SOURCE: Kulicke & Soffa

January 26, 2006 07:28 ET

Kulicke & Soffa Announces First Fiscal Quarter Results

A Conference Call to Discuss These Results Will be Held Today 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.

WILLOW GROVE, PA -- (MARKET WIRE) -- January 26, 2006 --Kulicke & Soffa Industries, Inc. (K&S) (NASDAQ: KLIC) today announced financial results for its first fiscal quarter ended December 31, 2005.

Net revenue for the first fiscal quarter ended December 31, 2005 was $228.1 million, compared to $116.3 million in the comparable year-ago quarter. This revenue growth was driven by the Company's equipment segment, which was up 42% sequentially and 311% from a year ago, due to strong demand across a broad customer base for its new Maxum Ultra wire bonder.

Diluted earnings per share during the first fiscal quarter were $0.38, compared to a loss per share of $0.14 in the year-ago quarter and diluted earnings per share of $0.19 in the quarter ended September 30, 2005. The financial results for the three months ended December 31, 2005 include stock-based compensation expense from stock options of $1.5 million, or $0.02 per diluted share. As previously communicated, the Company began recording stock-based compensation expense during the first fiscal quarter. Stock-based compensation expense was not recorded in any prior period. Also, during the quarter the Company sold certain intellectual property and distribution rights to an off-shore subsidiary. This sale, along with increased earnings in the U.S. resulted in incremental state income taxes and alternative minimum taxes of $2.6 million during the quarter ended December 31, 2005 that are not expected to reoccur through the rest of this fiscal year.

Scott Kulicke, chairman and chief executive officer of K&S, commented on the December quarter, "Demand for all of our products was strong in the December quarter, but especially for our wire bonders. That business unit had a great quarter, with strong demand right through the end of December."

First Quarter Review and Highlights

Corporate Strategy

--  As separately announced today, the Company has entered into definitive
    agreements to sell its wafer test assets to SV Probe PTE, Ltd. and its
    package test assets to Investcorp Technology Ventures II, L.P., allowing
    the Company to narrow its focus on its core businesses -- semiconductor
    assembly equipment and materials.
    

Technology & Manufacturing

--  The K&S Maxum Ultra is typically exceeding the 10% productivity gains
    that were targeted for this model. The throughput is measured in "packages
    wire bonded per hour," which provides customers a direct measurement of the
    improved factory output of the Maxum Ultra, relative to its competition.
    
--  The new Maxum Elite model (replacing the K&S Nutek) was adopted by
    several customers as their new "bonder of record." The increased
    productivity and the new features associated with this model provide
    customers leading-edge cost of ownership and competitive advantages in the
    assembly of low lead count packages.
    
--  Several customers are adopting the new AT Premier wafer bumper for
    assembly of non-wire bonded packages. This new K&S product mechanically
    adds gold bumps to semiconductor wafers, which is often more cost effective
    than traditional plating methods and represents an opportunity for
    incremental growth for K&S.
    

Key Product Trends

--  The customer transition to the new Maxum Ultra model is more rapid
    than planned. The Maxum Ultra model accounted for 25% of the wire bonders
    shipped by the Company during the September quarter and 63% of the wire
    bonders shipped during the December quarter. The percentage of Maxum Ultra
    shipments will rise again in the March quarter.
    
--  Wire unit volumes for the first quarter grew 38% over the same quarter
    of the previous year.
    

Financial Review

--  Sales of $228.1 million are the highest since the March 2004 quarter.
    Revenue grew by $46.1 million or 25.4% from the prior quarter.
    
--  Gross Profit Margin improved to 31.1% in the first quarter from 28.4%
    in the prior quarter, primarily from the significant sales increase in the
    equipment segment.
    
--  Additional information regarding the sale of the Company's Test
    business segment will be provided in our 10-Q filing.
    

Business Summary

Mr. Kulicke concluded, "Including revenues from our Test segment, our guidance for the March quarter is for revenue to be $180 million, plus or minus about 5%. Excluding revenues from our Test segment, our revenue expectations for the March quarter are expected to be $158 million, plus or minus about 5%."

About Kulicke & Soffa

Kulicke & Soffa (NASDAQ: KLIC) is the world's leading supplier of semiconductor wire bonding assembly equipment. We believe 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 that contact the surface of the customer's semiconductor devices. 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, operating expenses, profitability, cash flows, introduction and customer adoption of new products, sale of the Company's test assets and performance, and projected continued demand for our products. 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 risk that anticipated sales of the test businesses will not be achieved; 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
                                                        December 31,
                                                          ---------
                                                       2004       2005
                                                    ---------   ---------
Net revenue                                         $ 116,321   $ 228,100

Cost of sales                                          89,943     157,223
                                                    ---------   ---------

Gross profit                                           26,378      70,877
                                                    ---------   ---------

Selling, general and administrative                    22,073      27,933
Research and development, net                           8,878      12,179
Gain on sale of assets (1)                             (1,875)          -
Amortization of intangible assets                       2,194           -
                                                    ---------   ---------

Operating expense                                      31,270      40,112
                                                    ---------   ---------
Income (loss) from operations                          (4,892)     30,765

Interest income                                           449         712
Interest expense                                         (846)       (958)
                                                    ---------   ---------

Income (loss) before income tax                        (5,289)     30,519

Provision for income taxes                              1,902       5,218
                                                    ---------   ---------

Net Income (loss)                                   $  (7,191)  $  25,301
                                                    =========   =========


Net income (loss) per share:
      Basic                                         $   (0.14)  $    0.49
      Diluted                                       $   (0.14)  $    0.38

Weighted average shares outstanding:
      Basic                                            51,237      52,044
      Diluted                                          51,237      68,239

Stock-based compensation expense
 included in amounts above:
      Cost of sales                                 $       -   $     142
      Selling, general and administrative                   -       1,017
      Research and development, net                         -         341
                                                    ---------   ---------
Total stock-based compensation expense              $       -   $   1,500
                                                    =========   =========

                                                     Three months ended
                                                        December 31,
                                                          ---------
Additional financial data:                             2004       2005
                                                    ---------   ---------

Depreciation and amortization                       $   7,012   $   4,173

Capital expenditures                                $   2,978   $   2,965


Backlog of orders                                   $  58,000   $  73,000

Number of employees                                     3,236   $   3,512


Note: (1) The Gain on sale of assets is mainly comprised of a gain on the
          sale of land and building in Gilbert, Arizona of $1,497
          thousand.



                     KULICKE & SOFFA INDUSTRIES, INC.
                        CONSOLIDATED BALANCE SHEET
                              (In thousands)
                                                             (Unaudited)
                                              September 30,   December 31,
                                                   2005            2005
                                                ---------       ---------
                                  ASSETS

CURRENT ASSETS
Cash and cash equivalents                       $  79,455       $  84,320
Restricted cash                                     1,381          10,255
Short-term investments                             14,533           7,222
Accounts and notes receivable
(less allowance for doubtful accounts:
 9/30/05 - $3,257; 12/31/05 - $3,102)             143,575         179,520
Inventories, net                                   54,744          62,926
Prepaid expenses and other current assets          10,267          14,117
Deferred income taxes                               1,605           1,567
                                                ---------       ---------
       TOTAL CURRENT ASSETS                       305,560         359,927

Property, plant and equipment, net                 45,132          44,372
Goodwill                                           29,684          29,684
Other assets                                        6,120           5,835
                                                ---------       ---------

       TOTAL ASSETS                             $ 386,496       $ 439,818
                                                =========       =========

              LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES
Current portion of long term debt               $  10,119       $   9,970
Accounts payable                                   59,448          80,523
Accrued expenses                                   32,748          32,018
Income taxes payable                               17,196          20,615
                                                ---------       ---------
       TOTAL CURRENT LIABILITIES                  119,511         143,126

Long term debt                                    270,000         270,000
Other liabilities                                   6,389           6,610
Deferred taxes                                     22,344          23,207
                                                ---------       ---------

       TOTAL LIABILITIES                          418,244         442,943
                                                ---------       ---------

Commitments and contingencies                           -               -

SHAREHOLDERS' EQUITY (DEFICIT)
Common stock, without par value                   218,426         221,305
Accumulated deficit                              (243,994)       (218,692)
Accumulated other comprehensive loss               (6,180)         (5,738)
                                                ---------       ---------

       TOTAL SHAREHOLDERS' EQUITY (DEFICIT)       (31,748)         (3,125)
                                                ---------       ---------
       TOTAL LIABILITIES AND
        SHAREHOLDERS' EQUITY (DEFICIT)          $ 386,496       $ 439,818
                                                =========       =========




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

Fiscal 2006:
                                         Packaging
Three months ended             Equipment Materials     Test
 December 31, 2005: (1)        Segment    Segment    Segment  Consolidated
                               --------   --------   --------   --------

Net revenue                    $120,672   $ 83,960   $ 23,468   $228,100
Cost of sales                    68,760     70,486     17,977    157,223
                               --------   --------   --------   --------
Gross profit                     51,912     13,474      5,491     70,877
Operating costs                  20,351      7,011     12,750     40,112
                               --------   --------   --------   --------
Income (loss) from operations  $ 31,561   $  6,463   $ (7,259)  $ 30,765
                               ========   ========   ========   ========

Fiscal 2005:
                                         Packaging
Three months ended             Equipment Materials     Test
 December 31, 2004: (1)        Segment    Segment    Segment  Consolidated
                               --------   --------   --------   --------
Net revenue                    $ 29,349   $ 64,018   $ 22,954   $116,321
Cost of sales                    17,326     51,252     21,365     89,943
                               --------   --------   --------   --------
Gross profit                     12,023     12,766      1,589     26,378
Operating costs                  13,613      7,372     12,160     33,145
Gain on sale of assets (2)         (378)         -     (1,497)    (1,875)
                               --------   --------   --------   --------
Income (loss) from operations  $ (1,212)  $  5,394   $ (9,074)  $ (4,892)
                               ========   ========   ========   ========

Notes:  (1)  Beginning with the three months ended December 31, 2005, the
             company is no longer including "Corporate and Other" as a
             business segment.  Operating costs previously allocated to
             this segment, which primarily consisted of general corporate
             expenses, have been allocated to the company's three remaining
             business segments.  The business segments information for the
             three months ended December 31, 2004 have also been modified
             to reflect this change.
        (2)  The Gain on sale of assets is mainly comprised of a gain on
             the sale of land and building in Gilbert, Arizona of $1,497
             thousand.

Contact Information

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