SOURCE: Kulicke & Soffa

November 16, 2006 07:00 ET

Kulicke & Soffa Reports Preliminary Results for Its Fourth Quarter and Fiscal Year 2006; Earnings of $0.14 per Share for Fourth Quarter

FORT WASHINGTON, PA -- (MARKET WIRE) -- November 16, 2006 --Kulicke & Soffa Industries, Inc. (NASDAQ: KLIC)

--  Q4 Revenue rises above the Company's September 7, 2006 guidance
--  Q4 Net Income of $0.14 per diluted share from continuing operations
--  Cash position increased $47.8 million from the prior quarter
--  Fiscal 2006 Net Income from continuing operations of $1.09 per diluted
    share vs. $0.52 per diluted share in Fiscal 2005
    
Kulicke & Soffa Industries, Inc. (NASDAQ: KLIC) today announced preliminary financial results for its quarter ended September 30, 2006 ("fourth quarter") and its fiscal year ended September 30, 2006 ("fiscal year 2006").

Net revenue from continuing operations for the fourth quarter was $161.4 million compared to $162.0 million from continuing operations for the comparable year-ago quarter. Net income from continuing operations was $9.3 million or $0.14 per diluted share, versus net income from continuing operations for the year-ago quarter of $20.6 million or $0.31 per diluted share.

The lower net income from continuing operations in the fourth quarter on approximately the same net revenue as the comparable year-ago quarter is a result of lower equipment revenue and higher gold wire revenue, primarily from higher gold metal cost. The cost of the gold metal content of our wire is passed through to our customers without generating a profit. Included in net revenue from continuing operations for the fourth quarter is a $28.3 million gold metal revenue increase, from $52.1 million for the year-ago quarter to $80.4 million for the fourth quarter of 2006. These amounts are included in both our revenue and cost of sales.

Also included in the fourth quarter is expense for equity-based compensation from stock options of $1.0 million or $0.01 per diluted share. As previously reported, the Company began recording equity-based compensation expense during the first quarter of 2006. Equity-based compensation expense was not recorded in any period prior to fiscal year 2006.

As part of the fiscal year 2006 financial close process, the Company determined that it understated earnings in prior fiscal years in an aggregate amount not expected to exceed $4 million. The Company is currently assessing the impact on current and prior periods, as well as the impact on controls over financial reporting. The Company will complete its assessment before filing its annual report on Form 10-K on December 14, 2006. The impact of this assessment is not reflected in the financials presented in this earnings release.

Scott Kulicke, chairman and chief executive officer, commented on the fourth quarter, "Equipment revenue exceeded the high end of our guidance by approximately $4 million. This represents a more modest decline in revenue during the September quarter than originally forecasted. This level of business supports our belief that our customers did not over-spend for capacity during previous peak periods, so we did not see a marked correction for excess capacity, as some industry analysts had predicted. Our positive net income for this period marks the 12th sequential quarter of profitability, or break-even, from continuing operations.

He added, "In addition to our current product portfolio, we are focused on the recently announced acquisition of Alphasem, which represents an investment in growth at a reasonable price. We believe this potential revenue growth, when coupled with the proven profitability from our continuing operations, is a combination that will allow K&S to continue generating good financial results throughout the semiconductor business cycle."

For fiscal year 2006, net revenue from continuing operations was $696.3 million compared to net revenue from continuing operations of $475.5 million for the prior year. Net income from continuing operations was $73.4 million or $1.09 per diluted share, compared to net income from continuing operations of $33.3 million or $0.52 per diluted share for the prior year.

Fourth Fiscal Quarter Review and Highlights:

Technology & Manufacturing

--  The K&S CupraPlus capillary completed its final R&D milestones for
    release in the December quarter. This new tool is used in copper wire
    bonding and expected to improve customers' throughput and process yields.
    
--  The K&S AT Premier gold bumping machine is currently being used by a
    customer to develop methods for producing non-wire bonded, 3-D (stacked)
    packages. This represents a unique opportunity for K&S to provide
    technology to its customers outside of traditional wire bonded packaging.
    
    

Key Product Trends

--  K&S wire bonders gained incremental sales at several customers in
    Taiwan during the fourth quarter. These customers represent a previously
    underserved market as they had not taken delivery of any K&S wire bonders
    in the previous quarter and historically purchase our competitors'
    equipment. Some of these customers represent the results of the K&S sales
    team's efforts to better serve smaller Taiwanese subcons that have future
    growth potential.
    
--  Gold wire unit shipments for the fourth quarter increased to the
    highest level ever shipped in a single quarter.
    
--  The K&S AT Premier is currently installed at 14 different customers,
    applying gold bumps to wafers for the purpose of developing advanced
    packages, primarily for camera sensors, high brightness LEDs (HBLEDs), and
    memory devices.
    
Financial Review
--  Cash and cash equivalents, restricted cash, and short-term investments
    increased $47.8 million, from $109.5 million in the prior quarter to $157.3
    million in the fourth quarter.
    
--  Gross profit margin declined 1.5% from the prior quarter to 24.2% in
    the fourth quarter. The decline in gross profit margin was the result of
    higher gold metal revenue for the fourth fiscal quarter.
    
--  K&S Equipment segment maintained its gross profit margin on lower
    revenue in the fourth quarter. The prior quarter's gross profit margin was
    43.4% on $71.1 million in sales compared to 43.1% on $54.9 million in the
    fourth fiscal quarter.
    
--  Precious metal revenue for our gold wire products was $80.4 million
    for the fourth quarter compared to $75.3 million in the prior quarter.
    These same amounts are also included in the cost of sales.
    
Revenue Forecast for First Fiscal Quarter:

Mr. Kulicke provided the following revenue forecast, "We expect some further decline in wire bonder sales in the December quarter. Gold metal pass through, which is included in our revenue, is expected to be somewhat lower than the September quarter. Those two factors are partially offset by our recent acquisition of Alphasem. Die bonders will increase our equipment revenue by providing approximately two months of sales in the quarter. Therefore we expect revenue in the December quarter to be $140 to $150 million, including approximately $7 million of die bonder revenue. We look forward to demonstrating good financial performance in fiscal year 2007."

Earnings Conference Call Details

A conference call to discuss these results will be held today, November 16, 2006 beginning at 9:00 AM EST. Interested participants may call 877-407-8037 for the teleconference or log on to http://www.kns.com/investors/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 218650 (conference number). A replay will also be available on the K&S web site at http://www.kns.com/investors. The replay will be available via phone and web site through January 12, 2007.

About Kulicke & Soffa

Kulicke & Soffa (NASDAQ: KLIC) is the world's leading supplier of semiconductor assembly equipment, materials, and technology. K&S provides wire bonders, capillaries, wire, die bonders, and die collets for all types of semiconductor packages using wire as the internal electrical interconnections. K&S is the only major supplier to the semiconductor assembly industry that provides customers with semiconductor assembly equipment along with the complementing packaging materials and process technology that enable our customers to achieve the highest possible yields and throughput. The ability to provide these assembly related products is unique to Kulicke & Soffa, and allows us to develop system solutions to the new technology challenges inherent in assembling and packaging next-generation semiconductor devices. Kulicke & Soffa's web site address is http://www.kns.com.


Caution Concerning Forward-Looking Statements

In addition to historical statements, this press release contains statements relating to future events and our future results. These statements are "forward-looking" statements within the meaning of the Private Securities Litigation Reform Act of 1995, and include, but are not limited to, statements that relate to our future revenue, revenue growth, sales, profitability, financial results, unit volumes, product development, release of products, industry forecasts, the semiconductor business cycle, the price of gold metal, projected continued demand for our products, and our customers' growth potential. 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 of failure to successfully manage our operations; the risk that anticipated orders may not materialize or that orders received may be postponed or canceled, generally without charges; the volatility in the demand for semiconductors and our products and services; the risk that we may not be able to develop and manufacture new products and product enhancements on a timely and cost effective basis; acts of terrorism and violence; overall global economic conditions; 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; potential instability in foreign capital markets; and the factors listed or discussed in Kulicke and Soffa Industries, Inc. 2005 Annual report on Form 10-K and our other filings with the Securities and Exchange Commission. Kulicke & Soffa Industries 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 STATEMENT OF OPERATIONS
            (In thousands, except per share and employee data)
                                (Unaudited)

                              Three months ended      Fiscal year ended
                            September   September   September   September
                                30,         30,         30,         30,
                            ----------  ----------  ----------  ----------
                               2005        2006        2005        2006
                            ----------  ----------  ----------  ----------
Net revenue                 $  161,973  $  161,415  $  475,542  $  696,311

Cost of sales                  111,194     122,368     339,461     503,257
                            ----------  ----------  ----------  ----------

Gross profit                    50,779      39,047     136,081     193,054
                            ----------  ----------  ----------  ----------

Selling, general and
 administrative                 19,327      19,575      69,525      81,657
Research and development,
 net                             7,475       9,552      28,495      37,657
Gain on sale of assets            (127)          -      (1,690)     (4,544)
                            ----------  ----------  ----------  ----------

Operating expenses              26,675      29,127      96,330     114,770
                            ----------  ----------  ----------  ----------

Income from operations          24,104       9,920      39,751      78,284

Interest income                    664       1,301       2,228       3,921
Interest expense                  (960)       (634)     (3,806)     (3,126)
Gain on early
 extinguishment of debt                          -           -       4,040
                            ----------  ----------  ----------  ----------
Income from continuing
 operations before income
 taxes                          23,808      10,587      38,173      83,119

Provision for income taxes       3,247       1,315       4,836       9,769
                            ----------  ----------  ----------  ----------

Net income from continuing
 operations                     20,561       9,272      33,337      73,350
                            ----------  ----------  ----------  ----------

Loss from discontinued
 operations                     (7,938)       (121)   (137,419)    (24,862)

                            ----------  ----------  ----------  ----------
Net income (loss)           $   12,623  $    9,151  $ (104,082) $   48,488
                            ==========  ==========  ==========  ==========

Net income per share from
 continuing operations:
    Basic                   $     0.40  $     0.16  $     0.65  $     1.33
                            ==========  ==========  ==========  ==========
    Diluted                 $     0.31  $     0.14  $     0.52  $     1.09
                            ==========  ==========  ==========  ==========

Loss per share from
 discontinued operations:
    Basic                   $    (0.16) $        -  $    (2.67) $    (0.45)
                            ==========  ==========  ==========  ==========
    Diluted                 $    (0.12) $        -  $    (2.03) $    (0.37)
                            ==========  ==========  ==========  ==========

Net income (loss) per
 share:
    Basic                   $     0.24  $     0.16  $    (2.02) $     0.88
                            ==========  ==========  ==========  ==========
    Diluted                 $     0.19  $     0.14  $    (1.51) $     0.72
                            ==========  ==========  ==========  ==========

Weighted average shares
 outstanding:
    Basic                       51,939      57,100      51,619      55,089
    Diluted                     68,634      69,157      67,662      68,881

Stock-based compensation
 expense included in
 continuing operations:
    Cost of sales           $        -  $       79  $        -  $      619
    Selling, general and
     administrative                  -         747           -       2,996
    Research and
     development                     -         188           -       1,120
                            ----------  ----------  ----------  ----------
Total continuing operations $        -  $    1,014  $        -  $    4,735
                            ==========  ==========  ==========  ==========
     Discontinued
      operations            $        -  $        -  $        -  $      628
                            ==========  ==========  ==========  ==========



                              Three months ended      Fiscal year ended
                            September   September   September   September
                                30,         30,         30,         30,
                            ----------  ----------  ----------  ----------
Additional financial data:     2005        2006        2005        2006
                            ----------  ----------  ----------  ----------
Depreciation and
 amortization
  Continuing operations     $    2,986  $    2,078  $   12,746  $    9,523
  Discontinued operations   $    1,552  $        -  $   12,665  $    2,314

Capital expenditures
  Continuing operations     $    2,177  $    1,404  $    7,788  $    9,496
  Discontinued operations   $    1,618  $        -  $    4,717  $      753


                                                    September   September
                                                        30,         30,
                                                    ----------  ----------
                                                       2005        2006
                                                    ----------  ----------

Backlog of orders
  Continuing operations                             $   92,000  $   56,000
  Discontinued operations                                7,000           -

Number of employees
  Continuing operations                                  2,627       2,492
  Transition personnel                                       -         159
  Discontinued operations                                  983           -

Note - Statements of operations and additional financial data reflect
       accounting for the sale of the company's Test business as a
       discontinued operation in accordance with the requirements of
       FAS 144.




                     KULICKE & SOFFA INDUSTRIES, INC.
                        CONSOLIDATED BALANCE SHEET
                              (In thousands)

                                                               (Unaudited)
                                                    September   September
                                                        30,         30,
                                                       2005        2006
                                                    ----------  ----------
                             ASSETS

CURRENT ASSETS
Cash and cash equivalents                           $   79,455  $  133,967
Restricted cash                                          1,381       1,973
Short-term investments                                  14,533      21,343
Accounts and notes receivable (less allowance for
 doubtful accounts: 9/30/05 - $2,086;
 9/30/06 - $1,426)                                     128,376     120,651
Inventories, net                                        46,115      47,866
Assets held for sale                                         -       3,832
Current assets of discontinued operations               23,828           -
Prepaid expenses and other current assets               10,267      10,446
Deferred income taxes                                    1,605       3,990
                                                    ----------  ----------

  TOTAL CURRENT ASSETS                                 305,560     344,068

Property, plant and equipment, net                      32,428      28,487
Goodwill                                                29,684      29,684
Non-current assets of discontinued operations           12,704           -
Other assets                                             6,120       3,262
                                                    ----------  ----------

  TOTAL ASSETS                                      $  386,496  $  405,501
                                                    ==========  ==========

           LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES
Current portion of long term debt                   $   10,119  $        -
Accounts payable                                        53,498      46,469
Accrued expenses                                        32,748      33,084
Income taxes payable                                    17,196      19,218
Liabilities held for sale                                    -           -
Current liabilities of discontinued operations           5,950           -
                                                    ----------  ----------

  TOTAL CURRENT LIABILITIES                            119,511      98,771

Long term debt                                         270,000     195,000
Other liabilities                                        6,389      10,641
Deferred taxes                                          22,344      25,465
                                                    ----------  ----------

  TOTAL LIABILITIES                                    418,244     329,877
                                                    ----------  ----------


Commitments and contingencies                                -           -

SHAREHOLDERS' EQUITY (DEFICIT)
Common stock, without par value                        218,426     277,194
Accumulated deficit                                   (243,994)   (195,506)
Accumulated other comprehensive loss                    (6,180)     (6,064)
                                                    ----------  ----------

  TOTAL SHAREHOLDERS' EQUITY (DEFICIT)                 (31,748)     75,624
                                                    ----------  ----------
  TOTAL LIABILITIES AND
      SHAREHOLDERS' EQUITY (DEFICIT)                $  386,496  $  405,501
                                                    ==========  ==========

Note - Amounts have been adjusted to reflect accounting for the sale of the
       company's Test business as a discontinued operation in accordance
       with the requirements of FAS 144.




                     KULICKE & SOFFA INDUSTRIES, INC.
                  OPERATING RESULTS BY BUSINESS SEGMENT
                              (In thousands)
                                (Unaudited)


Fiscal 2006:
                                                  Packaging
                                    Equipment     Materials
Three months ended September 30,     Segment       Segment    Consolidated
 2006:                            ------------  ------------- ------------

Net revenue                       $     54,900  $     106,515 $    161,415
Cost of sales                           31,263         91,105      122,368
                                  ------------  ------------- ------------
Gross profit                            23,637         15,410       39,047
Operating costs                         20,001          9,126       29,127
                                  ------------  ------------- ------------
Income from continuing operations $      3,636  $       6,284 $      9,920
                                  ============  ============= ============

Fiscal year ended September 30,
 2006:

Net revenue                       $    319,788  $     376,523 $    696,311
Cost of sales                          181,980        321,277      503,257
                                  ------------  ------------- ------------
Gross profit                           137,808         55,246      193,054
Operating costs                         85,640         33,674      119,314
Gain on sale of assets                       -              -       (4,544)
                                  ------------  ------------- ------------
Income from continuing operations $     52,168  $      21,572 $     78,284
                                  ============  ============= ============


Fiscal 2005:
                                                  Packaging
                                    Equipment     Materials
Three months ended September 30,     Segment       Segment    Consolidated
 2005:                            ------------  ------------- ------------

Net revenue                       $     84,892  $      77,081 $    161,973
Cost of sales                           47,632         63,562      111,194
                                  ------------  ------------- ------------
Gross profit                            37,260         13,519       50,779
Operating costs                         19,345          7,457       26,802
Gain on sale of assets                    (127)             -         (127)
                                  ------------  ------------- ------------
Income from continuing operations $     18,042  $       6,062 $     24,104
                                  ============  ============= ============

Fiscal year ended September 30,
 2005:

Net revenue                       $    201,608  $     273,934 $    475,542
Cost of sales                          115,558        223,903      339,461
                                  ------------  ------------- ------------
Gross profit                            86,050         50,031      136,081
Operating costs                         67,296         30,724       98,020
Gain on sale of assets                  (1,690)             -       (1,690)
                                  ------------  ------------- ------------
Income from continuing operations $     20,444  $      19,307 $     39,751
                                  ============  ============= ============

Contact Information

  • Company Contact:
    Michael Sheaffer
    215-784-6411
    215-784-6167 fax
    Email Contact