SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended JUNE 30, 1997
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to .
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Commission File No. 0-121
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KULICKE AND SOFFA INDUSTRIES, INC.
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(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
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(Address of principal executive offices) (Zip code)
(215) 784-6000
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(Registrant's telephone number, including area code)
Indicate by check mark whether registrant (1) has filed all
reports required to be filed by section 13 or 15 (d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
----- -----
As of August 4, 1997, there were 23,201,179 shares of the
Registrant's Common Stock, Without Par Value outstanding.
<PAGE>
FORM 10 - Q JUNE 30, 1997
INDEX
Page No.
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PART I. FINANCIAL INFORMATION:
Item 1. FINANCIAL STATEMENTS
Consolidated Balance Sheet -
June 30, 1997 and September 30, 1996 3
Consolidated Statement of Operations -
Three and Nine Months Ended June 30, 1997
and 1996 4
Consolidated Condensed Statement of Cash Flows -
Nine Months Ended June 30, 1997 and 1996 5
Notes to Consolidated Financial Statements 6 - 7
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS. 8 - 14
PART II. OTHER INFORMATION:
Item 6. EXHIBITS AND REPORTS ON FORM 8 - K. 15
Signatures. 15
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
KULICKE AND SOFFA INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEET
(in thousands)
(unaudited)
June 30, September 30,
1997 1996
ASSETS -------- ---------
CURRENT ASSETS:
Cash and cash equivalents $ 81,830 $ 45,344
Short-term investments 8,201 13,078
Accounts and notes receivable, net 111,561 47,456
Inventories, net 40,453 44,519
Prepaid expenses and other current assets 4,609 4,277
Refundable income taxes -- 6,212
Deferred income taxes 1,144 1,765
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TOTAL CURRENT ASSETS 247,798 162,651
Property, plant and equipment, net 43,816 41,143
Intangible assets, primarily goodwill, net 43,274 42,049
Long-term investments -- 449
Investments in and loans to joint venture 12,246 1,556
Other assets 2,222 1,706
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TOTAL ASSETS $349,356 $249,554
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Debt due within one year $ 749 $ 491
Accounts payable to suppliers and others 40,286 23,032
Accrued expenses 22,366 18,389
Estimated income taxes payable 9,256 6,935
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TOTAL CURRENT LIABILITIES 72,657 48,847
Long-term debt 388 50,712
Other liabilities 2,515 2,506
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TOTAL LIABILITIES 75,560 102,065
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Commitments and contingencies -- --
SHAREHOLDERS' EQUITY:
Common stock, without par value 151,706 48,733
Retained earnings 124,335 101,085
Cumulative translation adjustment (2,245) (2,329)
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TOTAL SHAREHOLDERS' EQUITY 273,796 147,489
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $349,356 $249,554
======= =======
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
KULICKE AND SOFFA INDUSTRIES, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(in thousands, except per share data)
(unaudited)
Three months Nine months
ended June 30, ended June 30,
---------------- -----------------
1997 1996 1997 1996
------- ------- ------- -------
Net sales $146,380 $76,912 $349,715 $319,475
Cost of goods sold 92,544 49,111 221,863 194,101
------- ------ ------- -------
Gross profit 53,836 27,801 127,852 125,374
Selling, general and
administrative 22,527 18,192 57,490 53,436
Research and development, net 11,408 12,937 33,873 36,368
------- ------ ------- -------
Income (loss) from operations 19,901 (3,328) 36,489 35,570
Interest income 710 822 1,972 2,391
Interest expense (548) (806) (2,267) (2,507)
Equity in loss of joint venture (1,963) (192) (4,592) (240)
Other expense -- -- -- (630)
------- ------ ------- -------
Income (loss) before income taxes 18,100 (3,504) 31,602 34,584
Income tax provision (benefit) 4,571 (1,016) 8,352 10,030
------- ------ ------- -------
Net income (loss) $ 13,529 ($2,488) $ 23,250 $ 24,554
======= ====== ======= =======
Net income (loss) per share,
primary and fully diluted $0.62 ($0.13) $1.12 $1.24
===== ===== ===== =====
Weighted average shares
outstanding, primary and
fully diluted 21,810 19,798 20,732 19,836
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
KULICKE AND SOFFA INDUSTRIES, INC.
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
(in thousands)
(unaudited)
Nine months ended June 30,
1997 1996
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 23,250 $ 24,554
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 8,518 7,082
Deferred taxes on income 621 --
Equity loss in joint venture 4,592 240
Changes in other components of working
capital (35,733) 7,051
Collection of refundable income taxes 6,212 --
Other, net 436 (79)
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Net cash provided by operating activities 7,896 38,848
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INVESTING ACTIVITIES:
Purchase of net assets of Semitec in 1997;
AFW in 1996; net of cash acquired (4,510) (42,781)
Purchases of investments classified as
available for sale (4,163) (16,571)
Maturities of investments classified as
available for sale 9,460 19,200
Maturities of investments classified as
held-to-maturity 29 505
Purchases of property, plant and equipment (8,989) (14,532)
Investments in and loans to joint venture (15,282) (2,550)
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Net cash used by investing activities (23,455) (56,729)
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FINANCING ACTIVITIES:
Proceeds from issuances of common stock 102,973 225
Proceeds from borrowings -- 50,000
Payments on borrowings (50,523) (8,458)
Payments on capital leases (405) --
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Net cash provided by financing activities 52,045 41,767
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Effect of exchange rate changes on cash -- 11
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Change in cash and cash equivalents 36,486 23,897
Cash and cash equivalents at beginning
of year 45,344 28,624
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Cash and cash equivalents at end of period $ 81,830 $ 52,521
======= =======
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
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
June 30, 1997 and September 30, 1996, and the results of its
operations and its cash flows for the three and nine month periods
ended June 30, 1997 and 1996. 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, 1996.
NOTE 2 - INVENTORY
June 30, September 30,
1997 1996
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Raw materials and supplies $24,246 $29,985
Work in process 10,772 9,862
Finished goods 16,549 16,427
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51,567 56,274
Inventory reserves (11,114) (11,755)
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$40,453 $44,519
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NOTE 3 - COMMON STOCK
In May 1997, the Company completed the sale of 3,450,000 shares of
its common stock in an underwritten offering, resulting in net
proceeds to the Company approximating $101.1 million. A portion
of these proceeds were used to repay the $50.0 million outstanding
balance on the Company's existing bank revolving credit facility,
and approximately $4.5 million of a $4.7 million obligation
related to the October 1996 Semitec acquisition.
<PAGE>
NOTE 4 - OPERATING RESULTS BY BUSINESS SEGMENT
Operating results by business segment for the nine month periods
ended June 30, 1997 and 1996 were as follows:
Packaging Corporate
Nine months ended Equipment Materials and
June 30, 1997: Segment Segment Eliminations Total
--------- --------- ------------ --------
Net sales $270,007 $ 79,708 $349,715
Cost of goods sold 156,823 65,040 221,863
------- ------- -------
Gross profit 113,184 14,668 127,852
Operating costs 70,280 15,403 $ 5,680 91,363
------- ------- ------ -------
Income (loss) from
operations $ 42,904 ($735) ($5,680) $ 36,489
======= ======= ====== =======
Packaging Corporate
Nine months ended Equipment Materials and
June 30, 1996: Segment Segment Eliminations Total
--------- --------- ------------ --------
Net sales $247,839 $ 71,636 $319,475
Cost of goods sold 137,950 56,151 194,101
------- ------- -------
Gross profit 109,889 15,485 125,374
Operating costs 73,206 10,660 $ 5,938 89,804
------- ------- ------ -------
Income from
operations $ 36,683 $ 4,825 ($5,938) $ 35,570
======= ======= ====== =======
Intersegment sales are immaterial.
NOTE 5 - RECLASSIFICATIONS
Certain amounts in the Company's prior year financial statements
have been reclassified to conform to their presentation in the
Company's fiscal 1997 financial statements.
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
INTRODUCTION
The Company's operating results primarily depend upon the capital
expenditures of semiconductor manufacturers and subcontract
assemblers worldwide which, in turn, depend on the current and
anticipated market demand for semiconductors. The Company does not
consider its business to be seasonal in nature. The semiconductor
industry has historically been volatile and experienced periodic
slowdowns which have had a severe negative effect on the
semiconductor industry's demand for capital equipment, including
assembly equipment manufactured and sold by the Company and, to a
lesser extent, packaging materials such as those sold by the
Company. These slowdowns have also adversely affected the
Company's operating results. The Company believes that such
volatility will continue to characterize the industry and the
Company's operations in the future.
A significant portion of the Company's revenue is derived from
sales of a relatively small number of machines, most with selling
prices ranging from $60,000 to over $375,000. A delay in the
shipment of a limited quantity of machines, either due to
manufacturing delays, which occur from time to time, or to
rescheduling or cancellations of customer orders, could have a
material adverse effect on the results of the operations for any
particular quarter.
RESULTS OF OPERATIONS - Three and Nine Month Periods Ended June
30, 1997 and June 30, 1996.
Demand for semiconductor assembly equipment declined throughout
fiscal 1996. In fiscal 1997, the Company saw a resurgence in
demand for its products, principally its automatic wire bonders.
Fiscal 1997 third quarter bookings totaled $151.0 million, which
represented a $13.0 million improvement over the $138.0 million
booked during the fiscal 1997 second quarter. For the nine-month
period ended June 30, 1997, the Company recorded bookings totaling
$394.0 million, compared to $292.0 million booked during the same
period in fiscal 1996. The backlog of customer orders totaled
$115.0 million at June 30, 1997 compared to $65.0 million at June
30 1996. 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 three-month period ended June 30, 1997 totaled
$146.4 million compared to $76.9 million for the third quarter of
fiscal 1996. Equipment segment sales increased approximately $62.2
million to $117.7 million for the fiscal 1997 third quarter
compared to $55.5 million for the third quarter of fiscal 1996.
Increased unit sales of equipment, primarily of the Company's
Model 1488 plus ball bonders, offset in part by lower average
selling prices and reduced sales of upgrade kits and accessories
in fiscal 1997, were the primary reasons for the increase.
Packaging materials segment sales totaled $28.7 million for the
fiscal 1997 third quarter, reflecting an increase of approximately
<PAGE>
$7.3 million over the $21.4 million reported for the fiscal 1996
third quarter. This improvement resulted from increased volumes of
gold and aluminum wire sales, higher unit volume of Micro-Swiss
products, and approximately $1.4 million in incremental sales
attributable to the October 1, 1996 acquisition of the Semitec
business. These increases were offset in part by lower gold
prices.
For the nine-month period ended June 30, 1997, net sales totaled
$349.7 million, or $30.2 million higher than the $319.5 million
reported for the fiscal 1996 nine-month period.
Equipment segment net sales increased by $22.2 million to $270.0
million for the fiscal 1997 nine-month period. Increased sales of
automatic wire bonders contributed $36.9 million of incremental
revenues during the nine months ended June 30, 1997, but were
offset, in part, by a decline in sales of machine upgrade kits and
accessories and reduced unit sales of the Model SP2100 Tab
machines compared to the first nine months of fiscal 1996.
Sales of packaging materials products increased by $8.1 million to
$79.7 million for the first nine months of fiscal 1997 compared to
$71.6 million for the same period in fiscal 1996. This increase
resulted primarily from incremental sales following the October
1996 Semitec acquisition totaling $4.5 million, and increased gold
and aluminum wire sales volumes. Higher wire sales volumes were
offset in part by lower average gold prices and lower pricing on
certain aluminum wire sales in fiscal 1997 compared to fiscal
1996.
Gross profit as a percentage of net sales was 36.8% in the fiscal
1997 third quarter compared to 36.1% during the fiscal 1996 third
quarter. The fiscal 1997 improvement resulted from a shift in the
overall mix of product sales from lower margin packaging materials
to higher margin equipment products, as set forth below.
Three
months ended
June 30,
--------------
1997 1996
------ ------
Equipment segment 80.4% 72.2%
Packaging materials
segment 19.6% 27.8%
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Total net sales 100.0% 100.0%
====== ======
The equipment segment gross profit margin decreased to 41.2% in
the fiscal 1997 third quarter from 42.3% for the same period last
year. Lower average selling prices on gold ball wire bonders and
reduced unit sales of higher margin upgrade kits and accessories
compared to fiscal 1996 third quarter levels more than offset the
favorable manufacturing overhead absorption from higher fiscal
1997 unit volume of automatic wire bonders.
The packaging materials segment gross profit margin declined to
18.6% in the fiscal 1997 third quarter compared to 20.1% for the
<PAGE>
same period last year. A shift in sales mix to lower margin wire
products and lower pricing on certain aluminum wire sales in
fiscal 1997 were the primary reasons for this decline.
For the nine month period ended June 30, 1997, gross profit as a
percentage of net sales totaled 36.6% compared to 39.2% for the
same period last year.
Equipment segment gross profit margin declined to 41.9% for the
nine months ended June 30, 1997 compared to 44.3% for the same
period last year, primarily reflecting a shift in the product mix,
as lower margin ball bonders increased from 45% of equipment
segment revenues in fiscal 1996 to 76% in fiscal 1997.
The packaging materials segment gross profit margin dropped to
18.4% for the nine month period ended June 30, 1997 from 21.6% for
the same period last year due to a shift in product mix from
higher margin expendable tools to lower margin wire products, and
to costs associated with the relocation of the Micro-Swiss
manufacturing facility and excess manufacturing capacity of Micro-
Swiss during the first half of fiscal 1997.
Selling, general and administrative ("SG&A") expenses totaled
$22.5 million for the third quarter of fiscal 1997 compared to
$18.2 million for the same period in fiscal 1996. This increase
primarily resulted from approximately $2.6 million in management
and sales incentive costs and company-wide success sharing
accruals associated with the improved fiscal 1997 profitability, a
bad debt charge of $1.0 million in the fiscal 1997 third quarter,
and incremental operating costs associated with the acquired
Semitec business.
For the nine months ended June 30 1997, SG&A costs increased to
$57.5 million compared to $53.4 million for the same period last
year. In addition to incremental management and sales incentive
compensation and success sharing costs associated with improved
fiscal 1997 profitability, fiscal 1997 SG&A included incremental
costs resulting from the October 1996 Semitec acquisition. Fiscal
1997 SG&A costs also included charges approximating $1.1 million
in the packaging materials segment for the February 1997
relocation by Micro-Swiss to its new facility in Israel, the
relocation of AFW's administrative offices in Singapore and
severance due to management and other personnel changes at Micro-
Swiss. These increases were offset in part by certain equipment
segment and corporate cost savings resulting from August 1996 cost
reduction initiatives.
Net research and development ("R&D") costs declined approximately
$1.5 million to $11.4 million during the third quarter of fiscal
1997 compared to $12.9 million for the fiscal 1996 third quarter.
R&D costs decreased to $33.9 million in the first nine months of
fiscal 1997 compared to $36.4 million for the same period in
fiscal 1996. The decline in fiscal 1997 R&D spending generally
reflected reduced outside contract development costs and lower
expenditures for prototype materials as the Company nears
completion of development and market introduction of the 8000
series wire bonders.
<PAGE>
Income from operations for the fiscal 1997 third quarter totaled
$19.9 million compared to an operating loss of $3.3 million for
the same period last year due to the factors discussed above.
Equipment segment operating income increased to $22.1 million for
the fiscal 1997 third quarter from an operating loss of $1.8
million for the comparable period of fiscal 1996, while the
packaging materials segment operating income totaled $204,000
during the fiscal 1997 third quarter compared to $646,000 for the
same period last year.
Operating income totaled $36.5 million for the first nine months
of fiscal 1997 compared to $35.6 million for the same period in
fiscal 1996 due to the factors discussed above. The equipment
segment operating income increased to $42.9 million in fiscal 1997
from $36.7 million in fiscal 1996, and the packaging materials
segment experienced an operating loss of $735,000 for the first
nine months of fiscal 1997 compared to operating income of $4.8
million for the same period last year.
Interest expense incurred during the nine months of fiscal 1997
resulted from borrowings under the Company's $50.0 million
revolving credit facility to fund the October 1995 acquisition of
AFW and the $4.7 million obligation incurred in connection with
the October 1996 acquisition of Semitec. These borrowings were
repaid with proceeds from the May 1997 public offering of common
stock. Interest income during the first nine months of fiscal 1997
was lower than the comparable period of the prior fiscal year
primarily due to interest earned on a note receivable from a
customer in fiscal 1996.
In February 1996, the Company entered into a joint venture
agreement with Delco Electronics Corporation ("Delco") to operate
Flip Chip Technologies, L.L.C. ("FCT"). FCT was formed to provide
wafer bumping services on a contract basis and to license related
technologies. The $2.0 million loss for the fiscal 1997 third
quarter and $4.6 million loss for the fiscal 1997 nine-month
period reflect the Company's 51% equity interest in FCT's
operating results for the periods. The increase in the fiscal 1997
losses for the third quarter and nine-month periods over the
amounts reported for the comparable periods in fiscal 1996
reflected the effect of FCT's limited start-up activities during
the fiscal 1996 third quarter compared to a full quarter and nine
months of FCT's operating activities in fiscal 1997. FCT has
recently completed construction of its manufacturing facility in
Phoenix, Arizona and is currently working with its customers to
have its manufacturing process qualified. This qualification
process is expected to continue into early fiscal 1998. The
Company expects its share of FCT's loss for the fourth quarter of
fiscal 1997 will approximate the $2.0 million recognized during
the fiscal 1997 third quarter.
Non-operating costs during the nine-month period ended June 30,
1996 included the write-off of $630,000 of costs incurred in
connection with a proposed public offering of the Company's common
stock.
The fiscal 1997 effective tax rate is expected to approximate 26%.
The fiscal 1996 effective tax rate was 24%, due largely to the
loss reported in the fiscal fourth quarter which was primarily
<PAGE>
attributable to the Company's United States-based operations.
COMPANY OUTLOOK
Certain of the information set forth below and elsewhere in this
report contains forward looking statements that are subject to
certain risks and uncertainties that could cause actual results to
materially differ from those set forth in the forward looking
statements. These risks and uncertainties include, but are not
limited to, the following: the risk of volatile demand in the
semiconductor industry; the deferral or possible cancellation of
existing customer orders; the timing, development, introduction
and acceptance of new products and enhancements to existing
products; the Company's ability to manufacture and ship its
products on a timely basis; competitive pricing pressures; the
risk that certain customers may adopt alternate semiconductor
assembly processes; and international political and other
developments which could impact foreign operations. Reference is
made to a more detailed discussion of the Company's business in
its Annual Report on Form 10-K for the fiscal year ended September
30, 1996, other Company reports filed with the Securities and
Exchange Commission, and "Risk Factors" and other sections of the
Company's Registration Statement on Form S-3 (File No. 33-69734).
Demand for the Company's products continued to increase during the
third quarter of fiscal 1997 compared to the first and second
quarters of the fiscal year. The Company currently expects this
renewed strength in demand, particularly for the Company's
automatic wire bonders, to continue for the remainder of the 1997
fiscal year.
The Company is in the process of developing a new generation of
wire bonders, the 8000 family, which is based on an entirely new
platform and requires the development of new software and many
subassemblies not part of the Company's current wire bonders. The
Company has begun receiving customer orders for the Model 8020
ball bonder and Model 8060 wedge bonder. Shipments of production
versions of the Model 8060 are expected to commence in the fiscal
1997 fourth quarter and in early fiscal 1998 for the Model 8020.
Development and technical risks exist in all of the Company's R&D
projects and have the potential to delay the introduction of new
products. No assurance can be given that the introduction of the
8000 family of products will not be delayed due to technical or
other difficulties. The Company may also incur substantial costs
during the customer evaluation and qualification process to ensure
the functionality and reliability of the 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 plus 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 and increased risk of inventory obsolescence.
There can be no assurance that the Company will successfully
develop and manufacture new products, including the Model 8020,
<PAGE>
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 could materially adversely affect the Company's
business, financial condition and operating results.
LIQUIDITY AND CAPITAL RESOURCES
During the past three fiscal years and the nine-month period ended
June 30, 1997, the Company has financed its operations principally
through cash flows from operating activities, while its
acquisitions of AFW in October 1995 and Semitec in October 1996
were financed with borrowings. The Company's May 1997 public
offering of common stock resulted in net proceeds to the Company
of approximately $101.1 million. A portion of the proceeds from
this offering were used to repay substantially all of the
Company's outstanding borrowings.
Cash generated by operating activities totaled $7.9 million during
the first nine months of fiscal 1997 compared to $38.8 million
during the first nine months of fiscal 1996. Cash and total
investments increased to $90.0 million at June 30, 1997 from the
$58.9 million at September 30, 1996. Reduced cash flows from
operating activities in the first nine months of fiscal 1997 as
compared to the same period of fiscal 1996 largely resulted from
increases in other elements of working capital, primarily accounts
receivable, in fiscal 1997. The increase in cash and total
investments principally reflects public offering proceeds after
repayment of outstanding borrowings.
At June 30, 1997, working capital increased to $175.1 million
compared to $113.8 million at September 30, 1996. The accounts
receivable balance at June 30, 1997 increased by $64.1 million
compared to the September 30, 1996 balance. This increase resulted
largely from the higher sales volume in the fiscal 1997 third
quarter compared to the fiscal 1996 fourth quarter. Inventory
decreased by $4.0 million at June 30, 1997, primarily due to the
effect of higher sales in fiscal 1997 and the Company's efforts to
more effectively manage inventory levels in light of anticipated
product transitions later in calendar 1997.
Trade accounts payable and accrued expenses increased by
approximately $21.2 million at June 30, 1997 compared to their
September 30, 1996 balances. The increase primarily reflects the
effect of increased inventory purchases on trade accounts payable
as a result of the higher customer order rate, and higher accruals
for incentive compensation due to the Company's higher
profitability level in fiscal 1997.
During the first nine months of fiscal 1997, the Company invested
approximately $9.0 million in property and equipment, primarily to
complete the construction of its Micro-Swiss manufacturing
facility in Yokneam, Israel and to upgrade equipment used in the
Company's manufacturing and R&D activities. The Company presently
expects fiscal 1997 capital spending will not exceed $16.0
million. The Company's principal capital projects during fiscal
1997 included the purchase of tooling and equipment necessary for
the manufacture of new products, including the 8000 family of wire
bonders, relocation of its Singapore-based AFW manufacturing
<PAGE>
operation to a new location scheduled to occur in late calendar
1997, the purchase of equipment necessary to expand manufacturing
capacity primarily in the United States and Israel, and continued
investments in a new global management information system.
Relocation of AFW's Singapore manufacturing operation to a new
facility in Singapore is not expected to have a material adverse
effect on the Company's results of operations, cash flows or
liquidity.
Pursuant to terms of the FCT joint venture agreement, the Company
is obligated to make capital contributions up to an aggregate of
$16.8 million, all of which had been funded through June 30, 1997.
In addition, the Company has agreed to loan FCT an additional $5.0
million, of which $1.0 million was loaned during June 1997. The
Company may agree to provide additional capital contributions
and/or loans to FCT in the future.
A significant portion of the Company's consolidated earnings are
attributable to undistributed earnings of certain of its foreign
subsidiaries. Deferred income taxes have not been provided on that
portion of undistributed foreign earnings which is expected to be
indefinitely reinvested in foreign operations. If funds were
required to be repatriated to fund the Company's operations or
other financial obligations, substantial additional United States
federal income tax expense could be required to be recognized.
The Company has a $10.0 million revolving credit facility expiring
February 28, 1998 and a $50.0 million revolving credit facility
expiring March 30, 2001. There were no borrowings under the $10.0
million credit line during fiscal 1996 or the first nine months of
fiscal 1997. The Company repaid the $50.0 million outstanding
under its revolving credit facility, which was used for the AFW
acquisition, with proceeds of the May 1997 public offering.
The Company believes that anticipated cash flows from operations,
its working capital and amounts available under its revolving
credit facilities will be sufficient to meet the Company's
liquidity and capital requirements for at least the next 12
months, including any capital contributions and possible loans to
FCT. The Company may, however, seek equity or 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
potential capital requirements cannot be 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.
<PAGE>
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
No Reports on Form 8-K were filed during the quarter
to which this Report relates.
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
KULICKE AND SOFFA INDUSTRIES, INC.
Date: August 8, 1997 By: /s/ Clifford G. Sprague
-------------------------------
Clifford G. Sprague
Senior Vice President,
Chief Financial Officer
(Principal Financial Officer)
By: /s/ Curtis A. Massey
-------------------------------
Curtis A. Massey
Vice President,
Corporate Controller
(Principal Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> JUN-30-1997
<CASH> 81,830
<SECURITIES> 8,201
<RECEIVABLES> 111,561
<ALLOWANCES> 0
<INVENTORY> 40,453
<CURRENT-ASSETS> 247,798
<PP&E> 43,816
<DEPRECIATION> 0
<TOTAL-ASSETS> 349,356
<CURRENT-LIABILITIES> 72,657
<BONDS> 388
0
0
<COMMON> 151,706
<OTHER-SE> 122,090
<TOTAL-LIABILITY-AND-EQUITY> 349,356
<SALES> 349,715
<TOTAL-REVENUES> 349,715
<CGS> 221,863
<TOTAL-COSTS> 221,863
<OTHER-EXPENSES> 91,363
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,267
<INCOME-PRETAX> 31,602
<INCOME-TAX> 8,352
<INCOME-CONTINUING> 23,250
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 23,250
<EPS-PRIMARY> 1.12
<EPS-DILUTED> 1.12
</TABLE>
