<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 15, 1995
REGISTRATION NO. 33-69734
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
AMENDMENT NO. 1 TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
KULICKE AND SOFFA INDUSTRIES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
----------------
PENNSYLVANIA 23-1498399
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION
INCORPORATION OF ORGANIZATION) NUMBER)
2101 BLAIR MILL ROAD
WILLOW GROVE, PENNSYLVANIA 19090
(215) 784-6000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
----------------
C. SCOTT KULICKE
KULICKE AND SOFFA INDUSTRIES, INC.
2101 BLAIR MILL ROAD
WILLOW GROVE, PENNSYLVANIA 19090
(215) 784-6000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
COPIES TO:
JOHN C. BENNETT, JR., ESQ. JEFFREY D. SAPER, ESQ.
SCOTT A. BLANK, ESQ. HARRY K. PLANT, ESQ.
DRINKER BIDDLE & REATH FELIX P. PHILLIPS, ESQ.
1100 PHILADELPHIA NATIONAL BANK WILSON, SONSINI, GOODRICH & ROSATI,
BUILDING P.C.
1345 CHESTNUT STREET 650 PAGE MILL ROAD
PHILADELPHIA, PENNSYLVANIA 19107-3496 PALO ALTO, CALIFORNIA 94304-1050
(215) 988-2700 (415) 493-9300
----------------
Approximate date of commencement of proposed sale to the public: As soon as
practicable after this Registration Statement becomes effective and the
Underwriting Agreement is executed.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [_]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
PROPOSED PROPOSED
AMOUNT MAXIMUM MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF TO BE OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED (1) PER SHARE (2) OFFERING PRICE (2) FEE (3)
------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock........... 115,000 $42.00 $4,830,000 $1,666
</TABLE>
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(1) Includes 390,000 shares of Common Stock that may be sold pursuant to the
Underwriters' over-allotment option.
(2) Calculated pursuant to Rule 457(c) based upon the average of the high and
low sale prices for the Common Stock as reported by the Nasdaq National
Market on September 8, 1995.
(3) A fee of $13,560.79 was paid with the original filing of this Registration
Statement for 2,875,000 shares (post two-for-one stock split effected in
July 1995).
----------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
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<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED SEPTEMBER 15, 1995
2,600,000 SHARES
[LOGO OF KULICKE & SOFFA APPEARS HERE]
COMMON STOCK
Of the 2,600,000 shares of Common Stock being offered hereby, 2,500,000
shares are being sold by the Company and 100,000 shares are being sold by the
Selling Shareholder. See "Selling Shareholder." The Company will not receive
any of the proceeds from the sale of shares by the Selling Shareholder.
The Company's Common Stock is traded on the Nasdaq National Market under the
symbol "KLIC." On September 13, 1995, the last reported sale price of the
Common Stock on the Nasdaq National Market was $43.25 per share. See "Price
Range of Common Stock."
SEE "RISK FACTORS" BEGINNING ON PAGE 5 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE COMMON STOCK OFFERED
HEREBY.
----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Proceeds to
Price to Underwriting Proceeds to Selling
Public Discount (1) Company (2) Shareholder
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per Share......................... $ $ $ $
Total (3)......................... $ $ $ $
</TABLE>
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
(1) See "Underwriting" for information concerning indemnification of the
Underwriters and other matters.
(2) Before deducting expenses payable by the Company estimated at $500,000.
(3) The Company and the Selling Shareholder have granted to the Underwriters a
30-day option to purchase up to an aggregate of 390,000 additional shares
of Common Stock solely to cover over-allotments, if any. If the
Underwriters exercise this option in full, the Price to Public will total
$ , the Underwriting Discount will total $ , the Proceeds to Company
will total $ and the Proceeds to Selling Shareholder will total $ .
See "Underwriting."
The shares of Common Stock are offered by the several Underwriters named
herein, subject to receipt and acceptance by them and subject to their right to
reject any order in whole or in part. It is expected that delivery of the
certificates representing such shares will be made against payment therefor at
the office of Montgomery Securities on or about , 1995.
----------
MONTGOMERY SECURITIES PAINEWEBBER INCORPORATED
, 1995
<PAGE>
ADDITIONAL INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information may be inspected and copied at the public
reference facilities maintained by the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549-1004 and at the regional offices of the Commission
located at 7 World Trade Center, Suite 1300, New York, New York 10048 and
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511. Copies of such materials may also be obtained from the
Public Reference Section of the Commission, 450 Fifth Street, N.W.,
Washington, D.C. 20549-1004 at prescribed rates. The Company's Common Stock is
quoted on the Nasdaq National Market, and reports and other information
concerning the Company may be inspected at the Nasdaq Stock Market at 1735 K
Street, N.W., Washington, D.C. 20006-1500.
This Prospectus constitutes a part of a Registration Statement on Form S-3
filed by the Company with the Commission under the Securities Act of 1933, as
amended (the "Securities Act"). This Prospectus omits certain of the
information contained in the Registration Statement, and reference is hereby
made to the Registration Statement and related exhibits for further
information with respect to the Company and the securities offered hereby. Any
statements contained herein concerning the provisions of any document are not
necessarily complete, and, in such instance, reference is made to the copy of
such document filed as an exhibit to the Registration Statement or otherwise
filed with the Commission. Each such statement is qualified in its entirety by
such reference.
INCORPORATION BY REFERENCE
The following documents have been previously filed by the Company with the
Commission (Commission File No. 0-121) and are hereby incorporated by
reference in this Prospectus as of their respective dates: (a) Annual Report
on Form 10-K for the fiscal year ended September 30, 1994; (b) Quarterly
Reports on Form 10-Q for the quarters ended December 31, 1994, March 31, 1995
and June 30, 1995; (c) Current Reports on Form 8-K dated March 30, 1995 (as
amended by a Form 8-K/A filed April 10, 1995), May 22, 1995 and September 14,
1995; and (d) Form 8-A12G/A dated September 8, 1995 (as amended by a Form 8-
A12G/A dated September 11, 1995).
Additionally, all documents filed by the Company with the Commission
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent
to the date of this Prospectus and prior to the termination of the offering
made hereby shall be deemed to be incorporated by reference in this Prospectus
and to be a part hereof from the date of filing of such documents. Any
statement or information contained in a document incorporated by reference
herein shall be deemed to be modified or superseded for purposes of this
Prospectus to the extent that a statement or information contained herein
modifies or replaces such a statement or such information. Any such statement
or information so modified or replaced shall not be deemed, except as so
modified or replaced, to constitute a part of this Prospectus. Such
incorporation by reference shall not be deemed specifically to incorporate by
reference the information referred to in Item 402(a)(8) of Regulation S-K
under the Securities Act.
The Company will furnish without charge to each person, including any
beneficial owner, to whom this Prospectus is delivered, upon written or oral
request, a copy of any and all of the information that has been incorporated
by reference in this Prospectus, other than exhibits to such information,
unless such exhibits are specifically incorporated by reference into the
information that this Prospectus incorporates. Requests should be submitted by
telephone to (215) 784-6750 or in writing to Kulicke and Soffa Industries,
Inc., 2101 Blair Mill Road, Willow Grove, Pennsylvania 19090, Attention:
Director -- Investor Relations.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK
OF THE COMPANY AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS AND OTHER SELLING GROUP
MEMBERS MAY ENGAGE IN PASSIVE MARKET MAKING TRANSACTIONS IN THE COMMON STOCK
ON THE NASDAQ NATIONAL MARKET IN ACCORDANCE WITH RULE 10B-6A UNDER THE
EXCHANGE ACT. SEE "UNDERWRITING."
2
<PAGE>
Kulicke and Soffa Industries, Inc. is the world's largest supplier of
semiconductor assembly equipment. The Company's primary assembly equipment
products include wire bonders, dicing saws, TAB bonders and die bonders. The
Company also is a leading supplier of expendable tools and materials used in the
semiconductor assembly process and provides certain services to its customers.
THE
[illustration of SEMICONDUCTOR
silicon wafers] MANUFACTURING
PROCESS
WAFER FABRICATION
The manufacture of IC's requires complex and precise steps which can be broadly
grouped into, wafer fabrication, assembly and test. Wafer fabrication, the first
step in the semiconductor manufacturing process, starts with raw silicon wafers
and ends with finished devices in the form of die on a wafer. After fabricated
wafers are tested, they typically are shipped to assembly facilities located
primarily in the Pacific Rim.
WAFER DICING
[process photo of wafer dicing]
A finished wafer is mounted onto a carrier. After precise automatic positioning
of the wafer, a dicing saw cuts the wafer into individual die using diamond
embedded saw blades.
DIE BONDING
[process photo of die bonding]
The cut wafer, still mounted on its carrier, is next moved to a die bonder.
The die bonder picks each good die off the carrier and bonds it to a package,
which is typically a stamped metal leadframe or ceramic package, depending on
the die and the application in which it will be used.
WIRE BONDING
[process photo of wire bonding]
The die, now mounted on the package, is moved to a wire bonder. Very fine gold
or aluminum wire (typically 0.001 inches in diameter) is bonded between
specific locations on the die and corresponding leads on the package, in order
to create the electrical connections necessary for the device to function.
ENCAPSULATION
After wire bonding, the package is encapsulated. For leadframe-based packages,
plastic is molded around the package and the leads are then trimmed and formed.
For ceramic packages, encapsulation is accomplished by mounting a lid over the
die.
TEST
After encapsulation, individual die are re-tested, and are then marked and
prepared for shipment.
[illustrations of semiconductors]
FINISHED
SEMICONDUCTOR
DEVICES
<PAGE>
KULICKE AND SOFFA ASSEMBLY EQUIPMENT
A Scanning Electron Microscope (SEM) Photo of Diced Wafer
[photo of a Diced Wafer]
DICING [photo of machine]
SAWS
Model 918
Fully Automated Dicing Saw
SEM Photo of Die Bonded to Leadframe
[photo of Die Bonded to lead frame]
DIE [photo of machine] [photo of machine]
BONDERS
Model 6900 Model 5408
Automatic Automatic
Multi-Process Die Attach
Assembly System Machine
SEM Photo of Aluminum Wedge Bond
[photo of Aluminum Wedge Bond]
WIRE [photo of machine]
BONDERS
Model 1474fp
Wedge Bonder
SEM Photo of Gold Ball Bond
[photo of Gold Ball Bond]
SEM photo of Wire and Die Bonded Device
[photo of Wire and Die Bonded Device]
[photo of machine]
Model 1488
Turbo Ball Bonder
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information appearing elsewhere in this Prospectus and in the documents,
financial statements and notes thereto and other information incorporated by
reference herein. Unless otherwise indicated, the information in this
Prospectus (i) assumes the Underwriters' over-allotment option is not
exercised, (ii) gives effect to the two-for-one stock split of the Company's
Common Stock on July 28, 1995 (the "Stock Split") and (iii) assumes the AFW
Acquisition (as defined) has been consummated.
THE COMPANY
Kulicke and Soffa Industries, Inc. ("K&S" or the "Company") designs,
manufactures and markets capital equipment, related spare parts and expendable
tools and materials used to assemble semiconductor devices ("semiconductors" or
"ICs"). The Company also services, maintains, repairs and upgrades assembly
equipment. According to VLSI Research Inc. ("VLSI"), K&S is the world's largest
supplier of semiconductor assembly equipment. The Company offers systems that
address a broad range of applications in the assembly process including wire
bonding systems, wafer dicing saws and die, TAB and flip-chip bonders. Through
its American Fine Wire and Micro-Swiss subsidiaries, the Company offers
expendable tools and materials, including bonding wire, die collets,
capillaries and wedges.
The growth in demand for semiconductor capital equipment has been driven by
demand for semiconductor devices, which in turn is due to the increasing demand
for electronic devices such as personal computers, cellular telephones and
other electronic devices for business and consumer use, as well as the
increasing semiconductor content within these and other products such as
automobiles, consumer appliances and factory automation and control systems. In
response to the growing demand for semiconductor devices, semiconductor
manufacturers are increasing manufacturing capacity through the expansion and
upgrading of existing facilities and the construction of new facilities.
According to industry sources, as of April 1995, there were over 90 wafer
fabrication facilities under construction, under expansion or scheduled to
commence construction. As this new fabrication capacity comes on line, the
semiconductor industry will continue to add capacity to assemble the increased
output of processed wafers.
K&S is the world's leading supplier of wire bonders, with a worldwide market
share of 31% in calendar 1994 according to VLSI. The Company's wire bonders,
which represented approximately 73% of the Company's net sales in the nine
months ended June 30, 1995, are used to connect extremely fine wires, typically
made of gold or aluminum, between the bonding pads on a die and the leads on
the package to which the die has been bonded. The Company's principal wire
bonders are its Model 1488 Turbo ball bonder and Model 1474fp wedge bonder. The
Company believes that its wire bonders offer competitive advantages based on
high throughput and superior process control, enabling fine pitch bonding and
long, low wire loops, which are needed to assemble advanced IC packages.
The Company's principal strategy is to improve and broaden the range of
products and services it offers to its customers. The Company intends to
enhance its position as the leading supplier of wire bonders, and is currently
devoting substantial resources to develop its next generation of wire bonders,
the 8000 family. This family is being designed to enhance the technical
performance and further reduce the cost of ownership of K&S' wire bonder
products. The first product of this family, the Model 8020, is scheduled to be
introduced in the second half of 1996. The Company also intends to broaden its
assembly equipment product lines, expand its expendable tools and materials
business and focus on service and spare parts opportunities in order to reduce
its customers' cost of ownership.
The Company's customers consist of leading semiconductor manufacturers and
subcontract assemblers of semiconductors including Advanced Micro Devices,
Advanced Semiconductor Engineering, Anam Electronics, Hyundai, IBM, Intel,
Matsushita Electronics, Motorola, Philips, Samsung, Swire Technologies and
Texas Instruments.
On September 14, 1995, the Company entered into a definitive agreement to
acquire American Fine Wire Corporation ("AFW") through the acquisition of
Circle "S" Industries, Inc., the parent corporation of AFW ("Circle S"), for
$53.0 million in cash and short-term notes, subject to adjustment. AFW is a
leading manufacturer of fine gold and aluminum wire for use in the wire bonding
process. The Company is acquiring AFW (the "AFW Acquisition") as part of its
strategy to expand its expendable tools and materials product lines. The AFW
Acquisition is intended to be consummated prior to this Offering, and, unless
otherwise indicated, the information in this Prospectus gives effect to the
acquisition. See "Acquisition of AFW."
The Company was founded in 1951 and is a Pennsylvania corporation. Its
principal offices are located at 2101 Blair Mill Road, Willow Grove,
Pennsylvania 19090, and its telephone number is (215) 784-6000.
3
<PAGE>
THE OFFERING
<TABLE>
<C> <S>
Common Stock offered by the Company................ 2,500,000 shares
Common Stock offered by the Selling Shareholder.... 100,000 shares
Common Stock to be outstanding after the Offering.. 21,809,910 shares (1)
Use of Proceeds.................................... Expansion of the Company's
facilities and related
capital expenditures and
general corporate
purposes. See "Use of
Proceeds."
Nasdaq National Market symbol...................... KLIC
</TABLE>
SUMMARY CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
PRO FORMA
ACTUAL FOR ACQUISITION (2)
------------------------------------------------ -----------------------
NINE MONTHS FISCAL YEAR NINE MONTHS
FISCAL YEAR ENDED SEPT. 30, ENDED JUNE 30, ENDED ENDED
------------------------------ ----------------- SEPT. 30, JUNE 30,
1992 1993 1994 1994 1995 1994 1995
--------- --------- --------- -------- -------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales............... $ 94,959 $ 140,880 $ 173,302 $122,863 $203,540 $242,066 $256,415
Gross profit............ 40,401 61,675 71,968 50,663 91,042 81,834 98,527
Income (loss) from
operations............. (12,040) 14,280 13,930 8,822 34,544 17,091 36,269
Net income (loss)....... (12,123) 10,831 10,418 6,648 26,011 9,537 24,729
Net income (loss) per
share, fully
diluted(3)............. $ (0.77) $ 0.66 $ 0.63 $ 0.40 $ 1.37 $ 0.57 $ 1.30
Weighted average shares
outstanding, fully
diluted(3)............. 15,823 16,342 16,665 16,641 19,668 16,665 19,668
</TABLE>
<TABLE>
<CAPTION>
JUNE 30, 1995
--------------------------------------
PRO FORMA FOR
ACTUAL ACQUISITION(4) AS ADJUSTED(5)
-------- -------------- --------------
<S> <C> <C> <C>
BALANCE SHEET DATA:
Working capital......................... $ 89,838 $ 42,423 $144,858
Total assets............................ 163,668 223,559 325,994
Short-term borrowings................... 60 53,810 53,810
Long-term debt, less current portion.... 1,519 1,519 1,519
Shareholders' equity.................... 116,381 116,381 218,816
</TABLE>
--------
(1) Based upon the shares of Common Stock outstanding as of September 11, 1995.
Excludes 730,714 shares of Common Stock reserved for issuance upon exercise
of outstanding options and an additional 2,090,340 shares reserved for
issuance pursuant to future option grants under the Company's stock option
plans as of September 11, 1995.
(2) Reflects the Company's historical results of operations on a pro forma
basis reflecting the AFW Acquisition and the borrowing of $50.0 million
under a bank credit facility and under certain short-term notes as if each
had occurred at the beginning of the periods presented.
(3) All share and per share data reflect the July 1995 Stock Split.
(4) Reflects the Company's historical financial position on a pro forma basis
reflecting the AFW Acquisition and the borrowing of $50.0 million under a
bank credit facility and under certain short-term notes as if the
acquisition had occurred on June 30, 1995.
(5) Adjusted to reflect the sale of 2,500,000 shares of Common Stock offered by
the Company hereby at an assumed public offering price of $43.25 per share,
after deducting the estimated underwriting discount and offering expenses.
See "Use of Proceeds."
4
<PAGE>
RISK FACTORS
In evaluating the Company's business, prospective investors should carefully
consider the following factors in addition to the other information presented
in this Prospectus and in the documents incorporated by reference herein.
FLUCTUATIONS IN OPERATING RESULTS; LIMITED SYSTEM SALES
The Company has experienced and expects to continue to experience
significant fluctuations in its operating results. The Company's operating
results will depend upon a variety of factors, including the timing of
significant orders, the mix of products sold, changes in pricing by the
Company, its competitors, customers or suppliers, lengthy sales cycles for the
Company's systems, timing of new product announcements and releases by the
Company or its competitors, market acceptance of new products and enhanced
versions of the Company's products, capital spending patterns by customers,
manufacturing inefficiencies associated with new product introductions and the
ability to produce systems in volume and meet customer requirements, product
discounts, volatility in the Company's targeted markets, political and
economic instability, natural disasters, regulatory changes, possible
disruptions of operations caused by expanding existing facilities or moving
into new facilities, expenses associated with acquisitions and alliances, and
various competitive factors, including price-based competition and competition
from vendors employing other technologies. The Company's gross margins on
system sales have varied and will vary based on a variety of factors,
including the mix of products sold and significant purchases by customers with
volume purchase arrangements. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations."
The Company derives a substantial portion of its revenues from the sale of a
relatively small number of systems which typically range in purchase price
from approximately $60,000 to over $500,000. As a result, the sale of a
limited number of systems could have a material effect on the Company's net
sales and operating results in a particular period. In addition, the Company's
backlog at the beginning of a quarter typically does not include all orders
required to achieve the Company's sales objectives for that quarter. Moreover,
all customer purchase orders are subject to cancellation or rescheduling by
the customer with limited or no penalties, and, therefore, backlog at any
particular date is not necessarily representative of actual sales for any
succeeding period. The Company's net sales and operating results for a quarter
typically will depend upon the Company obtaining orders for systems to be
shipped in the same quarter that the order is received and could be materially
adversely affected if anticipated orders for a limited number of systems are
not received in time to permit shipment during such period. Furthermore, a
substantial portion of net sales may be realized near the end of each quarter.
A delay or reduction in shipments near the end of a particular quarter, due,
for example, to unanticipated shipment reschedulings, cancellations or
deferrals by customers or to customer credit issues, or to unexpected
manufacturing difficulties experienced by the Company or delays in deliveries
by suppliers, could cause net sales in a particular quarter to fall
significantly below the Company's expectations and may materially adversely
affect the Company's operating results for such quarter.
The Company has significantly increased its expense levels to support its
recent growth and intends to continue to make significant investments in
research and development, capital equipment and customer service and support
capabilities worldwide. These investments will make it difficult for the
Company to reduce its operating expenses in a particular period if the
Company's net sales goals for that period are not met. There can be no
assurance that the Company will achieve a rate of growth or level of sales in
any future period commensurate with its increased level of operating expenses.
The impact of the factors described above on the Company's sales and
operating results in any future period cannot be forecast with certainty. The
Company experienced declining net sales in 1991 and 1992 and incurred an
operating loss of $12.0 million in 1992. Furthermore, the Company's operating
income declined in fiscal 1994 compared to fiscal 1993 in spite of increased
revenues. The Company's net sales and operating results in fiscal 1994,
particularly in the quarter ended June 30, 1994, reflect significant quarterly
fluctuations and reduced gross margins and profitability due to increased
5
<PAGE>
competitive pressure in the wire bonder market, which forced the Company to
discount certain models, and the Company's decision in 1994 to increase its
expense levels in anticipation of future sales growth. There can be no
assurance that the impact of any of the factors described above on the
Company's future operating results and financial condition will not be
material and adverse. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations."
VOLATILITY OF SEMICONDUCTOR INDUSTRY
The Company's operating results depend primarily upon the capital
expenditures of semiconductor manufacturers and subcontract assemblers
worldwide, which in turn depend on the current and anticipated market demand
for semiconductors and products utilizing semiconductors. The semiconductor
industry has historically been highly volatile and experienced periodic
downturns and slowdowns, which have had a severe negative effect on the
semiconductor industry's demand for semiconductor capital equipment, including
assembly equipment manufactured and marketed by the Company and, to a lesser
extent, expendable tools and materials such as those sold by the Company.
These downturns and slowdowns have also adversely affected the Company's
operating results. There can be no assurance that the semiconductor industry
will achieve its historical growth rates in the future. Any future downturn or
slowdown in the semiconductor industry would have a material adverse effect on
the Company's business, financial condition and operating results.
TECHNOLOGICAL CHANGE; IMPORTANCE OF TIMELY PRODUCT INTRODUCTIONS; PRODUCT
TRANSITION
The semiconductor and semiconductor equipment industries are subject to
rapid technological change and frequent new product introductions and
enhancements. The Company believes that its continued success will depend on
its ability to continuously develop and manufacture new products and product
enhancements and to introduce them into the market in response to demands for
higher performance assembly equipment. There can be no assurance that the
Company's competitors will not develop enhancements to or future generations
of competitive products that will offer superior performance and features and
render the Company's products uncompetitive. Failure to develop and introduce
new products and product enhancements or to gain customers' acceptance of such
products in a timely fashion would harm the Company's competitive position.
The Company is in the process of developing a new generation of wire bonder,
the 8000 family, which will be based on an entirely new platform and will
require the development of new software and many subassemblies not part of the
Company's current wire bonders. The Company experienced delays in the
development of the Model 1488 Turbo wire bonder and has experienced delays in
the development of the first product in this family, the Model 8020, and no
assurance can be given that its scheduled introduction in the second half of
1996 will not be delayed, due to technical or other difficulties, or that the
Model 8020 will not experience quality or reliability problems after shipment.
The Company's inability to complete the development of and introduce the Model
8020 or other new products, or its inability to manufacture and ship these
products in volume and on a timely basis, could adversely affect the Company's
competitive position. The Company also may incur substantial costs early in a
new product's life cycle to ensure the functionality and reliability of such
product. Furthermore, the Company's planned transition to the Model 8020
platform involves numerous risks, including the possibility that customers
will defer purchases of Model 1488 Turbo wire bonders in anticipation of the
availability of the Model 8020 or that the Model 8020 will fail to meet
customer needs or achieve market acceptance. To the extent that the Company
fails to forecast demand in volume and configuration for both its current and
next-generation wire bonders and generally to manage product transitions
successfully, it could experience reduced orders, delays in product shipments,
increased risk of inventory obsolescence and delays in collecting accounts
receivable. There can be no assurance that the Company will successfully
develop and manufacture new products, including the Model 8020, that new
products introduced by the Company will be accepted in the marketplace or that
the Company will manage its product transitions successfully. The Company's
failure to do any of the foregoing would materially adversely affect the
Company's business, financial condition and operating results.
6
<PAGE>
CUSTOMER CONCENTRATION
The semiconductor manufacturing industry is highly concentrated, with a
relatively small number of large semiconductor manufacturers and subcontract
assemblers accounting for a substantial portion of the purchases of
semiconductor assembly equipment and expendable tools and materials. Sales to
the Company's five largest customers accounted for approximately 52% and 55%
of its net sales in fiscal 1994 and the nine months ended June 30, 1995,
respectively. Similarly, sales to AFW's five largest customers have
historically accounted for a substantial portion of its revenues. The Company
expects that sales of its products to a limited number of customers will
continue to account for a high percentage of net sales for the foreseeable
future. The loss of or reduction of orders from a significant customer,
including losses or reductions due to manufacturing, reliability or other
difficulties associated with the Company's products, changes in customer
buying patterns, market, economic or competitive conditions in the
semiconductor or subcontract assembly industries, could adversely affect the
Company's business, financial condition and operating results. See
"Business -- Customers."
PRODUCT CONCENTRATION
The Company's wire bonders have historically represented a substantial
portion of the Company's net sales. During the fiscal years ended September
30, 1992, 1993 and 1994 and the nine months ended June 30, 1995, sales of wire
bonders, primarily fully automatic gold ball wire bonders and aluminum wedge
bonders, comprised 51%, 63%, 68% and 73% of net sales, respectively. Should
the demand for, or pricing of, these products decline due to the introduction
of superior or lower cost systems by competitors, changes in the semiconductor
industry or other factors, the Company's business, financial condition and
operating results would be materially adversely affected. While the Company's
strategy is to diversify its products and services, no assurance can be given
that the Company will be able to develop, acquire, introduce or market new
products in a timely or cost-effective manner or that any new products or
improvements will achieve market acceptance.
The Company's wire bonder product concentration also subjects the Company to
risks from the emergence of alternate assembly technologies. The Company's
primary products employ traditional die and wire bonding methods used in
conventional semiconductor device assembly. However, alternate assembly
technologies have emerged which may offer superior device performance or
reduce the size of an IC package. These technologies, including TAB and flip-
chip, eliminate the need for wires to establish the electrical connections
between a die and its package. While most ICs currently incorporate
traditional die and wire bonding technologies, there can be no assurance that
the semiconductor industry will not, in the future, shift a significant part
of its volume into these or other alternate assembly technologies and
eliminate the need for certain of the Company's products, including its die
and wire bonders. See "Business."
MANAGEMENT OF GROWTH
The Company has recently experienced a period of rapid expansion of its
operations. The expansion has included hiring additional management and other
key personnel, adding manufacturing equipment and capacity and expanding its
domestic and international operations. In addition, the Company plans to
relocate its Singapore operations to a new facility and to construct a new
facility in Israel, either of which could result in short-term manufacturing
disruptions. The Company's recent acquisition of AFW has further increased the
complexity, scope and geographic distribution of its operations. The Company's
expansion has placed and is expected to continue to place increased demands on
the Company's management, financial resources and information and internal
control systems. The Company's financial results depend in significant part on
its ability to manage the further expansion of its operations and to continue
to implement, improve and expand its systems, procedures and controls. Any
failure to implement, improve and expand such systems, procedures and controls
in an efficient manner at a pace consistent with the Company's business could
have a material adverse effect on the Company's business, financial condition
and operating results.
7
<PAGE>
DEPENDENCE ON SUBCONTRACTORS; SINGLE OR LIMITED SOURCES OF SUPPLY
As a part of its strategy, the Company relies on subcontractors to
manufacture to the Company's specifications many of the components or
subassemblies used in its products. Certain of the Company's products require
components or parts of an exceptionally high degree of reliability, accuracy
and performance. Currently there are several such items for which there are
only a limited number of suppliers or for which a single supplier has been
accepted by the Company as a qualified supplier. The Company's reliance on
subcontractors and single source suppliers involves a number of significant
risks, including the loss of control over the manufacturing process, the
potential absence of adequate capacity and the reduced control over delivery
schedules, manufacturing yields, quality and costs. In the event that any
significant subcontractor or single source supplier were to become unable or
unwilling to continue to manufacture subassemblies, components or parts in
required volumes, the Company would have to identify and qualify acceptable
replacements. The process of qualifying subcontractors and suppliers could be
lengthy, and no assurance can be given that any additional sources would be
available to the Company on a timely basis. The Company has experienced and
continues to experience reliability and quality problems with certain key
subassemblies provided by single source suppliers. The Company also has
experienced delays in the delivery of subassemblies from these and other
subcontractors in the past, which caused delays in Company shipments. If
supplies of such items were not available from any such source and a
relationship with an alternative supplier could not be developed, shipments of
the Company's products could be interrupted and re-engineering of the affected
product could be required. Such delays, interruption and re-engineering could
have a material adverse effect on the Company's business, financial condition
and operating results. See "Business -- Manufacturing."
INTENSE COMPETITION
The semiconductor equipment and semiconductor materials industries are
intensely competitive. Significant competitive factors in the semiconductor
equipment market include process capability and repeatability, quality and
flexibility, and cost of ownership, including reliability and automation,
throughput, customer support and price. Competitive factors in the
semiconductor expendable tools and materials industry include price, delivery
and quality. In each of the markets it serves, the Company faces competition
and the threat of competition from established competitors and potential new
entrants, some of which may have greater financial, engineering, manufacturing
and marketing resources than the Company. Some of these competitors are
Japanese companies that have had and may continue to have an advantage over
the Company in supplying products to Japan-based companies due to their
preferences to purchase equipment from Japanese suppliers. The Company expects
its competitors to continue to improve the performance of their current
products and to introduce new products with improved price and performance
characteristics. New product introductions by the Company's competitors or by
new market entrants could cause a decline in sales or loss of market
acceptance of the Company's existing products. If a particular semiconductor
manufacturer or subcontract assembler selects a competitor's product for a
particular assembly operation, the Company may experience difficulty in
selling a product to that company for a significant period of time. Increased
competitive pressure could also lead to intensified price-based competition,
resulting in lower prices which could adversely affect the Company's business,
financial condition and operating results. The Company believes that to remain
competitive it must invest significant financial resources in new product
development and expand its customer service and support worldwide. There can
be no assurance that the Company will be able to compete successfully in the
future. See "Business-- Competition."
ACQUISITIONS AND ALLIANCES
The Company currently plans to broaden its business and product offerings,
in part through acquisitions of complementary product lines, technologies and
businesses. The Company recently acquired AFW, a manufacturer of gold and
aluminum bonding wire. Although AFW generated net income from continuing
operations during its fiscal years ended December 31, 1993 and December 31,
1994 and the six months ended June 30, 1995, there can be no assurance that
its operations will continue to be profitable or that the anticipated benefits
of the acquisition will be realized. The process
8
<PAGE>
of integrating AFW's business into the Company's operations may result in
unforeseen operating difficulties, could absorb significant management
attention and require substantial financial resources that would otherwise be
available for the ongoing development of the Company's business. See "Pro
Forma Financial Information." Further, although in connection with the AFW
Acquisition certain former shareholders of Circle "S" have agreed to indemnify
the Company against certain contingent liabilities of Circle "S" and AFW,
there can be no assurance that such indemnification will adequately protect
the Company. The Company is currently engaged in discussions with one party
which would involve the formation of a joint venture to pursue flip-chip
bonding technology development and subcontract services to semiconductor
manufacturers. Such joint venture, if consummated on the terms currently being
discussed, would require a minimum initial investment by the Company of
approximately $11.0 million to fund the start up of operations. However, no
assurance can be given that such discussions will lead to an agreement or
that, if an agreement is reached, it will be on the terms currently under
discussion. Furthermore, no assurances can be given that such a joint venture
would be successful. The Company's failure to successfully integrate AFW or
other business acquisitions or to successfully participate in joint ventures
could have a material, adverse effect on the Company's business, financial
condition and operating results. Further, possible future acquisitions or
alliances by the Company could result in dilutive issuances of equity
securities, the incurrence of additional debt and contingent liabilities and
additional amortization expenses related to goodwill and other intangible
assets, which could materially adversely affect the Company's financial
condition and operating results. See "Acquisition of AFW."
INTERNATIONAL OPERATIONS
Approximately 74% and 76% of the Company's net sales for fiscal 1994 and for
the nine-month period ended June 30, 1995, respectively, were attributable to
sales to customers for delivery outside of the United States. The Company
expects sales outside of the United States to continue to represent a
substantial portion of its future revenues. The future performance of the
Company will depend, in significant part, upon its ability to continue to
compete in foreign markets which in turn will depend, in part, upon a
continuation of current trade relations between the United States and foreign
countries in which semiconductor manufacturers or subcontractors have assembly
operations. A change toward more protectionist trade legislation in either the
United States or such foreign countries, such as a change in the current
tariff structures, export compliance or other trade policies, could adversely
affect the Company's ability to sell its products in foreign markets.
Because most of the Company's foreign sales are denominated in United States
dollars, the Company believes that the decline in value of the United States
dollar against foreign currencies in prior periods, particularly the Japanese
yen and the Swiss franc, may have made the Company's products more
competitively priced than those offered by certain of its foreign competitors.
The Company's ability to compete overseas in the future could be adversely
affected by a strengthening United States dollar against those currencies.
In addition, the Company maintains substantial manufacturing operations in
countries other than the United States, including operations located in Israel
and Singapore. Risks associated with the Company's international operations
include risks of war and civil disturbances or other events which may limit or
disrupt markets, expropriation, international exchange restrictions and
currency fluctuations, changing political conditions and monetary policies of
foreign governments. If such operations were interrupted by war, terrorism or
other factors beyond the Company's control, the Company's business, financial
condition and operating results could be materially adversely affected. See
"Business -- Manufacturing."
ENVIRONMENTAL REGULATIONS; POSSIBLE FINANCIAL EXPOSURE TO ENVIRONMENTAL CLAIMS
Federal, state and local regulations impose various controls on the use,
storage, discharge, handling, emission, generation, manufacture and disposal
of toxic or other hazardous substances used in the Company's operations. The
Company believes that its activities conform in all material respects to
current environmental and land use regulations applicable to its operations
and its current facilities and
9
<PAGE>
that it has obtained environmental permits necessary to conduct its business.
Nevertheless, the failure to comply with current or future regulations could
result in substantial fines being imposed on the Company, suspension of
production, alteration of its manufacturing process or cessation of
operations. Such regulations could require the Company to acquire expensive
remediation equipment or to incur substantial expenses to comply with
environmental regulations. Any failure by the Company to control the use,
disposal or storage of, or adequately restrict the discharge of, hazardous or
toxic substances could subject the Company to significant liabilities.
In August 1995, a third-party complaint was filed against the Company with
respect to the clean up of alleged contaminated soil and ground water beneath
a facility located in Fort Washington, Pennsylvania, which the Company
partially occupied from approximately 1962 to 1972. On the basis of the
complaint and information currently available to it, the Company is unable to
quantify the potential financial impact of this matter. The Company believes
the allegations set forth in the complaint are without merit, intends to
vigorously defend itself in this matter and does not believe the matter will
have a material adverse effect on its business, financial condition and
results of operations. However, the outcome of any litigation is uncertain,
and there can be no assurance that the Company will not incur substantial
legal, investigative and other expenses in connection with this lawsuit or
that the Company will not be compelled to undertake costly remedial action.
INTELLECTUAL PROPERTY PROTECTION; NOTICES OF ALLEGED PATENT INFRINGEMENT
Although the Company attempts to protect its proprietary technology through
patents, copyrights, trade secrets and other measures, there can be no
assurance that these measures will be adequate or that competitors will not be
able to develop similar technology independently. Further, there can be no
assurance that the claims allowed on any patent issued to the Company will be
sufficiently broad to protect the Company's technology, that any patent will
be issued from any pending application or that foreign intellectual property
laws will protect the Company's intellectual property rights. Litigation may
be necessary to enforce or determine the validity and scope of the Company's
proprietary rights or to defend against infringement claims. Such litigation
could result in substantial costs and diversion of resources and could have a
material adverse effect on the Company's business, financial condition and
operating results, regardless of the outcome of the litigation. In addition,
there can be no assurance that any of the patents issued to the Company will
not be challenged, invalidated or circumvented or that the rights granted
thereunder will provide competitive advantages to the Company.
Although the Company is not aware of any pending lawsuits against the
Company regarding infringement claims with respect to any existing patent or
any other intellectual property right of third parties, the Company has at
times been notified of claims that it may be infringing intellectual property
rights of third parties. Certain of the Company's customers have received
notices of infringement from two separate parties, Harold S. Hemstreet and
Jerome H. Lemelson, each alleging that equipment supplied by the Company, and
processes performed by such equipment, infringe on patents held by them. The
Company's product warranties generally provide customers with indemnification
for damages sustained by a customer as a consequence of patent infringement
claims arising out of use of the Company's products and obligate the Company
to defend such claims. As a consequence, the Company could be required to
reimburse its customers for certain damages resulting from these matters and
to defend customers in patent infringement suits. As of the date of this
Prospectus, no actions have been initiated or threatened directly against the
Company in connection with these matters, although certain customers have
requested that the Company defend and indemnify them against any damages that
they may be required to pay on the basis of their use of equipment supplied by
the Company and two of the Company's customers have actually been sued. The
Company believes, based in part on opinions from outside patent counsel, that
no equipment marketed by the Company, and no process performed by such
equipment, infringe on the patents in question and does not believe that such
matters will have a material adverse effect on its financial condition or
operating results. However, the ultimate outcome of any infringement claims
affecting the Company is uncertain and there can be no assurance that the
resolution of these matters will not have a material adverse effect on the
Company's business, financial condition and operating results. See
"Business -- Intellectual Property."
10
<PAGE>
DEPENDENCE ON KEY PERSONNEL
The Company is dependent upon the continued service of its key executive
management and technical personnel, who are generally not bound by employment
agreements requiring them to perform services for the Company. The loss of key
personnel could have a material adverse effect on the Company's business,
financial condition and operating results. In addition, the Company's future
operating results will depend in significant part upon its ability to attract
and retain highly skilled managerial, technical and marketing personnel. There
is only a limited number of personnel with the requisite skills to serve in
these positions, and it may become increasingly difficult for the Company to
hire such personnel over time. Competition for such personnel is intense, and
there can be no assurance that the Company will be successful in attracting or
retaining such personnel. The Company's inability to attract and retain the
executive management and other personnel it requires could have a material
adverse effect on the Company's business, financial condition and operating
results.
VOLATILITY OF STOCK PRICE
In recent months, the stock market in general, and the market for shares of
technology companies in particular, have experienced extreme price
fluctuations, which have often been unrelated to the operating performance of
the affected companies. Further, many companies in the semiconductor and
semiconductor equipment industries, including the Company, have experienced
historical highs in the market prices of their common stock. The Company
believes that factors such as announcements of developments related to the
Company's business or its competitors' or customers' businesses, fluctuations
in the Company's financial results, general conditions or developments in the
semiconductor and semiconductor equipment industries and the worldwide
economy, sales of the Company's Common Stock into the marketplace, the number
of market makers for the Company's Common Stock, announcements of
technological innovations or new or enhanced products by the Company or its
competitors or customers, a shortfall in revenue, gross margin, earnings or
other financial results from or changes in analysts' expectations and
developments in the Company's relationships with its customers and suppliers,
or a variety of factors beyond the Company's control could cause the price of
the Company's Common Stock to fluctuate, perhaps substantially. There can be
no assurance that the market price of the Company's Common Stock will not
experience significant fluctuations in the future, including fluctuations that
are material, adverse and unrelated to the Company's performance. See "Price
Range of Common Stock."
EFFECTS OF CERTAIN ANTI-TAKEOVER PROVISIONS
Certain provisions of the Company's Articles of Incorporation and By-laws
and Pennsylvania law may discourage certain transactions involving a change in
control of the Company. For example, the Company's Articles of Incorporation
and By-laws contain provisions which (i) classify the Board of Directors into
four classes, with one class being elected each year, (ii) permit the Board to
issue "blank check" preferred stock without shareholder approval and (iii)
prohibit the Company from engaging in certain business combinations with a
holder of 20% or more of the Company's voting securities without supra-
majority board or shareholder approval. Further, under the Pennsylvania
Business Corporation Law, because the Company's By-laws provide for a
classified Board of Directors, shareholders may only remove directors for
cause. These provisions and certain provisions of the Pennsylvania Business
Corporation Law could have the effect of delaying, deferring or preventing a
change in control of the Company and may adversely affect the voting and other
rights of holders of Common Stock. See "Description of Capital Stock."
FUTURE CAPITAL NEEDS
In order to remain competitive, the Company must continue to make
significant investments in capital equipment, facilities, computer systems,
sales, service, training and support capabilities, procedures, controls,
operations and research and development, among other items. The Company
believes that the proceeds from this Offering, together with its cash, short-
term investments and
11
<PAGE>
anticipated cash flow from operations and credit facilities will satisfy its
anticipated financing requirements for at least the next 12 months. To the
extent that such financial resources are insufficient to fund the Company's
activities, additional funds will be required. There can be no assurance that
additional financing will be available on reasonable terms or at all. See "Use
of Proceeds" and "Management's Discussion and Analysis of Financial Condition
and Results of Operations."
USE OF PROCEEDS
The net proceeds to the Company from the sale of the 2,500,000 shares of
Common Stock offered by it hereby are estimated to be $102.4 million ($117.9
million if the Underwriters' over-allotment option is exercised in full),
based on an assumed public offering price of $43.25 per share after deduction
of the underwriting discount with respect to the shares being sold by the
Company and estimated offering expenses of the Offering, substantially all of
which are being paid by the Company. The Company will not receive any of the
proceeds from the sale of shares by the Selling Shareholder.
The Company expects capital spending in fiscal 1996 to exceed $30 million,
principally for the expansion of its domestic and international facilities and
related equipment. In particular, the Company intends to expand its Willow
Grove, Pennsylvania facility, construct a new facility in Israel for its
Micro-Swiss operations and establish a new facility in Singapore for its AFW
operations. The remaining proceeds are expected to be used for working capital
and other general corporate purposes.
The Company may, but has no current plans to, use a portion of the net
proceeds to repay approximately $50 million of outstanding indebtedness under
a credit facility with Midlantic Bank, N.A. (the "Bank Credit Facility") and
short-term promissory notes due January 5, 1996 (the "AFW Notes"), both of
which were incurred in connection with the AFW Acquisition. Amounts borrowed
under the Bank Credit Facility and the AFW Notes bear interest at a floating
rate of 50 basis points over LIBOR (approximately 6.4% per year as of
September 13, 1995).
A portion of the net proceeds may also be used for acquisitions of
businesses, products or technologies complementary to the Company's business
and for joint ventures or other strategic alliances entered into for similar
purposes. The Company intends to pursue such opportunities and is currently
engaged in discussions with various parties. Although the Company has no
agreement, understanding or arrangement with any party that would involve the
use of any material portion of the proceeds from this Offering, the Company's
discussions with one party involve the formation of a joint venture to pursue
flip-chip bonding technology development and subcontract services to
semiconductor manufacturers. Such joint venture, if consummated on the terms
currently being discussed, would require a minimum initial investment by the
Company of approximately $11.0 million to fund the start up of operations.
However, no assurance can be given that such discussions will lead to a
definitive agreement or that, if an agreement is reached, it will be on the
terms currently under discussion. See "Risk Factors -- Acquisitions and
Alliances."
Pending the application of the net proceeds for the uses described above,
the net proceeds will be invested in short-term, investment-grade, interest-
bearing securities. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Liquidity and Capital Resources."
12
<PAGE>
PRICE RANGE OF COMMON STOCK
The Common Stock trades on the Nasdaq National Market under the symbol KLIC.
The following table sets forth for the periods indicated the high and low sale
prices for the Common Stock as reported on the Nasdaq National Market, which
prices have been adjusted to reflect the July 1995 Stock Split.
<TABLE>
<CAPTION>
HIGH LOW
--------- ---------
<S> <C> <C>
FISCAL 1993
First Quarter.......................................... $ 3 3/8 $ 2 3/8
Second Quarter......................................... 7 3/16 3 1/8
Third Quarter.......................................... 11 5 11/16
Fourth Quarter......................................... 15 5/8 9 5/8
FISCAL 1994
First Quarter.......................................... 14 11/16 6 3/16
Second Quarter......................................... 8 13/16 5 3/16
Third Quarter.......................................... 8 1/8 4 11/16
Fourth Quarter......................................... 8 11/16 5 5/8
FISCAL 1995
First Quarter.......................................... 10 31/32 7 1/2
Second Quarter......................................... 14 7/8 9 1/8
Third Quarter.......................................... 33 3/8 13 1/4
Fourth Quarter (through September 13, 1995)............ 45 3/8 33 1/2
</TABLE>
On September 13, 1995, the last reported sale price of the Common Stock on
the Nasdaq National Market was $43.25 per share. As of such date, there were
approximately 700 holders of record of the shares of outstanding Common Stock.
DIVIDEND POLICY
The Company currently does not pay cash dividends on its Common Stock. The
Company presently intends to retain any future earnings for use in its business
and does not anticipate paying any cash dividends on the Common Stock in the
foreseeable future.
13
<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of the Company (i) at June
30, 1995, (ii) on a pro forma basis to reflect the AFW Acquisition, including
the incurrence of indebtedness in connection therewith, and (iii) as adjusted
to reflect the sale by the Company of 2,500,000 shares of Common Stock
pursuant to this Offering at an assumed public offering price of $43.25 and
the receipt by the Company of the estimated net proceeds therefrom, after
deducting the estimated underwriting discount and offering expenses.
<TABLE>
<CAPTION>
JUNE 30, 1995
----------------------------------
PRO FORMA AS
ACTUAL FOR ACQUISITION ADJUSTED
-------- --------------- --------
(IN THOUSANDS)
<S> <C> <C> <C>
Short-term debt(1)......................... $ 60 $ 53,810 $ 53,810
======== ======== ========
Long-term debt:
8% convertible subordinated debentures
(2)..................................... $ 1,347 $ 1,347 $ 1,347
Other long-term debt, less current
portion................................. 172 172 172
-------- -------- --------
Total long-term debt, excluding current
portion............................... 1,519 1,519 1,519
-------- -------- --------
Shareholders' equity:
Preferred stock, without par value,
5,000,000 shares authorized, no shares
outstanding............................. -- -- --
Common stock, without par value,
50,000,000 shares authorized; 19,179,000
shares outstanding actual and pro forma
for acquisition; and 21,679,000 shares
outstanding as adjusted (3)............. 44,219 44,219 146,654
Retained earnings........................ 72,427 72,427 72,427
Cumulative translation adjustments....... (223) (223) (223)
Unrealized loss on short-term
investments............................. (42) (42) (42)
-------- -------- --------
Total shareholders' equity............. 116,381 116,381 218,816
-------- -------- --------
Total capitalization................. $117,900 $117,900 $220,335
======== ======== ========
</TABLE>
--------
(1) Represents borrowings under the Bank Credit Facility and short-term
promissory notes issued to shareholders of Circle "S" in connection with
the AFW Acquisition.
(2) Subsequent to June 30, 1995, all such debentures were converted.
(3) Excludes as of September 11, 1995, 730,714 shares of Common Stock reserved
for issuance upon exercise of outstanding options and 2,090,340 additional
shares reserved for issuance pursuant to future option grants under the
Company's stock option plans.
14
<PAGE>
ACQUISITION OF AFW
On September 14, 1995, the Company entered into a definitive agreement (the
"AFW Agreement") pursuant to which it agreed to acquire AFW through the
purchase of Circle "S," the parent corporation of AFW, for $53.0 million in
cash and short-term notes, subject to adjustment. AFW is a leading
manufacturer of fine gold and aluminum wire for use in the wire bonding
process and has facilities in Selma, Alabama, Singapore and Zurich,
Switzerland. The acquisition does not include two subsidiaries of Circle "S"
engaged in unrelated businesses. See "Business -- Products."
Consummation of the AFW Acquisition is subject to conditions typical in
acquisitions of this nature. Subject to fulfillment of such conditions, the
acquisition is expected to be consummated prior to completion of this
Offering. The $53.0 million purchase price is subject to upward or downward
adjustment based upon the amount of certain assets and liabilities of Circle
"S" at the closing and is expected to be financed primarily through borrowings
under the Bank Credit Facility and the issuance of the AFW Notes. See
"Capitalization."
The AFW Agreement provides for indemnification of the Company by certain
former Circle "S" stockholders against certain contingent liabilities. In
connection with the AFW Acquisition, the Company also has agreed to nominate
Larry D. Striplin, Jr., the Chairman and largest stockholder of Circle "S,"
for election as a director of the Company. See "Management."
AFW had sales of approximately $68.7 million and $35.6 million for the year
ended December 31, 1994 and the six months ended June 30, 1995, respectively.
The consolidated financial statements of Circle "S" for the periods ended
December 31, 1994 and June 30, 1995 are incorporated herein by reference to
the Company's Form 8-K dated September 14, 1995. See also "Risk Factors --
Acquisitions and Alliances," "Unaudited Pro Forma Financial Information" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
15
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The selected consolidated financial data presented below should be read in
conjunction with the Company's Consolidated Financial Statements and notes
thereto, which are incorporated herein by reference, and Management's
Discussion and Analysis of Financial Condition and Results of Operations
included elsewhere in this Prospectus. The consolidated statement of operations
data set forth below with respect to the fiscal years ended September 30, 1992,
1993 and 1994 and the consolidated balance sheet data at September 30, 1993 and
1994 have been derived from, and are qualified by reference to the audited
consolidated financial statements of the Company included in the Company's
Annual Report on Form 10-K for the fiscal year ended September 30, 1994, which
report is incorporated by reference herein, and should be read in conjunction
with such Annual Report on Form 10-K. The consolidated statement of operations
data for the fiscal years ended September 30, 1990 and 1991, and the
consolidated balance sheet data as of September 30, 1990, 1991 and 1992 have
been derived from the audited consolidated financial statements of the Company,
which are not included or incorporated by reference herein. The consolidated
statements of operations data for the nine-month periods ended June 30, 1994
and 1995 and the consolidated balance sheet data at June 30, 1995 have been
derived from the unaudited consolidated financial statements incorporated by
reference herein, which have been prepared on the same basis as the audited
consolidated financial statements and, in the opinion of management, contain
all adjustments, consisting of only normal recurring adjustments, necessary for
a fair presentation of the results of operations for such periods. The results
of operations for the nine-month period ended June 30, 1995 are not necessarily
indicative of results to be expected for any subsequent period.
16
<PAGE>
<TABLE>
<CAPTION>
NINE MONTHS
FISCAL YEAR ENDED SEPTEMBER 30, ENDED JUNE 30,
------------------------------------------------ ------------------
1990 1991 1992 1993 1994 1994 1995
-------- -------- -------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales.................... $102,812 $100,193 $ 94,959 $140,880 $173,302 $122,863 $203,540
Cost of goods sold........... 56,233 51,496 54,558 79,205 101,334 72,200 112,498
-------- -------- -------- -------- -------- -------- --------
Gross profit................. 46,579 48,697 40,401 61,675 71,968 50,663 91,042
Selling, general and
administrative.............. 31,424 34,083 34,104 31,463 36,752 26,613 35,476
Research and product
development, net............ 11,471 15,138 13,887 15,932 21,286 15,228 21,022
Restructuring cost........... -- -- 4,450 -- -- -- --
-------- -------- -------- -------- -------- -------- --------
Income (loss) from
operations.................. 3,684 (524) (12,040) 14,280 13,930 8,822 34,544
Interest expense, net (1).... (990) (1,029) (1,019) (1,066) (907) (713) (327)
Other expense (2)............ -- -- -- (1,125) -- -- --
-------- -------- -------- -------- -------- -------- --------
Income (loss) before income
taxes and extraordinary
gain........................ 2,694 (1,553) (13,059) 12,089 13,023 8,109 34,217
Provision for income tax
expense (benefit)........... 745 (310) (718) 1,258 2,605 1,461 8,206
-------- -------- -------- -------- -------- -------- --------
Income (loss) before
extraordinary gain.......... 1,949 (1,243) (12,341) 10,831 10,418 6,648 26,011
Extraordinary gain, net of
tax (1)..................... 1,441 211 218 -- -- -- --
-------- -------- -------- -------- -------- -------- --------
Net income (loss)............ $ 3,390 $ (1,032) $(12,123) $ 10,831 $ 10,418 $ 6,648 $ 26,011
======== ======== ======== ======== ======== ======== ========
Income (loss) per share (3):
Primary:
Before extraordinary
gain.................... $ 0.13 $ (0.08) $ (0.78) $ 0.66 $ 0.63 $ 0.40 $ 1.50
Extraordinary gain....... 0.09 0.01 0.01 -- -- -- --
-------- -------- -------- -------- -------- -------- --------
Net income (loss)........ $ 0.22 $ (0.07) $ (0.77) $ 0.66 $ 0.63 $ 0.40 $ 1.50
======== ======== ======== ======== ======== ======== ========
Fully diluted:
Before extraordinary
gain.................... $ 0.13 $ (0.08) $ (0.78) $ 0.66 $ 0.63 $ 0.40 $ 1.37
Extraordinary gain....... 0.09 0.01 0.01 -- -- -- --
-------- -------- -------- -------- -------- -------- --------
Net income (loss)........ $ 0.22 $ (0.07) $ (0.77) $ 0.66 $ 0.63 $ 0.40 $ 1.37
======== ======== ======== ======== ======== ======== ========
Weighted average shares
outstanding (3):
Primary.................... 15,562 15,694 15,823 16,342 16,665 16,641 17,381
Fully diluted.............. 15,562 15,694 15,823 16,342 16,665 16,641 19,668
<CAPTION>
SEPTEMBER 30,
------------------------------------------------
1990 1991 1992 1993 1994 JUNE 30, 1995
-------- -------- -------- -------- -------- ------------------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital.............. $ 59,842 $ 57,347 $ 45,937 $ 58,190 $ 61,459 $ 89,838
Total assets................. 97,180 92,922 83,941 105,278 121,198 163,668
Long-term debt, less current
portion..................... 28,479 27,721 26,778 26,708 26,474 1,519
Shareholders' equity......... 50,610 50,173 38,988 51,481 63,234 116,381
</TABLE>
--------
(1) In fiscal 1989, the Company began a program of selectively repurchasing
its 8% Convertible Subordinated Debentures at such times as market prices
were favorable. The effect of such repurchases has been to reduce interest
expense. See Note 5 to the Company's Consolidated Financial Statements for
the fiscal year ended September 30, 1994, which are incorporated by
reference herein.
(2) In fiscal 1993, the Company incurred $1.1 million in costs associated with
a failed acquisition.
(3) All share and per share data have been restated to give effect to the July
1995 Stock Split.
17
<PAGE>
UNAUDITED PRO FORMA FINANCIAL INFORMATION
BASIS OF PRESENTATION
The accompanying Unaudited Pro Forma Balance Sheet as of June 30, 1995 and
the Unaudited Pro Forma Statements of Operations for the year ended September
30, 1994 and for the nine months ended June 30, 1995 have been prepared to
give effect to the AFW Acquisition as if it had occurred on June 30, 1995, in
the case of the Unaudited Pro Forma Balance Sheet, and on October 1, 1993, in
the case of the Unaudited Pro Forma Statements of Operations.
The following Unaudited Pro Forma Balance Sheet is based on the unaudited
historical balance sheets of the Company and Circle "S" as of June 30, 1995,
adjusted as if the following transactions contemplated in this Prospectus
occurred on June 30, 1995: (i) the borrowing of $50.0 million under the Bank
Credit Facility and AFW Notes, (ii) payment of $53.0 million in cash and
principal amount of AFW Notes as acquisition consideration, and (iii) the
accrual of approximately $1.0 million in costs incurred in connection with the
AFW Acquisition. Prior to the closing of the AFW Acquisition, Circle "S" will
sell two unrelated operations, which are reflected as discontinued operations
in the historical financial statements of Circle "S."
The Unaudited Pro Forma Statement of Operations for the 12-month period
ended September 30, 1994 is based on the historical audited statements of
operations of the Company for the year ended September 30, 1994 and of Circle
"S" for the year ended December 31, 1994, which audited financial statements
are incorporated by reference herein. The Unaudited Pro Forma Statement of
Operations for the nine-month period ended June 30, 1995 is based on the
historical unaudited interim statements of operations of the Company and on
the unaudited interim statement of operations of Circle "S" for the six months
ended June 30, 1995, both of which are incorporated by reference herein, and
on the Circle "S" unaudited statement of operations data for the three months
ended December 31, 1994. Circle "S" interim financial data for such three
month period reflect sales of $17.2 million and net income of $622,000 and are
not separately presented or incorporated by reference herein.
Such unaudited pro forma financial data have been presented for
informational purposes only and do not purport to indicate what the Company's
results of operations or financial position would have been if the AFW
Acquisition actually had occurred at the beginning of such period or to
project the Company's results of operations for any future period or future
date.
The unaudited pro forma adjustments are based upon available information and
upon certain assumptions stated in the notes thereto that the Company believes
are reasonable. However, there can be no assurance that such assumptions will
be realized. The pro forma financial data should be read in conjunction with
the Consolidated Financial Statements and notes thereto of the Company for the
fiscal year ended September 30, 1994 and the nine months ended June 30, 1995
which are incorporated by reference herein and with the Consolidated Financial
Statements and notes thereto of Circle "S" for the year ended December 31,
1994 and the six months ended June 30, 1995 incorporated into this Prospectus
by reference to the Company's Form 8-K dated September 14, 1995.
18
<PAGE>
UNAUDITED PRO FORMA BALANCE SHEET
(IN THOUSANDS)
<TABLE>
<CAPTION>
HISTORICAL HISTORICAL
COMPANY CIRCLE "S"
JUNE 30, JUNE 30, PRO FORMA PRO FORMA
1995 1995 ADJUSTMENTS FOR ACQUISITION
----------------------- ----------- ---------------
<S> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash
equivalents............. $ 22,234 $ 2,427 $(3,000)(a) $ 21,661
Short-term investments... 9,808 -- -- 9,808
Accounts and notes
receivable, net......... 58,480 8,902 -- 67,382
Inventories, net......... 40,054 2,134 -- 42,188
Prepaid expenses and
other current assets.... 3,395 346 -- 3,741
Deferred income tax
benefit................. -- 109 -- 109
Net assets of
discontinued
operations.............. -- 2,618 (2,618)(b) --
---------- ------- ------- --------
Total Current Assets.... 133,971 16,536 (5,618) 144,889
Long-term investments..... 4,301 -- -- 4,301
Property, plant and
equipment, net........... 22,331 3,633 -- 25,964
Intangible assets,
including goodwill....... -- 1,175 44,120 (c) 45,295
Other assets.............. 3,065 45 -- 3,110
---------- ------- ------- --------
Total Assets............ $ 163,668 $21,839 $38,502 $223,559
========== ======= ======= ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Debt due within one
year.................... $ 60 $ 3,750 $50,000 (d) $ 53,810
Accounts payable to
suppliers and others.... 27,771 1,517 -- 29,288
Accrued expenses......... 10,674 1,473 1,000 (e) 13,147
Estimated income taxes
payable................. 5,628 593 -- 6,221
---------- ------- ------- --------
Total Current
Liabilities............ 44,133 7,333 51,000 102,466
Long-term debt, less
current portion.......... 1,519 -- -- 1,519
Deferred income taxes..... 692 1,558 -- 2,250
Other liabilities......... 943 -- -- 943
---------- ------- ------- --------
Total Liabilities....... 47,287 8,891 51,000 107,178
---------- ------- ------- --------
Shareholders' Equity:
Common stock............. 44,219 2,920 (2,920)(f) 44,219
Retained earnings........ 72,427 16,211 (16,211)(f) 72,427
Treasury stock........... -- (6,787) 6,787 (f) --
Cumulative translation
adjustment.............. (223) 154 (154)(f) (223)
Unrealized loss on
investments, net of
tax..................... (42) -- -- (42)
---------- ------- ------- --------
Total Shareholders'
Equity................. 116,381 12,498 (12,498) 116,381
---------- ------- ------- --------
Total Liabilities and
Shareholders' Equity... $ 163,668 $21,389 $38,502 $223,559
========== ======= ======= ========
</TABLE>
--------
(a) The estimated excess of the $53.0 million purchase price to be paid for
Circle "S" over the amount borrowed under the Bank Credit Facility and the
AFW Notes.
(b) Elimination of the net assets and intercompany receivable associated with
Circle "S" discontinued operations not acquired by the Company.
(c) The purchase price and estimated costs for the AFW Acquisition are
expected to exceed the estimated fair value of net tangible assets
acquired by approximately $44.1 million.
(d) Borrowings under the Bank Credit Facility and principal amount of AFW
Notes.
(e) Accrual of transaction related costs associated with the AFW Acquisition.
(f) Elimination of Circle "S" equity account balances in connection with the
AFW Acquisition.
19
<PAGE>
UNAUDITED PRO FORMA STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
HISTORICAL HISTORICAL
COMPANY FISCAL CIRCLE "S"
YEAR ENDED YEAR ENDED
SEPTEMBER 30, DECEMBER 31, PRO FORMA PRO FORMA
1994 1994 ADJUSTMENTS FOR ACQUISITION
-------------- -------------- ----------- ---------------
<S> <C> <C> <C> <C>
Net sales............... $173,302 $68,764 $ -- $242,066
Cost of goods sold...... 101,334 58,898 -- 160,232
-------- ------- ------- --------
Gross profit............ 71,968 9,866 -- 81,834
-------- ------- ------- --------
Selling, general and
administrative......... 36,752 5,004 (505)(a) 41,251
Research and
development, net....... 21,286 -- -- 21,286
Amortization of
intangibles, including
goodwill............... -- -- 2,206 (b) 2,206
-------- ------- ------- --------
Total costs and
expenses............... 58,038 5,004 1,701 64,743
-------- ------- ------- --------
Operating income........ 13,930 4,862 (1,701) 17,091
Net interest and other
expense................ (907) (620) (3,260)(c) (4,787)
-------- ------- ------- --------
Income before income
taxes.................. 13,023 4,242 (4,961) 12,304
Income tax expense
(benefit).............. 2,605 1,629 (1,467)(d) 2,767
-------- ------- ------- --------
Net income from
continuing operations.. $ 10,418 $ 2,613 $(3,494) $ 9,537
======== ======= ======= ========
Net income per share:
Primary................ $ 0.63 $ 0.57
======== ========
Fully diluted.......... $ 0.63 $ 0.57
======== ========
Shares outstanding:
Primary................ 16,665 16,665
Fully diluted.......... 16,665 16,665
<CAPTION>
HISTORICAL
COMPANY CIRCLE "S"
NINE MONTHS NINE MONTHS
ENDED JUNE 30, ENDED JUNE 30, PRO FORMA PRO FORMA
1995 1995 ADJUSTMENTS FOR ACQUISITION
-------------- -------------- ----------- ---------------
<S> <C> <C> <C> <C>
Net sales............... $203,540 $52,875 $ -- $256,415
Cost of goods sold...... 112,498 45,390 -- 157,888
-------- ------- ------- --------
Gross profit............ 91,042 7,485 -- 98,527
-------- ------- ------- --------
Selling, general and
administrative......... 35,476 4,336 (231)(a) 39,581
Research and
development, net....... 21,022 -- -- 21,022
Amortization of
intangibles, including
goodwill............... -- -- 1,655 (b) 1,655
-------- ------- ------- --------
Total costs and
expenses............... 56,498 4,336 1,424 62,258
-------- ------- ------- --------
Operating income........ 34,544 3,149 (1,424) 36,269
Net interest and other
expense................ (327) (600) (2,479)(c) (3,406)
-------- ------- ------- --------
Income before income
taxes.................. 34,217 2,549 (3,903) 32,863
Income tax expense
(benefit).............. 8,206 968 (1,040)(d) 8,134
-------- ------- ------- --------
Net income from
continuing operations.. $ 26,011 $ 1,581 $(2,863) $ 24,729
======== ======= ======= ========
Net income per share:
Primary................ $ 1.50 $ 1.42
======== ========
Fully diluted.......... $ 1.37 $ 1.30
======== ========
Shares outstanding:
Primary................ 17,381 17,381
Fully diluted.......... 19,668 19,668
</TABLE>
--------
(a) Elimination of non-recurring costs associated with the management of
Circle "S" and the discontinued operations, totaling $705 for the annual
period ($381 for the nine-month period), net of the $200 annual payment
($150 for the nine-month period) to be incurred pursuant to a five-year
contract to be paid after closing the AFW Acquisition.
(b) Amortization of intangible assets, including goodwill, arising from the
AFW Acquisition over an estimated 20-year life.
(c) Assumed interest expense on the Bank Credit Facility and AFW notes used to
finance the AFW Acquisition, with interest at LIBOR plus 50 basis points
(which is assumed to be 6.25% per annum for purposes of this pro forma
presentation) and reduction of investment income on $3.0 million of cash
used for the AFW Acquisition.
(d) Adjustment to provide income taxes (benefit) on the pro forma adjustments
and pro forma combined taxable income at the estimated combined effective
income tax rate.
20
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
INTRODUCTION
The Company's historical operating results for each of the three years ended
September 30, 1992, 1993 and 1994 and for the nine month periods ended June
30, 1994 and 1995, as a percentage of net sales, are as follows:
<TABLE>
<CAPTION>
FISCAL YEAR NINE MONTHS
ENDED SEPTEMBER 30, ENDED JUNE 30,
----------------------- ----------------
1992 1993 1994 1994 1995
------ ------ ------ ------- -------
<S> <C> <C> <C> <C> <C>
Net sales.......................... 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of goods sold................. 57.5 56.2 58.5 58.8 55.3
------ ------ ------ ------- -------
Gross profit....................... 42.5 43.8 41.5 41.2 44.7
Selling, general and
administrative.................... 35.9 22.3 21.2 21.7 17.4
Research and development, net...... 14.6 11.3 12.3 12.4 10.3
Restructuring cost................. 4.7 -- -- -- --
------ ------ ------ ------- -------
Income (loss) from operations...... (12.7) 10.1 8.0 7.2 17.0
Interest expense, net.............. (1.1) (0.8) (0.5) (0.6) (0.2)
Other expense...................... -- (0.8) -- -- --
------ ------ ------ ------- -------
Income (loss) before income taxes
and extraordinary gain............ (13.8) 8.6 7.5 6.6 16.8
Provision for income tax expense
(benefit)......................... (0.8) 0.9 1.5 1.2 4.0
------ ------ ------ ------- -------
Income (loss) before extraordinary
gain.............................. (13.0) 7.7 6.0 5.4 12.8
Extraordinary gain on early
retirement of debentures, net of
income taxes...................... 0.2 -- -- -- --
------ ------ ------ ------- -------
Net income (loss).................. (12.8)% 7.7% 6.0% 5.4% 12.8%
====== ====== ====== ======= =======
</TABLE>
RESULTS OF OPERATIONS
Nine-Month Periods Ended June 30, 1995 and June 30, 1994
The Company recorded bookings totaling $236.0 million for the nine months
ended June 30, 1995 compared to $123.0 million for the same period of fiscal
1994. The continued strength in customer orders is primarily attributable to
the following factors. First, growing end-user demand for semiconductor
devices is fueling industry-wide expansion both in wafer fabrication capacity
and semiconductor assembly capacity. In addition, certain semiconductor
manufacturers are replacing older assembly capital equipment with newer,
higher throughput machines capable of handling more complex semiconductor
devices for a wider variety of applications. Finally, enhanced versions of the
Company's gold ball wire bonder (Model 1488 Turbo -- introduced in late fiscal
1994) and aluminum wedge bonder (Model 1474fp -- introduced in the second
quarter of fiscal 1995) offer significant performance advantages compared to
the Company's earlier models, including greater throughput, finer pitch
capabilities and improved programmability to handle a wider variety of
applications. Favorable customer acceptance of these enhanced models has
contributed to the Company's increased volume of orders during fiscal 1995.
At June 30, 1995, ending backlog of customer orders totaled approximately
$79.0 million compared to $42.0 million at June 30, 1994. Since the timing of
deliveries may vary and orders generally are subject to cancellation, the
Company's backlog as of any date may not be indicative of sales for any
succeeding period.
21
<PAGE>
Net sales for the nine-month period ended June 30, 1995 totaled $203.5
million compared to $122.8 million for the same period in fiscal 1994, an
increase of 66%. Of this increase, approximately $77.9 million was due to
increased unit volume, primarily of the Company's Model 1488 Turbo gold ball
wire bonders and 1474fp aluminum wedge bonders, and, to a lesser extent, to
increased sales of spare parts and consumable tools. Approximately $6.1
million of the volume increase was attributable to sales of die bonder
products added from the July 1994 acquisition of Assembly Technologies, Inc.
("AT").
Higher selling prices, due in large part to the introduction of the higher
priced Model 1488 Turbo ball bonder and Model 1474fp wedge bonder, contributed
approximately $2.8 million to net sales for the fiscal 1995 year-to-date
period, over the amount reported for the comparable period last year.
Gross profit as a percentage of net sales increased to 44.7% for the nine
months ended June 30, 1995 compared to 41.2% for the same period in fiscal
1994. The increase in the gross profit percentage resulted principally from
improved manufacturing overhead absorption associated with higher sales
volumes, the improved gross profit margin on the gold ball and wedge bonder
products largely due to the higher selling prices realized on the new,
enhanced models, and to a shift in sales mix toward higher margin wedge
bonders. Partially offsetting the above factors were additional inventory
reserves established for slower moving products during fiscal 1995.
Selling, general and administrative expenses ("SG&A") totaled $35.5 million
during the nine-month period ended June 30, 1995, compared to $26.6 million
during the same period in fiscal 1994. This increase was primarily
attributable to higher employment levels required to support the higher volume
of business, increased sales incentives and commissions resulting from the
higher sales levels, increased management incentives associated with improved
earnings and higher outside contractor costs associated with ongoing internal
management information systems development efforts. Of the total increase in
SG&A costs, $1.3 million was related to the incremental costs incurred by the
Company to market and support products added in the July 1994 acquisition of
AT.
Net research and development ("R&D") costs increased to $21.0 million for
the nine months ended June 30, 1995, compared to $15.2 million for the same
period last year. Of the $5.8 million increase for the fiscal 1995 year-to-
date period, $1.3 million resulted from incremental expenditures related to
die bonder products following the AT acquisition. The remainder consisted
primarily of personnel related costs, outside contractor costs and prototype
materials related to new product development.
The Company continues to invest heavily in the development of the 8000
Series wire bonders and in enhancements of existing products, including the
recently introduced Model 1474fp wedge bonder which is capable of handling
higher lead-count devices with finer pitch requirements at faster bonding
speeds than the earlier Model 1472 wedge bonder. In addition, the Company
continues to invest in new technologies which may eventually lead to improved
or alternate semiconductor assembly technologies.
Operating income totaled $34.5 million for the nine months ended June 30,
1995 compared to $8.8 million for the same period in fiscal 1994. This
improvement resulted principally from the higher revenue levels and improved
gross profit margins, offset in part by the increased expenses noted above.
During fiscal 1995, approximately $24.9 million of the Company's 8%
Convertible Subordinated Debentures were converted into Common Stock. As a
result, interest expense for the nine-month period ended June 30, 1995 was
lower than during the comparable period in fiscal 1994. The $1.3 million of
Debentures which remained outstanding at June 30, 1995, were converted into
the Company's Common Stock by July 10, 1995.
22
<PAGE>
The provision for income taxes for the nine months ended June 30, 1995 was
based on the Company's estimated effective tax rate of 24% for the year. The
increase in the effective rate in fiscal 1995 compared to the fiscal 1994 rate
of 20% was due primarily to greater utilization of remaining net operating
loss carryforwards in fiscal 1994 and to the estimated amount and geographic
distribution of taxable income in fiscal 1995. The Company expects that its
effective tax rate will be higher in the future, as most available tax credits
will have been utilized by the end of fiscal 1995.
Fiscal Years Ended September 30, 1994 and September 30, 1993
The Company achieved record sales and bookings of customer orders during
fiscal 1994. This growth was driven by the continued expansion of the
semiconductor industry and increased investment in semiconductor assembly
equipment.
Driven largely by growing demand for the Company's Model 1484LXQ gold ball
wire bonders and Model 1472 aluminum wedge bonders, bookings increased 11% in
fiscal 1994 to $178.0 million. Backlog rose from $42.0 million at September
30, 1993 to $46.8 million at September 30, 1994.
Net sales increased 23% in fiscal 1994 to $173.3 million compared to $140.9
million in 1993. Increased unit volume, primarily of the Company's Model
1484LXQ gold ball wire bonders, Model 1472 aluminum wedge bonders and
expendable tools, generated approximately $38.7 million of incremental net
sales in fiscal 1994 over fiscal 1993. The acquisition of the AT business
contributed an additional $1.9 million to fiscal 1994 net sales.
Increases in net sales from the higher unit volume were partially offset by
lower average selling prices of certain machines due to the continuing
competitive pricing environment in the Asian market and to discounts given for
certain large volume orders booked early in fiscal 1994. In July 1994, the
Company introduced the Model 1488 Turbo gold ball wire bonder, which offers
significantly improved throughput compared to the Model 1484LXQ ball bonders.
The higher productivity offered by this model led to higher average selling
prices.
Cost of goods sold increased to $101.3 million for fiscal 1994 from $79.2
million during fiscal 1993, largely as a result of increased unit volume in
fiscal 1994. Gross profit as a percentage of net sales decreased from 43.8%
during fiscal 1993 to 41.5% for fiscal 1994. This change resulted primarily
from the lower average selling prices realized on Model 1484LXQ gold ball wire
bonders and, to a lesser extent, from a shift in sales mix. In fiscal 1994,
sales of gold ball wire bonders, which have lower than average gross margins,
increased to 51% of net sales compared to 46% of total net sales in fiscal
1993. Conversely, sales of higher margin spare parts declined from 14% of net
sales in 1993 to 11% in 1994.
SG&A expenses increased 17% to $36.8 million in fiscal 1994 from the $31.5
million reported in fiscal 1993. These higher expenses were primarily
attributable to increased sales and customer support activities associated
with increased unit volume and the larger installed base of machines,
increased costs to enhance the Company's worldwide management information
systems and incremental costs to market and support the additional products
offered by the Company following the acquisition of AT, including a new sales
and service office in Singapore.
Net R&D increased to $21.3 million during fiscal 1994 from $15.9 million in
fiscal 1993. Personnel related costs rose as the Company expanded its overall
level of R&D activities in fiscal 1994. In addition, the Company incurred
higher outside service and prototype materials costs in fiscal 1994 as R&D
activities on new products progressed from the design to the development and
testing stage. Gross R&D expenses were partially offset by funding received
from customers and governmental subsidies totaling $2.0 million in fiscal 1994
and $1.0 million in fiscal 1993. Major R&D projects during fiscal 1994
included development of the improved productivity Model 1488 Turbo gold ball
wire bonder, continued
23
<PAGE>
efforts toward the next generation 8000 series automatic wire bonders,
development of the Model 6900 automatic die attach machine and continuous
improvements to enhance the capabilities or extend the lives of the Company's
existing products.
Income from operations totaled $13.9 million in fiscal 1994 compared to
$14.3 million in fiscal 1993. The $10.3 million increase in gross profit
generated by higher sales volume in fiscal 1994 was offset by higher SG&A and
R&D costs compared to fiscal 1993.
Changes in interest income and expense were not significant. In fiscal 1993,
the Company charged $1.1 million to expense in connection with a failed
acquisition attempt; there was no comparable charge in fiscal 1994.
The Company's effective tax rate increased to 20% in fiscal 1994 compared to
10.4% in fiscal 1993. The increase primarily resulted from a shift in the
amount and geographic distribution of taxable income during fiscal 1994 and
from higher utilization of net operating loss carryforwards in the United
States and Israel during fiscal 1993.
Fiscal Years Ended September 30, 1993 and September 30, 1992
During fiscal 1993, the Company's net sales increased to $140.9 million from
the $95.0 million reported in fiscal 1992 due to a surge in demand for
semiconductor assembly equipment in 1993. The increased unit volume of
machines sold resulted in approximately $46.6 million of the increase in net
sales. The most significant volume increases were realized in the Company's
Model 1484XQ and 1484LXQ automatic gold ball wire bonders and the Model 1472
automatic aluminum wedge bonder. Increased revenues due to higher volume were
offset in part by lower average selling prices on certain products due mainly
to competitive pricing pressures experienced in the Asian market.
Incoming customer orders booked into backlog during fiscal 1993 exceeded
$159.0 million compared to $102.0 million for fiscal 1992. Backlog of orders
totaled $42.0 million and $23.5 million at September 30, 1993 and 1992,
respectively. The most significant increases in the backlog resulted from
orders for the Model 1484XQ and Model 1484LXQ automatic gold ball wire bonders
and the Model 1472 automatic aluminum wedge bonder.
Cost of goods sold as a percentage of net sales declined to 56.2% in fiscal
1993 compared to 57.5% for fiscal 1992. Increased unit volume in 1993 resulted
in substantially greater manufacturing overhead absorption than was
experienced in fiscal 1992, which more than offset the unfavorable impact of
lower average selling prices and unfavorable sales mix. A change in sales mix
during fiscal 1993 compared to 1992 resulted in an unfavorable impact on gross
profit approximating $5.5 million. Sales of gold ball wire bonders which have
lower than average gross margins, increased from 33% of net sales in fiscal
1992 to 46% of net sales in fiscal 1993. Conversely, sales of higher margin
spare parts declined as a percentage of net sales from 18% in fiscal 1992 to
14% during fiscal 1993. Fiscal 1992 cost of goods sold included $1.5 million
of costs associated with retrofitting new product enhancements and costs
associated with phasing out older products.
SG&A expenses decreased $2.6 million to $31.5 million in 1993 compared to
$34.1 million in fiscal 1992. In fiscal 1992, the Company implemented a
restructuring program designed to reduce the Company's worldwide overhead. The
Company incurred approximately $4.5 million in costs associated with this
restructuring program in fiscal 1992. The major elements of this program
included converting the Company's Israeli manufacturing facility into a
satellite work center of the Willow Grove manufacturing facility,
consolidating its European administrative operations into one facility in
Switzerland and marketing its products in Europe through independent agents
rather than through the Company's direct sales force. In addition, in late
fiscal 1992, the Company consolidated its Japanese operations into less costly
office facilities and reduced the number of administrative personnel in Japan.
There was no such charge in fiscal 1993. As a result of this restructuring
program, fiscal 1993 SG&A
24
<PAGE>
expenses in Israel, Europe and Japan were approximately $3.6 million lower
than in fiscal 1992. Savings associated with the 1992 restructuring program
were partially offset by increased compensation costs, including incentive
payments associated with higher sales and profitability levels and increased
utilization of outside contractors and temporary employees in lieu of
permanent employees.
Net spending on R&D activities increased by $2.0 million to $15.9 million in
fiscal 1993 compared to $13.9 million in fiscal 1992. This increase reflected
greater expenditures associated with the development of the next generation
8000 Series automatic wire bonder and higher costs associated with extending
the capability of certain existing products through enhancements and
evolutionary improvements. Gross R&D expenses were partially offset by funding
received from a customer and governmental subsidies totaling $1.0 million in
fiscal 1993 and $700,000 in fiscal 1992.
Income from operations was $14.3 million in fiscal 1993 compared to a loss
from operations of $12.0 million in fiscal 1992. This improvement primarily
reflects the favorable impact in fiscal 1993 of increased sales levels, lower
per unit manufacturing costs, reduced SG&A expenses and the adverse effect of
restructuring costs on 1992 operating results.
During fiscal 1993, the Company incurred costs of approximately $1.1 million
in connection with the failed acquisition of ASM Fico Tooling B.V. In
September 1993, negotiations for this acquisition were discontinued. Costs
associated with this transaction were charged to expense during the fourth
quarter of fiscal 1993.
The Company recorded a provision for income taxes of $1.3 million in fiscal
1993, as compared to a tax benefit of $718,000 in fiscal 1992, due to
increased profitability during fiscal 1993. The fiscal 1993 effective tax rate
was below the statutory United States tax rate primarily due to utilization of
net operating losses, available tax credits and lower tax rates in several of
the foreign jurisdictions in which the Company operates.
25
<PAGE>
Quarterly Operating Results
The following table presents the Company's historical unaudited quarterly
results of operations for the Company's most recent seven fiscal quarters.
This data is derived from the Company's annual and quarterly financial
statements which are incorporated into this Prospectus by reference. In the
opinion of management, such quarterly financial information has been prepared
on the same basis as the Company's annual financial statements and includes
all adjustments, consisting only of normal recurring adjustments, necessary to
present fairly the financial results set forth therein. Results of operations
for any previous quarter are not necessarily indicative of results for any
future period. The following discussion is qualified by the more detailed
discussion of these quarterly results by management which are contained in the
Company's quarterly filings for the respective periods.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
------------------------------------------------------------------------------
DECEMBER 31, MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31, MARCH 31, JUNE 30,
1993 1994 1994 1994 1994 1995 1995
------------ --------- -------- ------------- ------------ --------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
Net sales............... $38,259 $43,766 $40,838 $50,439 $51,459 $64,785 $87,296
Cost of goods sold...... 21,788 25,435 24,977 29,134 29,414 35,628 47,456
------- ------- ------- ------- ------- ------- -------
Gross profit............ 16,471 18,331 15,861 21,305 22,045 29,157 39,840
------- ------- ------- ------- ------- ------- -------
Selling, general and
administrative......... 8,457 9,154 9,002 10,139 10,655 11,668 13,153
Research and
development, net....... 5,060 4,992 5,176 6,058 6,160 6,546 8,316
------- ------- ------- ------- ------- ------- -------
Income from operations.. 2,954 4,185 1,683 5,108 5,230 10,943 18,371
Interest income
(expense), net......... (240) (242) (231) (194) (197) (223) 93
------- ------- ------- ------- ------- ------- -------
Income before income
taxes.................. 2,714 3,943 1,452 4,914 5,033 10,720 18,464
Provision for income
taxes.................. 407 749 305 1,144 1,309 2,466 4,431
------- ------- ------- ------- ------- ------- -------
Net income.............. $ 2,307 $ 3,194 $ 1,147 $ 3,770 $ 3,724 $ 8,254 $14,033
======= ======= ======= ======= ======= ======= =======
AS A PERCENTAGE OF NET
SALES:
Net sales............... 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of goods sold...... 56.9 58.1 61.2 57.8 57.2 55.0 54.4
------- ------- ------- ------- ------- ------- -------
Gross profit............ 43.1 41.9 38.8 42.2 42.8 45.0 45.6
------- ------- ------- ------- ------- ------- -------
Selling, general and
administrative......... 22.1 20.9 22.0 20.1 20.7 18.0 15.1
Research and
development, net....... 13.2 11.4 12.7 12.0 12.0 10.1 9.5
------- ------- ------- ------- ------- ------- -------
Income from operations.. 7.8 9.6 4.1 10.1 10.1 16.9 21.0
Interest income
(expense), net......... (0.6) (0.6) (0.6) (0.4) (0.4) (0.3) 0.1
------- ------- ------- ------- ------- ------- -------
Income before income
taxes.................. 7.2 9.0 3.5 9.7 9.7 16.6 21.1
Provision for income
taxes.................. 1.1 1.7 0.7 2.3 2.5 3.8 5.1
------- ------- ------- ------- ------- ------- -------
Net income.............. 6.1% 7.3% 2.8% 7.4% 7.2% 12.8% 16.0%
======= ======= ======= ======= ======= ======= =======
</TABLE>
The Company's operating results have fluctuated significantly in the past
and may fluctuate significantly in the future depending upon a variety of
factors, including timing of new product announcements and releases by the
Company or its competitors, market acceptance of new products and enhanced
versions of the Company's products, lengthy sales cycles for the Company's
systems, patterns of capital spending by customers, customer concentration,
the timing of significant orders, manufacturing inefficiencies associated with
the start up of new product introductions and the ability to produce systems
in volume and meet customer requirements, product discounts, changes in
pricing by the Company, its competitors, customers or suppliers, the mix of
products sold, volatility in the Company's targeted markets, political and
economic instability, natural disasters, regulatory changes, possible
disruptions of operations caused by expanding existing facilities or moving
into new facilities, expenses associated with acquisitions and alliances, and
various competitive factors including price-based competition and competition
from vendors employing other technologies. See "Risk Factors --
26
<PAGE>
Fluctuations in Operating Results; Limited System Sales" and "Risk Factors --
Volatility of Semiconductor Industry."
Throughout fiscal 1994 and 1995, net sales have increased each successive
quarter with the exception of the fiscal 1994 third quarter, primarily due to
increased unit sales of the Company's gold ball and aluminum wedge wire
bonders. Lower unit sales and lower average selling prices on the Model 1484
gold ball bonders due to increased competitive pressures, which led to
discounting of certain models, were the primary reasons for the overall
decline in net sales during the quarter ended June 30, 1994. During the second
and third quarters of fiscal 1995, sales increased sharply, primarily due to
increased unit volumes of the recently introduced Model 1488 Turbo gold ball
bonder and 1474fp aluminum wedge bonder. This growth is attributable both to
increased customer acceptance of these enhanced versions of earlier models and
to industry-wide demand for increased capacity.
The quarterly fluctuations in gross profit as a percentage of net sales were
attributable to a variety of factors, including declining average selling
prices on gold ball bonders throughout fiscal 1994 due to competitive pricing
issues with older model machines, volume purchase arrangements with certain
customers, changing product mix, improved manufacturing efficiencies
associated with increasing unit volume beginning in late fiscal 1994 and
throughout fiscal 1995, and improved selling prices on gold ball and aluminum
wedge bonders following the introductions of enhanced versions of these
products in September 1994 and February 1995, respectively.
SG&A expenses have increased steadily over the periods presented above,
principally due to increases in employment related costs as the Company has
expanded its sales, marketing, customer support and administrative
capabilities to support the higher volume of business activities. In addition,
the Company incurred incremental costs beginning in the fiscal quarter ended
September 30, 1994, to market and support die bonder products following the
July 1994 acquisition of AT.
Net R&D expenses have also risen consistently over the periods presented as
the Company has increased its development activities, both for continuous
improvements and enhancements of existing platforms (leading to the
introductions of enhanced versions of existing products such as the Model 1488
Turbo gold ball wire bonder in September 1994 and the Model 1474fp aluminum
wedge bonder in February 1995), and toward the development of new generation
machines including the 8000 series wire bonders and the Model 6900 fully
automatic die attach machine capable of handling "multi-chip module" and
"flip-chip" applications.
Operating income has increased consistently over the periods presented, with
the exception of the fiscal 1994 third quarter. The decline in net sales and
gross profits during that quarter, without corresponding cost reductions,
adversely affected operating results for the period.
Pro Forma Operating Results
As described more fully elsewhere in this Prospectus, the Company has
entered into a definitive agreement to acquire AFW, a supplier of gold and
aluminum bonding wire for the semiconductor assembly industry, which had sales
of approximately $68.7 million for the year ended December 31, 1994. The total
purchase price is $53.0 million, subject to closing adjustments, and is
expected to be financed with borrowings under the Bank Credit Facility and the
issuance of the AFW Notes. See "Acquisition of AFW" and "Pro Forma Financial
Information."
Following the AFW Acquisition, the Company's consolidated operating results
will include the sales, costs and expenses of AFW. Revenues of AFW include a
fabrication charge per thousand feet of wire and the value of precious metals
(primarily gold) which is sold to the customer. Gross revenues could vary
significantly based on market fluctuations in the value of gold. To minimize
AFW's financial exposure to gold price fluctuations, AFW leases gold from its
gold supplier for fabrication and only purchases the gold upon shipment and
sale of the finished product to the customer. Accordingly, fluctuations in the
price of gold are typically passed on to AFW's customers.
27
<PAGE>
AFW has historically reported a lower gross profit margin than the Company.
As such, the consolidated gross profit percentage of the Company is expected
to be lower than historically reported following the AFW Acquisition.
The Company's future operating costs will also include the operating costs
of the AFW business and amortization of intangible assets, including goodwill,
arising from the AFW Acquisition. The amortization of intangible assets
arising from the AFW Acquisition is not expected to be tax deductible, which
will adversely affect the Company's overall effective tax rate in the future.
LIQUIDITY AND CAPITAL RESOURCES
During the past three years, the Company has financed its operations
principally through cash flows from operations. Cash flows from operating
activities and the overall increase in cash and total investments in fiscal
1995 compared to fiscal 1994 generally reflect improved profitability in
fiscal 1995. Cash generated by operating activities totaled $12.8 million for
the nine months ended June 30, 1995 compared to $13.1 million for the same
period last year. Cash and total investments increased to $36.3 million at
June 30, 1995 from the $27.0 million reported at September 30, 1994.
At June 30, 1995, working capital increased to $89.8 million compared to
$61.5 million at September 30, 1994. The accounts receivable balance at June
30, 1995 increased by $18.2 million compared to the September 30, 1994 balance
due largely to increased sales volume in the fiscal 1995 third quarter. The
$12.8 million increase in inventory at June 30, 1995 primarily reflects growth
in work in process inventories as the Company continues to increase
manufacturing activities to satisfy increased customer demand for its
products.
Trade accounts payable and accrued expenses increased by approximately $10.2
million at June 30, 1995 compared to their September 30, 1994 balances. The
increase in trade payables is directly attributable to increased inventory
purchases during the third quarter of fiscal 1995. The increase in accrued
expenses primarily resulted from higher sales and management incentives due to
improved fiscal 1995 sales and profits and to increased accruals associated
with higher employment levels compared to fiscal 1994.
During the nine months ended June 30, 1995, the Company invested
approximately $5.2 million in property and equipment, net of retirements and
disposals, primarily to upgrade equipment used in the Company's manufacturing
and R&D activities and for tooling used in the manufacturing of new machines.
The Company expects capital spending to exceed $30 million in fiscal 1996,
principally for the expansion of domestic and international facilities and
related equipment. The Company is currently in discussions with one party
which would involve the formation of a joint venture to pursue flip-chip
bonding technology, development and subcontract services to semiconductor
manufactures. Such joint venture, if consummated on the terms currently being
discussed, would require a minimum initial investment of approximately $11.0
million to fund the start up of operations.
Stock option exercises and sales of shares of Common Stock to employees
pursuant to the Company's Employee Stock Purchase Plan generated approximately
$1.4 million in cash during the nine months ended June 30, 1995.
The Company maintains a $10.0 million unsecured line of credit with a
financial institution, subject to interest at 0.25% below the lender's prime
rate. Borrowings under this credit line are subject to the Company's
compliance with certain financial and other covenants. There have been no
borrowings under this credit line during fiscal 1995. This credit line will
expire in March 1996, unless renewed. The Company expects to renew this credit
line.
28
<PAGE>
The Bank Credit Facility consists of $50.0 million in unsecured term loans
and letters of credit securing the AFW Notes. The Company may, but has no
current plans to, repay the Bank Credit Facility with a portion of the net
proceeds of this Offering. To the extent the Bank Credit Facility is not
repaid within 90 days after the closing of the AFW Acquisition, it will be
converted automatically to a five-year term loan payable in equal monthly
installments. The Bank Credit Facility bears interest at 50 basis points over
LIBOR before such conversion and 100 basis points over LIBOR thereafter. If
such conversion were to occur, the Company would have the option to fix the
interest rate at 115 basis points over five-year U.S. Treasury securities.
Borrowings under the Bank Credit Facility are subject to the Company's
compliance with certain financial and other covenants.
The Company believes that the net proceeds of this Offering, together with
its working capital, anticipated cash flow from operations and amounts
available under its line of credit will be sufficient to meet the Company's
liquidity and capital requirements for at least the next 12 months. The
Company may, however, seek additional equity or debt financing to fund
strategic business opportunities, including possible acquisitions, joint
ventures, alliances or other business arrangements which could require
substantial capital outlays. The timing and amount of such capital
requirements cannot be precisely determined at this time and will depend on a
number of factors, including demand for the Company's products, semiconductor
and semiconductor capital equipment industry conditions and competitive
factors and the nature and size of strategic business opportunities which the
Company may elect to pursue.
29
<PAGE>
BUSINESS
K&S was founded in 1951 to design equipment for industrial use. During the
1970s, the Company began to focus its efforts on the semiconductor assembly
equipment market. Today, K&S is the world's largest supplier of semiconductor
assembly equipment, according to VLSI. Through its American Fine Wire and
Micro-Swiss subsidiaries, the Company also supplies expendable tools and
materials used in the semiconductor assembly process. The Company's primary
assembly equipment products include wire bonders, dicing saws and die, TAB and
flip-chip bonders, while its expendable tools and materials offerings include
bonding wire, die collets, capillaries and wedges. The Company's customers
consist of leading semiconductor manufacturers and subcontract assemblers of
semiconductors, including Advanced Micro Devices, Advanced Semiconductor
Engineering, Anam Electronics, Hyundai, IBM, Intel, Matsushita Electronics,
Motorola, Philips, Samsung, Swire Technologies and Texas Instruments.
INDUSTRY BACKGROUND
The worldwide market for semiconductors has experienced significant growth
in recent years and is estimated to have exceeded $100 billion in 1994. VLSI
projects this market to reach approximately $200 billion by 1998. This growth
reflects the increasing demand for a wide variety of electronic devices, such
as personal computers, cellular telephones, multimedia systems and other
electronic devices for business and consumer use, as well as the increasing
semiconductor content within these electronic devices and other products, such
as automobiles, consumer appliances and factory automation and control
systems. This demand has been driven in large part by continuing increases in
semiconductor performance as measured by functionality, speed and memory
density at declining costs per function.
In response to the growing demand for semiconductor devices, semiconductor
manufacturers are increasing capacity by expanding and upgrading existing
facilities and constructing new facilities. According to VLSI, as of April
1995, there were over 90 wafer fabrication facilities under construction,
under expansion or scheduled to commence construction. As these new
fabrication facilities come on line and existing facilities are expanded and
upgraded, the Company anticipates that the semiconductor industry will need to
add capacity to assemble the increased output of processed wafers.
Semiconductor Manufacturing Process
The manufacture of ICs requires complex and precise steps which can be
broadly grouped into wafer fabrication, assembly and test. Wafer fabrication,
the first step in the semiconductor manufacturing process, starts with raw
silicon wafers and ends with finished devices in the form of die on wafers.
After fabricated wafers are tested, they typically are shipped to assembly
facilities located primarily in the Pacific Rim. Set forth below is a diagram
of some of the major steps in the semiconductor manufacturing process:
[diagram of semiconductor manufacturing process showing a silicon wafer
moving through wafer fabrication, assembly and test processes to result in a
finished semiconductor device. The diagram further illustrates the assembly
process steps of wafer dicing, die bonding, wire bonding and encapsulation]
Assembly Steps Performed by K&S Equipment
30
<PAGE>
Semiconductor devices are small and fragile and must be packaged to protect
them and facilitate their connection to electronic systems. "Assembly" refers
to those process steps required to package semiconductor devices. The packages
are typically based on a stamped metal leadframe, which is subsequently molded
with plastic, or on ceramic, depending on the device and the application in
which it will be used.
The semiconductor assembly process begins with the mounting of a finished,
tested wafer onto a carrier, after which a dicing saw cuts the wafer into
individual die. The cut wafer is then moved to a die bonder which picks each
good die off the wafer and bonds it to a package. Next, the device is wire
bonded. Very fine gold or aluminum wire (typically 0.001 inches in diameter)
is bonded between specific locations called bond pads on the die and
corresponding leads on the package in order to create the electrical
connections necessary for the device to function.
After wire bonding, the package is encapsulated. For leadframe-based
packages, plastic is molded around the package and the leads are then trimmed
and formed. For ceramic packages, encapsulation is accomplished by mounting a
lid over the die. After encapsulation, devices are re-tested and are then
marked and prepared for shipment.
Semiconductor Assembly Market
According to VLSI, sales of semiconductor assembly equipment totaled
approximately $1.5 billion in 1994 and are projected to grow to approximately
$3.2 billion by 1998. Sales of semiconductor packaging materials were
approximately $6.0 billion in 1994 and are expected to grow to approximately
$8.3 billion by 1998 according to Rose Associates.
The market for semiconductor assembly equipment is expected to continue to
be driven by the demand for ICs, as well as the proliferation of different
device types and technological advances in IC packages. Different types of
devices such as microprocessors, logic devices and memory devices require
different assembly and packaging solutions. In addition, current-generation
semiconductors are more complex, more densely fabricated and more highly
integrated than those of prior generations. To package these newer devices,
assembly equipment must be able to handle smaller, more complex packages with
higher pin counts. In addition, device manufacturers and assemblers continue
to demand equipment with faster throughput, greater reliability, more
automated manufacturing support and lower cost of ownership. The market for
the expendable tools and materials used in the semiconductor assembly process
is similarly driven by IC unit volume, cost and increased technological
demands. These demands typically include package size reduction and greater
consistency or uniformity of materials.
COMPANY STRATEGY
The Company's principal strategy is to improve and broaden the range of
products and services it offers to its customers. To implement this strategy,
the Company continues to pursue the following objectives:
Enhance Leadership Position in Wire Bonders. The Company is the world's
leading supplier of wire bonders. According to VLSI, the Company's
worldwide market share increased from 22% in calendar 1992 to 31% in
calendar 1994. In addition to the technical capabilities of its products,
the Company believes its leadership position in the wire bonder market
derives, in part, from a high level of customer support. The Company
intends to enhance its worldwide market leadership by continuing to improve
the technical performance of its wire bonders while reducing their cost of
ownership. The Company's ongoing product development strategy includes
continuous improvement of its existing wire bonding products, as well as
the development of a next-generation family of wire bonders. The Company is
currently developing its next generation of wire bonders, the 8000 family,
which is based on a new control platform. The Company's 8000 family is
being designed to enhance the technical performance and further reduce the
cost of ownership of K&S' wire bonder products. The first product of this
family, Model 8020, is scheduled to be introduced in the second half of
1996. The Company also has developed modules that allow the Company's
31
<PAGE>
wire bonders to be integrated with both K&S' and its competitors' die
bonders in response to the trend of certain assemblers to increase factory
automation.
Broaden Assembly Equipment Product Lines. The Company continues to
leverage its significant investment in customer relationships by offering
its customers a broader range of assembly equipment. The Company intends to
increase the market penetration of its current product lines and to broaden
its assembly product offerings through acquisitions, strategic alliances
and internal development. Through its acquisition of Assembly Technologies,
Inc., the Company offers a family of die bonders. The Company's internal
development efforts continue to focus on new product offerings for its die
bonder and wafer saw product lines. In addition, the Company continues to
focus internal development efforts on alternate assembly technologies,
including TAB and flip-chip bonding, to further broaden its product lines
and to position the Company in the event that such technologies achieve
increased market acceptance.
Expand Expendable Tools and Materials Product Offerings. The Company is
adding to its expendable tools and materials business in an effort to
increase its revenues related to the manufacture of ICs as opposed to the
expansion of IC manufacturing capacity. The Company's expendables products
include a broad range of ceramic, carbide and metal tools used in die and
wire bonding, such as die collets, capillaries and wedges. Through its
recent acquisition of AFW, the Company has significantly increased the size
of its expendable tools and materials business by adding gold and aluminum
bonding wire to its product offerings.
Focus on Service and Spare Parts Opportunities. The Company seeks to
capture additional revenue opportunities from its installed base of
assembly equipment through sales of spare parts, repair and maintenance,
training services and the reconfiguring and upgrading of systems. The
Company has established a relationship with a key customer whereby the
Company performs repair and maintenance and provides equipment upgrades and
training capabilities, enabling this customer to outsource these functions.
The Company intends to establish similar relationships with other key
customers. The Company plans to expand its revenue in these areas by
offering more comprehensive services designed to reduce its customers' cost
of ownership.
PRODUCTS
K&S offers a broad range of semiconductor assembly equipment, expendable
tools and materials and complementary services and spare parts used in the
semiconductor assembly process. Set forth below is a table listing the
approximate percentage of net sales by principal product areas for the first
nine months of fiscal 1995 and on a pro forma basis for the same period giving
effect to the AFW Acquisition.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
JUNE 30, 1995
----------------------
ACTUAL PRO FORMA
-------- ----------
<S> <C> <C>
Wire Bonders..................................... 73% 58%
Additional Assembly Equipment.................... 9 7
Expendable Tools and Materials................... 7 26
Services and Spare Parts......................... 11 9
-------- --------
100% 100%
======== ========
</TABLE>
Wire Bonders
The Company's principal product line is its family of wire bonders, which
are used to connect extremely fine wires, typically made of gold or aluminum,
between the bonding pads on the die and the leads on the package to which the
die has been bonded. The Company offers both ball and wedge bonders in
automatic and manual configurations. Ball bonders are typically used for
plastic packages (i.e., leadframe-based packages) while wedge bonders are
typically used for ceramic packages.
32
<PAGE>
The Company's principal wire bonders are its Model 1488 Turbo ball bonder
and Model 1474fp wedge bonder. The Company believes that its wire bonders
offer competitive advantages based on high throughput and superior process
control enabling fine pitch bonding and long, low wire loops, which are needed
to assemble advanced IC packages.
The Company is currently developing its next generation of wire bonders, the
8000 family, which is based on a new control platform. The Company's 8000
family is being designed to enhance the technical performance and further
reduce the cost of ownership of K&S' wire bonder products. The first model of
this family, Model 8020, is scheduled to be introduced in the second half of
1996. The Company also has developed modules that allow the Company's wire
bonders to be integrated with both K&S' and its competitors' die bonders in
response to the trend of certain assemblers to increase factory automation.
The selling prices for the Company's automatic wire bonders range from
$60,000 to over $150,000 and from $8,000 to $35,000 for manual wire bonders,
in each case depending upon system configuration and purchase volume.
Additional Semiconductor Assembly Equipment
In addition to wire bonders, the Company also produces other types of
semiconductor assembly equipment, including dicing saws, die bonders, TAB
bonders and flip-chip bonders, which allows the Company to leverage its
significant investment in customer relationships by offering its customers a
broad range of assembly equipment. Principal products offered by the Company
consist of the following:
Dicing Saws. After precise automatic positioning of the wafer, a dicing
saw is used to cut it into individual die using diamond-embedded saw
blades. The Company's primary dicing product is its Model 918 fully
automated dicing saw. Dicing saws range in price from $60,000 to more than
$185,000.
Die Bonders. Die bonders are used to attach a semiconductor die to a
leadframe or other package before wire bonding. Through the acquisition of
Assembly Technologies, Inc., the Company added Models 4206 and 5408
Automatic Die Attach machines to its die bonder product line. In addition,
in March 1995, the Company shipped its first Model 6900, an automatic
multi-process assembly system which can be configured to support either
conventional die bonding applications or alternate semiconductor assembly
technologies. Die bonders range in price from $60,000 to more than
$250,000.
Tape Automated Bonding (TAB). TAB is an alternate assembly method which
uses a thin, flexible film of laminated copper and polyimide in place of a
conventional package. In a TAB assembled device, the die is bonded directly
to copper leads, thereby eliminating the need for wire bonding. The
Company's principal TAB bonder is the Model SP2100. TAB bonders range in
price from $375,000 to approximately $500,000.
Flip-Chip Assembly Systems. Flip-chip is an alternate assembly technique
in which the die is mounted face down in a package or other electronic
system using conductive bumps, thereby eliminating the need for either
conventional die or wire bonding. The Company's Model 6900 is an automatic
multi-process assembly system which can be configured to support flip-chip
applications. The Company shipped the first Model 6900, which was
configured as a flip-chip bonder, in March 1995. Selling prices for flip-
chip assembly systems are expected to exceed $300,000, depending upon
configuration.
The Company also offers different configurations of certain of its products
for non-semiconductor applications, including the Company's Model 980 saw for
use in cutting and grinding hard and brittle materials, such as ceramic, glass
and ferrite, for applications such as the fabrication of chip capacitors or
disk drive heads. A variant of the Model 2100 TAB bonder is used to assemble
ink jet printer cartridges.
33
<PAGE>
Expendable Tools and Materials
The Company currently offers a range of expendable tools and materials to
semiconductor device assemblers which it sells under the brand names "American
Fine Wire" and "Micro-Swiss." The Company intends to expand this business in
an effort to increase its revenues related to the manufacture of IC's as
opposed to the expansion of IC manufacturing capacity. The Company sells its
expendable tools and materials for use with competitors' assembly equipment as
well as its own equipment. The following constitute the principal expendable
tools and materials products offered by the Company:
Bonding Wire. AFW is a leading supplier of very fine (typically 0.001
inches in diameter) gold and aluminum wire used in the wire bonding
process. AFW produces wire to a wide range of specifications, which can
satisfy most wire bonding applications. Gold bonding wire is generally
priced based on a fabrication charge per 1,000 feet of wire, plus the value
of the gold. The fabrication charge varies based on a number of factors,
such as total volume, wire diameter and wire length per spool, and
typically ranges from $7 to $10 per 1,000 feet of wire, depending upon
specifications. To minimize AFW's financial exposure to gold price
fluctuations, AFW leases gold for fabrication from its gold supplier and
only purchases the gold upon shipment and sale of the finished product to
the customer. Accordingly, fluctuations in the price of gold are typically
passed on to AFW's customers.
Expendable Tools. The Micro-Swiss family of expendable tools includes die
collets, capillaries and wedges. Die collets are used to pick up, place and
bond die to packages. Capillaries and wedges are used to feed out, attach
and cut the wires used in wire bonding. Die collets sell for up to $150,
capillaries sell for $6 to $15 and wedges sell for $17 to $45, in each case
depending upon specifications.
Services and Spare Parts
The Company believes that its knowledge and experience have positioned it to
deliver innovative, customer-specific services that reduce the cost of
ownership associated with the Company's equipment. Historically, the Company's
offerings in this area were limited to spare parts, customer training and
extended warranty contracts. In response to customer trends in outsourcing
equipment-related services, the Company now also focuses on providing repair
and maintenance services, a variety of equipment upgrades and training
capabilities. These services are generally priced on a time and materials
basis.
CUSTOMERS
The Company's customers include large semiconductor manufacturers and
subcontract assemblers worldwide. The following list sets forth customers who
have purchased in excess of $1 million of K&S products during the first nine
months of fiscal 1995.
Advanced Micro Devices Micron Technology, Inc.
Advanced Semiconductor Engineering Motorola
Anam Orient Semiconductor Electronics
AT&T Ltd.
Caesar Technology Olivetti
Fujitsu Pantronix
GSS/ARRAY Philips Electronics NV
Hyundai Electronics Industries Co. Ltd. Samsung Pacific, Inc.
IBM SGS-Thomson Microelectronics
Intel Corporation Silicon Systems
Kyocera Siliconware Precision
Matsushita Electronics Swire Technologies
Texas Instruments
Sales to a relatively small number of customers account for a significant
percentage of the Company's net sales. During the nine months ended June 30,
1995, sales to Intel, Anam and Advanced Semiconductor Engineering accounted
for approximately 15.7%, 15.3% and 10.3%, respectively, of the Company's net
sales. In fiscal 1994, sales to Anam, Intel and Motorola accounted for 14.2%,
11.5% and 10.8%, respectively, of the Company's net sales.
34
<PAGE>
The Company believes that developing long-term relationships with its
customers is critical to its success. By establishing these relationships with
semiconductor manufacturers and subcontract assemblers, the Company gains
insight to its customers' future IC packaging strategies. This information
assists the Company in its efforts to develop process and equipment solutions
that address its customers' future assembly requirements.
The Company expects that sales of its products to a limited number of
customers will continue to account for a high percentage of net sales for the
foreseeable future. The loss of or reduction of orders from a significant
customer, including losses or reductions due to manufacturing, reliability or
other difficulties associated with the Company's products, changes in customer
buying patterns, market, economic or competitive conditions in the
semiconductor or subcontract assembly industries, could adversely affect the
Company's business, financial condition and operating results. See "Risk
Factors --Customer Concentration."
SALES AND CUSTOMER SUPPORT
The Company markets its semiconductor assembly equipment and its expendable
tools and materials through separate sales organizations. With respect to
semiconductor assembly equipment, the Company's direct sales force, consisting
of approximately 50 individuals at June 30, 1995, is principally responsible
for sales of major product lines to customers in the United States, Japan and
the rest of the Pacific Rim. Lower volume product lines, as well as all
equipment sales to customers in Europe, are sold through a network of
manufacturer's representatives.
The Company sells its AFW and Micro-Swiss product lines through an
independent sales force supporting customers primarily in the Pacific Rim and
through manufacturers' representatives supporting customers throughout the
rest of the world.
The Company sells its products to semiconductor device manufacturers and
contract manufacturers, who are primarily located or have operations in the
Pacific Rim. Approximately 74% of the Company's fiscal 1994 net sales and 76%
of the Company's net sales for the first nine months of fiscal 1995 were
attributable to sales to customers for delivery outside of the United States.
The Company believes that providing comprehensive worldwide sales, service
and customer support are important competitive factors in the semiconductor
equipment industry. K&S has sales and support operations in Japan, Hong Kong
and Singapore and also has a technology center in Japan. In addition, the
Company supports its assembly equipment customers with over 120 customer
service and support personnel at June 30, 1995, located in Hong Kong, Japan,
Korea, Malaysia, the Philippines, Singapore, Taiwan, Thailand and the United
States.
BACKLOG
At June 30, 1995, the Company's backlog was approximately $79.0 million as
compared to approximately $42.0 million at June 30, 1994. The Company's
backlog consists of product orders for which confirmed purchase orders have
been received and which are scheduled for shipment within 12 months. In
addition, the Company may allocate production capacity to customers for
anticipated purchases for which a confirmed purchase order has not yet been
received. Virtually all orders are subject to cancellation, deferral or
rescheduling by the customer with limited or no penalties. Because of the
possibility of customer changes in delivery schedules or cancellations and
potential delays in product shipments, the Company's backlog as of any
particular date may not be indicative of revenues for any succeeding period.
MANUFACTURING
The Company's assembly equipment manufacturing activities consist primarily
of integrating components and subassemblies to create finished systems
configured to customer specifications. The Company utilizes an outsourcing
strategy for the manufacture of many of its major subassemblies and performs
system design, assembly and testing in-house. K&S believes that outsourcing
enables it to minimize its fixed costs and capital expenditures and allows the
Company to focus on product differentiation through system design and quality
control. The Company's just-in-time inventory
35
<PAGE>
management strategy has reduced manufacturing cycle times and has limited on-
hand inventory. The Company recently obtained ISO 9001 registration for most
operations in its Willow Grove, Pennsylvania facility and for both of its
Israeli manufacturing facilities.
The Company manufactures its Micro-Swiss expendable tools and materials from
raw materials at facilities in Israel and its gold and aluminum bonding wire
at facilities in Alabama, Singapore and Switzerland. The Company currently is
constructing a new facility in Israel for its Micro-Swiss operations and
intends to establish a new facility in Singapore for its AFW operations.
Parts, materials and supplies for components used in the Company's products
are for the most part readily available from a number of sources at acceptable
costs. Certain of the Company's products, however, require components or
assemblies of an exceptionally high degree of reliability, accuracy and
performance. Currently there are several such items for which there are only a
limited number of suppliers or for which a single supplier has been accepted
by the Company as a qualified supplier. The Company's reliance on
subcontractors and single source suppliers involves a number of significant
risks, including the loss of control over the manufacturing process, the
potential absence of adequate capacity and the reduced control over delivery
schedules, manufacturing yields, quality and costs. In the event that any
significant subcontractor or single source supplier were to become unable or
unwilling to continue to manufacture subassemblies, components or parts in
required volumes, the Company would have to identify and qualify acceptable
replacements. The process of qualifying subcontractors and suppliers could be
lengthy, and no assurance can be given that any additional sources would be
available to the Company on a timely basis. The Company has experienced and
continues to experience reliability and quality problems with certain key
subassemblies provided by single source suppliers. The Company also has
experienced delays in the delivery of subassemblies from these and other
subcontractors in the past, which caused delays in Company shipments. If
supplies of such items were not available from any such source and a
relationship with an alternative supplier could not be developed, shipments of
the Company's products could be interrupted and re-engineering of the affected
product could be required. Such delays, interruption and re-engineering could
have a material adverse effect on the Company's business, financial condition
and operating results. See "Risk Factors -- Dependence on Subcontractors;
Single or Limited Sources of Supply."
RESEARCH AND PRODUCT DEVELOPMENT
Because technological change occurs rapidly in the semiconductor industry,
the Company devotes substantial resources to its research and development
programs to maintain competitiveness. The Company employed more than 260
individuals in research and development at June 30, 1995. The Company pursues
the continuous improvement and enhancement of existing products while
simultaneously developing next generation products. For example, while the
performance of current generations of gold ball wire bonders is being enhanced
in accordance with a specific continuous improvement plan, the Company is
simultaneously developing the series 8000 family of next generation wire
bonders, the first models of which are expected to be introduced in the second
half of 1996. Most of the next generation equipment presently being developed
by the Company is expected to be based on modular, interchangeable subsystems,
including the 8000 control platform, which management believes will promote
more efficient and cost-effective manufacturing operations, lower inventory
levels, improved field service capabilities and shorter product development
cycles, which will allow the Company to introduce new products more quickly.
The Company's net expenditures for research and development totaled
approximately $13.9 million, $15.9 million, $21.3 million and $21.0 million
during the fiscal years ended September 30, 1992, 1993 and 1994 and the nine-
month period ended June 30, 1995, respectively. The Company receives funding
from certain customers and government agencies pursuant to contracts or other
arrangements for the performance of specified research and development
activities. Such amounts are recognized as a reduction of research and
development expense when specified activities have been performed. During the
fiscal years ended September 30, 1992, 1993 and 1994 and the nine-month period
ended June 30,
36
<PAGE>
1995, such funding totaled approximately $720,000, $1.0 million, $2.0 million
and $1.9 million, respectively.
COMPETITION
The semiconductor equipment and semiconductor materials industries are
intensely competitive. Significant competitive factors in the semiconductor
equipment market include process capability and repeatability, quality and
flexibility, and cost of ownership, including throughput, reliability and
automation, customer support and price. The Company's major equipment
competitors include Shinkawa and Kaijo in wire bonders; ESEC, Nichiden, ASM
Pacific Technology and Alphasem in die bonders; and Disco Corporation in
dicing saws. Competitive factors in the semiconductor expendable tools and
materials industry include price, delivery and quality. Significant
competitors in the expendable tools line include Gaiser Tool Co. and Small
Precision Tools, Inc. In the bonding wire market, significant competitors
include Tanaka Electronic Industries and Sumitomo Metal Mining.
In each of the markets it serves, the Company faces competition and the
threat of competition from established competitors and potential new entrants,
some of which may have greater financial, engineering, manufacturing and
marketing resources than the Company. Some of these competitors are Japanese
companies that have had and may continue to have an advantage over the Company
in supplying products to Japan-based companies due to their preferences to
purchase equipment from Japanese suppliers. The Company expects its
competitors to continue to improve the performance of their current products
and to introduce new products with improved price and performance
characteristics. New product introductions by the Company's competitors or by
new market entrants could cause a decline in sales or loss of market
acceptance of the Company's existing products. If a particular semiconductor
manufacturer or subcontract assembler selects a competitor's product for a
particular assembly operation, the Company may experience difficulty in
selling a product to that company for a significant period of time. Increased
competitive pressure could also lead to intensified price-based competition,
resulting in lower prices which could adversely affect the Company's business,
financial condition and operating results. The Company believes that to remain
competitive it must invest significant financial resources in new product
development and expand its customer service and support worldwide. There can
be no assurance that the Company will be able to compete successfully in the
future. See "Risk Factors -- Intense Competition."
INTELLECTUAL PROPERTY
The Company has a strategy of seeking patents on inventions governing new
products and processes developed as part of its ongoing research, engineering
and manufacturing activities. The Company currently holds a number of United
States patents some of which have foreign counterparts. The Company believes
that the duration of its patents generally exceeds the life cycles of the
technologies disclosed and claimed therein. Although the patents it holds and
may obtain in the future may be of value, the Company believes that its
success will depend primarily on its engineering, manufacturing, marketing and
service skills.
The Company also believes that much of its important technology resides in
its proprietary software and trade secrets. Insofar as the Company relies on
trade secrets and unpatented knowledge, including software, to maintain its
competitive position, there is no assurance that others may not independently
develop similar technologies. In addition, although the Company executes non-
disclosure and non-competition agreements with certain of its employees,
customers, consultants, selected vendors and others, there is no assurance
that such secrecy obligations will not be breached.
Certain of the Company's customers have received notices of infringement
from two separate parties, Harold S. Hemstreet and Jerome H. Lemelson,
alleging that equipment supplied by the Company, and processes performed by
such equipment, infringe on patents held by them. The Company's product
warranties generally provide customers with indemnification for damages
sustained by a customer as a consequence of patent infringement claims arising
out of use of the Company's products and obligate the Company to defend such
claims. As a consequence, the Company could be
37
<PAGE>
required to reimburse its customers for certain damages resulting from these
matters and to defend its customers in patent infringement suits. As of the
date of this Prospectus, no actions have been initiated or threatened directly
against the Company in connection with these matters, although certain
customers have requested that the Company defend them and indemnify them
against any damages that they may be required to pay on the basis of their use
of equipment supplied by the Company and two of the Company's customers have
actually been sued. The Company believes, based in part on opinions from
outside patent counsel, that no equipment marketed by the Company, and no
process performed by such equipment, infringe on the patents in question and
does not believe that such matters will have a material adverse effect on its
financial condition or operating results. However, the ultimate outcome of any
infringement claim affecting the Company is uncertain and there can be no
assurances that the resolution of these matters will not have a material
adverse effect on the Company's business, financial condition or operating
results. See "Risk Factors -- Intellectual Property Protection; Notices of
Alleged Patent Infringement."
EMPLOYEES
At June 30, 1995, K&S had 1,513 permanent employees, 65 temporary employees
and 128 contract employees worldwide. In addition, at June 30, 1995, AFW had
281 employees. The only Company employees represented by a labor union are
AFW's employees in Singapore. K&S considers its employee relations to be good.
FACILITIES
The Company's major facilities are described in the table below:
<TABLE>
<CAPTION>
PRODUCTS
FACILITY APPROXIMATE SIZE FUNCTION MANUFACTURED
-------- ---------------- -------- ------------
<S> <C> <C> <C>
Willow Grove, 214,000 sq. ft. (1) Corporate headquarters, Wire bonders, die
Pennsylvania manufacturing, bonders and TAB
technology center, sales bonders
and service
Haifa, Israel 43,000 sq. ft. (2) Manufacturing, Manual wire bonders,
technology center dicing saws and
automatic multi-
process assembly
systems
Haifa, Israel 26,000 sq. ft. (2) Manufacturing, Micro- Capillaries, wedges
Swiss operations and die collets
Hong Kong 16,000 sq. ft. (3) Sales and service
Tokyo, Japan 10,667 sq. ft. (2) Technology center, sales
and service
Singapore 22,942 sq. ft. (2) Manufacturing, AFW Bonding wire
operations
Selma, Alabama 25,629 sq. ft. (2) Manufacturing, AFW Bonding wire
operations
Zurich, Switzerland 15,123 sq. ft. (2) Manufacturing, AFW Bonding wire
operations
</TABLE>
--------
(1) Owned.
(2) Leased.
(3) Part owned and part leased.
The Company is planning to expand its Willow Grove, Pennsylvania facilities
and is constructing a manufacturing facility in Yokneam, Israel for its Micro-
Swiss operations. Construction of this latter facility is expected to be
completed in the fall of 1996. Upon completion, the lease of Micro-Swiss'
manufacturing facility in Haifa will be terminated. The Company is also
planning to relocate AFW's Singapore facilities. The Company also rents space
for sales and service offices in Santa Clara, California; Mesa, Arizona; Zug,
Switzerland; Korea; Taiwan; and Singapore. The Company believes that its
facilities are generally in good condition.
38
<PAGE>
MANAGEMENT
The following table sets forth information regarding the directors and
executive officers of the Company.
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
C. Scott Kulicke 46 Chairman of the Board of Directors and
Chief Executive Officer
James W. Bagley 56 Director
Frederick W. Kulicke, 77 Director
Jr.
John A. O'Steen 51 Director
Allison F. Page 72 Director
MacDonell Roehm, Jr. 56 Director
C. William Zadel 52 Director
Morton K. Perchick 58 Executive Vice President
Clifford G. Sprague 51 Senior Vice President and Chief Financial Officer
Moshe Jacobi 53 Senior Vice President, Expendable Tools and Materials
Asuri Raghavan 42 Senior Vice President, Marketing
Cary H. Baskin 45 Vice President, Die Bonder Business
Mark H. Heeter 48 Vice President, Human Resources
Shlomo Oren 49 Vice President and Managing Director of
Kulicke and Soffa (Israel) Ltd.
Charles Salmons 40 Vice President, Operations
Teruhiko Sawachi 52 Vice President and President of Kulicke
and Soffa (Japan) Ltd.
Walter Von Seggern 55 Vice President, Engineering and Technology
Michael A. Wolf 50 Vice President, Sales
</TABLE>
C. Scott Kulicke has been Chief Executive Officer since 1979 and Chairman of
the Board since 1984. Prior to that he held a number of executive positions
with the Company. Mr. Kulicke is the son of Frederick W. Kulicke, Jr., a
member of the Board of Directors.
James W. Bagley has been a director of the Company since 1993. He is the
Vice Chairman of the Board of Directors of Applied Materials, the largest
supplier of wafer fabrication systems to the semiconductor industry. Prior to
joining Applied Materials, Inc. in 1981, Mr. Bagley was with Texas Instruments
Incorporated for more than 15 years. Mr. Bagley also serves on the board of
directors of Megatest Corporation, Tencor Instruments and Extraction Systems,
Inc.
Frederick W. Kulicke, Jr. co-founded the Company in 1951, served as its
Chief Executive Officer until his retirement in 1979 and has been a director
since 1956.
John A. O'Steen has been a director of the Company since 1988 and is
Chairman and Chief Executive Officer of Cinmar L.P., a mail order catalog
company. Prior to joining Cinmar in 1991, he was President, Chief Executive
Officer and a director of Cincinnati Microwave, Inc., a manufacturer of
electronic products.
Allison F. Page, a director of the Company since 1962, is a retired partner
of the Philadelphia law firm of Pepper, Hamilton & Scheetz.
MacDonell Roehm, Jr. has been a director of the Company since 1984 and has
been Chairman, President and Chief Executive Officer of Bill's Dollar Stores,
Inc. since 1994. Prior to that, he served for approximately nine years as
Managing Director of AEA Investors, Inc., a private investment firm.
39
<PAGE>
C. William Zadel, a director of the Company since 1989, is the President and
Chief Executive Officer of Ciba-Corning Diagnostics Corp., a manufacturer and
distributor of medical diagnostic products, of which he has been an executive
officer for more than five years.
Morton K. Perchick joined the Company in 1980 and has served in various
executive positions, most recently as Senior Vice President, prior to his
being appointed Executive Vice President in July 1995.
Clifford G. Sprague joined the Company in March 1989 as Vice President and
Chief Financial Officer and was promoted to Senior Vice President in 1990.
Prior to joining the Company, he served for more than five years as Vice
President and Controller of the Oilfield Equipment Group of NL Industries,
Inc., an oilfield equipment and service company.
Moshe Jacobi has served as the Company's Senior Vice President, Expendable
Tools and Materials since July 1995. Prior to that, he had served as Vice
President of the Company and Managing Director of Micro-Swiss Ltd., a wholly-
owned subsidiary of the Company since November 1992. He was Division Director
and General Manager of the Micro-Swiss Division from July to November 1992,
and, from August 1986 to July 1992, he was Deputy Managing Director of Kulicke
and Soffa (Israel) Ltd., a wholly-owned subsidiary of the Company.
Asuri Raghavan was promoted to Senior Vice President, Marketing in July
1995, having served as Vice President of the Wire Bonder Business since
December 1993. Prior to that, he served as Vice President, Strategic
Development from June 1991 to 1993, and in various other management capacities
since joining the Company in 1980, except for the period from December 1985
until November 1987 when he was Director, Research and Technology of American
Optical.
Cary H. Baskin joined the Company in 1992 and since February 1995 he has
served as Vice President, Die Bonding Business. Prior to such time, Mr. Baskin
served as director of corporate marketing and, before that, director of
product marketing for the Company's ball bonding and TAB business. Formerly,
Mr. Baskin held senior marketing positions with Mars Electronics and
Checkpoint Systems.
Mark H. Heeter was appointed Vice President, Human Resources in July 1995.
Prior to that, he was Vice President of Human Resources of The Dispatch
Printing Company from 1993 to 1994. From 1987 to 1993, Mr. Heeter was Director
of Human Resources of Checkers, Simon and Rosner, a public accounting and
business services firm.
Shlomo Oren joined the Company in 1980 and has served as a Vice President of
the Company since 1991 and has been Managing Director of Kulicke and Soffa
(Israel), Ltd. since January 1993. Prior to January 1993, he served as Vice
President of Marketing of the Company, Director, Microelectronic Business
Division of the Company, and Deputy Managing Director, Marketing, Kulicke and
Soffa (Israel).
Charles Salmons joined the Company in 1978 and became Vice President,
Operations in September 1994. Prior to that, he served as Vice President of
Manufacturing, Director of Operations, Director of Production and Manager of
Production.
Teruhiko Sawachi joined the Company in December 1991 as Vice President of
the Company and President of Kulicke & Soffa (Japan) Ltd. Prior to that, he
was Representative Director of Senco Japan Ltd., a division of Senco Products,
Inc., from November 1987 to December 1991.
Walter Von Seggern joined the Company in September 1992 as Vice President of
Engineering and Technology. From April 1988 to April 1992, he worked for M/A-
Com, Inc. He was General Manager of M/A-Com's ANZAC, RGH and Eurotec Divisions
from 1990 to 1992 and from 1988 to 1990, he was General Manager of M/A-Com's
Radar Products Division.
40
<PAGE>
Michael A. Wolf was appointed Vice President, Sales in February 1995, having
served as Director of Sales since 1993. He came to K&S from Proconics
International, Inc., Boston, Massachusetts, where he served as vice president
of sales and marketing, and has more than 25 years of experience within the
semiconductor manufacturing industry in various marketing, sales and sales
management positions.
In connection with the AFW Acquisition, the Company agreed to appoint Larry
D. Striplin, Jr., the Chairman and largest stockholder of Circle "S" (the
parent corporation of AFW), as a director of the Company, and it is
anticipated that he will be so elected shortly following consummation of the
sale of the Common Stock being offered hereby and will continue to serve for a
period of at least five years. In addition, R. Kelly Payne, who is currently
the President of AFW, will become a Vice President of the Company and
President of AFW. See "Acquisition of AFW."
41
<PAGE>
SELLING SHAREHOLDER
Of the 2,600,000 shares of Common Stock offered hereby, 100,000 shares are
being offered by C. Scott Kulicke, Chairman and Chief Executive Officer of the
Company, and his spouse. Mr. Kulicke and his spouse beneficially own 585,660
shares (or approximately 3.0% of the outstanding Common Stock), including
108,160 shares purchasable under options held by Mr. Kulicke, which currently
are purchasable or will become purchasable on or before November 30, 1995
under vested stock options granted under the Company's stock option plans. In
addition, Mr. Kulicke holds options to purchase an additional 57,680 shares
subject to subsequent vesting under such plans. Following consummation of this
Offering, beneficial ownership of Common Stock by Mr. Kulicke and his spouse
will be reduced by 100,000 shares to approximately 2.2% of the outstanding
Common Stock (or by 115,000 shares to approximately 2.1% of the outstanding
Common Stock if the Underwriters' over-allotment option is exercised in full).
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of the Company consists of 50,000,000 shares of
Common Stock, without par value, and 5,000,000 shares of preferred stock,
without par value. As of September 11, 1995, 19,309,910 shares of Common Stock
and no shares of preferred stock were outstanding. The following description
of the capital stock of the Company is qualified in its entirety by reference
to the Company's Articles of Incorporation and By-laws, each as amended,
previously filed with the Commission and incorporated by reference herein.
The holders of the Common Stock are entitled to one vote per share for each
share held of record on all matters submitted to a vote of shareholders.
Subject to preferential rights with respect to any series of preferred stock
that may be issued, holders of the Common Stock are entitled to receive
ratably such dividends as may be declared by the Board of Directors on the
Common Stock out of funds legally available therefor and, in the event of a
liquidation, dissolution or winding-up of the affairs of the Company, are
entitled to share equally and ratably in all remaining assets and funds of the
Company. In the election of directors, the holders of the Common Stock may
multiply the number of votes the shareholder is entitled to cast by the total
number of directors to be elected at a meeting of shareholders and cast the
whole number of votes for one candidate or distribute them among some or all
candidates. The holders of the Common Stock have no preemptive rights or
rights to convert shares of the Common Stock into any other securities and are
not subject to future calls or assessments by the Company. All outstanding
shares of the Common Stock are fully paid and nonassessable by the Company.
The Company, by resolution of the Board of Directors and without any further
vote or action by the shareholders, has the authority to issue preferred stock
in one or more series and to fix from time to time the number of shares to be
included in each such series and the designations, preferences,
qualifications, limitations, restrictions and special or relative rights of
the shares of each such series. The ability of the Company to issue preferred
stock, while providing flexibility in connection with possible acquisitions
and other corporate purposes, could adversely affect the voting power of the
holders of the Common Stock and could have the effect of making it more
difficult for a person to acquire, or of discouraging a person from acquiring,
control of the Company. The Company has no present plans to issue any of the
preferred stock.
Certain provisions of the Company's Articles of Incorporation and By-laws
and Pennsylvania law may discourage certain transactions involving a change in
control of the Company. For example, the Company's Articles of Incorporation
and By-laws contain provisions which (i) classify the Board of Directors into
four classes, with one class being elected each year, (ii) permit the Board to
issue "blank check" preferred stock without shareholder approval and (iii)
prohibit the Company from engaging in
42
<PAGE>
certain business combinations with a holder of 20% or more of the Company's
voting securities without supra-majority board or shareholder approval.
Further, under the Pennsylvania Business Corporation Law, because the
Company's By-laws provide for a classified Board of Directors, shareholders
may only remove directors for cause. These provisions and certain provisions
of the Pennsylvania Business Corporation Law could have the effect of
delaying, deferring or preventing a change in control of the Company and may
adversely affect the voting and other rights of holders of Common Stock.
Mellon Bank, National Association is the transfer agent and registrar for
the Company's Common Stock with offices in Ridgefield Park, New Jersey.
43
<PAGE>
UNDERWRITING
Montgomery Securities and PaineWebber Incorporated (the "Underwriters") have
agreed, subject to the terms and conditions contained in the Underwriting
Agreement, to purchase from the Company and the Selling Shareholder the number
of shares of Common Stock as indicated below opposite their respective names
at the public offering price less the underwriting discount set forth on the
cover page of this Prospectus. The Underwriting Agreement provides that the
obligations of the Underwriters are subject to certain conditions precedent
and that the Underwriters are committed to purchase all of such shares if any
are purchased.
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITERS SHARES
------------ ---------
<S> <C>
Montgomery Securities.............................................
PaineWebber Incorporated..........................................
---
Total...........................................................
===
</TABLE>
The Underwriters have advised the Company that they propose initially to
offer the Common Stock to the public on the terms set forth on the cover page
of this Prospectus. The Underwriters may allow to selected dealers a
concession of not more than $ per share, and the Underwriters may allow,
and such dealers may reallow, a concession of not more than $ per share to
certain other dealers. After the shares of Common Stock are released for sale
to the public, the offering price and other selling terms may be changed by
the Underwriters. The Common Stock is offered subject to receipt and
acceptance by the Underwriters, and to certain other conditions, including the
right to reject orders in whole or in part.
The Company and the Selling Shareholder proportionately have granted an
option to the Underwriters, exercisable during the 30-day period after the
date of this Prospectus, to purchase up to a maximum aggregate of 390,000
additional shares of Common Stock to cover over-allotments, if any, at the
same price per share as the initial 2,600,000 shares to be purchased by the
Underwriters. To the extent that the Underwriters exercise this option, the
Underwriters will be committed, subject to certain conditions, to purchase
such additional shares in approximately the same proportion as set forth in
the above table. The Underwriters may purchase such shares only to cover over-
allotments made in connection with this Offering.
The Underwriting Agreement provides that the Company and the Selling
Shareholder will indemnify the Underwriters against certain liabilities,
including civil liabilities under the Securities Act, or will contribute to
payments the Underwriters may be required to make in respect thereof.
Each individual executive officer and director of the Company has agreed
that for a period of 75 days after the date of this Prospectus, he will not,
without the prior consent of Montgomery Securities, offer for sale, sell,
transfer or otherwise dispose of any shares of Common Stock of the Company. In
addition, the Company has agreed that, for a period of 90 days after the date
of this Prospectus, it will not, without the prior written consent of
Montgomery Securities, directly or indirectly issue, offer to sell, sell,
distribute or otherwise dispose of any shares of its Common Stock or
securities convertible into or exchangeable for its Common Stock or other
equity security, except pursuant to outstanding options or pursuant to the
Company's current stock option and employee benefit plans.
In connection with the AFW Acquisition, Montgomery Securities rendered their
opinion to the Board of Directors of K&S that the acquisition was fair to K&S
and its shareholders from a financial point of view. For its services in
rendering such opinion, Montgomery Securities received from the Company a
$300,000 fee plus expenses.
44
<PAGE>
In connection with this offering, the Underwriters and selling group members
have engaged in passive market making transactions in the Common Stock on the
Nasdaq National Market in accordance with Rule 10b-6A under the Exchange Act.
Passive market making consists of displaying bids on the Nasdaq National
Market that are limited by the bid prices of independent market makers and
completing purchases in response to order flow at prices limited by such bids.
Net purchases by a passive market maker on each day are limited to a specified
percentage of the passive market maker's average daily trading volume in the
Common Stock during a specified prior period. Purchases by the passive market
maker must be discontinued for any day on which such limit is reached. Passive
market making may stabilize the market price of the Common Stock at a level
above that which might otherwise prevail and, if commenced, may be
discontinued at any time.
LEGAL MATTERS
The validity of the issuance of the Common Stock offered hereby will be
passed upon by Drinker Biddle & Reath, Philadelphia, Pennsylvania, counsel for
the Company. Certain legal matters will be passed upon for the Underwriters by
Wilson, Sonsini, Goodrich & Rosati, Professional Corporation, Palo Alto,
California.
EXPERTS
The Consolidated Financial Statements of the Company as of September 30,
1993 and 1994 and for each of the three fiscal years ended September 30, 1994
incorporated in this Prospectus by reference to the Annual Report on Form 10-K
for the year ended September 30, 1994, (and the Company's Current Report on
Form 8-K dated September 14, 1995) except as they relate to Kulicke and Soffa
(Israel) Ltd., a wholly-owned subsidiary of the Company, have been audited by
Price Waterhouse LLP, independent accountants, and, insofar as they relate to
Kulicke and Soffa (Israel) Ltd., have been audited by Luboshitz, Kasierer &
Co., independent accountants, as set forth in their respective reports thereon
incorporated herein by reference. Such consolidated financial statements have
been so incorporated in reliance on the reports of such independent
accountants given on the authority of such firms as experts in accounting and
auditing.
The consolidated financial statements of Circle "S" Industries, Inc. and
subsidiaries as of December 31, 1993 and 1994 and for each of the three years
ended December 31, 1994, incorporated in this Prospectus by reference from the
Kulicke and Soffa Industries, Inc. Current Report on Form 8-K dated September
14, 1995, have been audited by Deloitte & Touche LLP, independent auditors, as
stated in their report, which is incorporated herein by reference and have
been so incorporated in reliance upon the report of such firm given their
authority as experts in accounting and auditing.
45
<PAGE>
[photo of wedge] [photo of Pick-up Tool] [photo of capillary]
Pick-up Tool
Used to Handle
Individual Die
Capillary Used to
Feed Wire Through
Ball Bonders
Wedge Used to
Feed Wire Through
Wedge Bonders
EXPENDABLE TOOLS AND MATERIALS
Kulicke and Soffa currently offers a range of expendable tools and materials to
semiconductor device assemblers which it sells under the brand names American
Fine Wire and Micro-Swiss. The Micro-Swiss family of expendable tools includes
die collets, capillaries and wedges. Die collets are used to pick up, place and
bond the die to the package on which it is mounted during die bonding.
Capillaries and wedges are used to feed out, attach and cut wires used in wire
bonding. American Fine Wire is a leading supplier of very fine (typically 0.001
inches in diameter) gold and aluminum wire used in the wire bonding process. AFW
produces wire to a wide range of specifications, which can satisfy many wire
bonding applications.
[photo of spool of
aluminum wire]
[photo of spool of
gold wire]
Aluminum Bonding Wire
Gold Bonding Wire
[K&S LOGO APPEARS HERE] MICRO-SWISS
Bonding, Dicing Tools
and Production Accessories
______________________________AMERICAN FINE WIRE________________________________
__________________________________CORPORATION___________________________________
<PAGE>
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
No dealer, sales representative or any other person has been authorized to
give any information or to make any representations in connection with this
offering other than those contained in this Prospectus, and, if given or made,
such information or representations must not be relied upon as having been au-
thorized by the Company, the Selling Shareholder or the Underwriters. This
Prospectus does not constitute an offer to sell or a solicitation of any offer
to buy any securities other than the shares of Common Stock to which it re-
lates or an offer to, or a solicitation of, any person in any jurisdiction
where such an offer or solicitation would be unlawful. Neither the delivery of
this Prospectus nor any sale made hereunder shall, under any circumstances,
create any implication that there has been no change in the affairs of the
Company or that information contained herein is correct as of any time subse-
quent to the date hereof.
------------------
TABLE OF CONTENTS
------------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
Additional Information................................................... 2
Incorporation by Reference............................................... 2
Prospectus Summary....................................................... 3
Risk Factors............................................................. 5
Use of Proceeds.......................................................... 12
Price Range of Common Stock.............................................. 13
Dividend Policy.......................................................... 13
Capitalization........................................................... 14
Acquisition of AFW....................................................... 15
Selected Consolidated Financial Data..................................... 16
Unaudited Pro Forma Financial Information................................ 18
Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................... 21
Business................................................................. 30
Management............................................................... 39
Selling Shareholder...................................................... 42
Description of Capital Stock............................................. 42
Underwriting............................................................. 44
Legal Matters............................................................ 45
Experts.................................................................. 45
</TABLE>
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
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2,600,000 SHARES
[LOGO OF KULICKE & SOFFA APPEARS HERE]
COMMON STOCK
-----------
PROSPECTUS
-----------
Montgomery Securities
PaineWebber Incorporated
, 1995
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
<PAGE>
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the costs and expenses of the sale and
distribution of the securities being registered, substantially all of which
are being borne by the Company and the remainder of which will be borne by the
Selling Shareholder. All of such expenses are estimates, except the SEC
registration fee, NASD filing fee and Nasdaq listing fee.
<TABLE>
<S> <C>
SEC registration fee............................................. $ 1,666
NASD filing fee.................................................. 13,058
Nasdaq National Market listing fee............................... 17,500
Legal fees and expenses.......................................... 160,000
Accounting fees and expenses..................................... 100,000
Printing expenses................................................ 125,000
Blue Sky fees and expenses....................................... 15,000
Transfer Agent and Registrar fees and expenses................... 15,000
Miscellaneous Expenses........................................... 52,776
--------
Total.......................................................... $500,000
========
</TABLE>
* Excludes $13,561 that was paid with the original filing of this Registration
Statement.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company's By-laws require the Company to indemnify any person who was or
is a party or is threatened to be made a party to any threatened, pending or
completed proceeding by reason of the fact that he or she is or was a director
or officer of the Company or is or was serving at the request of the Company
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by him or her in connection with such proceeding if he or
she acted in good faith and in a manner he or she reasonably believed to be
in, or not opposed to, the best interests of the Company, and, with respect to
any criminal proceeding, had no reasonable cause to believe his or her conduct
was unlawful. Such indemnification as to expenses is mandatory to the extent
the individual is successful on the merits or otherwise in defense of the
matter or in defense of any claim, issue or matters therein. In addition,
Pennsylvania law permits the Company to provide similar indemnification to
employees and agents who are not directors or officers. The determination of
whether an individual meets the applicable standard of conduct may be made by
the disinterested directors, independent legal counsel or the shareholders.
Pennsylvania law also permits indemnification in connection with a proceeding
brought by or in the right of the Company to procure a judgment in its favor.
Reference is made to Section 11 of the form of Underwriting Agreement filed as
Exhibit 1.1 to this Registration Statement for certain provisions relating to
indemnification of the directors and certain officers of the Company. Insofar
as indemnification for liabilities arising under the Securities Act may be
permitted to directors, officers, or persons controlling the Company pursuant
to the foregoing provisions, the Company has been informed that in the opinion
of the Securities and Exchange Commission such indemnification is against
public policy as expressed in the Securities Act and is therefore
unenforceable.
II-1
<PAGE>
ITEM 16. EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER ITEM
------- ----
<C> <S>
1.1+ Form of Underwriting Agreement.
5+ Opinion of Drinker Biddle & Reath.
23.1* Consent of Price Waterhouse LLP (Independent Accountants).
23.2* Consent of Luboshitz, Kasierer & Co. (Independent Accountants).
23.3* Consent of Deloitte & Touche LLP (Independent Accountants).
23.4+ Consent of Drinker Biddle & Reath (included in Exhibit 5).
24* Powers of Attorney of James W. Bagley, C. Scott Kulicke, Frederick W.
Kulicke, Jr., John A. O'Steen, Allison F. Page, MacDonell Roehm, Jr.,
Clifford G. Sprague and C. William Zadel.
</TABLE>
--------
+ To be filed by amendment.
* Filed herewith.
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) That, for purposes of determining any liability under the Securities Act
of 1933, as amended (the "Securities Act"), the information omitted from the
form of prospectus filed as part of this registration statement in reliance
upon Rule 430A and contained in a form of prospectus filed by the registrant
pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be
deemed to be part of this registration statement as of the time it was
declared effective.
(2) That, for the purpose of determining any liability under the Securities
Act, each such post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(3) That, insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the registrant, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other
than the payment by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful defense of
any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
(4) That, for purposes of determining any liability under the Securities
Act, each filing of the registrant's annual report pursuant to Section 13(a)
or Section 15(d) of the Securities Exchange Act of 1934 that is incorporated
by reference in the registration statement shall be deemed to be a new
registration statement relating to the securities offered herein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
II-2
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THE
REGISTRANT CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS
ALL OF THE REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS
AMENDMENT TO REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, HEREUNTO DULY AUTHORIZED IN WILLOW GROVE, COMMONWEALTH OF
PENNSYLVANIA, ON THE 14TH DAY OF SEPTEMBER, 1995.
KULICKE AND SOFFA INDUSTRIES, INC.
By /s/ C. Scott Kulicke
----------------------------------
C. SCOTT KULICKE
CHIEF EXECUTIVE OFFICER
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT TO
REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
SIGNATURE TITLE DATE
/s/ C. Scott Kulicke Chairman of the September 14,
------------------------------------- Board, Director and 1995
C. SCOTT KULICKE (PRINCIPAL Chief Executive
EXECUTIVE OFFICER) Officer
/s/ Clifford G. Sprague Senior Vice September 14,
------------------------------------- President and Chief 1995
CLIFFORD G. SPRAGUE (PRINCIPAL Financial Officer
FINANCIAL AND ACCOUNTING OFFICER)
* Director September 14,
------------------------------------- 1995
JAMES W. BAGLEY
* Director September 14,
------------------------------------- 1995
FREDERICK W. KULICKE, JR.
* Director September 14,
------------------------------------- 1995
JOHN A. O'STEEN
* Director September 14,
------------------------------------- 1995
ALLISON F. PAGE
* Director September 14,
------------------------------------- 1995
MACDONELL ROEHM, JR.
* Director September 14,
------------------------------------- 1995
C. WILLIAM ZADEL
*/s/ C. Scott Kulicke
-------------------------------------
ATTORNEY-IN-FACT
III-3
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-3 of our report
dated November 15, 1994 (except as to the first paragraph of Item 5(b) of
Kulicke and Soffa Industries, Inc.'s Current Report on Form 8-K dated
September 14, 1995), which appears on Exhibit 99.1 of Kulicke and Soffa
Industries, Inc.'s Current Report on Form 8-K dated September 14, 1995. We
also consent to the reference to us under the heading "Experts" in such
Prospectus.
/s/ Price Waterhouse llp
Philadelphia, PA
September 14, 1995
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-3 of our report
dated November 3, 1994, which appears on page 2 of the 1994 Annual Report to
Shareholders of Kulicke and Soffa (Israel) Ltd. which is incorporated by
reference in Kulicke and Soffa Industries, Inc.'s Annual Report on Form 10-K
for the year ended September 30, 1994. We also consent to the reference to us
under the heading "Experts" in such Prospectus.
/s/ Luboshitz, Kasierer & Co.
Certified Public Accountants (Isr.)
September 14, 1995
Haifa, Israel
<PAGE>
EXHIBIT 23.3
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement
of Kulicke and Soffa Industries, Inc. on Form S-3 of our report relating to
the consolidated financial statements of Circle "S" Industries, Inc. and
subsidiaries as of December 31, 1994 and 1993 and for each of the three years
in the period ended December 31, 1994, dated March 29, 1995 except for Note
11, as to which the date is April 10, 1995 and Note 12, as to which the date
is July 24, 1995, which appears in the Current Report on Form 8-K of Kulicke
and Soffa Industries, Inc. dated September 14, 1995. We also consent to the
reference to us under the heading "Experts" in such Prospectus, which is part
of the Registration Statement.
/s/ Deloitte & Touche LLP
Birmingham, Alabama
September 15, 1995
<PAGE>
Exhibit 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that the undersigned does hereby consent and
appoint C. Scott Kulicke and Clifford G. Sprague, or either of them acting
alone, his true and lawful attorney-in-fact and agent, with full power of
substitution and revocation for him and in his name, place and stead, in any
and all capacities, to sign the Registration Statement on Form S-3 of Kulicke
and Soffa Industries, Inc., relating to the offer and sale of shares of its
Common Stock and any and all amendments (including post-effective amendments)
to the Registration Statement and to file the same with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, full power and
authority to do and perform each and every act and thing requisite and
necessary to be done as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or his or their substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 25th day
of July 1995.
/s/ James W. Bagley
_____________________________________
JAMES W. BAGLEY
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that the undersigned does hereby consent and
appoint Clifford G. Sprague his true and lawful attorney-in-fact and agent,
with full power of substitution and revocation for him and in his name, place
and stead, in any and all capacities, to sign the Registration Statement on
Form S-3 of Kulicke and Soffa Industries, Inc., relating to the offer and sale
of shares of its Common Stock and any and all amendments (including post-
effective amendments) to the Registration Statement and to file the same with
all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent, full power and authority to do and perform each and every act and thing
requisite and necessary to be done as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent, or his substitute or substitutes, may lawfully do
or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 6th day
of September 1995.
/s/ C. Scott Kulicke
_____________________________________
C. SCOTT KULICKE
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that the undersigned does hereby consent and
appoint C. Scott Kulicke and Clifford G. Sprague, or either of them acting
alone, his true and lawful attorney-in-fact and agent, with full power of
substitution and revocation for him and in his name, place and stead, in any
and all capacities, to sign the Registration Statement on Form S-3 of Kulicke
and Soffa Industries, Inc., relating to the offer and sale of shares of its
Common Stock and any and all amendments (including post-effective amendments)
to the Registration Statement and to file the same with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, full power and
authority to do and perform each and every act and thing requisite and
necessary to be done as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or his or their substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 25th day
of July 1995.
/s/ Frederick W. Kulicke, Jr.
_____________________________________
FREDERICK W. KULICKE, JR.
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that the undersigned does hereby consent and
appoint C. Scott Kulicke and Clifford G. Sprague, or either of them acting
alone, his true and lawful attorney-in-fact and agent, with full power of
substitution and revocation for him and in his name, place and stead, in any
and all capacities, to sign the Registration Statement on Form S-3 of Kulicke
and Soffa Industries, Inc., relating to the offer and sale of shares of its
Common Stock and any and all amendments (including post-effective amendments)
to the Registration Statement and to file the same with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, full power and
authority to do and perform each and every act and thing requisite and
necessary to be done as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or his or their substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 25th day
of July 1995.
/s/ John A. O'Steen
_____________________________________
JOHN A. O'STEEN
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that the undersigned does hereby consent and
appoint C. Scott Kulicke and Clifford G. Sprague, or either of them acting
alone, his true and lawful attorney-in-fact and agent, with full power of
substitution and revocation for him and in his name, place and stead, in any
and all capacities, to sign the Registration Statement on Form S-3 of Kulicke
and Soffa Industries, Inc., relating to the offer and sale of shares of its
Common Stock and any and all amendments (including post-effective amendments)
to the Registration Statement and to file the same with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, full power and
authority to do and perform each and every act and thing requisite and
necessary to be done as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or his or their substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 25th day
of July 1995.
/s/ Allison F. Page
_____________________________________
ALLISON F. PAGE
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that the undersigned does hereby consent and
appoint C. Scott Kulicke and Clifford G. Sprague, or either of them acting
alone, his true and lawful attorney-in-fact and agent, with full power of
substitution and revocation for him and in his name, place and stead, in any
and all capacities, to sign the Registration Statement on Form S-3 of Kulicke
and Soffa Industries, Inc., relating to the offer and sale of shares of its
Common Stock and any and all amendments (including post-effective amendments)
to the Registration Statement and to file the same with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, full power and
authority to do and perform each and every act and thing requisite and
necessary to be done as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or his or their substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 25th day
of July 1995.
/s/ MacDonnell Roehm, Jr.
_____________________________________
MACDONNELL ROEHM, JR.
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that the undersigned does hereby consent and
appoint C. Scott Kulicke his true and lawful attorney-in-fact and agent, with
full power of substitution and revocation for him and in his name, place and
stead, in any and all capacities, to sign the Registration Statement on Form
S-3 of Kulicke and Soffa Industries, Inc., relating to the offer and sale of
shares of its Common Stock and any and all amendments (including post-
effective amendments) to the Registration Statement and to file the same with
all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent, full power and authority to do and perform each and every act and thing
requisite and necessary to be done as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent, or his substitute or substitutes, may lawfully do
or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 6th day
of September 1995.
/s/ Clifford G. Sprague
_____________________________________
CLIFFORD G. SPRAGUE
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that the undersigned does hereby consent and
appoint C. Scott Kulicke and Clifford G. Sprague, or either of them acting
alone, his true and lawful attorney-in-fact and agent, with full power of
substitution and revocation for him and in his name, place and stead, in any
and all capacities, to sign the Registration Statement on Form S-3 of Kulicke
and Soffa Industries, Inc., relating to the offer and sale of shares of its
Common Stock and any and all amendments (including post-effective amendments)
to the Registration Statement and to file the same with all exhibits thereto,
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, full power and
authority to do and perform each and every act and thing requisite and
necessary to be done as fully to all intents and purposes as he might or could
do in person, hereby ratifying and confirming all that said attorneys-in-fact
and agents, or his or their substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand this 25th day
of July 1995.
/s/ C. William Zadel
_____________________________________
C. WILLIAM ZADEL
