<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended DECEMBER 31, 1995.
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to _________.
Commission File No. 0-121
KULICKE AND SOFFA INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
PENNSYLVANIA 23-1498399
(State or other jurisdiction (IRS Employer
of incorporation) Identification No.)
2101 BLAIR MILL ROAD, WILLOW GROVE, PENNSYLVANIA 19090
(Address of principal executive offices) (Zip code)
(215) 784-6000
(Registrant's telephone number, including area code)
Indicate by check mark whether registrant (1) has filed all reports
required to be filed by section 13 or 15 (d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90
days. Yes X No
----- -----
As of February 7, 1996, there were 19,318,054 shares of the
Registrant's Common Stock, Without Par Value outstanding.
<PAGE>2
KULICKE AND SOFFA INDUSTRIES, INC.
FORM 10 - Q DECEMBER 31, 1995
INDEX
Page No.
--------
PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
Consolidated Balance Sheet -
December 31, 1995 and September 30, 1995 3
Consolidated Income Statement -
Three Months Ended December 31, 1995 and 1994 4
Consolidated Condensed Statement of Cash Flows -
Three Months Ended December 31, 1995 and 1994 5
Notes to Consolidated Financial Statements 6 - 9
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS 10 - 15
PART II. OTHER INFORMATION
Item 6. EXHIBITS AND REPORTS ON FORM 8 - K 15
Signatures 15
<PAGE>3
PART I. FINANCIAL INFORMATION.
Item 1. Financial Statements.
KULICKE AND SOFFA INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEET
(in thousands)
(unaudited)
December 31, September 30,
1995 1995
--------- ---------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 36,291 $ 28,624
Short-term investments 10,124 9,590
Accounts and notes receivable, net 96,057 77,427
Inventories, net 47,013 40,850
Prepaid expenses and other current assets 3,211 3,534
------- -------
TOTAL CURRENT ASSETS 192,696 160,025
Property, plant and equipment, net 31,832 25,519
Intangible assets, primarily goodwill, net 43,729 1,183
Long-term investments 2,227 2,732
Other assets 2,437 1,570
------- -------
TOTAL ASSETS $272,921 $191,029
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Debt due within one year $ 50,253 $ 60
Accounts payable to suppliers and others 39,628 33,145
Accrued expenses 19,949 16,014
Estimated income taxes payable 10,501 6,973
------- -------
TOTAL CURRENT LIABILITIES 120,331 56,192
Long-term debt, less current portion -- 156
Deferred income taxes 605 --
Other liabilities 2,297 1,034
------- -------
TOTAL LIABILITIES 123,233 57,382
------- -------
Commitments and contingencies -- --
SHAREHOLDERS' EQUITY:
Common stock, without par value 45,802 45,757
Retained earnings 105,575 89,238
Cumulative translation adjustment (1,689) (1,348)
------- -------
TOTAL SHAREHOLDERS' EQUITY 149,688 133,647
------- -------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $272,921 $191,029
======= =======
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>4
KULICKE AND SOFFA INDUSTRIES, INC.
CONSOLIDATED INCOME STATEMENT
(in thousands except per share amounts)
(unaudited)
Three months ended
December 31,
-----------------------
1995 1994
------- ------
Net sales $127,189 $51,459
Cost of goods sold 75,113 29,414
------- ------
Gross profit 52,076 22,045
Selling, general and
administrative 16,988 10,655
Research and development, net 11,276 6,160
------- ------
Income from operations 23,812 5,230
Interest income 709 342
Interest expense (881) (539)
Other expense (630) --
------- ------
Income before income taxes 23,010 5,033
Provision for income taxes 6,673 1,309
------- ------
Net income $ 16,337 $ 3,724
======= ======
Net income per share:
Primary $0.82 $0.22
==== ====
Fully diluted $0.82 $0.21
==== ====
Weighted average shares outstanding:
Primary 19,861 16,828
Fully diluted 19,861 19,343
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>5
KULICKE AND SOFFA INDUSTRIES, INC.
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
(in thousands)
(unaudited)
Three months ended
December 31,
-------------------
1995 1994
------ ------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $16,337 $ 3,724
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 2,183 1,141
Deferred income taxes 75 25
Changes in other components of working
capital, excluding the effects
of the AFW acquisition (6,477) (4,639)
Other changes, net 181 (153)
------ ------
Net cash provided by operating activities 12,299 98
------ ------
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash portion of preliminary AFW purchase price,
less cash acquired (7,383) --
Purchase of property, plant and equipment (4,284) (1,538)
Purchases of short-term investments classified
as available-for-sale (5,487) (2,976)
Proceeds from sales of short-term investments
classified as available-for-sale 4,954 8,353
Proceeds from maturities of debt securities
held-to-maturity 505 538
------ ------
Net cash provided (used) by
investing activities (11,695) 4,377
------ ------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings under bank
term credit facility 15,033 --
Repayment of borrowings, including AFW
short-term borrowings (8,015) (15)
Proceeds from exercise of stock options 45 193
------ ------
Net cash provided by financing activities 7,063 178
------ ------
Change in cash and cash equivalents 7,667 4,653
Cash and cash equivalents at beginning of
period 28,624 8,754
------ ------
Cash and cash equivalents at end of period $36,291 $13,407
====== ======
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>6
KULICKE AND SOFFA INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(amounts in thousands)
(unaudited)
NOTE 1 - BASIS OF PRESENTATION
The consolidated financial statement information included herein is
unaudited, but in the opinion of management, contains all adjustments,
consisting only of normal recurring adjustments, necessary to present fairly
the Company's financial position as of December 31, 1995 and September 30,
1995, and the results of its operations and its cash flows for the three
month periods ended December 31, 1995 and 1994. These financial statements
should be read in conjunction with the audited financial statements included
in the Company's Annual Report on Form 10-K for the fiscal year ended
September 30, 1995.
NOTE 2 - ACQUISITION OF AMERICAN FINE WIRE CORPORATION
On October 2, 1995, the Company acquired American Fine Wire Corporation
("AFW") through the acquisition of all of the common stock of Circle "S"
Industries, Inc. ("Circle S"), the parent corporation of AFW. AFW is a
manufacturer of fine gold and aluminum wire used in the wire bonding process,
and has manufacturing facilities in Singapore; Selma, Alabama; and Zurich,
Switzerland.
The preliminary AFW purchase price, excluding transaction related costs,
approximated $53,572, is subject to adjustment, and was initially financed by
borrowings under a bank term credit facility and seller promissory notes (see
Note 4). The AFW acquisition was accounted for using the purchase method.
Accordingly, AFW's operating results are included in the Company's
consolidated financial statements commencing October 2, 1995.
The purchase price, including transaction related costs, has been
preliminarily allocated to the assets acquired and liabilities assumed based
on their estimated fair market values, as follows:
Cash $10,944
Accounts receivable 9,166
Inventory 1,964
Property and equipment 3,687
Intangible assets, primarily goodwill 43,099
Other assets 283
Short-term debt (8,000)
Accounts payable and accrued expenses (5,231)
Other liabilities (1,190)
-------
Total purchase price $ 54,722
=======
The excess of the purchase price over the estimated fair value of acquired
tangible net assets consists primarily of goodwill and a favorable operating
lease for the Selma manufacturing facility, both of which are being amortized
over a twenty-year period.
<PAGE>7
Revenues of AFW include a fabrication charge per thousand feet of wire and
the value of precious metals (primarily gold) sold to the customer. To
minimize the Company's financial exposure to gold price fluctuations, the
Company obtains gold from its gold supplier on a consignment basis during the
fabrication process and purchases the gold upon shipment and sale of the
finished product to the customer.
Unaudited pro forma income statement data reflecting the combined operating
results of the Company and AFW for the three month period ended December 31,
1994, as if the acquisition had occurred on October 1, 1994, after giving
effect to certain pro forma adjustments, are as follows:
Pro forma
-----------
(unaudited)
Revenue $68,695
Net income $ 3,440
Net income per share $ 0.20
NOTE 3 - INVENTORY
December 31, September 30,
1995 1995
------ ------
Finished goods $11,200 $10,673
Work in process 15,744 15,740
Raw materials and supplies 28,372 22,190
------ ------
55,316 48,603
Inventory reserves (8,303) (7,753)
------ ------
$47,013 $40,850
====== ======
NOTE 4 - DEBT OBLIGATIONS
In connection with the AFW acquisition, on September 14, 1995, the Company
entered into a Restated Loan Agreement which extended its existing $10,000
revolving loan facility to March 29, 1996 (unless renewed) and established a
separate term credit facility for borrowings of up to $50,000 to finance the
AFW acquisition.
On October 2, 1995, the Company borrowed $15,033 under the term credit
facility to fund the cash portion of the AFW purchase price and issued
promissory notes totaling $34,395 to certain selling shareholders of Circle
"S." The promissory notes were repaid in full on January 5, 1996, together
with accrued interest thereon. To finance the repayment of the promissory
notes, on January 5, 1996, the Company borrowed the remaining $34,967 million
available under the term credit facility.
<PAGE>8
Borrowings under the $50,000 term credit facility until March 29, 1996 bear
interest at the LIBOR rate plus 50 basis points (6.3437% at
December 31, 1995). If amounts borrowed under the term credit
facility are not repaid by March 29, 1996, the loan automatically will be
converted into a five-year term loan payable in equal monthly installments,
plus accrued interest. If converted into a five-year term loan, the term
credit facility would bear interest, at the Company's option, at 115 basis
points over the five-year U.S. Treasury Securities rate or at 100 basis
points over LIBOR.
The Restated Loan Agreement is unsecured and contains certain financial and
other covenants, all of which have been met by the Company.
NOTE 5 - RECLASSIFICATIONS
Certain amounts in the Company's September 30, 1995 balance sheet and
statement of cash flows for the three months ended December 31, 1994 have
been reclassified to conform to their presentation in the Company's fiscal
1996 financial statements.
NOTE 6 - EARNINGS PER SHARE
For the three month period ended December 31, 1995, primary and fully diluted
earnings per share included the dilutive effect of shares issuable upon
exercise of stock options. For the three month period ended December 31,
1994, fully diluted earnings per share included the dilutive effects of
shares issuable upon exercise of stock options and shares assumed to be
issued upon conversion of the Company's 8% convertible subordinated
debentures, the remainder of which were either converted or redeemed during
fiscal 1995.
<PAGE>9
NOTE 7 - OPERATING RESULTS BY BUSINESS SEGMENT
As a result of the AFW acquisition, the portion of the Company's business
attributable to expendable tools and materials products (which include the
Micro Swiss and AFW operations) exceeds 10% of net revenues. These products
have different manufacturing processes, distribution channels and a less
volatile revenue pattern than historically experienced by the Company's
equipment business. Accordingly, in fiscal 1996, the Company commenced
reporting its operations on a disaggregated basis by business segment.
Operating results by business segment for the three month periods ended
December 31, 1995 and 1994 were as follows:
Expendable
Tools and Corporate
Three months ended Equipment Materials and
December 31, 1995: Segment Segment Eliminations Total
--------- ---------- ------------ ----------
Net sales $103,235 $23,954 $127,189
Cost of goods sold 56,541 18,572 75,113
------- ------ -------
Gross profit 46,694 5,382 52,076
Operating costs 23,250 3,226 $1,788 28,264
------- ------ ----- -------
Operating income $ 23,444 $ 2,156 ($1,788) $ 23,812
======= ====== ===== =======
Expendable
Tools and Corporate
Three months ended Equipment Materials and
December 31, 1994: Segment Segment Eliminations Total
--------- ---------- ------------ ----------
Net sales $ 47,412 $ 4,047 $ 51,459
Cost of goods sold 26,718 2,696 29,414
------- ------ -------
Gross profit 20,694 1,351 22,045
Operating costs 14,629 624 $1,562 16,815
------- ------ ----- -------
Operating income $ 6,065 $ 727 ($1,562) $ 5,230
======= ====== ===== =======
Intersegment sales are immaterial.
<PAGE>10
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Introduction
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 has 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. While the Company does not consider its
business to be seasonal in nature, historically there have been substantial
fluctuations in the amounts which semiconductor manufacturers and subcontract
assemblers have invested in capital equipment.
Furthermore, the Company's sales consist primarily of a relatively small
number of machines, most with selling prices ranging from approximately
$60,000 to over $500,000. A delay in shipment of a limited number of
machines, either due to manufacturing delays or to rescheduling or
cancellation of customer orders, could have a material adverse effect on
operating results for any particular quarter. The Company believes that such
volatility will continue to characterize the industry and the Company's
operations in the future.
Certain customers have recently asked the Company to delay shipments of
machines originally scheduled for the second quarter of fiscal 1996. As a
consequence, it is likely that net revenues and earnings will be lower in the
second quarter of fiscal 1996 compared to the first quarter of fiscal 1996.
However, the Company currently expects fiscal 1996 quarterly net revenues in
both the equipment segment and the expendable tools and materials segment to
exceed the amounts reported during the comparable quarters of fiscal 1995.
The Company continues to believe the long-term trend for the semiconductor
industry is positive and as such, intends to continue to aggressively pursue
its product development plans and build the infrastructure necessary to
support its customer base and the anticipated higher volume of activity.
Results of Operations - Three months ended December 31, 1995 compared to
three months ended December 31, 1994.
The Company recorded bookings totaling $138.0 million during the fiscal 1996
first quarter ended December 31, 1995 (including $16.7 million related to
AFW) compared to $56.0 million for the first quarter of fiscal 1995. The
increase in customer orders primarily reflects a continuation of the elevated
order rate experienced throughout fiscal 1995 associated with industry-wide
expansion both in
<PAGE>11
wafer fabrication capacity and semiconductor assembly capacity and an
increase in the Company's share of the semiconductor assembly capital
equipment market, primarily as a result of sales of the Company's 1488 Turbo
gold ball wire bonder (the "1488 Turbo bonder").
At December 31, 1995, the backlog of customer orders (excluding AFW products)
totalled approximately $96.0 million compared to $85.0 million at September
30, 1995. Since the timing of deliveries may vary and orders generally are
subject to delay or cancellation, the Company's backlog as of any date may
not be indicative of sales for any succeeding period.
Net sales for the fiscal 1996 first quarter ended December 31, 1995 increased
$75.7 million, or 147%, to $127.2 million compared to $51.5 million for the
same period last year. Of this increase, $55.8 million was attributable to
the equipment segment and $19.9 million was due to the expendable tools and
materials segment. Higher unit volume of machines, primarily of the
Company's Model 1488 Turbo bonders, accounted for approximately $51.3 million
of the fiscal 1996 revenue increase. Higher selling prices for the Model
1488 Turbo bonder (compared to selling prices realized on earlier models of
gold ball wire bonders) contributed an additional $2.7 million to net
revenues in fiscal 1996, over the amounts reported in fiscal 1995.
Approximately $16.7 million of the fiscal 1996 increase in net revenues was
attributable to sales of wire products following the October 2, 1995 AFW
acquisition and approximately $3.2 million was due to increased sales of
expendable tools over the comparable period last year. By geographic area,
the revenue increases were primarily realized in the Asia/Pacific region,
with shipments primarily destined for Korea, Taiwan and the Philippines.
Gross profit as a percentage of net revenues in the equipment segment
increased to 45.2% during the first quarter of fiscal 1996 from 43.6% during
the first quarter of fiscal 1995. Improved manufacturing overhead absorption
associated with higher sales volumes and improved selling prices on the 1488
Turbo bonder in the first quarter of fiscal 1996 were primarily responsible
for this increase.
In the expendable tools and materials segment, gross profit as a percentage
of net revenues decreased to 22.5% for the first quarter of fiscal 1996 from
33.4% for the same period last year. This decrease is due primarily to the
effect of the AFW acquisition, as AFW's gross profit percentage is
significantly lower than that historically realized on sales of expendable
tools.
Selling, general and administrative expenses ("SG&A") totaled $17.0 million
during the first quarter of fiscal 1996, compared to $10.7 million during the
same period last year. Of this increase, $2.1 million reflects incremental
SG&A costs attributable to the AFW acquisition, including $520,000 of
goodwill amortization. The remainder of the increase was primarily
attributable higher employment levels in fiscal 1996 required to support the
higher volume of business and to annual salary increases.
Net research and development ("R&D") costs increased to $11.3 million for the
first quarter of fiscal 1996, from the $6.2 million for the
<PAGE>12
same period last year. The Company continues to invest heavily in the
development of the 8000 Series wire bonders and in enhancements of existing
products, including an enhancement to the Model 1488 Turbo bonder which will
enable it to deliver improved throughput compared to the current Model 1488
Turbo.
Operating income totaled $23.8 million for the first quarter of fiscal 1996
compared to $5.2 million for the same period in fiscal 1995. This
improvement resulted principally from the higher revenue levels and improved
gross profit margins in the equipment segment, offset in part by the
increases in SG&A and R&D expenses noted above.
The majority of interest expense incurred during the first quarter of fiscal
1996 resulted from borrowings related to the AFW acquisition. During the
fiscal 1995 first quarter, most of the interest expense related to the
Company's 8% Subordinated Convertible Debentures, the remainder of which were
converted or redeemed during fiscal 1995. Interest income during the first
quarter of fiscal 1996 exceeded the amount reported for the first quarter of
fiscal 1995 primarily due to interest earned on a note receivable from a
customer and to a higher average balance of invested cash in fiscal 1996.
Non-operating costs in fiscal 1996 included the write-off of approximately
$630,000 of costs incurred with a proposed offering of the Company's common
stock to the public which was indefinitely delayed due to a decline in the
market price of the Company's common stock.
The increase in the Company's effective tax rate to 29% in fiscal 1996
compared to the fiscal 1995 rate of 24% was due primarily to utilization of
most remaining tax credit carryforwards in fiscal 1995, the effect of non-
deductible goodwill amortization resulting from the AFW acquisition, and the
estimated amount and geographic distribution of taxable income in fiscal
1996.
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. While development and technical risks
exist which have the potential to delay the introduction of the Model 8020
(the first production model of the 8000 family), the Company currently
expects that the product will be released in the second half of calendar
1996. However, 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
<PAGE>13
customers will defer purchases of the current model of gold ball 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 accurately 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.
LIQUIDITY AND CAPITAL RESOURCES
During the past three fiscal years, the Company has financed its operations
principally through cash flows from operations. Cash generated by operating
activities totaled $12.3 million during the first quarter of fiscal 1996
compared to $98,000 during the first quarter of fiscal 1995. Cash and total
investments increased to $48.6 million at December 31, 1995 from the $40.9
million reported at September 30, 1995. Cash flows from operating activities
and the overall increase in cash and total investments in the first quarter
of fiscal 1996 compared to the first quarter of fiscal 1995 generally reflect
improved profitability in fiscal 1996.
As described in Notes 2 and 4 to the Company's December 31, 1995 financial
statements, the Company acquired AFW on October 2, 1995. In connection with
this acquisition, $17.2 million of the $53.6 million preliminary purchase
price was paid in cash at closing. The Company borrowed $15.0 million under
its new term credit facility and $34.4 million pursuant to certain promissory
notes, to finance the AFW acquisition. The promissory notes were repaid in
full on January 5, 1996. To finance the repayment of the promissory notes,
on January 5, 1996, the Company borrowed the remaining $35.0 million under
the bank term credit facility.
At December 31, 1995, working capital decreased to $72.3 million compared to
$103.8 million at September 30, 1995. This resulted primarily from the $50
million of borrowings associated with the AFW acquisition which are
classified as current liabilities at December 31, 1995. If such borrowings
are not repaid by March 29, 1996, the outstanding balance automatically will
be converted to a five year term loan.
The accounts receivable balance at December 31, 1995 increased by $18.6
million compared to the September 30, 1995 balance. Of this increase, $8.4
million was attributable to the AFW acquisition and $5.1 million was due to
an increase in the note receivable from a customer. The remainder of the
increase was due to increased sales volume in the fiscal 1996 first quarter.
The $13.6 million increase in inventory at December 31, 1995 primarily
reflects approximately
<PAGE>14
$2.3 million related to the AFW acquisition and growth in raw materials and
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 $10.4
million at December 31, 1995 compared to their September 30, 1995 balances.
The increase in trade payables reflects the effect of the AFW acquisition,
increased inventory purchases and the timing of vendor payments during the
first quarter of fiscal 1995. The increase in accrued expenses reflects
additional accruals related to the AFW business and acquisition related
accruals.
During the first quarter of fiscal 1996, the Company invested approximately
$4.3 million in property and equipment, primarily to upgrade equipment used
in the Company's manufacturing and R&D activities and for tooling used to
manufacture new models of machines. The Company presently expects fiscal
1996 capital spending to approximate $30 million. The principal capital
projects planned for fiscal 1996 include expansion of facilities (including
Willow Grove, PA, Singapore and Israel), purchase of equipment necessary to
expand capacity, and investment in a new global management information
system. Relocation of facilities in Singapore and Israel is not expected to
have a material adverse effect on the Company's results of operation, cash
flow or liquidity.
In addition, the Company has signed a memorandum of understanding and 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 manufacturers. This 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.
The Company maintains a $10.0 million unsecured revolving bank credit
facility, 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 1996. This credit line will expire on
March 29, 1996, unless renewed. The Company intends to renew this credit
line.
A significant portion of the Company's cash and investments are attributable
to undistributed earnings of its foreign subsidiaries. Deferred income taxes
have not been provided on that portion of such undistributed earnings which
is considered indefinitely reinvested in the foreign operations. If such
funds were required to be repatriated to fund the Company's operations or
other financial obligations, additional income tax expenses could be required
to be recognized. The amended Gold Supply Agreement dated October 2, 1995
between AFW and its subsidiaries (collectively, the "AFW Companies") and
their gold supplier contains certain financial covenants and prohibits the
AFW Companies from paying any dividends or making any distributions without
the consent of the supplier if, following any such dividend or distribution,
the net worth of the AFW Companies would be less than $7.0 million.
<PAGE>15
The Company believes that anticipated cash flows from operations, its working
capital and amounts available under its revolving credit facility will be
sufficient to meet the Company's liquidity and capital requirements for at
least the next 12 months, including debt service requirements under its bank
term credit facility. The Company may, however, seek additional equity or
additional or replacement debt financing to provide capital for corporate
purposes and/or 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.
PART II. OTHER INFORMATION.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8 - K
On October 6, 1995, the Company filed a Form 8-K dated October 2, 1995,
reporting as Item 2, the consummation of the AFW acquisition.
On October 26, 1995, the Company filed Amendment 1 to the Form 8-K dated
September 14, 1995, to revise certain previously filed financial information.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
KULICKE AND SOFFA INDUSTRIES, INC.
Date: February 14, 1996 /s/ Clifford G. Sprague
______________________________________
Clifford G. Sprague
Senior Vice President,
Chief Financial Officer and
Chief Accounting Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-END> DEC-31-1995
<CASH> 36,291
<SECURITIES> 10,124
<RECEIVABLES> 96,057
<ALLOWANCES> 0
<INVENTORY> 47,013
<CURRENT-ASSETS> 192,696
<PP&E> 31,832
<DEPRECIATION> 0
<TOTAL-ASSETS> 272,921
<CURRENT-LIABILITIES> 120,331
<BONDS> 0
0
0
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</TABLE>
