Kulicke & Soffa Reports Results for Its Fourth Quarter and Fiscal Year 2004
Thursday November 18, 7:00 am ET
WILLOW GROVE, PA--(MARKET WIRE)--Nov 18, 2004 -- Kulicke & Soffa Industries, Inc. (NasdaqNM:KLIC - News) today announced financial results for its fourth quarter and fiscal year ended September 30, 2004.
Net revenue for the fourth quarter ended September 30, 2004 was $147.5 million compared to $124.6 million in the comparable year-ago quarter. Net income was $3.3 million or $0.05 per fully diluted share versus a loss for the year-ago quarter of $28.4 million or $0.57 per fully diluted share. Results from the Company's former flip chip business are included in discontinued operations.
Scott Kulicke, chairman and chief executive officer, stated, "Many of our objectives for fiscal 2004 were focused on reducing the Company's cost structure in anticipation of ongoing cyclicality in the semiconductor business. Now that the downturn is upon us, the benefits from those efforts are apparent. We are committed to continuing to reduce our product and operating costs. As the semiconductor industry moves toward the trough of this cycle, we expect continued pressure on sales, with December quarter revenue in the $115 million to $130 million range. While we can't change the cycle, we can focus on the inevitable recovery, continuing to reshape the Company to maximize our performance over the whole cycle."
Included in the results for the September 2004 quarter is a charge of $1.9 million for the redemption of the Company's 5.25% convertible subordinated notes. Also included is a $600 thousand reversal of the $3 million severance charge recorded in the second fiscal quarter for closing a production facility in France.
For the full year ended September 30, 2004, net revenue was $717.8 million compared to net revenue of $477.9 million for the previous year. Net income was $55.9 million or $0.89 per fully diluted share compared to a net loss of $76.7 million or $1.54 per fully diluted share for the year ended September 30, 2003.
Fourth Quarter Review and Highlights
Technology & Manufacturing
* K&S acquired a license for new electrical contact technology to be used in future package test products. Licensing this technology will reduce time and cost to develop a new product line. In addition, the technology is expected to reduce customers' operating expense for package testing.
* The K&S China facility gained momentum in cantilever production. Shipments of cantilever products manufactured in China increased to 21% of cantilever shipments this quarter, compared to 7% in the third quarter. This product line continues to shift manufacturing emphasis from its U.S. and European sites to the China factory to lower production costs.
* The capillary product line continued to benefit from lower manufacturing costs at the K&S China facility. During the fourth quarter 65% of capillaries shipped from China, compared to 58% in the third quarter and 35% in the comparable year-ago quarter.
Key Product Trends
* K&S packaging materials division reported a record net revenue quarter at $67.3 million, growing 9% from the third quarter to the fourth quarter and 35% from fiscal 2003 to fiscal 2004.
* The average selling price for wire bonders was unchanged from the third quarter to the fourth quarter.
* Orders for K&S Vertical Test products remained strong during the fourth quarter with high demand for microprocessors and flash memory products.
* Cantilever Test moved into a new K&S design/manufacture/service center in Taiwan to better serve the leading edge fabless customers utilizing the wafer foundries located in the Hsin Chu, Taiwan area. The facility will also service the vertical product line.
* The new Quatrix product for K&S Package Test was introduced to customers at Semicon West and ITC trade shows during the quarter.
Financial Review
* K&S total interest expense (which includes amortization of deferred financing costs) was reduced from $17.4 million in fiscal 2003 to $10.5 million in fiscal 2004. The Company expects total interest expense to decline to $3.1 million for fiscal 2005.
* The Company used $43 million in cash from operations and $12 million from the sale of its 1.0% convertible subordinated notes to redeem the remaining 5.25% notes.
Business Summary
Scott Kulicke concluded, "K&S was profitable throughout fiscal 2004. We continued to invest in new products in all business segments. While we are currently moving through a downturn, our focus has not changed: cost and technology leadership."
A conference call to discuss these results will be held today beginning at 9:00 AM EST. Interested participants may call 877-407-8037 for the teleconference or log on to kns.com for listen-only mode.
About Kulicke & Soffa
Kulicke & Soffa (NasdaqNM:KLIC - News) is the world's leading supplier of semiconductor wire bonding assembly equipment. We believe K&S is the only major supplier to the semiconductor assembly industry that provides customers with semiconductor wire bonding equipment along with the complementing packaging materials and test interconnect products that actually contact the surface of the customer's semiconductor devices. The ability to control all of these assembly related products is unique to Kulicke & Soffa, and allows us to develop system solutions to the new technology challenges inherent in assembling and packaging next-generation semiconductor devices. Test interconnect products include a variety of wafer probe cards, ATE interface assemblies, and PC boards for wafer testing, as well as test sockets for all types of packaged semiconductor devices. Kulicke & Soffa's web site address is kns.com.
Caution Concerning Forward-Looking Statements
In addition to historical statements, this press release contains statements relating to future events and our future results. These statements are "forward-looking" statements within the meaning of the Private Securities Litigation Reform Act of 1995, and include, but are not limited to, statements that relate to our future revenue, operating expenses, profitability, cash flows, and projected continued demand for our products. While these forward-looking statements represent our judgments and future expectations concerning our business, a number of risks, uncertainties and other important factors could cause actual developments and results to differ materially from our expectations. These factors include, but are not limited to: the risk of failure to successfully manage our operations; the risk that anticipated orders may not materialize or that orders received may be postponed or canceled, generally without charges; the risk that anticipated cost savings will not be achieved; the volatility in the demand for semiconductors and our products and services; the risk that we may not be able to develop and manufacture new products and product enhancements on a timely and cost effective basis; acts of terrorism and violence; overall global economic conditions; risks, such as changes in trade regulations, currency fluctuations, political instability and war, associated with a substantial foreign customer and supplier base and substantial foreign manufacturing operations; potential instability in foreign capital markets; and the factors listed or discussed in Kulicke and Soffa Industries, Inc. 2003 Annual report on Form 10-K and our other filings with the Securities and Exchange Commission. Kulicke & Soffa Industries is under no obligation to (and expressly disclaims any obligation to) update or alter its forward-looking statements whether as a result of new information, future events or otherwise.
KULICKE & SOFFA INDUSTRIES, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands, except per share and employee data)
(Unaudited)
Three months ended Twelve months ended
September 30, September 30,
2003 (1) 2004 2003 (1) 2004
---------- ---------- ---------- ----------
Net revenue $ 124,614 $ 147,543 $ 477,935 $ 717,811
Cost of sales 91,377 105,506 349,727 486,806
---------- ---------- ---------- ----------
Gross profit 33,237 42,037 128,208 231,005
---------- ---------- ---------- ----------
Selling, general and
administrative 24,425 23,170 102,327 101,225
Research and
development, net 8,709 8,820 38,121 34,611
Resizing (recovery)
costs (270) - (475) (68)
Asset impairment 831 - 3,629 3,293
Gain on sale of assets - (229) - (1,023)
Loss on sale of
product lines 5,257 - 5,257 -
Amortization of
intangibles 2,316 2,194 9,260 9,022
---------- ---------- ---------- ----------
Operating expense 41,268 33,955 158,119 147,060
---------- ---------- ---------- ----------
Income (loss) from
operations (8,031) 8,082 (29,911) 83,945
Interest, net (4,073) (1,086) (16,491) (9,357)
Charge on
extinguishment
of debt - (1,916) - (10,510)
---------- ---------- ---------- ----------
Income (loss) from
continuing operations
before income tax (12,104) 5,080 (46,402) 64,078
Provision for income
taxes 1,900 1,749 7,594 7,386
---------- ---------- ---------- ----------
Net income (loss) from
continuing operations $(14,004) $ 3,331 $ (53,996) $ 56,692
---------- ---------- ---------- ----------
Loss from discontinued
operations (14,387) - (22,693) (432)
Loss on sale of FCT
Division - - - (380)
---------- ---------- ---------- ----------
Net income (loss) $(28,391) $ 3,331 $ (76,689) $ 55,880
========== ========== ========== ==========
Net income (loss) per
share from continued
operations:
Basic $ (0.28) $ 0.07 $ (1.09) $ 1.12
========== ========== ========== ==========
Diluted $ (0.28) $ 0.05 $ (1.09) $ 0.90
========== ========== ========== ==========
Net loss per share
from discontinued
operations:
Basic $ (0.29) $ - $ (0.46) $ (0.02)
========== ========== ========== ==========
Diluted $ (0.29) $ - $ (0.46) $ (0.01)
========== ========== ========== ==========
Net income (loss)
per share:
Basic $ (0.57) $ 0.07 $ (1.54) $ 1.10
========== ========== ========== ==========
Diluted $ (0.57) $ 0.05 $ (1.54) $ 0.89
========== ========== ========== ==========
Weighted average shares
outstanding:
Basic 50,030 51,074 49,695 50,746
Diluted 50,030 66,947 49,695 68,582
Three months ended Twelve months ended
September 30, September 30,
Additional financial 2003 2004 2003 2004
data: ---------- ---------- ---------- ----------
Depreciation and
amortization $ 8,861 $ 7,396 $ 37,800 $ 30,678
Capital expenditures $ 3,058 $ 5,329 $ 10,975 $ 13,405
September 30,
2003 2004
Backlog of orders
Core Business $ 60,000 $ 60,000
Discontinued Operations $ 8,000 $ -
Number of employees
Core Business 3,056 3,294
Discontinued Operations 113 -
Note: (1) Prior period income statements have been revised to reflect
accounting for the sale of the Company’s Flip Chip business as a
discontinued operation in accordance with the requirements of FAS 144.
KULICKE & SOFFA INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEET
(In thousands)
September 30, September 30,
2003 2004
---- ----
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 65,725 $ 60,333
Restricted cash 2,836 3,257
Short-term investments 4,490 32,176
Accounts and notes receivable
(less allowance for doubtful accounts:
9/30/03 - $5,929; 9/30/04 - $3,646) 94,144 110,718
Inventories, net 37,906 58,017
Assets held for sale 6,799 6,072
Prepaid expenses and other current assets 11,187 10,310
Deferred income taxes 10,700 12,417
--------- ---------
TOTAL CURRENT ASSETS 233,787 293,300
Property, plant and equipment, net 54,439 51,434
Intangible assets, (net of accumulated
amortization: 9/30/03 - $26,187;
9/30/04 - $35,209) 66,249 54,045
Goodwill 81,440 81,440
Other assets 6,946 7,463
--------- ---------
TOTAL ASSETS $ 442,861 $ 487,682
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Debt due within one year $ 36 $ 202
Accounts payable 45,844 50,002
Accrued expenses 41,885 37,660
Income taxes payable 13,394 11,986
--------- ---------
TOTAL CURRENT LIABILITIES 101,159 99,850
Long-term debt 300,338 275,725
Other liabilities 9,865 8,112
Deferred taxes 31,402 36,975
--------- ---------
TOTAL LIABILITIES 442,764 420,662
--------- ---------
Commitments and contingencies - -
SHAREHOLDERS' EQUITY
Common stock, without par value 203,607 213,847
Retained deficit (195,792) (139,912)
Accumulated other comprehensive loss (7,718) (6,915)
--------- ---------
TOTAL SHAREHOLDERS' EQUITY 97 67,020
--------- ---------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 442,861 $ 487,682
========= =========
KULICKE & SOFFA INDUSTRIES, INC.
OPERATING RESULTS BY BUSINESS SEGMENT
(In thousands)
(Unaudited)
Fiscal 2004:
Quarter ended Packaging Corporate
September 30, Equipment Materials Test and Consoli-
2004: Segment Segment Segment Other (1) dated
--------- --------- --------- --------- ---------
Net revenue $ 49,072 $ 67,272 $ 31,199 $ - $ 147,543
Cost of sales 27,340 52,690 25,476 - 105,506
--------- --------- --------- --------- ---------
Gross profit 21,732 14,582 5,723 - 42,037
Operating costs 13,653 5,962 10,340 4,229 34,184
Gain on sale of
assets - (229) - - (229)
--------- --------- --------- --------- ---------
Income (loss)
from
operations $ 8,079 $ 8,849 $ (4,617) $ (4,229) $ 8,082
========= ========= ========= ========= =========
Twelve months
ended September
30, 2004:
Net revenue $ 361,244 $ 234,690 $ 121,877 $ - $ 717,811
Cost of sales 208,862 182,658 95,286 - 486,806
--------- --------- --------- --------- ---------
Gross profit 152,382 52,032 26,591 - 231,005
Operating costs 59,071 22,171 44,899 18,717 144,858
Resizing - - - (68) (68)
Asset impairment - - 3,293 - 3,293
Gain on sale of
assets - (229) (85) (709) (1,023)
--------- --------- --------- --------- ---------
Income (loss)
from operations $ 93,311 $ 30,090 $ (21,516) $ (17,940) $ 83,945
========= ========= ========= ========= =========
Fiscal 2003:
Quarter ended Packaging Corporate
September 30, Equipment Materials Test and Consoli-
2003: Segment Segment Segment Other (1) dated
Net revenue $ 52,567 $ 45,484 $ 26,563 $ - $ 124,614
Cost of sales 32,898 34,821 23,658 - 91,377
--------- --------- --------- --------- ---------
Gross profit 19,669 10,663 2,905 - 33,237
Operating costs 15,979 5,631 10,099 3,741 35,450
Resizing costs (175) (20) - (75) (270)
Asset impairment - 385 200 246 831
Loss on sale of
product lines 4,346 911 - - 5,257
--------- --------- --------- --------- ---------
Income (loss)
from operations $ (481) $ 3,756 $ (7,394) $ (3,912) $ (8,031)
========= ========= ========= ========= =========
Twelve months
ended September
30, 2003:
Net revenue $ 198,447 $ 174,471 $ 104,882 $ 135 $ 477,935
Cost of sales 129,092 132,779 87,856 - 349,727
--------- --------- --------- --------- ---------
Gross profit 69,355 41,692 17,026 135 128,208
Operating costs 67,490 25,408 41,223 15,587 149,708
Resizing costs (175) (20) (103) (177) (475)
Asset impairment 17 385 3,098 129 3,629
Loss on sale of
product lines 4,346 911 - - 5,257
--------- --------- --------- --------- ---------
Income (loss)
from operations $ (2,323) $ 15,008 $ (27,192) $ (15,404) $ (29,911)
========= ========= ========= ========= =========
Note: (1) Corporate and Other includes the residual activity from our
former substrate business unit that was closed in the September
quarter of 2002.
Note: Prior period income statements have been revised to reflect
accounting for the sale of the Company’s Flip Chip business
as a discontinued operation in accordance with the requirements
of FAS 144.
--------------------------------------------------------------------------------
Source: Kulicke & Soffa |
