operating activities
$
36,770

 
$
25,188

 
$
93,843

 
$
68,166

Net cash provided by / (used in) investing activities, continuing operations
25,929

 
24,387

 
(57,527
)
 
(8,012
)
Net cash used in financing activities, continuing operations
(41,564
)
 
(162
)
 
(65,805
)
 
(805
)
Effect of exchange rate changes on cash, cash equivalents and restricted cash
1,379

 
(687
)
 
(251
)
 
673

Changes in cash, cash equivalents and restricted cash
22,514

 
48,726

 
(29,740
)
 
60,022

Cash, cash equivalents and restricted cash, beginning of period*
340,686

 
435,203

 
392,940

 
423,907

Cash, cash equivalents and restricted cash, end of period
$
363,200

 
$
483,929

 
$
363,200

 
$
483,929

 
 
 
 
 
 
 
 
Short-term investments
258,000

 
110,000

 
258,000

 
110,000

Total cash, cash equivalents, restricted cash and short-term investments
$
621,200

 
$
593,929

 
$
621,200

 
$
593,929

*Certain time deposits as at October 1, 2016 have been corrected 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
 
 
June 30, 2018
 
July 1, 2017
As Restated
 
March 31, 2018
Net revenue
 
$
268,834

 
$
243,897

 
$
221,772

U.S. GAAP Income from operations
 
64,463

 
15,672

 
38,436

U.S. GAAP operating margin
 
24.0
%
 
6.4
%
 
17.3
%
 
 
 
 
 
 
 
Pre-tax non-GAAP items:
 
 
 
 
 
 
Amortization related to intangible assets acquired through business combination- selling, general and administrative
 
1,962

 
1,521

 
2,022

Restructuring
 
(39
)
 
2,170

 
(7
)
Impairment charges
 

 
35,207

 

Non-GAAP Income from operations
 
$
66,386

 
$
54,570

 
$
40,451

Non-GAAP operating margin
 
24.7
%
 
22.4
%
 
18.2
%

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
 
 
June 30, 2018
 
July 1, 2017
As Restated
 
March 31, 2018
Net revenue
 
$
268,834

 
$
243,897

 
$
221,772

U.S. GAAP net income
 
60,256

 
34,809

 
36,313

U.S. GAAP net margin
 
22.4
%
 
14.3
%
 
16.4
%
 
 
 
 
 
 
 
Pre-tax non-GAAP adjustments:
 
 
 
 
 
 
Amortization related to intangible assets acquired through business combination- selling, general and administrative
 
1,962

 
1,521

 
2,022

Restructuring
 
(39
)
 
2,170

 
(7
)
Impairment charges
 

 
35,207

 

Net income tax expense/(benefit) on non-GAAP items
 
78

 
(241
)
 
(111
)
Total non-GAAP adjustments
 
2,001

 
38,657

 
1,904

Non-GAAP net income
 
62,257

 
73,466

 
38,217

Non-GAAP net margin
 
23.2
%

30.1
%

17.2
%
 
 
 
 
 
 
 
U.S. GAAP net income per share:
 
 
 
 
 
 
Basic
 
0.87

 
0.49

 
0.52

Diluted
 
0.86

 
0.48

 
0.51

 
 
 
 
 
 
 
Non-GAAP adjustments per share:
 
 
 
 
 
 
Basic
 
0.03

 
0.54

 
0.03

Diluted
 
0.03

 
0.53

 
0.03

 
 
 
 
 
 
 
Non-GAAP net income per share:
 
 
 
 
 
 
Basic
 
$
0.90

 
$
1.03

 
$
0.54

Diluted
 
$
0.89

 
$
1.01

 
$
0.54



7