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 MARCH 31, 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
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(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 April 28, 1997, there were 19,646,307 shares of the
Registrant's Common Stock, Without Par Value outstanding.
<PAGE>
KULICKE AND SOFFA INDUSTRIES, INC.
FORM 10 - Q MARCH 31, 1997
INDEX
Page No.
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PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS.
Consolidated Balance Sheet -
March 31, 1997 and September 30, 1996 3
Consolidated Income Statement -
Three and Six Months Ended March 31, 1997
and 1996 4
Consolidated Condensed Statement of Cash Flows -
Six Months Ended March 31, 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 - 13
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK 14
PART II. OTHER INFORMATION
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. 14
Item 6. EXHIBITS AND REPORTS ON FORM 8-K. 14
Signatures. 14
<PAGE>
PART I. FINANCIAL INFORMATION.
Item 1. Financial Statements.
KULICKE AND SOFFA INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEET
(in thousands)
(unaudited)
March 31, September 30,
1997 1996
ASSETS ----------- ------------
CURRENT ASSETS:
Cash and cash equivalents $ 30,320 $ 45,344
Short-term investments 10,404 13,078
Accounts and notes receivable, net 92,017 47,456
Inventories, net 40,486 44,519
Prepaid expenses and other current assets 4,205 4,277
Refundable income taxes -- 6,212
Deferred income taxes 2,443 1,765
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TOTAL CURRENT ASSETS 179,875 162,651
Property, plant and equipment, net 44,392 41,143
Intangible assets, primarily goodwill, net 43,873 42,049
Long-term investments -- 449
Investment in joint venture 12,444 1,556
Other assets 2,302 1,706
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TOTAL ASSETS $282,886 $249,554
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt $ 5,196 $ 491
Accounts payable 39,373 23,032
Accrued expenses 20,371 18,389
Income taxes payable 6,894 6,935
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TOTAL CURRENT LIABILITIES 71,834 48,847
Long-term debt 50,553 50,712
Other liabilities 2,413 2,506
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TOTAL LIABILITIES 124,800 102,065
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Commitments and contingencies -- --
SHAREHOLDERS' EQUITY:
Common stock, without par value 50,338 48,733
Retained earnings 110,806 101,085
Treasury stock (216) --
Cumulative translation adjustment (2,842) (2,329)
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TOTAL SHAREHOLDERS' EQUITY 158,086 147,489
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $282,886 $249,554
======= =======
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
KULICKE AND SOFFA INDUSTRIES, INC.
CONSOLIDATED INCOME STATEMENT
(in thousands, except per share data)
(unaudited)
Three months Six months
ended March 31, ended March 31,
------------------- -------------------
1997 1996 1997 1996
-------- -------- -------- --------
Net sales $121,491 $115,374 $203,335 $242,563
Cost of goods sold 76,256 69,877 129,319 144,990
------- ------- ------- -------
Gross Profit 45,235 45,497 74,016 97,573
Selling, general and
administrative 18,736 18,256 34,963 35,244
Research and development,
net 11,772 12,155 22,465 23,431
------- ------- ------- -------
Income from operations 14,727 15,086 16,588 38,898
Interest income 588 860 1,262 1,569
Interest expense (865) (820) (1,719) (1,701)
Equity in loss of
joint venture (1,546) (48) (2,629) (48)
Other expense -- -- -- (630)
------- ------- ------- -------
Income before income taxes 12,904 15,078 13,502 38,088
Provision for income taxes 3,602 4,373 3,781 11,046
------- ------- ------- -------
Net income $ 9,302 $ 10,705 $ 9,721 $ 27,042
======= ======= ======= =======
Net income per share,
primary and fully diluted $0.46 $0.54 $0.48 $1.36
==== ==== ==== ====
Weighted average shares
outstanding, primary and
fully diluted 20,160 19,831 20,072 19,854
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)
Six months ended March 31,
1997 1996
------ ------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 9,721 $27,042
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 5,563 4,577
Deferred income taxes (678) 160
Equity in loss of joint venture 2,629 48
Changes in other components of working
capital, net of acquisitions of businesses (14,955) (15,940)
Other changes, net (901) 1,019
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Net cash provided by operating activities 1,379 16,906
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CASH FLOWS FROM INVESTING ACTIVITIES:
Cash portion of AFW purchase price,
less cash acquired -- (41,778)
Purchases of property, plant and equipment (6,837) (7,876)
Purchases of short-term investments
classified as available-for-sale (4,069) (13,028)
Proceeds from sales of short-term
investments classified as
available-for-sale 7,163 10,692
Proceeds from maturities of debt
securities held-to-maturity 29 505
Investment in joint venture (13,515) (510)
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Net cash used by investing
activities (17,229) (51,995)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings -- 50,000
Repayment of borrowings and capital
lease obligations (595) (8,142)
Proceeds from exercise of stock options 1,389 103
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Net cash provided by financing activities 794 41,961
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Effect of exchange rate changes on cash 32 (22)
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Change in cash and cash equivalents (15,024) 6,850
Cash and cash equivalents at beginning of
period 45,344 28,624
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Cash and cash equivalents at end of period $30,320 $35,474
====== ======
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 March 31, 1997 and September 30, 1996,
and the results of its operations and its cash flows for the three and six
month periods ended March 31, 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
March 31, September 30,
1997 1996
------ ------
Finished goods $29,139 $29,985
Work in process 11,893 9,862
Raw materials and supplies 11,705 16,427
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52,737 56,274
Inventory reserves (12,251) (11,755)
------ ------
$40,486 $44,519
====== ======
NOTE 3 - DEBT OBLIGATIONS
On February 28, 1997, the Company renewed its $10.0 million unsecured
revolving credit facility for a term of one year.
NOTE 4 - RECENT ACCOUNTING PRONOUNCEMENTS
In February 1997, Statement of Financial Accounting Standards No. 128,
"Earnings Per Share" ("SFAS 128"), was issued. The statement specifies the
computation, presentation, and disclosure requirements for earnings per
share. The Company will implement SFAS 128 commencing with the first quarter
of fiscal 1998, at which time all earnings per share data for prior periods
will be restated to conform to the provisions of the statement. The principal
effect of SFAS 128 will be to replace the current "Primary income per share"
calculation with "Basic income per share."
<PAGE>
NOTE 5 - OPERATING RESULTS BY BUSINESS SEGMENT
Operating results by business segment for the six month periods ended March
31, 1997 and 1996 were as follows:
Packaging Corporate
Six months ended Equipment Materials and
March 31, 1997: Segment Segment Eliminations Total
--------- ---------- ------------ ---------
Net sales $152,322 $51,013 $203,335
Cost of goods sold 87,646 41,673 129,319
------- ------ -------
Gross profit 64,676 9,340 74,016
Operating costs 43,831 10,279 $3,318 57,428
------- ------ ----- -------
Operating income $ 20,845 ($ 939) ($3,318) $ 16,588
======= ====== ===== =======
Packaging Corporate
Six months ended Equipment Materials and
March 31, 1996: Segment Segment Eliminations Total
--------- ---------- ------------ --------
Net sales $192,307 $50,256 $242,563
Cost of goods sold 105,915 39,075 144,990
------- ------ -------
Gross profit 86,392 11,181 97,573
Operating costs 47,878 7,002 $3,795 58,675
------- ------ ----- -------
Operating income $ 38,514 $ 4,179 ($3,795) $ 38,898
======= ====== ===== =======
Intersegment sales are immaterial.
<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 Six Month Periods Ended March 31, 1997 and
March 31, 1996.
Demand for semiconductor assembly equipment declined throughout fiscal 1996.
In the first half of fiscal 1997, the Company saw a resurgence in demand for
its automatic wire bonders and recorded bookings totaling $243.0 million, or
$19.0 million higher than the $224.0 million booked during the comparable
period of the prior fiscal year. Fiscal 1997 second quarter bookings totaled
$138.0 million, which represented a $33.0 million improvement over the $105.0
million booked during the fiscal 1997 first quarter. The backlog of customer
orders increased by $17.0 million, or 18%, to $110.0 million at March 31,
1997 compared to $93.0 million at December 31, 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 March 31, 1997 totaled $121.5
million compared to $81.8 million during the fiscal 1997 first quarter and
$115.4 million during the second quarter of fiscal 1996. Equipment segment
sales increased approximately $7.0 million for the fiscal 1997 second quarter
over the amount for the comparable period last year, primarily from increased
unit shipments of the Company's Model 1488 turbo plus ball bonders. Packaging
materials segment sales for the fiscal 1997 second quarter, which included
$1.6 million in incremental sales following the October 1, 1996 acquisition
of the Semitec business, were approximately $909,000 lower than the same
period in the preceding year, primarily due to lower unit sales of Micro-
Swiss products and reduced gold wire sales as a result of lower gold prices.
For the six-month period ended March 31, 1997, net sales totaled $203.3
million, or $39.3 million lower than the $242.6 million reported for the
comparable fiscal 1996 period. This difference primarily reflected the
effect of the Company's highest sales level to date in the first quarter of
fiscal 1996 followed by the decline in the second quarter which continued for
<PAGE>
the balance of the 1996 fiscal year. Equipment segment revenues declined by
$40.0 million in the first half of fiscal 1997 compared to the same period of
the prior fiscal year, principally reflecting differences of approximately
$34.5 million attributable to reduced demand for the Company's machines,
primarily automatic wire bonders, and approximately $5.2 million related to
lower sales of machine accessories, upgrade kits and spare parts.
Specifically, shipments of 1488 turbo and plus ball bonders declined by 316
machines, or $26.3 million, and shipments of 1474 fp wedge bonders declined
by 10 machines, or $1.3 million from first half of fiscal 1996 levels. Sales
of packaging materials increased by $757,000 in the first half of fiscal 1997
from the corresponding period of the prior fiscal year, primarily reflecting
$3.2 million of incremental sales of Semitec which was acquired in October
1996, which was partially offset by a $2.6 million reduction in sales of
Micro-Swiss products. In addition, increased gold and aluminum wire sales
volumes were offset by lower gold prices and lower pricing on certain
aluminum wire sales in fiscal 1997.
Gross profit as a percentage of net sales was 37.2% in the fiscal 1997 second
quarter compared to 39.4% during the fiscal 1996 second quarter. This decline
resulted from reductions in both the equipment and packaging materials
segments' gross profit margins in fiscal 1997 compared to fiscal 1996.
Reduced sales of machine accessories and upgrade kits, which typically yield
higher gross margins than machine sales, were the primary cause for the lower
equipment segment gross margin in the fiscal 1997 second quarter compared to
the same period in fiscal 1996. The packaging materials segment's gross
profit margin declined primarily as a result of costs associated with the
February 1997 relocation of Micro-Swiss' manufacturing facility in Israel,
and excess manufacturing capacity to support anticipated Micro-Swiss sales
increases which did not materialize during the period. Also, a shift in
product mix and increased volume of lower gross margin wire sales in fiscal
1997 contributed to the packaging materials segment's fiscal 1997 second
quarter margin decline.
Gross profit as a percentage of net sales decreased to 36.4% in the first
half of fiscal 1997 compared to 40.2% during the same period of the prior
fiscal year. This decline reflects lower gross profit margins in both the
equipment and packaging materials segments and a shift in the overall mix of
product sales from higher margin equipment products to lower margin packaging
materials, due to the disproportionate decline in equipment sales, as set
forth below:
Six months ended
March 31,
----------------
1997 1996
------ ------
Equipment segment sales 74.9% 79.3%
Packaging materials segment sales 25.1% 20.7%
------ ------
Total net sales 100.0% 100.0%
====== ======
Equipment segment gross profit margin decreased to 42.5% from 44.9% primarily
due to reduced sales of machine accessories, upgrade kits and spare parts.
The packaging materials segment gross profit margin dropped to 18.3% from
22.2% due principally to costs associated with the relocation of the Micro-
Swiss manufacturing facility and excess manufacturing capacity of Micro-
Swiss, and to a shift in product mix from higher margin expendable tools to
lower margin wire products.
<PAGE>
Selling, general and administrative ("SG&A") expenses increased by $480,000
to $18.7 million in the fiscal 1997 second quarter compared to $18.3 million
for the same period in fiscal 1996. This increase included the effect of a
company-wide annual merit increase effective January 1997, incremental
operating costs associated with the acquired Semitec business, charges
approximating $1.1 million in the packaging materials segment for the
February 1997 relocation by Micro-Swiss to its new facility in Israel and the
relocation of AFW's administrative offices in Singapore, and severance due to
management and other personnel changes at Micro-Swiss. These increases were
largely offset by the continued savings from cost reduction measures
implemented in August 1996 in the equipment segment.
SG&A expenses totaled $35.0 million for the first half of fiscal 1997
compared to $35.2 million in the same period of the prior fiscal year,
reflecting lower equipment segment and corporate expenses resulting from cost
reduction initiatives implemented in August 1996. These savings were
partially offset by higher expenses in the packaging materials segment due to
incremental operating costs associated with the Semitec business, severance
and relocation related charges approximating $1.1 million in the packaging
materials segment and increased expense levels due to expansion of the
packaging materials marketing and distribution organizations.
Net research and development ("R&D") costs declined approximately $383,000
during the second quarter of fiscal 1997 compared to the fiscal 1996 second
quarter.
R&D costs decreased to $22.5 million in the first half of fiscal 1997
compared to $23.4 million for the same period of the prior fiscal year. The
decline in fiscal 1997 R&D spending was principally in the equipment segment,
and reflects reduced outside contract development costs and lower
expenditures for prototype materials. The Company continues to invest heavily
in the development of the 8000 Series wire bonders and the enhancement of
many of its existing products, including, but not limited to, the Model 1488
plus ball bonder to enable them to meet customer requirements for higher lead
count devices with finer pitch requirements at faster bonding speeds. The
Company also continues to invest in new technologies which may eventually
lead to improved and alternative semiconductor assembly technologies.
Income from operations for the fiscal 1997 second quarter totaled $14.7
million compared to $15.1 million for the same period last year. Equipment
segment operating income increased to $17.8 million from $15.2 million while
the packaging materials segment incurred an operating loss of $1.3 million in
the fiscal 1997 second quarter compared to operating income of $1.9 million
in same quarter of fiscal 1996.
Operating income totaled $16.6 million for the first half of fiscal 1997
compared to $38.9 million for the same period in fiscal 1996 due to the
factors discussed above. The equipment segment operating income declined from
$38.5 million in fiscal 1996 to $20.8 million in fiscal 1997, and the
packaging materials segment changed from $4.2 million operating income in
fiscal 1996 to a $939,000 operating loss in fiscal 1997.
Interest expense incurred during the first half 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.
Interest income during the first half of fiscal 1997 was lower than the same
period of the prior fiscal year primarily due to interest earned on a note
<PAGE>
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 $1.5 million loss for
the fiscal 1997 second quarter and $2.6 million loss for the fiscal 1997 six-
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
second quarter and six-month periods over the amounts reported for the
comparable periods in fiscal 1996 reflected the effect of only one month of
FCT's start-up activities in March 1996 compared to a full quarter and six
months of FCT's 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 through at
least fiscal 1997. The Company expects its share of FCT's loss for the
remainder of fiscal 1997 will exceed the $2.6 million recognized during the
first half of the year.
Non-operating costs during the six-month period ended March 31, 1996 included
the write-off of $630,000 of costs incurred in connection with a proposed
public offering of the Company's common stock.
Income before income taxes totaled $12.9 million for the fiscal 1997 second
quarter and $13.5 million for the fiscal 1997 six month period, due to the
factors enumerated previously.
The fiscal 1997 effective tax rate is expected to approximate 28%. The
fiscal 1996 effective tax rate was 24%, due largely to the loss reported in
the fiscal fourth quarter which was primarily 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 second
quarter of fiscal 1997 compared to the first quarter of the fiscal year. The
Company currently expects this renewed strength in demand, primarily for the
Company's automatic wire bonders, to continue throughout the fiscal year, and
has added a full second shift and a partial third shift to its Willow Grove
<PAGE>
manufacturing operations to satisfy customer delivery requirements.
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 first prequalification Model 8020 ball bonder (the
first production model of the 8000 family) was shipped to a customer in March
1996, and the first prequalification Model 8060 wedge bonder was shipped in
the first quarter of fiscal 1997. These products are presently being field
tested, and the Company currently expects that these products will be
released in the second half of calendar 1997. 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's inability to complete the
development of and introduce the 8000 family of products 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.
LIQUIDITY AND CAPITAL RESOURCES
During the past three fiscal years and the six-month period ended March 31,
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. Cash generated by
operating activities totaled $1.4 million during the first half of fiscal
1997 compared to $16.9 million during the first half of fiscal 1996. Cash and
total investments decreased to $40.7 million at March 31, 1997 from the $58.9
million at September 30, 1996. Reduced cash flows from operating activities
in the first half of fiscal 1997 as compared to the first half of fiscal 1996
primarily resulted from lower sales and profitability in the first half of
fiscal 1997.
At March 31, 1997, working capital decreased to $108.0 million compared to
$113.8 million at September 30, 1996. The accounts receivable balance at
March 31, 1997 increased by $44.6 million compared to the September 30, 1996
balance. This increase resulted from increased sales volume in the fiscal
1997 second quarter compared to the fiscal 1996 fourth quarter. Inventory
decreased by $4.0 million at March 31, 1997, primarily due to the effect of
higher sales in the first six months of 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 $18.3
million at March 31, 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.
During the first half of fiscal 1997, the Company invested approximately $6.8
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 to approximate
$18.0 million. The Company's principal capital projects planned for fiscal
1997 include the purchase of tooling and equipment necessary for the
manufacture of new products, including the 8000 family of wire bonders,
<PAGE>
relocation of its Singapore-based AFW manufacturing 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,
of which $16.1 million had been funded through March 31, 1997. In addition,
the Company has agreed to loan FCT an additional $5.0 million and 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 half of fiscal 1997. The Company has $50.0 million
outstanding under its revolving credit facility, which was used for the AFW
acquisition, and a $4.7 million obligation relating to the financing of the
Semitec acquisition. In February 1997, the Company filed a registration
statement with the Securities and Exchange Commission to register for sale to
the public 3,000,000 newly issued shares of common stock (and up to an
additional 450,000 shares, if the underwriters' overallotment option is
exercised in full). The Company intends to repay the $50.0 million
outstanding under the revolving credit facility expiring March 30, 2001 and
the $4.7 million Semitec obligation with the net proceeds of the public
offering. There can be no assurance that the public offering will be
consummated.
The Company believes that anticipated cash flows from operations, its working
capital and amounts expected to be 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>
Item 3. Quantitative and Qualitative Disclosure
About Market Risks.
Not applicable.
PART II. OTHER INFORMATION.
Item 4. Submission of Matters to a Vote of Security Holders.
The 1997 Annual Meeting of Shareholders of the Company was held on February
11, 1997. At this meeting, Messrs. Allison F. Page and C. William Zadel were
re-elected to the Board of Directors of the Company for terms expiring at the
2001 Annual Meeting. In such election, 17,809,681 votes were cast for Mr.
Page and Mr. Zadel. Under Pennsylvania law, votes cannot be cast against a
candidate. Proxies filed by the holders of 104,307 shares at the 1997 Annual
Meeting withheld authority to vote for Mr. Page and Mr. Zadel.
At the 1997 Annual Meeting, 17,803,405 shares were voted for ratification of
the reappointment of Price Waterhouse, L.L.P., as independent accountants of
the Company to serve until the 1998 Annual Meeting and 56,395 shares were
voted against such proposal. Proxies filed by the holders of 54,188 shares at
the 1997 Annual Meeting instructed the proxy holders to abstain from voting
on such proposal.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8 - K
None
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: April 29, 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)
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