SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1994.
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to _________.
Commission File No. 0-121
KULICKE AND SOFFA INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
Pennsylvania 23-1498399
(State or other jurisdiction (IRS employer
of incorporation) identification number)
2101 Blair Mill Road 19090
Willow Grove, Pennsylvania (Zip code)
(Address of principal
executive offices)
(215) 784-6000
(Registrant's telephone number, including area code)
Indicate by check mark whether registrant (1) has filed all reports
required to be filed by section 13 or 15 (d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes [ X ] No [ ]
As of August 5, 1994, there were 8,246,848 shares of the Registrant's
Common Stock, Without Par Value, outstanding.
KULICKE AND SOFFA INDUSTRIES, INC.
FORM 10 - Q
JUNE 30, 1994
INDEX
Page No.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheet - June 30, 1994
and September 30, 1993 3
Consolidated Statement of Operations - Three
and Nine Months Ended June 30, 1994
and 1993 4
Consolidated Condensed Statement of Cash
Flows - Nine Months Ended June 30, 1994
and 1993 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 7 - 10
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8 - K 11
Signatures 12
- 2 -
KULICKE AND SOFFA INDUSTRIES, INC. and Subsidiaries
CONSOLIDATED BALANCE SHEET
(in thousands)
(unaudited)
June 30, September 30,
1994 1993
Assets -------- -------
Cash and cash equivalents $ 10,801 $ 7,413
Short-term investments at cost plus accrued
interest which approximates market 20,994 15,355
Accounts and notes receivable, net 29,699 29,346
Inventories, net 23,261 29,108
Prepaid expenses and other current assets 2,901 3,061
------- -------
Total current assets 87,656 84,283
Property, plant and equipment, at cost, less
accumulated depreciation and amortization 20,427 18,181
Other assets 2,878 2,814
------- -------
Total assets $110,961 $105,278
======= =======
Liabilities and Shareholders' Equity
Debt due within one year $ 60 $ 60
Accounts payable 14,135 15,371
Accrued expenses 8,101 9,889
Estimated income taxes payable 1,580 773
------- -------
Total current liabilities 23,876 26,093
------- -------
Long-term debt 26,489 26,708
Deferred income taxes 190 408
Other liabilities 693 588
------- -------
Total liabilities 51,248 53,797
------- -------
Commitments and contingencies
Common stock, without par value 17,571 16,336
Retained earnings 42,646 35,998
Cumulative translation adjustment (504) (853)
------- -------
Total shareholders' equity 59,713 51,481
------- -------
Total liabilities and shareholders' equity $110,961 $105,278
======= =======
See accompanying notes to consolidated financial statements.
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KULICKE AND SOFFA INDUSTRIES, INC. and Subsidiaries
CONSOLIDATED STATEMENT OF OPERATIONS
(in thousands, except share related data)
(unaudited)
Three months Nine months
ended June 30, ended June 30,
----------------- ------------------
1994 1993 1994 1993
------ ------ ------- ------
Net sales $40,838 $38,532 $122,863 $96,914
Costs and expenses:
Cost of goods sold 24,977 21,968 72,200 54,225
Selling, general and
administrative 9,002 7,816 26,613 23,637
Research and development, net 5,176 4,107 15,228 11,167
------ ------ ------- ------
Total costs and expenses 39,155 33,891 114,041 89,029
------ ------ ------- ------
Income from operations 1,683 4,641 8,822 7,885
Interest income 308 258 920 849
Interest expense (539) (552) (1,633) (1,652)
------ ------ ------- ------
Income before income taxes 1,452 4,347 8,109 7,082
Provision for income taxes 305 435 1,461 757
------ ------ ------- ------
Net income $ 1,147 $ 3,912 $ 6,648 $ 6,325
====== ====== ======= ======
Net income per share $0.14 $0.47 $0.80 $0.78
==== ==== ==== ====
Weighted average shares
outstanding 8,352,660 8,281,877 8,320,595 8,108,173
See accompanying notes to consolidated financial statements.
- 4 -
KULICKE AND SOFFA INDUSTRIES, INC. and Subsidiaries
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
(in thousands)
(unaudited)
Nine months ended June 30,
1994 1993*
------ ------
Operating activities:
Net income $ 6,648 $ 6,325
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization 2,856 2,327
Deferred income taxes (218) --
Changes in other components of
working capital excluding short-term
investments 3,524 (6,459)
Other changes, net 304 (314)
------- -------
Net cash provided by operating activities 13,114 1,879
------- -------
Investing activities:
Purchases of property, plant and equipment,
net (5,116) (3,041)
Purchases of short-term investments, net (5,639) (1,298)
------- -------
Net cash used by investing activities (10,755) (4,339)
-------- -------
Financing activities:
Proceeds from exercise of stock options 1,061 1,133
Payments on borrowings (45) (66)
------- -------
Net cash provided by financing activities 1,016 1,067
------- -------
Effects of exchange rate changes on cash 13 46
------- -------
Change in cash and cash equivalents 3,388 (1,347)
Cash and cash equivalents at beginning
of year 7,413 6,414
------- -------
Cash and cash equivalents at end of period $10,801 $ 5,067
====== ======
* Reclassified for comparative purposes.
See accompanying notes to consolidated financial statements.
- 5 -
KULICKE AND SOFFA INDUSTRIES, INC. and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands)
(Unaudited)
Note 1. Basis of Presentation
The consolidated financial statement information included herein
is unaudited, but in the opinion of management, contains all
adjustments, consisting only of normal recurring adjustments,
necessary to present fairly the Company's financial position as
of June 30, 1994 and 1993, the results of its operations for the
three and nine month periods ended June 30, 1994 and 1993, and
its cash flows for the nine month periods ended June 30, 1994 and
1993. These financial statements should be read in conjunction
with the audited financial statements included in the Company's
Annual Report on Form 10-K for the fiscal year ended September
30, 1993.
Note 2. Subsequent Event
On July 13, 1994, the Company acquired the business and certain
assets of Assembly Technologies, an operating division of General
Signal Corporation, for a cash purchase price approximating $2.9
million before transaction-related costs. Assembly Technologies
manufactured and sold semiconductor assembly equipment, including
automatic die attach machines, automatic dicing saws and related
spare parts. The transaction will be accounted for as a
purchase. Accordingly, the acquired assets and results of
operations of the Assembly Technologies business will be included
in the Company's consolidated financial statements from the date
of the acquisition.
- 6 -
KULICKE AND SOFFA INDUSTRIES, INC. and Subsidiaries
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
INTRODUCTION
The Company's sales largely depend on the capital expenditures of
semiconductor manufacturers, which in turn depend on the current
and anticipated market demand for semiconductors and products
using semiconductors. Historically, there have been substantial
fluctuations in the amounts which semiconductor manufacturers
have invested in capital equipment. The Company believes that
such fluctuations will continue to characterize the industry in
the future. In view of the historical fluctuations in the
semiconductor and semiconductor assembly equipment markets, it is
inherently difficult to predict demand for semiconductor assembly
equipment.
RESULTS OF OPERATIONS
The Company achieved record quarterly bookings of customer orders
totaling $51.6 million during the three months ended June 30,
1994 compared to $40.6 million for the second quarter of fiscal
1994, and $43.0 million for the third quarter of fiscal 1993.
The current bookings level reflects a continuing buoyant market
and the capturing of market share at some key accounts in Asia.
As a result, the backlog increased to $42.0 million at June 30,
1994 from $31.0 million at March 31, 1994. The Company's backlog
as of any date may not be representative of sales for any
succeeding period.
During the three months ended June 30, 1994, revenues totaled
$40.8 million compared to revenues of $38.5 million for the same
period last year. For the nine month period ended June 30, 1994,
revenues increased to $122.9 million versus the $96.9 million
reported for the fiscal 1993 year to date period. The fiscal
1994 revenue increases reflect a continuation of the higher level
of activity in the semiconductor assembly equipment industry
which commenced in the latter half of fiscal 1993.
Increased revenues during the third fiscal quarter of 1994
primarily resulted from increased sales of consumable tools
compared to fiscal 1993. A modest increase in unit sales of
machines during the 1994 third quarter was offset by lower
average selling prices compared to fiscal 1993.
For the nine month period ended June 30, 1994, increased unit
sales of the Company's wire bonders and higher sales of
consumable tools accounted for the majority of the growth in
revenues compared to fiscal 1993. These increases were mitigated
in part by lower average selling prices for certain of the
Company's machines and lower unit sales of dicing saws in 1994
compared to the same period last year.
- 7 -
The cost of goods sold increased to $25.0 million and $72.2
million for the three and nine month periods ended June 30, 1994,
respectively, compared to $22.0 million and $54.2 million for the
same periods in fiscal 1993. These increases were largely due to
the higher unit volume noted above.
Gross profit margin declined to 38.8% and 41.2% for the three and
nine month periods ended June 30, 1994, respectively, compared to
43.0% and 44.0% during the same periods last year. These changes
primarily reflect the lower average selling prices for certain of
the Company's machines due to large volume orders from certain
Asian customers and a shift in product sales mix during fiscal
1994 compared to fiscal 1993. Sales of machines comprised 77% of
total revenues during the nine month period ended June 30, 1994.
In the first nine months of fiscal 1993, machine sales comprised
74% of total revenues. Sales of higher margin spare parts and
consumable tools comprised 19% of total revenues during the nine
month period ended June 30, 1994, versus 22% for the comparable
period in fiscal 1993. The favorable effect of higher volume on
average unit costs of machines in fiscal 1994 was offset by lower
average selling prices on certain machines in the Asian market,
as compared to fiscal 1993. Introduction of an enhanced version
of the Company's gold ball wire bonders in late 1994 should have
a favorable effect on average selling prices.
Selling, general and administrative ("SG&A") expenses increased
to $9.0 million and $26.6 million for the three and nine month
periods ended June 30, 1994, respectively, compared to $7.8
million and $23.6 million for the comparable periods last year.
Higher SG&A costs during fiscal 1994 include increased costs to
support the worldwide installed base of machines, increased
marketing and applications support costs for scheduled product
introductions, and increased costs necessary to enhance and
support worldwide computerized information systems. These
increases were offset in part by cost savings in Europe and Japan
as a consequence of the Company's 1992 restructuring program.
Net research and development ("R&D") costs increased to $5.2
million for the three months ended June 30, 1994 and $15.2
million for the fiscal 1994 year to date period, up from the $4.1
million and $11.2 million reported for the three and nine month
periods ended June 30, 1993, respectively. The increased
expenditures during fiscal 1994 are attributable to the Company's
continued development of the next generation machines, including
the 8000 Series wire bonders and the Model 6900 automatic die
bonder, and enhancements of existing products. With respect to
the Series 8000 wire bonder and Model 6900 automatic die bonder,
fiscal 1994 R&D costs include increased labor and fringe costs
associated with engineering activities, increased costs for
prototype materials as R&D activities progress from the design to
development phase, and increased use of outside contractors for
portions of the development work.
- 8 -
Operating income declined to $1.7 million for the three months
ended June 30, 1994 compared to $4.6 million during the third
quarter of fiscal 1993. This change resulted from reduced gross
profit margins and higher operating costs as discussed above.
On a year to date basis, operating income in fiscal 1994
increased to $8.8 million compared to $7.9 million reported in
fiscal 1993 due primarily to the higher sales levels realized in
fiscal 1994, offset in part by cost increases noted above.
Interest expense, net of interest income, totaled $231,000 for
the three months ended June 30, 1994 compared to $294,000 for the
same period last year. On a year to date basis, interest
expense, net of interest income, totaled $713,000 in fiscal 1994
compared to $803,000 in fiscal 1993. These improvements are
largely due to increased interest income resulting from the
higher average level of invested cash in fiscal 1994.
The provision for income taxes for the nine months ended June 30,
1994 is based on the Company's estimated effective tax rate for
the year. The increase in the fiscal 1994 estimated effective
tax rate of 18% over the 11% effective tax rate reported for the
nine months ended June 30, 1993 primarily resulted from
exhausting the remaining net operating loss and most tax credit
carryforwards in the United States during fiscal 1993 and 1994
and the estimated amount and geographic distribution of taxable
income during fiscal 1994.
As discussed in Note 2 to the June 30, 1994 financial statements,
the Company acquired the business and certain assets of Assembly
Technologies on July 13, 1994. As a consequence, sales, cost of
goods sold and operating costs are expected to increase in the
future due to the incremental activities associated with the
Assembly Technologies business.
LIQUIDITY AND CAPITAL RESOURCES
Cash generated by operating activities totaled $13.1 million for
the nine months ended June 30, 1994. Cash and cash equivalents
increased to $10.8 million at June 30, 1994 from the $7.4 million
reported at September 30, 1993. Working capital increased to
$63.8 million at June 30, 1994 compared to $ 58.2 million. The
$5.8 million decline in inventory primarily reflects the
Company's continued efforts to reduce fiscal 1994 inventory
levels. The declines in trade accounts payable and accrued
expenses are primarily the result of the timing of purchases and
payments to vendors and others as invoices and other liabilities
became due.
During the nine months ended June 30, 1994, the Company invested
approximately $5.1 million in property and equipment, primarily
to upgrade capital equipment used in the Company's manufacturing
and research and development activities, and to upgrade worldwide
information processing capabilities.
- 9 -
In January 1994, the Company renewed its $10.0 million credit
line with a financial institution. The credit line expires
January 31, 1995. Borrowings under this facility are subject to
interest at 1/4% below the lender's prime rate. The Company's
ability to borrow under this line of credit is subject to the
Company meeting certain financial requirements. All such
financial requirements have been met by the Company.
The Company believes that, based on its present operating levels,
its working capital, internally generated funds and amounts
available under its line of credit will be sufficient to meet
anticipated cash requirements for operating expenses and capital
expenditures throughout the next year.
- 10 -
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8 - K
(a) Exhibits
None.
(b) Reports on Form 8 - K
There were no reports on Form 8 - K filed during the
three month period ended June 30, 1994.
- 11 -
SIGNATURES
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 thereunto duly authorized.
KULICKE AND SOFFA INDUSTRIES, INC.
Date: August 15, 1994 /s/ Clifford G. Sprague
---------------------------------
Clifford G. Sprague
Senior Vice President, Chief
Financial Officer and Chief
Accounting Officer
- 12 -
