FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark one)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended DECEMBER 31, 1997.
-------------------
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 of (IRS Employer
incorporation or organization) 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 6, 1998 there were 23,290,023 shares of the
Registrant's Common Stock, Without Par Value, outstanding.
<PAGE>
KULICKE AND SOFFA INDUSTRIES, INC.
FORM 10 - Q DECEMBER 31, 1997
INDEX
Page No.
--------
PART I. FINANCIAL INFORMATION:
ITEM 1. FINANCIAL STATEMENTS
Consolidated Balance Sheet -
December 31, 1997 and September 30, 1997 3
Consolidated Income Statement -
Three Months Ended December 31, 1997 and 1996 4
Consolidated Statement of Cash Flows -
Three Months Ended December 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
PART II. OTHER INFORMATION:
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS 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)
December 31, September 30,
1997 1997
ASSETS ------------ -------------
CURRENT ASSETS:
Cash and cash equivalents $ 70,215 $107,605
Short-term investments 33,594 7,982
Accounts receivable, net 98,099 105,103
Inventories, net 58,026 45,602
Prepaid expenses and other current assets 4,060 4,391
Deferred income taxes 2,022 1,521
------- -------
TOTAL CURRENT ASSETS 266,016 272,204
Property, plant and equipment, net 45,314 45,648
Intangible assets, primarily goodwill, net 42,126 42,724
Investments in and loans to joint venture 15,906 14,135
Other assets 2,034 2,108
------- -------
TOTAL ASSETS $371,396 $376,819
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Debt due within one year $ 540 $ 780
Accounts payable to suppliers and others 39,721 47,408
Accrued expenses 21,971 24,932
Income taxes payable 7,070 8,864
------- -------
TOTAL CURRENT LIABILITIES 69,302 81,984
Long-term debt 92 220
Other liabilities 3,104 2,688
------- -------
TOTAL LIABILITIES 72,498 84,892
------- -------
Commitments and contingencies -- --
SHAREHOLDERS' EQUITY:
Common stock, without par value 156,401 155,246
Retained earnings 146,228 139,404
Cumulative translation adjustment (3,731) (2,723)
------- -------
TOTAL SHAREHOLDERS' EQUITY 298,898 291,927
------- -------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $371,396 $376,819
======= =======
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 amounts)
(unaudited)
Three months ended
December 31,
----------------------
1997 1996
------- ------
Net sales $123,111 $81,844
Cost of goods sold 77,766 53,063
------- ------
Gross profit 45,345 28,781
Selling, general and
administrative 22,447 16,227
Research and development, net 12,268 10,693
------- ------
Income from operations 10,630 1,861
Interest income 1,394 674
Interest expense (47) (854)
Equity in loss of joint venture (2,229) (1,083)
------- ------
Income before income taxes 9,748 598
Income tax provision 2,924 179
------- ------
Net income $ 6,824 $ 419
======= ======
Net income per share:
Basic $0.29 $0.02
==== ====
Diluted $0.29 $0.02
==== ====
Weighted average shares outstanding:
Basic 23,247 19,453
Diluted 23,719 19,799
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
KULICKE AND SOFFA INDUSTRIES, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(in thousands)
(unaudited)
Three months ended
December 31,
----------------------
1997 1996
------- -------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 6,824 $ 419
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 2,966 2,707
Deferred income taxes (501) 125
Equity in loss of joint venture 2,229 1,083
Changes in other components of working
capital, excluding the effects
of acquisitions (17,531) (1,620)
Other changes, net 589 861
------- ------
Net cash provided by operating activities (5,424) 3,575
------- ------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment (3,141) (3,864)
Purchases of short-term investments classified
as available-for-sale (28,214) (3,927)
Proceeds from sales of short-term investments
classified as available-for-sale 2,602 6,523
Proceeds from maturities of debt securities
held-to-maturity -- 29
Investment in and loans to joint venture (4,000) (7,142)
------- ------
Net cash provided (used) by
investing activities (32,753) (8,381)
------- ------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of borrowings (368) (560)
Proceeds from exercise of stock options 1,155 17
------- ------
Net cash provided by financing activities 787 (543)
------- ------
Change in cash and cash equivalents (37,390) (5,349)
Cash and cash equivalents at beginning of
period 107,605 45,344
------- ------
Cash and cash equivalents at end of period $ 70,215 $39,995
======= ======
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 December 31, 1997 and September 30,
1997, and the results of its operations and its cash flows for the three
month periods ended December 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, 1997.
NOTE 2 - INVENTORY:
December 31, September 30,
1997 1997
------------ -------------
Raw materials and supplies $32,427 $28,237
Work in process 17,101 16,028
Finished goods 24,468 17,245
------ ------
73,996 61,510
Inventory reserves (15,970) (15,908)
------ ------
$58,026 $45,602
====== ======
NOTE 3 - EARNINGS PER SHARE
In the fiscal 1998 first quarter ended December 31, 1997, the Company adopted
Statement of Financial Accounting Standards No. 128, "Earnings Per Share,"
("SFAS 128"). All earnings per share amounts are reported in accordance with
SFAS 128.
NOTE 4 - FINANCIAL INFORMATION BY BUSINESS SEGMENT
The Company operates predominantly in two business segments, its equipment
segment which manufactures and sells semiconductor assembly equipment,
related spare parts and services, and its packaging materials segment which
manufactures a variety of packaging tools and materials used in the assembly
of semiconductor devices. Packaging materials products have different
manufacturing processes and distribution channels, and a less volatile
revenue pattern than the Company's capital equipment business.
In June 1997, the Financial Accounting Standards Board issued SFAS No. 131,
"Disclosures about Segments of an Enterprise and Related Information," which
revised disclosure requirements related to operating segments, products and
services, the geographic areas in which the Company operates, and major
customers. The Company adopted this Statement in the first quarter of fiscal
1998. There was no change in the basis of segmentation or in the measurement
<PAGE>
of segment profit and loss compared to the 1997 fiscal year as a result of
adoption of SFAS 131.
Operating results by business segment for the three month periods ended
December 31, 1997 and 1996 were as follows:
Packaging Corporate
Three months ended Equipment Materials and
December 31, 1997: Segment Segment Eliminations Total
- ------------------ --------- --------- ------------ --------
Net sales $93,938 $29,173 $123,111
Cost of goods sold 55,547 22,219 77,766
------ ------ -------
Gross profit 38,391 6,954 45,345
Operating costs 26,148 6,298 $ 2,269 34,715
------ ------ ----- -------
Operating income $12,243 $ 656 $(2,269) 10,630
====== ====== =====
Net interest income 1,347
Equity in loss of
joint venture (2,229)
-------
Income before taxes $ 9,748
=======
Identifiable assets at
December 31, 1997 $163,109 $88,572 $119,715 $371,396
======= ====== ======= =======
Three months ended
December 31, 1996:
- ------------------
Net sales $56,224 $25,620 $81,844
Cost of goods sold 32,349 20,714 53,063
------ ------ ------
Gross profit 23,875 4,906 28,781
Operating costs 20,828 4,529 $ 1,563 26,920
------ ------ ----- ------
Operating income $ 3,047 $ 377 $(1,563) 1,861
====== ====== =====
Net interest expense (180)
Equity in loss of
joint venture (1,083)
------
Income before taxes $ 598
======
Identifiable assets at
December 31, 1996 $111,863 $84,602 $58,092 $254,557
======= ====== ====== =======
Intersegment sales are immaterial. Corporate assets primarily include cash,
investments and the Company's equity investment in Flip Chip Technologies,
LLC ("FCT"). The increase in Corporate assets at December 31, 1997 compared
to December 31, 1996 is due principally to the increase in cash and
investments from net proceeds of the Company's May 1997 underwritten offering
of common stock.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Certain statements contained in this report are forward looking statements
and are subject to risks and uncertainties that could cause actual results to
differ materially. These risks and uncertainties include, but are not limited
to the following: the risks associated with a substantial foreign customer
base; the risks associated with recent instability in foreign capital markets
and foreign currency fluctuations; the upward and downward volatility in
demand for semiconductors and for the Company's products and services; the
risk of order postponements or cancellations; the Company's ability to
manufacture and ship its products on a timely basis; competitive pricing
pressures; the risk of delays in customer qualification of new products and
services; and the risk that certain customers may adopt alternate
semiconductor assembly processes. Reference is made to a more detailed
discussion of risk factors affecting the Company's business in other Company
reports filed with the Securities and Exchange Commission including the
Company's Annual Report on Form 10-K for the fiscal year ended September 30,
1997, and "Risk Factors" and other sections of the Company's Registration
Statement on Form S-3 (33-69734) filed in May 1997.
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 $400,000. 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 Company's results of operations for any particular
quarter.
The Company is in the process of transitioning to its new family of wire
bonders, the 8000 family, which is based on an entirely new platform and has
required the development of new software and many subassemblies not part of
the Company's current wire bonders. The first products in the 8000 family are
the Model 8020 ball bonder which will replace the Model 1488 plus, and the
Model 8060 wedge bonder which will replace the Model 1474fp. Sales of Model
8020 and 8060 wire bonders accounted for approximately 20% of automatic wire
bonder revenues during the fiscal 1998 first quarter. While development and
technical risks exist which have the potential to further affect the
transition to the 8000 family wire bonders, the Company expects the
transition to volume production and sales of Model 8020 and 8060 machines to
<PAGE>
continue through the first half of fiscal 1998.
The Company has incurred incremental costs to date and may incur substantial
additional costs during the customer evaluation and qualification process to
ensure the functionality and reliability of these new products. The Company's
inability to successfully qualify 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.
Furthermore, the transition to the Model 8020 and 8060 platforms involves
numerous risks, including the possibility that customers will defer
purchases of Model 1488 plus and 1474fp wire bonders in anticipation of the
availability of the Model 8020 or 8060, or that the Model 8020 or 8060 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 introduce and manufacture
new products, including the Model 8020 and 8060, 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.
RESULTS OF OPERATIONS - Three months ended December 31, 1997 compared to the
three months ended December 31, 1996.
Customer orders booked into backlog during the fiscal 1998 first quarter
totaled $136.0 million. While this amount is higher than the $105.0 million
booked in the comparable quarter last year, it is lower than the $155.0
million booked in the fiscal 1997 fourth quarter, primarily reflecting
reduced orders for assembly equipment, principally automatic ball bonders.
This decline is due, in part, to the ongoing financial turmoil in the
Asia/Pacific region. The backlog of customer orders totaled $131.0 million at
December 31, 1997, compared to $118.0 million at September 30, 1997 and $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 fiscal 1998 first quarter ended December 31, 1997, totaled
$123.1 million, up $41.3 million from the $81.8 million for the comparable
quarter of fiscal 1997, but $29.1 million lower than the $152.2 million in
sales reported for the fiscal 1997 fourth quarter. During fiscal 1997
quarterly sales increased steadily throughout the year, boosted principally
by the rebound in equipment sales. In the first quarter of fiscal 1998,
equipment sales declined in relation to the late 1997 levels, largely
reflecting the need for customers to assimilate the record number of machines
sold late in 1997, and the growing uncertainty over the impact of the recent
financial instability in the Asia/Pacific region.
During the first quarter of fiscal 1998, equipment segment sales totaled
$93.9 million compared to $56.2 million for the fiscal 1997 first quarter.
<PAGE>
This increase primarily resulted from increased unit sales of automatic wire
bonders. During the fiscal 1998 first quarter, sales of the Company's new
Model 8020 and 8060 wire bonders totaled $13.5 million, representing
approximately 20% of total wire bonder revenues for the period. Sales of
packaging materials increased to $29.2 million in the fiscal 1998 first
quarter compared to $25.6 million for the same period last year, reflecting
higher unit sales of expendable tools and increased gold and aluminum wire
volume. However, the favorable effect of higher fiscal 1998 gold wire volumes
was largely offset by lower average gold prices in fiscal 1998 compared to
fiscal 1997.
By geographic region, during the first quarter of fiscal 1998, shipments to
customer locations in the United States and Taiwan increased significantly in
relation to the first quarter of fiscal 1997. However, compared to the fiscal
1997 fourth quarter, fiscal 1998 first quarter sales to US based customers
increased, while sales to customer locations throughout the Asia/Pacific
region, primarily Taiwan, Korea, Malaysia and Singapore declined.
Gross profit as a percentage of net sales increased to 36.8% in the first
quarter of fiscal 1998 compared to 35.2% during the same period last year.
This increase primarily reflects a shift in the overall mix of product sales
to higher margin equipment products from lower margin packaging materials, as
summarized in the table below:
Three months ended
December 31,
------------------
1997 1996
------ ------
Equipment segment sales 76.3% 68.7%
Packaging materials segment sales 23.6% 31.3%
------ ------
Total net sales 100.0% 100.0%
====== ======
Equipment segment gross margin as a percentage of net sales declined to 40.8%
in the fiscal 1998 first quarter from 42.5% in the comparable period last
year, due primarily to lower average selling prices on older model 1488 plus
ball bonders and to reduced sales of higher margin upgrade kits and
accessories in fiscal 1998 compared to fiscal 1997. These declines offset the
favorable effect on gross margins from sales of the Model 8020 and 8060
machines during the quarter. Gross profit margins in the packaging materials
segment improved, primarily due to a shift in total sales mix to higher
margin expendable tools and aluminum wire during the fiscal 1998 first
quarter.
Selling, general and administrative ("SG&A") expenses totaled $22.4 million
for the first quarter of fiscal 1998 compared to $16.2 million for the same
period last year. Fiscal 1997 first quarter SG&A levels reflected the effect
of certain cost reduction initiatives implemented late in fiscal 1996 in
response to the 1996 business downturn. On a sequential quarter basis, fiscal
1998 first quarter SG&A costs were down slightly compared to the fiscal 1997
fourth quarter, despite the effect of annual merit increases commencing in
October 1997.
<PAGE>
Net research and development ("R&D") costs increased to $12.3 million in the
first quarter of fiscal 1998, compared to $10.7 million for the same period
last year. The increase in fiscal 1998 R&D costs primarily reflects increased
development activities related to the 8000 family of products and continuous
improvement of existing products in the equipment segment, and increased
expenditures in the packaging materials segment, primarily for new product
development.
Operating income totaled $10.6 million for the first quarter of fiscal 1998
compared to $1.9 million for the same period in fiscal 1997. Increased sales
and gross profits in both the equipment and packaging materials segments,
offset in part by higher operating costs due to the greater volume of
business in fiscal 1998 compared to fiscal 1997, contributed to this
increase.
During the fiscal 1998 first quarter, the Company was essentially debt-free,
principally as a result of the Company's May 1997 underwritten public
offering of common stock which generated net proceeds of $101.1 million. A
portion of such proceeds was used to repay the $50.0 million borrowed under
the Company's bank revolving credit facility to fund the AFW acquisition, and
the $4.7 million obligation incurred in connection with the October 1996
Semitec acquisition, which borrowings accounted for the majority of the
fiscal 1997 interest expense.
In the fiscal 1998 first quarter, the Company recognized $2.2 million as its
51% equity interest in the loss from its joint venture investment in Flip
Chip Technologies, LLC ("FCT"), compared to a $1.1 million loss during the
same period last year.
Through December 31, 1997, the Company has made capital contributions
totaling $16.8 million and has loaned to FCT $9.0 million to fund start-up
operations. The Company is currently evaluating FCT's fiscal 1998 operating
and financial plans with FCT management and Delco. As a result of delays in
the customer evaluation process and in the generation of substantial
operating revenues, the Company now anticipates that its proportionate share
of FCT's fiscal 1998 loss will exceed $7.0 million, and that an additional
$10 million to $15 million of loans may be required by FCT during the
remainder of fiscal 1998. The joint venture is subject to numerous risks
common to business arrangements of this nature. There can be no assurance
that FCT will ever become profitable, that the Company will not make
additional capital contributions and loans to FCT or that the anticipated
benefits of the joint venture will ever be realized. If the joint venture
were to not realize such benefits, the Company's business, financial
condition and operating results could be materially adversely affected.
The fiscal 1998 effective tax rate is presently expected to approximate 30%,
compared to approximately 29% for the 1997 fiscal year.
COMPANY OUTLOOK
The Company presently expects sales for the fiscal 1998 second quarter to
approximate the fiscal 1998 first quarter level. However, because of a shift
in product mix toward newer, more profitable 8000 family machines, second
quarter earnings are expected to show some improvement over the first
<PAGE>
quarter. While the Company continues to believe that long-term growth
prospects for the semiconductor industry and for the Company's products
remain positive, the ongoing financial instability affecting the Asia/Pacific
region has significantly hampered the Company's ability to accurately
forecast financial results for the balance of the 1998 fiscal year. However,
while sales destined for customer locations in Korea accounted for
approximately 19% of consolidated sales in fiscal 1997, the Company currently
expects shipments to Korean-based customers to be relatively insignificant
for the balance of fiscal 1998.
LIQUIDITY AND CAPITAL RESOURCES
During the past three fiscal years, the Company has financed its operations
principally through cash flows from operations. In May 1997, the Company
completed an underwritten public offering of 3,450,000 shares of common stock
which generated $101.1 million in net proceeds, of which a portion was used
to repay the $50.0 million outstanding balance on the Company's bank
revolving credit facility.
During the fiscal 1998 first quarter, cash used by operating activities
totaled $6.4 million, compared to cash generated by operating activities of
$3.6 million during the fiscal 1997 first quarter. In addition, cash and
total investments decreased to $103.8 million at December 31, 1997 compared
to $115.6 million at September 30, 1997. At December 31, 1997, working
capital increased to $196.7 million compared to $190.2 million at September
30, 1997.
The decrease in operating cash flow and total cash and investments in the
fiscal 1998 first quarter resulted primarily from increases in inventory and
payments of trade accounts payable and accrued liabilities during the
quarter. The growth in inventory primarily resulted from delays in shipments
of certain machines late in the fiscal 1998 first quarter. Lower trade
payables and accrued liability balances reflect payments to vendors in
accordance with normal terms and payment during the quarter of fiscal 1997
management incentive and employee success sharing accruals.
During fiscal 1998 first quarter, the Company invested approximately $3.1
million in property and equipment, primarily to upgrade equipment used in the
Company's manufacturing and R&D activities. The Company presently expects
total fiscal 1998 capital spending to approximate $18.0 million. The
principal capital projects planned for fiscal 1998 include the purchase of
additional tooling and equipment necessary to manufacture the 8000 series of
machines, the purchase of equipment necessary to expand manufacturing
capacity, primarily in the United States and Israel, and additional
investments in a new global management information system.
The Company has initiated a project to replace existing business and
accounting systems with an enterprise-wide business system which is "Year
2000" compliant. The Company expects to incur capital expenditures, primarily
for computer hardware and software, related to this system implementation
project. Such amounts are included in the estimated capital expenditures
discussed above. Internal staffing costs and reengineering costs, if any,
associated with this system implementation project will be expensed as
incurred. The Company's business system implementation plan currently
anticipates conversion to the new enterprise business system in early 1999.
<PAGE>
The Company does not currently anticipate any material disruption in its
business operations as a consequence of the year 2000 issue.
See "Results of Operations" above for information concerning anticipated
capital contributions and loans to FCT.
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, additional U.S. Federal income tax
expense could be required to be recognized.
The Company currently has available the entire amount of a $10.0 million
revolving credit facility expiring February 28, 1998, which it expects to
renew under comparable terms, and a $50.0 million revolving credit facility
expiring March 30, 2001. There were no borrowings under these facilities
during fiscal 1998. The Company intends to retain both of these revolving
credit facilities.
The Company believes that anticipated cash flows from operations, its working
capital and amounts expected to be available under its revolving credit
facility will be sufficient to meet the Company's liquidity and capital
requirements for at least the next twelve 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.
EFFECT OF RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS:
In June 1997, the Financial Accounting Standards issued Statement of
Financial Standards No. 130, "Reporting Comprehensive Income," ("SFAS 130"),
which establishes standards for reporting and display of comprehensive income
and its components (revenues, expenses, gains and losses) in a full set of
general purpose financial statements. The Company will implement the
provisions of this statement in the quarterly financial statements commencing
for its fiscal 1999 first quarter. The Company presently expects that foreign
currency translation adjustments and unrealized gains or losses on short-term
investments classified as available for sale will be reported as components
of the Company's comprehensive income under the requirements of SFAS No. 130.
<PAGE>
PART II. OTHER INFORMATION.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
During the first quarter of fiscal 1998, the Company contributed 23,403
shares of unregistered common stock, valued at its fair market value, as its
matching contribution to its Section 401(k) Employee Incentive Savings Plan.
Registration for such shares was not required because the transaction did not
constitute a "sale" under Section 2(3) of the Securities Act of 1933, or,
alternatively, the transaction was exempt pursuant to the private offering
provisions of that Act and the rules thereunder.
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: February 13, 1998 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
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED INCOME STATEMENT AND CONSOLIDATED BALANCE SHEET INCLUDED IN KULICKE
& SOFFA INDUSTRIES, INC.'S QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTERLY
PERIOD ENDED DECEMBER 31, 1997, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS AND RELATED FOOTNOTES INCLUDED THEREIN.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-END> DEC-31-1997
<CASH> 70,215
<SECURITIES> 33,594
<RECEIVABLES> 98,099
<ALLOWANCES> 0
<INVENTORY> 58,026
<CURRENT-ASSETS> 266,016
<PP&E> 45,314
<DEPRECIATION> 0
<TOTAL-ASSETS> 371,396
<CURRENT-LIABILITIES> 69,302
<BONDS> 92
0
0
<COMMON> 156,401
<OTHER-SE> 142,497
<TOTAL-LIABILITY-AND-EQUITY> 371,396
<SALES> 123,111
<TOTAL-REVENUES> 123,111
<CGS> 77,766
<TOTAL-COSTS> 77,766
<OTHER-EXPENSES> 34,715
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 47
<INCOME-PRETAX> 9,748
<INCOME-TAX> 2,924
<INCOME-CONTINUING> 6,824
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,824
<EPS-PRIMARY> .29
<EPS-DILUTED> .29
</TABLE>
