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, 2019
 
____________________________________________________
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, 2019, Kulicke and Soffa Industries, Inc. (the “Company”) issued a press release with respect to its financial results for its first fiscal quarter ended December 29, 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 January 31, 2019






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, 2019
By:
/s/ LESTER WONG
 
 
Name:
Lester Wong
 
 
Title:
Senior Vice President, 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=12667185&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 2019 Results


Singapore – January 31, 2019 – Kulicke and Soffa Industries, Inc. (NASDAQ: KLIC) (“Kulicke & Soffa”, “K&S” or the “Company”), today announced financial results of its first fiscal quarter ended December 29, 2018. The Company reported first quarter net revenue of $157.2 million, and reported diluted EPS of $0.11 and a non-GAAP diluted EPS of $0.25.
During its first fiscal quarter, K&S repurchased $25.5 million of common stock in open market transactions at an average price of $20.68 per share. The Company also recorded a quarterly dividend equivalent to $0.12 per share during its first fiscal quarter.
Quarterly Results - U.S. GAAP
 
 
Fiscal Q1 2019
 
Change vs.
Fiscal Q1 2018
Change vs.
Fiscal Q4 2018
Net Revenue
$157.2 million
down 26.4%
down 14.9%
Gross Profit
$74.8 million
down 23.0%
down 12.8%
Gross Margin
47.6%
up 210 bps
up 120 bps
Income from Operations
$14.6 million
down 62.8%
down 40.7%
Operating Margin
9.3%
down 900 bps
down 400 bps
Net Income
$7.5 million
down 110.8%
down 74.7%
Net Margin
4.8%
up 3730 bps
down 1120 bps
EPS – Diluted
$0.11
up 111.1%
down 74.4%
Quarterly Results - Non-GAAP
 
 
Fiscal Q1 2019
 
Change vs.
Fiscal Q1 2018
Change vs.
Fiscal Q4 2018
Income from Operations
$16.5 million
down 61.1%
down 39.3%
Operating Margin
10.5%
down 930 bps
down 420 bps
Net Income
$17.0 million
down 56.9%
down 45.5%
Net Margin
10.8%
down 760 bps
down 610 bps
EPS - Diluted
$0.25
down 54.5%
down 44.4%
* 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, “Despite the softness in demand experienced throughout the capital equipment space, we were able to generate strong gross margins, deliver shareholder returns and continue driving near-term fundamental progress, specifically new product development and qualifications."


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During the December quarter the Company incurred a $7.7 million tax expense primarily related to an adjustment to the one-time transition tax associated with the Tax Cuts and Reform Act of 2017, specifically due to new guidance issued by the U.S. Department of Treasury on November 28, 2018.
First Quarter Fiscal 2019 Financial Highlights
 
Net revenue of $157.2 million.    
Gross margin of 47.6%.
Net income of $7.5 million or $0.11 per share; Non-GAAP net income of $17.0 million or $0.25 per share.
Cash, cash equivalents, and short-term investments were $632.4 million as of December 29, 2018.

Second Quarter Fiscal 2019 Outlook
The Company currently expects net revenue in the second fiscal quarter of 2019 ending March 30, 2019 to be approximately $110 million to $130 million.
Looking forward, Dr. Fusen Chen commented, "Despite the current soft-demand environment, which we believe is only a near-term headwind, our entire organization remains extremely focused in delivering long-term improvement and sustainable growth. Over the past two years, we have made meaningful changes to our organization that have allowed us to pursue and execute on several new growth initiatives in parallel."
The Company does not believe the softer near-term outlook reduces its ability to benefit from the long-term trends driving high-volume advanced packaging adoption, the long-term trends driving semiconductor unit and LED growth or its ability to gain market share within its after-market products and services segment.

Earnings Conference Call Details
A conference call to discuss these results will be held today, January 31, 2019, beginning at 6:00pm EST. To access the conference call, interested parties may call +1-877-407-8037 or internationally +1-201-689-8037. A live webcast will also be available at investor.kns.com.
A replay will be available from approximately one hour after the completion of the call through February 7th by calling toll-free +1-877-660-6853 or internationally +1-201-612-7415 and using the replay ID number of 13686378. A webcast replay will also be available at investor.kns.com.

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.
 

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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).

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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. 2018 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
 
 
 

4


KULICKE & SOFFA INDUSTRIES, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(In thousands, except per share and employee data)
(Unaudited)
 
Three months ended
 
December 29, 2018
 
December 30, 2017
Net revenue
$
157,208

 
$
213,691

Cost of sales
82,409

 
116,489

Gross profit
74,799

 
97,202

 
 
 
 
Operating expenses:
 
 
 
Selling, general and administrative
28,533

 
24,536

Research and development
29,803

 
30,250

Amortization of intangible assets
1,877

 
1,943

Restructuring
31

 
1,314

Total operating expenses
60,244

 
58,043

Income from operations
14,555

 
39,159

Other income (expense):
 
 
 
Interest income
3,826

 
1,975

Interest expense
(251
)
 
(266
)
Income before income taxes
18,130

 
40,868

Income tax expense
10,570

 
110,412

Share of results of equity-method investee, net of tax
43

 
(16
)
Net income
$
7,517

 
$
(69,528
)
 
 
 
 
Net income per share:
 
 
 
Basic
$
0.11

 
$
(0.99
)
Diluted
$
0.11

 
$
(0.99
)
 
 
 
 
Cash dividends declared per share
$
0.12

 
$

 
 
 
 
Weighted average shares outstanding:
 
 
 
Basic
67,176

 
70,577

Diluted
67,851

 
70,577

 
Three months ended
Supplemental financial data:
December 29, 2018
 
December 30, 2017
Depreciation and amortization
$
4,769

 
$
4,468

Capital expenditures
4,942

 
6,257

Equity-based compensation expense:


 


Cost of sales
150

 
132

Selling, general and administrative
2,925

 
2,323

Research and development
798

 
654

Total equity-based compensation expense
$
3,873

 
$
3,109

 
As of
 
December 29, 2018
 
December 30, 2017
Backlog of orders 1
$
105,265

 
$
164,968

Number of employees
2,677

 
3,182

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

5



KULICKE & SOFFA INDUSTRIES, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(In thousands)
(Unaudited)
 
As of
 
December 29, 2018
 
September 29, 2018
ASSETS
CURRENT ASSETS
 
 
 
Cash and cash equivalents
$
277,426

 
$
320,630

Restricted cash
516

 
518

Short-term investments
355,000

 
293,000

Accounts and other receivable, net of allowance for doubtful accounts of $8 and $385 respectively
187,240

 
243,373

Inventories, net
109,731

 
115,191

Prepaid expenses and other current assets
13,667

 
14,561

TOTAL CURRENT ASSETS
943,580

 
987,273

 
 
 
 
Property, plant and equipment, net
77,320

 
76,067

Goodwill
56,340

 
56,550

Intangible assets, net
50,252

 
52,871

Deferred income taxes
9,456

 
9,017

Equity investments
1,330

 
1,373

Other assets
2,508

 
2,589

TOTAL ASSETS
$
1,140,786

 
$
1,185,740

 
 
 
 
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
 

 
 

Accounts payable
$
46,437

 
$
48,527

Accrued expenses and other current liabilities
75,905

 
105,978

Income taxes payable
21,115

 
19,571

TOTAL CURRENT LIABILITIES
143,457

 
174,076

 
 
 
 
Financing obligation
15,003

 
15,187

Deferred income taxes
25,359

 
25,591

Income taxes payable
89,295

 
81,491

Other liabilities
9,263

 
9,188

TOTAL LIABILITIES
282,377

 
305,533

 
 
 
 
SHAREHOLDERS' EQUITY
 

 
 

Common stock, no par value
523,117

 
519,244

Treasury stock, at cost
(274,149
)
 
(248,664
)
Retained earnings
613,525

 
613,529

Accumulated other comprehensive loss
(4,084
)
 
(3,902
)
TOTAL SHAREHOLDERS' EQUITY
$
858,409

 
$
880,207

 
 
 
 
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
$
1,140,786

 
$
1,185,740

 

6



KULICKE & SOFFA INDUSTRIES, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 
Three months ended
 
December 29, 2018
 
December 30, 2017
Net cash provided by operating activities
$
56,001

 
$
50,333

Net cash used in investing activities, continuing operations
(65,273
)
 
(48,183
)
Net cash used in financing activities, continuing operations
(33,916
)
 
(3,391
)
Effect of exchange rate changes on cash, cash equivalents and restricted cash
(18
)
 
(510
)
Changes in cash, cash equivalents and restricted cash
(43,206
)
 
(1,751
)
Cash, cash equivalents and restricted cash, beginning of period
321,148

 
392,940

Cash, cash equivalents and restricted cash, end of period
$
277,942

 
$
391,189

 
 
 
 
Short-term investments
355,000

 
259,000

Total cash, cash equivalents, restricted cash and short-term investments
$
632,942

 
$
650,189



7



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 29, 2018
 
December 30, 2017
 
September 29, 2018
Net revenue
 
$
157,208

 
$
213,691

 
$
184,824

U.S. GAAP Income from operations
 
14,555

 
39,159

 
24,574

U.S. GAAP operating margin
 
9.3
%
 
18.3
%
 
13.3
%
 
 
 
 
 
 
 
Pre-tax non-GAAP items:
 
 
 
 
 
 
Amortization related to intangible assets acquired through business combination- selling, general and administrative
 
1,877

 
1,943

 
1,899

Restructuring
 
31

 
1,314

 
756

Non-GAAP Income from operations
 
$
16,463

 
$
42,416

 
$
27,229

Non-GAAP operating margin
 
10.5
%
 
19.8
%
 
14.7
%


8



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 29, 2018
 
December 30, 2017
 
September 29, 2018
Net revenue
 
$
157,208

 
$
213,691

 
$
184,824

U.S. GAAP net income/(loss)
 
7,517

 
(69,528
)
 
29,635

U.S. GAAP net margin
 
4.8
%
 
(32.5
)%
 
16.0
%
 
 
 
 
 
 
 
Non-GAAP adjustments:
 
 
 
 
 
 
Amortization related to intangible assets acquired through business combination- selling, general and administrative
 
1,877

 
1,943

 
1,899

Restructuring
 
31

 
1,314

 
756

Income tax expense- Tax Reform
 
7,712

 
105,688

 
(1,137
)
Net income tax (benefit)/expense on non-GAAP items
 
(141
)
 
(36
)
 
44

Total non-GAAP adjustments
 
9,479

 
108,909

 
1,562

Non-GAAP net income
 
16,996

 
39,381

 
31,197

Non-GAAP net margin
 
10.8
%

18.4
 %

16.9
%
 
 
 
 
 
 
 
U.S. GAAP net income/(loss) per share:
 
 
 
 
 
 
Basic
 
0.11

 
(0.99
)
 
0.44

Diluted(a)
 
0.11

 
(0.99
)
 
0.43

 
 
 
 
 
 
 
Non-GAAP adjustments per share:(b)
 
 
 
 
 
 
Basic
 
0.14

 
1.54

 
0.02

Diluted
 
0.14

 
1.52

 
0.02

 
 
 
 
 
 
 
Non-GAAP net income per share:
 
 
 
 
 
 
Basic
 
$
0.25

 
$
0.56

 
$
0.46

Diluted(c)
 
$
0.25

 
$
0.55

 
$
0.45

(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 adjustments per share includes amortization related to intangible assets acquired through business combinations, 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.
(c)
Non-GAAP diluted net earnings per share reflects any dilutive effect of outstanding restricted stock units and stock options.


9