Kulicke & Soffa Reports Results for its First Fiscal Quarter 2009
Fri. January 30, 2009; Posted: 08:07 AM
FORT WASHINGTON, Pa., Jan 30, 2009 (BUSINESS WIRE) -- KLIC | Quote | Chart | News | PowerRating -- Kulicke & Soffa Industries, Inc. (NASDAQ:KLIC) ("K&S") today announced results for the quarter ended December 27, 2008. The Company reported net revenue from continuing operations of $37.4 million, and a loss from continuing operations of $18.2 million, or $0.30 per share. This press release contains both GAAP and non-GAAP information.
On a non-GAAP* basis, the Company reported first quarter net revenue from continuing operations of $37.4 million, and a loss from continuing operation of $22.2 million, or $0.37 per share.
During the quarter, the Company completed the divestiture of its Wire business and accordingly all operating results associated with this business are reported as discontinued operations. The Company also completed the acquisition of Orthodyne Electronics Corporation ("Orthodyne") during the quarter.
GAAP Results: Q1 2009 Change vs. Q1 2008 Change vs. Q4 2008 Net Revenue 37,416 -70% -39% Gross Profit 13,928 -72% -44% Gross Margin 37.2% -375 basis points -339 basis points Income (Loss) from continuing operations (18,243) -359% -66% Net Margin -48.8% -5,445 basis points -3,076 basis points EPS - Diluted from Continuing Operations $ (0.30) -350% -43%
Non-GAAP Measures: Q1 2009 Change vs. Q1 2008 Change vs. Q4 2008 Net Revenue 37,416 -70% -39% Gross Profit 13,899 -73% -44% Gross Margin 37.1% -388 basis points -357 basis points Income (Loss) from continuing operations (22,164) -367% -116% Net Margin -59.2% -6,595 basis points -4,246 basis points EPS - Diluted from Continuing Operations $ (0.37) -368% -91%
*Non-GAAP measures exclude: equity-based compensation, contractual commitments for former Test facilities, amortization of intangibles, severance plan, and related tax effects from expenses; debt extinguishment; and settlement of Israel tax assessment from income tax expense (see reconciliations of GAAP results to Non-GAAP measures in the following financial schedules).
Commenting on the results, Scott Kulicke, Chairman and Chief Executive Officer, said, "The rapid deterioration of the global economy last year had a dramatic effect on our first quarter 2009 results. Demand fell across the entire semiconductor industry during the quarter as customers reduced capital equipment purchases to what we believe are below maintenance levels. Visibility into the timing and extent of any upturn remains extremely poor and challenging conditions are expected to persist at least through calendar 2009. We currently expect net revenue for our second fiscal quarter of 2009 to be approximately $30 million, although we believe there is a larger than normal range of possible results because of unusually low visibility."
"In response to the industry's present weakness, we have taken aggressive action. In November, we announced a headcount reduction of 240 positions and the cancellation of annual salary increases. In January, we initiated reductions in weekly hours for our direct labor force and significant wage cuts for all other employees. We also announced to our employees that further workforce reductions were forthcoming. The goal of these steps is to preserve the Company's liquidity position so that we will be able to scale the business when the global economy recovers."
"We believe the severity of the global economic downturn, and the rapidity with which it emerged, validates the strategic decisions we made over the last several quarters. The divestiture of our Wire business added $149.5 million in cash to our balance sheet before the inclusion of Orthodyne and the repayment of our 0.5% notes due in November, and reduced our working capital requirements. Our cash position permitted us to repurchase $3.0 million of our 1.0% Convertible Subordinated Notes due 2010 at a discount during the first quarter and to tender for the remaining $62 million of these bonds."
"Although the business environment remains extremely difficult, we continue to make important progress in our technology portfolio. IConnPS, our new high-performance ball bonder for high-pin count applications, continues to achieve the technical and price performance we anticipated. First units of ConnXPS, our ball bonder for LED, discrete and low pin-count applications, were sold during the quarter, and the product continues to generate positive feedback from customers. Discovery development is proceeding on schedule. Orthodyne, our recently acquired wedge bonding business unit, concluded an important qualification of its PowerRibbon(TM) interconnect solution with a major European automotive supplier of high current power modules. Our product portfolio is strong and this strength will become apparent once the industry recovers."
Significant Events
A number of significant events occurred during the quarter that impacted our financial statements
-- The sale of the Wire business, which resulted in $22.7 million of income (net of tax) from discontinued operations
-- The settlement of the Company's Israel tax audit, which resulted in a $12.2 million tax benefit to net income
-- The completion of the acquisition of Orthodyne
-- Actions in response to the current economic weakness -- The reduction of 240 positions in November, resulting in $7.6 million in annualized savings and $2.6 million of severance expense
-- Deferred annual salary increases, which will result in $4.7 million of cost avoidance
-- An equity compensation expense reversal of $1.6 million due to a decrease of estimated percentage attainment for fiscal 2007 and 2008 performance-based restricted stock awards
-- An expense of $2.6 million related to contractual commitments for former Test facilities
Other Financial Details
-- Total cash and investments of $175 million
-- Subsequent to quarter end, the Company announced a reduction of hours for its direct labor force, cut wages for all salaried employees between 5% -20%, and took other actions, which are expected to generate annual savings of $8.1 million
-- Subsequent to quarter end, the Company announced a tender offer for the outstanding portion of its 1.0% Convertible Subordinated Notes due in 2010
Key Product Highlights
-- IConnPS exceeding technical performance parameters
-- First sales of ConnXPS ball bonders
-- Over 200 customers attended private demonstration of Discovery at SEMICON Korea; Discovery is on schedule for formal launch at SEMI China, March 2009
-- Orthodyne concluded a 2-year joint development project with a major European automotive supplier for the qualification and implementation of its PowerRibbon(TM) interconnect solution into high current automotive power modules
Outlook for Second Fiscal Quarter 2009
-- Net revenue is expected to be approximately $30 million, although with a larger than normal range of possible results because of unusually low visibility.
Earnings Conference Call Details
A conference call and simultaneous audio webcast will be held today, January 30, 2009 beginning at 9:00 am (ET). Interested parties may call (877) 407-8037 or (201) 689-8037, or they may log on to kns.com for listen-only mode. A replay will be available approximately one hour after the completion of the call by calling toll-free (877) 660-6853 or internationally (201) 612-7415 and using the following replay access codes: 5521 (account number) and 310017 (replay ID number). A replay will also be available on the K&S website at kns.com. The replay will be available via phone and website for a limited period.
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