Kulicke & Soffa (KLIC) Fiscal 2Q 2011 Results Exceed High-End of Guidance

May 3, 2011 (Business Wire) — Kulicke & Soffa Industries, Inc. (NASDAQ: KLIC) (“K&S” or the “Company”) today announced results for its second fiscal quarter ended April 2, 2011.

For its second quarter of fiscal 2011, the Company reported net revenue of $206.7 million and net income of $39.9 million, or $0.54 per diluted share.

Quarterly Results

Fiscal Q2 2011

Change vs. Fiscal Q2 2010

Change vs. Fiscal Q1 2011

Net Revenue

$206.7 million

34.4%

38.9%

Gross Profit

$99.0 million

46.0%

37.2%

Gross Margin

47.9%

380 bps

(50) bps

Income from Operations

$43.6 million

87.2%

97.8%

Operating Margin

21.1%

590 bps

630 bps

Net Income

$39.9 million

88.5%

164.2%

Net Margin

19.3%

550 bps

920 bps

EPS – Diluted

$0.54

92.9%

157.1%

Bruno Guilmart, Kulicke & Soffa’s President and Chief Executive Officer, said, “Our results exceeded the high-end of prior guidance, with revenue increasing approximately 39% compared to the prior quarter led by our OSAT customers. We continue to benefit from strong demand from both our ball and wedge bonder equipment lines from a wide range of customers.

“Momentum continued in the gold to copper transition, with approximately 71% of our ball bonder shipments in the most recent quarter sold as copper capable bonders. We also continue to benefit from ongoing replacement demand for our latest generation of gold only ball bonders. We have also seen an increased demand for large area bondable options, which enable our customers to gain added efficiencies and reduce the cost of packaging. We believe we are maintaining our leadership position by offering the best equipment and tools solutions available on the market, backed by a flexible and efficient manufacturing model that allows us to ramp up production to meet customer demand.”

Key Product Trends

• Ball bonder equipment net revenue increased 57.7% over the December quarter. This sequential change was predominantly driven by increased OSAT customer demand.
• 71% of ball bonder equipment shipments were sold as copper capable bonders.
• Wedge bonder equipment net revenue increased 19.4% over the December quarter.

Financial Highlights

• Net revenue increased sequentially to $206.7 million, exceeding the high end of guidance.
• Gross margin remained strong at 47.9%.
• Operating margin was up 630 bps from the prior quarter to 21.1%.
• Net income was $39.9 million.
• Diluted EPS was $0.54.
• Cash and cash equivalents increased to $275.7 million up $78.1 million from the prior quarter.

Third Quarter Fiscal 2011 Outlook

The Company expects net revenue for the third quarter of fiscal 2011 to be approximately $255 million to $275 million.

Looking forward, Bruno Guilmart, commented, “We continue to position our business to leverage our R&D leadership and innovation and to focus our efforts to mitigate volatility, improve profitability and ensure our longer-term growth. We expect our overall ball and wedge bonding businesses to remain strong through the third quarter.”

Earnings Conference Call Details

A conference call to discuss these results will be held today, May 3, 2011 beginning at 8:00 am (ET). To access the conference call, interested parties may call +1-877-407-8037 or internationally +1-201-689-8037, or can access the live webcast at www.kns.com/investors/events.

A replay will be available from approximately one hour after the completion of the call through May 10, 2011 by calling toll-free +1-877-660-6853 or internationally +1-201-612-7415 and using the following replay access codes: 5521 (account number) and 370466 (replay ID number). A webcast replay will also be available at www.kns.com/investors/events.

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 our future revenue, sustained, increasing, continuing or strengthening demand for our products, the continuing transition from gold to copper wire bonding, replacement demand and improving OSAT volumes. 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, which may be associated with a substantial non-U.S. customer and supplier base and substantial non-U.S. manufacturing operations; and the factors listed or discussed in Kulicke and Soffa Industries, Inc. 2010 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										Six months ended
			April 2,					April 3,					April 2,					April 3,
			2011					2010					2011					2010
Net revenue:
Equipment			$	190,010				$	136,353				$	322,708				$	247,950
Expendable Tools				16,719					17,485					32,884					34,303
Total net revenue				206,729					153,838					355,592					282,253
Cost of sales:
Equipment				100,833					79,466					171,071					144,611
Expendable Tools				6,939					6,600					13,452					13,497
Total cost of sales				107,772					86,066					184,523					158,108
Gross profit:
Equipment				89,177					56,887					151,637					103,339
Expendable Tools				9,780					10,885					19,432					20,806
Total gross profit				98,957					67,772					171,069					124,145
Operating expenses:
Selling, general and administrative				35,415					27,678					66,087					50,317
Research and development				16,524					13,980					31,719					27,141
Amortization of intangible assets				2,386					2,386					4,772					4,774
Restructuring				983					406					2,775					605
Total operating expenses				55,308					44,450					105,353					82,837
Income from operations:
Equipment				41,346					20,194					60,530					35,041
Expendable Tools				2,303					3,128					5,186					6,267
Total income from operations				43,649					23,322					65,716					41,308
Other income (expense):
Interest income				156					89					261					186
Interest expense				(241	)				(359	)				(483	)				(730	)
Interest expense: non-cash				(1,780	)				(1,746	)				(3,552	)				(3,458	)
Income from operations before income taxes				41,784					21,306					61,942					37,306
Provision for income taxes				1,899					148					6,958					308
Net income			$	39,885				$	21,158				$	54,984				$	36,998
Net income per share:
Basic			$	0.55				$	0.30				$	0.77				$	0.52
Diluted			$	0.54				$	0.28				$	0.75				$	0.50
Weighted average shares outstanding:
Basic				71,512					69,806					71,196					69,745
Diluted				73,120					74,371					72,410					74,143
			Three months ended										Six months ended
			April 2,					April 3,					April 2,					April 3,
Supplemental financial data:			2011					2010					2011					2010
Depreciation and amortization			$	4,397				$	4,410				$	8,804				$	8,919
Capital expenditures			$	1,884				$	1,010				$	4,589				$	2,106
Equity-based compensation expense:
Cost of sales			$	56				$	50				$	104				$	96
Selling, general and administrative				2,148					1,273					3,111					1,987
Research and development				354					386					630					730
Total equity-based compensation expense			$	2,558				$	1,709				$	3,845				$	2,813
													As of
													April 2,					April 3,
													2011					2010
Backlog of orders													$	217,000				$	132,000
Number of employees														2,884					2,749

KULICKE & SOFFA INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
			April 2,					October 2,
			2011					2010
ASSETS
CURRENT ASSETS
Cash and cash equivalents			$	275,676				$	178,112
Restricted cash				–					237
Short-term investments				6,139					2,985
Accounts and notes receivable, net of allowance for doubtful accounts of $870 and $980, respectively				163,631					196,035
Inventories, net				82,939					73,893
Prepaid expenses and other current assets				12,232					15,985
Deferred income taxes				5,454					5,443
TOTAL CURRENT ASSETS				546,071					472,690
Property, plant and equipment, net				30,604					30,059
Goodwill				43,898					26,698
Intangible assets				34,340					39,111
Other assets				11,902					11,611
TOTAL ASSETS			$	666,815				$	580,169
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable			$	76,030				$	82,353
Accrued expenses and other current liabilities				48,193					41,498
Earnout agreement payable				17,200					–
Income taxes payable				1,349					1,279
TOTAL CURRENT LIABILITIES				142,772					125,130
Long term debt				101,749					98,475
Deferred income taxes				21,388					20,355
Other liabilities				13,129					13,729
TOTAL LIABILITIES				279,038					257,689
SHAREHOLDERS’ EQUITY
Common stock, no par value				433,176					423,715
Treasury stock, at cost				(46,356	)				(46,356	)
Accumulated deficit				(686	)				(55,670	)
Accumulated other comprehensive income				1,643					791
TOTAL SHAREHOLDERS’ EQUITY				387,777					322,480
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY			$	666,815				$	580,169

KULICKE & SOFFA INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
			Three months ended										Six months ended
			April 2, 2011					April 3, 2010					April 2, 2011					April 3, 2010
Net cash provided by operating activities, continuing operations			$	76,477				$	6,194				$	101,787				$	40,319
Net cash used in operating activities, discontinued operations				(444	)				(410	)				(968	)				(906	)
Net cash provided by operating activities			$	76,033				$	5,784				$	100,819				$	39,413
Net cash provided by (used in) investing activities, continuing operations				(1,989	)				2,948					(7,637	)				1,917
Net cash used in investing activities, discontinued operations				–					–					–					(1,838	)
Net cash provided by (used in) investing activities			$	(1,989	)			$	2,948				$	(7,637	)			$	79
Net cash provided by financing activities				3,906					206					4,031					183
Effect of exchange rate changes on cash and cash equivalents				175					(64	)				351					(154	)
Changes in cash and cash equivalents			$	78,125				$	8,874				$	97,564				$	39,521
Cash and cash equivalents, beginning of period				197,551					175,207					178,112					144,560
Cash and cash equivalents, end of period			$	275,676				$	184,081				$	275,676				$	184,081
Short-term investments & restricted cash				6,139					216					6,139					216
Total cash, cash equivalents, restricted cash and short-term investments			$	281,815				$	184,297				$	281,815				$	184,297

Kulicke & Soffa Industries, Inc.

Joseph Elgindy

Investor Relations

P: +1-215-784-7518

F: +1-215-784-6180

jelgindy@kns.com

or

Global IR Partners

David Pasquale

P: +1-914-337-8801

klic@globalirpartners.com