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Kulicke & Soffa Industries, Inc. Reports Results for its Fourth Quarter and Fiscal Year 2010

FORT WASHINGTON, Pa., Nov 10, 2010 (BUSINESS WIRE) -- Kulicke & Soffa Industries, Inc. (NASDAQ: KLIC) ("K&S" or the "Company")today announced results for its fourth fiscal quarter and year ended October 2, 2010. This press release contains both GAAP results and non-GAAP measures.

For its fourth fiscal quarter of 2010, the Company reported net revenue of $259.3 million and net income of $56.1 million, or $0.78 per diluted share. On a non-GAAP basis* for its fourth quarter, the Company reported net income of $63.8 million, or $0.89 per diluted share.

 
Quarterly GAAP Results
     

Fiscal Q4 2010

   

Change vs.
Fiscal Q4 2009**

   

Change vs.
Fiscal Q3 2010

Net Revenue     $259.3 million     134.6%     17.2%
Gross Profit     $112.3 million     138.0%     13.3%
Gross Margin     43.3%     60 basis points     (150) basis points
Income from Operations     $56.7 million     604.9%     13.2%
Operating Margin     21.9%     1,460 basis points     (70) basis points
Net Income     $56.1 million     872.4%     14.2%
Net Margin     21.6%     1,640 basis points     (60) basis points
EPS - Diluted     $0.78     875.0%     20.0%
                   
Quarterly Non-GAAP Measures*
     

Fiscal Q4 2010

   

Change vs.
Fiscal Q4 2009**

   

Change vs.
Fiscal Q3 2010

Gross Profit     $112.4 million     138.0%     13.3%
Gross Margin     43.4%     70 basis points     (140) basis points
Income from Operations     $63.0 million     412.9%     14.3%
Operating Margin     24.3%     1,320 basis points     (60) basis points
Net Income     $63.8 million     492.0%     14.6%
Net Margin     24.6%     1,490 basis points     (50) basis points
EPS - Diluted     $0.89     456.3%     20.3%

 

* Non-GAAP measures exclude: equity-based compensation; amortization of intangibles; restructuring; non-cash interest expense; net tax settlement expense (benefit) and other tax adjustments; 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.
 

Commenting on the results, Bruno Guilmart, President and Chief Executive Officer, said, "In fiscal 2010 we saw significant increases in customer demand and revenue growth, driven by a general recovery of the semiconductor industry and compounded by increased business opportunities such as the transition from gold to copper wire, market share gains in LED bonders, increased wedge bonder demand for power management applications, and the launch of our new 'IStack' high performance die bonder.

"Looking forward to the December quarter we forecast revenue to be in the $125 million to $135 million range. The same level of operational flexibility which allowed us to cost effectively ramp throughout fiscal 2010 will carry forward into the December quarter and enable us to reduce our cost accordingly as we produce at these lower revenue levels."

Key Product Trends

 

  • Ball bonder net revenue increased by 19.9% over the June quarter.
     
    • Demand continues for the K&S copper solution; 57.4% of ball bonders sold during the quarter were configured for copper.
    • 8.4% of ball bonders sold were configured for LED applications.
  • The newly released IConn ProCu Wire Bonder will allow for a more efficient industry transition from gold to copper wire through optimized copper wire-bonding processes.
  • Heavy wire wedge bonder demand continues to strengthen; increased volumes are anticipated through the December quarter.

Financial Highlights

 

  • Revenue increased 17.2% sequentially, achieving the high end of guidance.
  • GAAP operating margin was 21.9%, or 24.3% on a non-GAAP basis.
  • GAAP net income was $56.1 million, or $63.8 million on a non-GAAP basis.
  • GAAP diluted EPS was $0.78, or $0.89 on a non-GAAP basis.
  • Continuing operations generated $19.7 million of net cash.
  • Net revenue for the December quarter is expected to be in the $125 million to $135 million range.

Earnings Conference Call Details

A conference call to discuss these results will be held tomorrow, November 11, 2010 beginning at 9:00 a.m. (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 353660 (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 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:

 

  • Amortization of intangibles
  • Restructuring
  • Impairment of goodwill
  • Switzerland pension plan curtailment
  • Gain on extinguishment of debt
  • Non-cash interest expense
  • Net tax settlement expense (benefit) and other tax adjustments

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:

-Adjusted Gross Profit and Adjusted Gross Margin K&S non-GAAP adjusted gross profit and adjusted gross margin exclude the effect of equity-based compensation expense recorded within cost of sales.

-AdjustedNet Income (Loss), Adjusted Net Margin and Adjusted EPS K&S non-GAAP adjusted net income (loss) and adjusted EPS exclude equity-based compensation; amortization of intangibles; restructuring; impairment of goodwill; Switzerland pension curtailment plan; gain on extinguishment of debt; non-cash interest expense; net tax settlement expense (benefit) and other tax adjustments; and related tax effects on non-GAAP adjustments.

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 increasing, continuing or strengthening demand for our products, and our future revenue, cost reductions,and operational flexibility. 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, 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   Twelve months ended
    October 2,   October 3,   October 2,   October 3,
    2010   2009 *   2010   2009 *
                 
Net revenue:                
Equipment   $ 241,853     $ 92,356     $ 691,988     $ 170,536  
Expendable Tools     17,424       18,160       70,796       54,704  
Total net revenue     259,277       110,516       762,784       225,240  
                 
Cost of sales:                
Equipment     140,262       56,270       399,042       111,103  
Expendable Tools     6,671       7,045       28,069       25,294  
Total cost of sales     146,933       63,315       427,111       136,397  
                 
Gross profit:                
Equipment     101,591       36,086       292,946       59,433  
Expendable Tools     10,753       11,115       42,727       29,410  
Total gross profit     112,344       47,201       335,673       88,843  
                 
Operating expenses:                
Selling, general and administrative     37,699       22,590       119,031       84,124  
Research and development     14,833       12,561       56,660       53,483  
Amortization of intangible assets     2,385       2,781       9,545       11,092  
Restructuring     752       1,229       2,402       10,959  
Impairment of goodwill     -       -       -       2,709  
Total operating expenses     55,669       39,161       187,638       162,367  
                 
                 
Income (loss) from operations:                
Equipment     55,512       3,128       137,321       (78,741 )
Expendable Tools     1,163       4,912       10,714       5,217  
Total income (loss) from operations     56,675       8,040       148,035       (73,524 )
                 
Other income (expense):                
Interest income     113       84       403       1,106  
Interest expense     (242 )     (398 )     (1,348 )     (1,594 )
Interest expense: non-cash     (1,750 )     (1,676 )     (6,985 )     (6,594 )
Gain on extinguishment of debt     -       -       -       3,965  
                 
Income (loss) from continuing operations, before tax     54,796       6,050       140,105       (76,641 )
                 
Provision (benefit) for income taxes     (1,265 )     285       (2,037 )     (13,029 )
                 
Income (loss) from continuing operations, net of tax     56,061       5,765       142,142       (63,612 )
                 
Income (loss) from discontinued operations, net of tax     -       (716 )     -       22,011  
                 
Net income (loss)   $ 56,061     $ 5,049     $ 142,142     $ (41,601 )
                 
Income (loss) per share from continuing operations:            
Basic   $ 0.79     $ 0.09     $ 2.01     $ (1.02 )
Diluted   $ 0.78     $ 0.08     $ 1.92     $ (1.02 )
                 
Income (loss) per share from discontinued operations:              
Basic   $ -     $ (0.01 )   $ -     $ 0.35  
Diluted   $ -     $ (0.01 )   $ -     $ 0.35  
                 
Net income (loss) per share:                
Basic   $ 0.79     $ 0.08     $ 2.01     $ (0.67 )
Diluted   $ 0.78     $ 0.07     $ 1.92     $ (0.67 )
                 
Weighted average shares outstanding:                
Basic     70,426       65,754       70,012       62,188  
Diluted     71,229       70,082       73,548       62,188  
                 
    Three months ended   Twelve months ended
    October 2,   October 3,   October 2,   October 3,
Supplemental financial data (continuing operations):   2010   2009   2010   2009
                 
Depreciation and amortization   $ 4,273     $ 5,616     $ 17,531     $ 21,224  
                 
Capital expenditures   $ 2,899     $ 865     $ 6,270     $ 5,264  
                 
Equity-based compensation expense:                
Cost of sales   $ 67     $ 25     $ 207     $ 64  
Selling, general and administrative     2,628       401       5,846       649  
Research and development     448       199       1,512       674  
Total equity-based compensation expense   $ 3,143     $ 625     $ 7,565     $ 1,387  
                 
            As of
            October 2,   October 3,
            2010   2009
                 
Backlog of orders           $ 252,000     $ 42,000  
                 
Number of employees (1)             2,950       2,202  
                         
* 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 2,   October 3,
    2010   2009 *
ASSETS
         
CURRENT ASSETS        
Cash and cash equivalents   $ 178,112     $ 144,560  
Restricted cash     237       281  
Short-term investments     2,985       -  
Accounts and notes receivable, net of allowance for doubtful        
accounts of $980 and $1,378, respectively     196,035       95,779  
Inventories, net     73,893       41,489  
Prepaid expenses and other current assets     15,985       11,566  
Deferred income taxes     5,443       1,786  
         
TOTAL CURRENT ASSETS     472,690       295,461  
         
Property, plant and equipment, net     30,059       36,046  
Goodwill     26,698       26,698  
Intangible assets     39,111       48,656  
Other assets     11,611       5,774  
         
TOTAL ASSETS   $ 580,169     $ 412,635  
         
LIABILITIES AND SHAREHOLDERS' EQUITY
         
CURRENT LIABILITIES        
Current portion of long term debt   $ -     $ 48,964  
Accounts payable     82,353       39,908  
Accrued expenses and other current liabilities     41,498       32,576  
Income taxes payable     1,279       1,612  
         
TOTAL CURRENT LIABILITIES     125,130       123,060  
         
Long term debt     98,475       92,217  
Deferred income taxes     20,355       16,282  
Other liabilities     13,729       10,273  
         
TOTAL LIABILITIES     257,689       241,832  
         
SHAREHOLDERS' EQUITY        
Common stock, no par value     423,715       413,092  
Treasury stock, at cost     (46,356 )     (46,356 )
Accumulated deficit     (55,670 )     (197,812 )
Accumulated other comprehensive income     791       1,879  
         
TOTAL SHAREHOLDERS' EQUITY     322,480       170,803  
         

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

  $ 580,169     $ 412,635  
         
* As adjusted for ASC No. 470.20, Debt, Debt With Conversion Options.
 
 
KULICKE & SOFFA INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 
    Three months ended   Twelve months ended
   

October 2, 2010

 

October 3, 2009

 

October 2, 2010

 

October 3, 2009

                 
Net cash provided by (used in) operating activities, continuing operations   $ 19,661   $ (10,161)   $ 87,638   $ (51,406)
Net cash used in operating activities, discontinued operations   (351)   (417)   (1,839)   (2,116)
Net cash provided by (used in) operating activities   $ 19,310   $ (10,578)   $ 85,799   $ (53,522)
                 
Net cash provided by (used in) investing activities, continuing operations   (5,233)   1,441   (4,591)   (51,453)
Net cash provided by (used in) investing activities, discontinued operations   -   -   (1,838)   149,857
Net cash provided by (used in) investing activities   $ (5,233)   $ 1,441   $ (6,429)   $ 98,404
                 
Net cash provided by (used in) financing activities, continuing operations   1,000   38,865   (46,121)   (45,439)
Effect of exchange rate changes on cash and cash equivalents   195   145   303   185
Changes in cash and cash equivalents   $ 15,272   $ 29,873   $ 33,552   $ (372)
Cash and cash equivalents, beginning of period   162,840   114,687   144,560   144,932
Cash and cash equivalents, end of period   $ 178,112   $ 144,560   $ 178,112   $ 144,560
                 
Short-term investments & restricted cash   3,222   281   3,222   281
Total cash, cash equivalents, restricted cash and short-term investments   $ 181,334   $ 144,841   $ 181,334   $ 144,841
                 
 
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   Twelve months ended
    October 2,   October 3,   October 2,   October 3,
    2010   2009 *   2010   2009 *
                 
   

(GAAP results)

                 
Net revenue   $ 259,277   $ 110,516   $ 762,784   $ 225,240  
Gross profit     112,344     47,201     335,673     88,843  
Income (loss) from operations     56,675     8,040     148,035     (73,524 )
Income (loss) from continuing operations, net of tax     56,061     5,765     142,142     (63,612 )
                 
Weighted average shares outstanding                
Basic     70,426     65,754     70,012     62,188  
Diluted     71,229     70,082     73,548     62,188  
                 
Income (loss) per share from continuing operations                
Basic   $ 0.79   $ 0.09   $ 2.01     (1.02 )
Diluted   $ 0.78   $ 0.08   $ 1.92   $ (1.02 )
                 
   

(Non-GAAP measures)

                 
Net revenue   $ 259,277   $ 110,516   $ 762,784   $ 225,240  
Gross profit     112,411     47,226     335,880     88,907  
Income (loss) from operations     62,955     12,275     167,547     (47,011 )
Income (loss) from continuing operations, net of tax     63,788     10,774     167,838     (48,759 )
                 
Weighted average shares outstanding, continuing operations                
Basic     70,426     65,754     70,012     62,188  
Diluted     71,229     70,082     73,548     62,188  
                 
Income (loss) per share from continuing operations                
Basic   $ 0.90   $ 0.16   $ 2.38   $ (0.78 )
Diluted   $ 0.89   $ 0.16   $ 2.27   $ (0.78 )
                           
* 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 October 2, 2010            
   

(GAAP results)

             
Net revenue   $ 241,853     $ 17,424   $ 259,277  
Gross profit     101,591       10,753     112,344  
Income from operations     55,512       1,163     56,675  
             
   

(Non-GAAP measures)

             
Net revenue   $ 241,853     $ 17,424   $ 259,277  
Gross profit     101,644       10,767     112,411  
Income from operations     60,385       2,570     62,955  
             
Twelve months ended October 2, 2010            
   

(GAAP results)

             
Net revenue   $ 691,988     $ 70,796   $ 762,784  
Gross profit     292,946       42,727     335,673  
Income from operations     137,321       10,714     148,035  
             
   

(Non-GAAP measures)

             
Net revenue   $ 691,988     $ 70,796   $ 762,784  
Gross profit     293,111       42,769     335,880  
Income from operations     152,016       15,531     167,547  
             
Fiscal 2009:            
             
Three months ended October 3, 2009            
   

(GAAP results)

             
Net revenue   $ 92,356     $ 18,160   $ 110,516  
Gross profit     36,086       11,115     47,201  
Income from operations     3,128       4,912     8,040  
             
   

(Non-GAAP measures)

             
Net revenue   $ 92,356     $ 18,160   $ 110,516  
Gross profit     36,107       11,119     47,226  
Income from operations     6,605       5,670     12,275  
             
Twelve months ended October 3, 2009            
   

(GAAP results)

             
Net revenue   $ 170,536     $ 54,704   $ 225,240  
Gross profit     59,433       29,410     88,843  
Income (loss) from operations     (78,741 )     5,217     (73,524 )
             
   

(Non-GAAP measures)

             
Net revenue   $ 170,536     $ 54,704   $ 225,240  
Gross profit     59,519       29,388     88,907  
Income (loss) from operations     (59,773 )     12,762     (47,011 )
                       
                   
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     Twelve months ended     Twelve months ended  
    October 2,   % of   October 3,   % of   October 2,   % of   October 3,   % of
      2010     Revenue   2009 *   Revenue     2010     Revenue   2009 *   Revenue
                                 
Net revenue (GAAP results)   $ 259,277         $ 110,516         $ 762,784         $ 225,240      
Net revenue (Non-GAAP measures)     259,277           110,516           762,784           225,240      
                                 
Gross profit (GAAP results)     112,344     43.3 %     47,201     42.7 %     335,673     44.0 %     88,843     39.4 %
- Equity-based compensation expense     67           25           207           64      
Gross profit (Non-GAAP measures)     112,411     43.4 %     47,226     42.7 %     335,880     44.0 %     88,907     39.5 %
                                 
Income (loss) from operations (GAAP results)     56,675     21.9 %     8,040     7.3 %     148,035     19.4 %     (73,524 )   -32.6 %
- Amortization of intangibles     2,385           2,781           9,545           11,092      
- Restructuring     752           1,229           2,402           10,959      
- Impairment of goodwill     -           -           -           2,709      
- Equity-based compensation expense     3,143           625           7,565           1,387      
- Switzerland pension plan curtailment     -           -           -           (1,446 )    
- Tax settlement expense     -           (400 )         -           1,812      
Income (loss) from operations (Non-GAAP measures)     62,955     24.3 %     12,275     11.1 %     167,547     22.0 %     (47,011 )   -20.9 %
                                 
Income (loss) from continuing operations, net of tax (GAAP results)     56,061     21.6 %     5,765     5.2 %     142,142     18.6 %     (63,612 )   -28.2 %
- Total non-GAAP adjustments to income (loss) from continuing operations     6,280           4,235           19,512           26,513      
- Gain on extinguishment of debt     -           -           -           (3,965 )    
- Non cash interest expense     1,750           1,676           6,985           6,594      
- Net tax settlement benefit and other tax adjustments     -           -           -           (13,201 )    
- Tax effect of non-GAAP adjustments     (303 )         (902 )         (801 )         (1,088 )    
Income (loss) from continuing operations, net of tax (Non-GAAP measures)     63,788     24.6 %     10,774     9.7 %     167,838     22.0 %     (48,759 )   -21.6 %
                                 
                                 
Weighted average shares outstanding (GAAP & Non-GAAP)                            
Basic     70,426           65,754           70,012           62,188      
Diluted     71,229           70,082           73,548           62,188      
                                 
Income (loss) per share from continuing operations (GAAP results)                          
Basic   $ 0.79         $ 0.09         $ 2.01         $ (1.02 )    
Diluted   $ 0.78         $ 0.08         $ 1.92         $ (1.02 )    
                                 
Adjustments to net income per share                                
Basic   $ 0.11         $ 0.07         $ 0.37         $ 0.24      
Diluted   $ 0.11         $ 0.08         $ 0.35         $ 0.24      
                                 
Income (loss) per share from continuing operations (Non-GAAP measures)                          
Basic   $ 0.90         $ 0.16         $ 2.38         $ (0.78 )    
Diluted   $ 0.89         $ 0.16         $ 2.27         $ (0.78 )    
                                 
* 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 October 2, 2010                    
                     
Net revenue (GAAP results)   $ 241,853         $ 17,424         $ 259,277  
Net revenue (Non-GAAP measures)     241,853           17,424           259,277  
                     
Gross profit (GAAP results)     101,591     42.0 %     10,753     61.7 %     112,344  
- Equity-based compensation expense     53           14           67  
Gross profit (Non-GAAP measures)     101,644     42.0 %     10,767     61.8 %     112,411  
                     
Income from operations (GAAP results)     55,512     23.0 %     1,163     6.7 %     56,675  
- Amortization of intangibles     1,813           572           2,385  
- Restructuring     564           188           752  
- Equity-based compensation expense     2,496           647           3,143  
Income from operations (Non-GAAP measures)     60,385     25.0 %     2,570     14.8 %     62,955  
                     
Twelve months ended October 2, 2010                    
                     
Net revenue (GAAP results)   $ 691,988         $ 70,796         $ 762,784  
Net revenue (Non-GAAP measures)     691,988           70,796           762,784  
                     
Gross profit (GAAP results)     292,946     42.3 %     42,727     60.4 %     335,673  
- Equity-based compensation expense     165           42           207  
Gross profit (Non-GAAP measures)     293,111     42.4 %     42,769     60.4 %     335,880  
                     
Income from operations (GAAP results)     137,321     19.8 %     10,714     15.1 %     148,035  
- Amortization of intangibles     7,255           2,290           9,545  
- Restructuring     1,432           970           2,402  
- Equity-based compensation expense     6,008           1,557           7,565  
Income from operations (Non-GAAP measures)     152,016     22.0 %     15,531     21.9 %     167,547  
                     
                     
Fiscal 2009:                    
                     
Three months ended October 3, 2009                    
                     
Net revenue (GAAP results)   $ 92,356         $ 18,160         $ 110,516  
Net revenue (Non-GAAP measures)     92,356           18,160           110,516  
                     
Gross profit (GAAP results)     36,086     39.1 %     11,115     61.2 %     47,201  
- Equity-based compensation expense     21           4           25  
Gross profit (Non-GAAP measures)     36,107     39.1 %     11,119     61.2 %     47,226  
                     
Income from operations (GAAP results)     3,128     3.4 %     4,912     27.0 %     8,040  
- Amortization of intangibles     2,124           657           2,781  
- Restructuring     817           412           1,229  
- Equity-based compensation expense     536           89           625  
- Tax settlement expense     -           (400 )         (400 )
Income from operations (Non-GAAP measures)     6,605     7.2 %     5,670     31.2 %     12,275  
                     
Twelve months ended October 3, 2009                    
                     
Net revenue (GAAP results)   $ 170,536         $ 54,704         $ 225,240  
Net revenue (Non-GAAP measures)     170,536           54,704           225,240  
                     
Gross profit (GAAP results)     59,433     34.9 %     29,410     53.8 %     88,843  
- Equity-based compensation expense     86           (22 )         64  
Gross profit (Non-GAAP measures)     59,519     34.9 %     29,388     53.7 %     88,907  
                     
Income (loss) from operations (GAAP results)     (78,741 )   -46.2 %     5,217     9.5 %     (73,524 )
- Amortization of intangibles     8,464           2,628           11,092  
- Restructuring     8,023           2,936           10,959  
- Impairment of goodwill     2,709           -           2,709  
- Equity-based compensation expense     1,218           169           1,387  
- Switzerland pension plan curtailment     (1,446 )         -           (1,446 )
- Tax settlement expense     -           1,812           1,812  
Income (loss) from operations (Non-GAAP measures)     (59,773 )   -35.1 %     12,762     23.3 %     (47,011 )
                                     
 
KULICKE & SOFFA INDUSTRIES, INC.
ADJUSTED RETURN ON INVESTED CAPITAL
(In thousands)
(Unaudited)
         
         
         
    Three months ended
    October 2, 2010
         
Income from operations   $ 56,675      
Adjustment: Depreciation and amortization (1)     4,273      
         
Adjusted income from operations     60,948      
         
Adjusted income from operations, annualized (4)       $ 243,792  
         
Cash, cash equivalents, restricted cash and investments   $ 181,334      
Adjustment: cash, cash equivalents, restricted cash and investments (2)     (106,334 )    
         
Adjusted cash, cash equivalents and investments       $ 75,000  
Total assets excluding cash, cash equivalents and investments         398,835  
         
Adjusted total assets         473,835  
         
Total current liabilities   $ 125,130      
Add: taxes payable (3)     1,968      
         
Adjusted current liabilities         127,098  
         
Adjusted net invested capital       $ 346,737  
         
ROIC (4)         70.3 %
         
(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

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