klic punished
Kulicke & Soffa Reports Results for Its Third Quarter 2008
Kulicke & Soffa Industries, Inc. (NASDAQ:KLIC) (“K&S”) today reports results for its quarter ended June 28, 2008. K&S announced quarterly net revenue of $180.1 million and a net loss of $1.8 million or $0.03 per share. This press release contains both GAAP and non-GAAP financial information.
On a non-GAAP basis (excluding gold metal cost from both revenue and cost of sales, equity-based compensation, and amortization of intangibles) the Company reported third quarter net revenue of $83.2 million and a net loss of $0.7 million or $0.01 per share. Non-GAAP gross margin was 44.2%, a slight increase of 36 basis points from the prior quarter.
GAAP Results: Q3 2008 Change vs. Q3 2007 Change vs. Q2 2008 Net Revenue $180.1 million +7% +2% Gross Profit
Gross Margin $36.7 million
20.4% - 498 basis points +26 basis points Net Income (Loss)
Net Margin ($1.8 million)
(1.0%) - 427 basis points +248 basis points EPS- Diluted ($0.03) ($0.11) $0.08 Non-GAAP Measures: Q3 2008 Change vs. Q3 2007 Change vs. Q2 2008 Net Revenue $83.2 million -12% +3% Gross Profit
Gross Margin $36.8 million
44.2% - 109 basis points + 36 basis points Net Income (Loss)
Net Margin ($0.7 million)
(0.8%) - 832 basis points - 87 basis points EPS- Diluted ($0.01) ($0.12) ($0.01) Non-GAAP measures exclude: gold metal cost from both net revenue and cost of sales; equity-based compensation from expenses; amortization of intangibles; and U.S. pension plan termination charge and related tax effects (see reconciliations of GAAP results to Non-GAAP measures in the following financial schedules).
Scott Kulicke, Chairman and Chief Executive Officer, commented, “The industry is in about the same place it was a quarter ago. However, we do not believe these soft conditions can last for too long and we are planning on a 2009 upturn. Once this occurs, we are well positioned with the positive steps we’ve taken recently, which will make K&S stronger and more profitable.” Third Quarter Financial Details Foreign currency exchange rates were unfavorable during the quarter, negatively impacting net income by $2.6 million in comparison to last quarter.
Total cash and investments increased $11.6 million from last quarter, to $182.8 million, driven by a reduction in accounts receivable.
Non-GAAP consolidated gross margin improved slightly to 44.2%, from 43.8% in the prior quarter.
Key Product Trends Began production shipments of the new IConnPS ball bonder during the third quarter. The IConnPS replaces the market-leading Maxum Ultra with higher throughput and enhanced technology for advanced packaging requirements, ultra fine pitch, and copper wire packages.
Shipped the first next generation ConnXPS wire bonder to an LED customer for evaluation. The new ConnXPS wire bonder replaces the Maxum Elite wire bonder and is engineered to provide optimal manufacturing capabilities for the lower pin count IC market and the rapidly growing LED market.
Shipped an alpha version of our next-generation Discovery die bonder in July. The machine meets all our expectations and we remain on track for a formal Discovery product launch this winter.
Outlook for Fourth Fiscal Quarter Net revenue is expected to be about $160 million on a GAAP basis, assuming current gold prices.
Net revenue is expected to be about $66 million on a non-GAAP basis, which excludes gold metal cost.
The fourth quarter outlook does not include any effects of the Orthodyne or wire business transactions announced on July 31, 2008.
Earnings Conference Call Details A conference call to discuss these results will be held today, August 6, 2008 beginning at 9:00 AM EDT. Interested participants may call 877-407-8037 for the teleconference or 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 291300 (replay ID number). A replay will also be available on the K&S web site at kns.com. The replay will be available via phone and web site through September 30, 2008.
Discussion of Non-GAAP Financials This press release contains non-GAAP financial measures as a supplement to the consolidated financial results presented in accordance with GAAP. The Company believes certain non-GAAP measures provide investors with an additional, useful perspective on the Company’s performance as seen through the eyes of management. Management uses non-GAAP financial measures along with GAAP financial results for: analyzing the performance of the Company’s businesses; strategic and tactical decision making; and determining compensation. The Company does not consider non-GAAP financial measures to be a substitute for, or superior to, financial results presented in accordance with GAAP. All of the non-GAAP financial measures included herein are reconciled to the most directly comparable GAAP results in the following financial statements. These non-GAAP measures may be calculated differently from non-GAAP measures used by other companies. In addition, these non-GAAP financial measures are not based on a comprehensive set of accounting rules or principles and some of the adjustments reflect the exclusion of items that are recurring and will be reflected in the Company’s GAAP financial results for the foreseeable future.
Exclusions from GAAP Results The Company excludes the following from its GAAP results in presenting non-GAAP financial measures: -- Gold metal cost. The Company’s GAAP net revenue and cost of sales include the value of the gold metal content of wire. The cost of gold metal that is passed-through to customers is excluded from non-GAAP net revenue and cost of sales. Fabrication charges and profit on gold metal are not excluded. The Company believes that excluding the large impact of passed-through gold cost can provide investors with greater visibility into the Company’s profit margin percentages.
-- Equity-based compensation expenses. In accordance with Statement of Financial Accounting Standards (“SFAS”) No. 123R, Share Based Payments, the Company recognizes the fair value of its equity-based compensation in expenses. Equity-based compensation consists of common stock, stock options and performance-based restricted stock granted under the Company’s equity compensation plans. Equity-based compensation is a non-cash expense that can vary significantly in amount from period to period.
-- Other. The exclusion of certain other non-GAAP amounts allows for improved comparisons of the Company’s results to both prior periods and other companies. The Company excludes the following other items from non-GAAP measures as these items are not reflective of the performance of the Company’s ongoing businesses: U.S. pension plan termination, and; Amortization of intangibles.
-- Tax Adjustment. Non-GAAP measures are tax adjusted using the GAAP tax rate associated with each quarterly period. The tax rate is calculated by dividing each quarter’s GAAP tax expense by the GAAP net income for that quarter. Non-GAAP year-to-date measures are calculated by summing the associated quarterly non-GAAP measures, without further tax adjustments.
Non-GAAP Measures The specific non-GAAP measures included herein are net revenue, gross profit, gross margin, net income, net margin, and EPS. The Company calculates these measures as follows: -- Net Revenue. K&S non-GAAP net revenue excludes gold metal cost that is passed-through to customers.
-- Gross Profit. K&S non-GAAP gross profit excludes the effects of equity-based compensation expense recorded within cost of sales. K&S non-GAAP gross profit is not affected by the exclusion of its gold metal cost from its net revenue since the same gold metal cost is also excluded from cost of sales.
-- Gross Margin. K&S non-GAAP gross margin excludes the impact of gold metal cost and equity-based compensation expenses recorded within cost of sales.
-- Net Income and Earnings per Share. K&S non-GAAP net income and EPS exclude equity-based compensation expenses, amortization of intangibles, U.S. pension plan termination charge, gains on debt extinguishment, and related tax effects.
-- Net Margin. Non-GAAP net margin reflects the Company’s net margin excluding gold metal cost, equity-based compensation, amortization of intangibles, U.S. pension plan termination charge, gains on debt extinguishment, and related tax effects.
About Kulicke & Soffa Kulicke & Soffa (NASDAQ:KLIC) is the world's leading supplier of semiconductor assembly equipment, materials, and technology. K&S provides wire bonders, capillaries, wire, die bonders, and die collets for all types of semiconductor packages using wire as the internal electrical interconnections. K&S is the only major supplier to the semiconductor assembly industry that provides customers with semiconductor assembly equipment along with the complementing packaging materials and process technology that enable our customers to achieve the highest possible yields and throughput. The ability to provide 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. 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 a future cyclical industry upturn, our future revenue, sales, profitability, financial results, strength of our balance sheet, and product development. 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 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. 2007 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 STATEMENTS OF OPERATIONS (omitted due to poor formatting)
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