Kulicke & Soffa Industries Inc 10-Q for FY2023 Q1

Kulicke & Soffa Industries Inc (KLIC)

10-Q 2023-02-02 For: 2022-12-31

Added on April 09, 2026

About this 10-Q

Kulicke & Soffa Industries Inc filed this 10-Q on February 2, 2023, covering the quarter ended December 31, 2022 (FY2023 Q1).

Headline figures

Quarter ended December 31, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $176.23M; down 61.8% from $460.89M a year earlier
Net income: $14.59M; down 89.1% from net income of $133.61M a year earlier
Diluted EPS: $0.25; down 88.2% from $2.11 a year earlier

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Pennsylvania			23-1498399
(State or other jurisdiction of incorporation)			(IRS Employer
			Identification No.)


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, Without Par Value	KLIC	The Nasdaq Global Market


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐


		Page Number

PART I - FINANCIAL INFORMATION

Item 1.	FINANCIAL STATEMENTS (Unaudited)

	Consolidated Condensed Balance Sheets as of December 31, 2022 and October 1, 2022	1

	Consolidated Condensed Statements of Operations for the three months ended December 31, 2022 and January 1, 2022	2

	Consolidated Condensed Statements of Comprehensive Income for the three months ended December 31, 2022 and January 1, 2022	3

	Consolidated Condensed Statements of Changes in Shareholders’ Equity for the three months ended December 31, 2022 and January 1, 2022	4

	Consolidated Condensed Statements of Cash Flows for the three months ended December 31, 2022 and January 1, 2022	5

	Notes to Consolidated Condensed Financial Statements	6

Item 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	22

Item 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	32

Item 4.	CONTROLS AND PROCEDURES	33

PART II - OTHER INFORMATION

Item 1.	LEGAL PROCEEDINGS	34

Item 1A.	RISK FACTORS	34

Item 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	34

Item 3.	DEFAULTS UPON SENIOR SECURITIES	34

Item 4.	MINE SAFETY DISCLOSURES	34

Item 5.	OTHER INFORMATION	34

Item 6.	EXHIBITS	35

	SIGNATURES	36


	As of
	December 31, 2022		October 1, 2022
ASSETS
Current assets:
Cash and cash equivalents	$	550,613	$	555,537

Short-term investments	245,000		220,000
Accounts and other receivable, net of allowance for doubtful accounts of $0 and $0, respectively	200,337		309,323
Inventories, net	211,637		184,986
Prepaid expenses and other current assets	63,122		62,200
Total current assets	1,270,709		1,332,046

Property, plant and equipment, net	92,819		80,908
Operating right-of-use assets	45,377		41,767
Goodwill	70,536		68,096
Intangible assets, net	33,281		31,939
Deferred tax assets	28,414		25,572
Equity investments	5,433		5,397
Other assets	3,249		2,874
TOTAL ASSETS	$	1,549,818	$	1,588,599

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:

Accounts payable	57,482		67,311
Operating lease liabilities	6,841		6,766
Income taxes payable	45,799		40,063
Accrued expenses and other current liabilities	110,933		134,541
Total current liabilities	221,055		248,681



Deferred tax liabilities	34,139		34,037
Income taxes payable	64,641		64,634
Operating lease liabilities	40,325		34,927
Other liabilities	12,429		11,670
TOTAL LIABILITIES	$	372,589	$	393,949

Commitments and contingent liabilities (Note 15)

Shareholders’ equity:
Preferred stock, without par value: Authorized 5,000 shares; issued - none	$	—	$	—
Common stock, without par value: Authorized 200,000 shares; issued 85,364 and 85,364, respectively; outstanding 56,747 and 57,128 shares, respectively	561,736		561,684
Treasury stock, at cost, 28,617 and 28,237 shares, respectively	(714,713)		(675,800)
Retained earnings	1,345,461		1,341,666
Accumulated other comprehensive loss	(15,255)		(32,900)
TOTAL SHAREHOLDERS’ EQUITY	$	1,177,229	$	1,194,650
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	1,549,818	$	1,588,599


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


	Three months ended
	December 31, 2022		January 1, 2022
Net revenue	$	176,233	$	460,888
Cost of sales	87,527		237,650
Gross profit	88,706		223,238
Selling, general and administrative	42,376		38,959
Research and development	34,508		33,169

Operating expenses	76,884		72,128
Income from operations	11,822		151,110

Interest income	6,559		471
Interest expense	(34)		(40)
Income before income taxes	18,347		151,541
Provision for income taxes	3,758		17,935

Net income	$	14,589	$	133,606

Net income per share:
Basic	$	0.26	$	2.14
Diluted	$	0.25	$	2.11



Weighted average shares outstanding:
Basic	57,051		62,385
Diluted	57,729		63,316


	Common Stock			Treasury Stock		Retained Earnings		Accumulated Other Comprehensive (Loss)/Income		Shareholders' Equity
	Shares	Amount
Balances as of October 1, 2022	57,128	$	561,684	$	(675,800)	$	1,341,666	$	(32,900)	$	1,194,650
Issuance of stock for services rendered	6	180		57		—		—		237
Repurchase of common stock	(1,054)	—		(45,382)		—		—		(45,382)

Issuance of shares for equity-based compensation	667	(6,412)		6,412		—		—		—
Equity-based compensation	—	6,284		—		—		—		6,284

Cash dividend declared	—	—		—		(10,794)		—		(10,794)
Components of comprehensive income:
Net income	—	—		—		14,589		—		14,589
Other comprehensive income	—	—		—		—		17,645		17,645
Total comprehensive income	—	—		—		14,589		17,645		32,234
Balances as of December 31, 2022	56,747	$	561,736	$	(714,713)	$	1,345,461	$	(15,255)	$	1,177,229


	As of
(in thousands)	December 31, 2022		October 1, 2022

Short-term investments, available-for-sale (1)	$	245,000	$	220,000

Inventories, net:
Raw materials and supplies	$	142,520	$	118,833
Work in process	43,117		40,114
Finished goods	45,118		45,277
	230,755		204,224
Inventory reserves	(19,118)		(19,238)
	$	211,637	$	184,986
Property, plant and equipment, net:
Land	$	2,182	$	2,182
Buildings and building improvements	22,964		22,783
Leasehold improvements	32,784		32,400
Data processing equipment and software	39,282		38,223
Machinery, equipment, furniture and fixtures	93,931		90,151
Construction in progress	37,356		25,004
	228,499		210,743
Accumulated depreciation	(135,680)		(129,835)
	$	92,819	$	80,908
Accrued expenses and other current liabilities:

Accrued customer obligations (2)	$	55,833	$	58,916
Wages and benefits	26,494		50,279
Dividends payable	10,794		9,743
Commissions and professional fees	3,435		5,019

Severance	88		19
Other	14,289		10,565
	$	110,933	$	134,541


(in thousands)	Capital Equipment		APS		Total
Balance at October 1, 2022	$	42,189	$	25,907	$	68,096

Other	2,198		242		$	2,440
Balance at December 31, 2022	$	44,387	$	26,149	$	70,536


	As of				Average estimated
(dollar amounts in thousands)	December 31, 2022		October 1, 2022		useful lives (in years)
Developed technology	$	94,149	$	89,017	6.0 to 15.0

Accumulated amortization	(62,335)		(58,636)
Net developed technology	$	31,814	$	30,381

Customer relationships	$	34,822	$	33,515	5.0 to 6.0

Accumulated amortization	(34,822)		(33,515)
Net customer relationships	$	—	$	—






Trade and brand name	$	7,161	$	6,945	7.0 to 8.0

Accumulated amortization	(7,161)		(6,945)
Net trade and brand name	—		—

Other intangible assets	$	4,700	$	4,700	1.9 to 6.0

Accumulated amortization	(3,233)		(3,142)
Net other intangible assets	$	1,467	$	1,558

	$	33,281	$	31,939


(in thousands)	Amortized Cost		Unrealized Gains		Unrealized Losses		Estimated Fair Value
Current assets:
Cash	$	124,825	$	—	$	—	$	124,825
Cash equivalents:
Money market funds (1)	300,785		—		(6)		300,779
Time deposits (2)	125,009		—		—		125,009

Total cash and cash equivalents	$	550,619	$	—	$	(6)	$	550,613


Short-term investments:
Time deposits (2)	245,000		—		—		245,000

Total short-term investments	$	245,000	$	—	$	—	$	245,000
Total cash, cash equivalents and short-term investments	$	795,619	$	—	$	(6)	$	795,613


	Three months ended
(shares in thousands)	December 31, 2022	January 1, 2022
Time-based RSUs	508	295
Relative TSR PSUs	186	150
Growth PSUs	92	74
Common stock	6	4
Equity-based compensation in shares	792	523



	Three months ended
(in thousands, except per share data)	December 31, 2022				January 1, 2022
	Basic		Diluted		Basic		Diluted
NUMERATOR:
Net income	$	14,589	$	14,589	$	133,606	$	133,606


DENOMINATOR:
Weighted average shares outstanding - Basic	57,051		57,051		62,385		62,385

Dilutive effect of Equity Plans			678				931


Weighted average shares outstanding - Diluted			57,729				63,316
EPS:
Net income per share - Basic	$	0.26	$	0.26	$	2.14	$	2.14
Effect of dilutive shares			(0.01)				(0.03)
Net income per share - Diluted			$	0.25			$	2.11

Anti-dilutive shares(1)			1				38


	Three months ended
	December 31, 2022		January 1, 2022
Net income	$	14,589	$	133,606
Other comprehensive income:

Foreign currency translation adjustment	14,319		(1,665)
Unrecognized actuarial loss on pension plan, net of tax	(47)		(68)
	14,272		(1,733)

Derivatives designated as hedging instruments:
Unrealized gain on derivative instruments, net of tax	3,093		208
Reclassification adjustment for loss on derivative instruments recognized, net of tax	280		536
Net increase from derivatives designated as hedging instruments, net of tax	3,373		744

Total other comprehensive income/(loss)	17,645		(989)

Comprehensive income	$	32,234	$	132,617


	Three months ended
	December 31, 2022		January 1, 2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	14,589	$	133,606
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	5,613		5,339

Equity-based compensation and employee benefits	6,521		5,312


Adjustment for inventory valuation	809		1,519
Deferred taxes	(2,740)		2,926
Gain on disposal of property, plant and equipment	(256)		—
Unrealized foreign currency translation	3,588		(414)

Changes in operating assets and liabilities, net of assets and liabilities assumed in businesses combinations:
Accounts and other receivable	108,754		(10,322)
Inventories	(27,229)		(31,410)
Prepaid expenses and other current assets	252		(1,551)
Accounts payable, accrued expenses and other current liabilities	(32,763)		(23,278)
Income taxes payable	5,745		13,256
Other, net	2,233		891
Net cash provided by operating activities	85,116		95,874

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchases of property, plant and equipment	(13,878)		(2,711)

Investment in private equity fund	(36)		—


Purchase of short-term investments	(85,000)		(89,000)
Maturity of short-term investments	60,000		99,000


Net cash (used in)/provided by investing activities	(38,914)		7,289

CASH FLOWS FROM FINANCING ACTIVITIES:
Payment on short-term debt	—		(12,000)


	As of
(in thousands)	December 31, 2022
Remaining fiscal 2023	$	4,354
Fiscal 2024	5,806
Fiscal 2025	5,806
Fiscal 2026	5,806
Fiscal 2027	5,108
Thereafter	6,401
Total amortization expense	$	33,281


	As of
	December 31, 2022				October 1, 2022
(in thousands)	Notional Amount		Fair Value Asset Derivatives(1)			Notional Amount		Fair Value Liability Derivatives(2)
Derivatives designated as hedging instruments:
Foreign exchange forward contracts (3)	$	47,395	$	1,139		$	57,570	$	(2,234)
Total derivatives	$	47,395	$	1,139		$	57,570	$	(2,234)


			Payments due by fiscal year
(in thousands)	Total		2023		2024		2025		2026		2027		thereafter
Inventory purchase obligation (1)	$	273,139	$	153,613	$	119,526	$	—	$	—	$	—	$	—



	Three months ended				Basis Point
	December 31, 2022		January 1, 2022		Change
Capital Equipment	48.8	%	46.9	%	190

APS	55.3	%	60.4	%	(510)
Total gross profit margin	50.3	%	48.4	%	190


			Payments due in
(in thousands)	Total		Less than 1 year		1 - 3 years		3 - 5 years		More than 5 years
Inventory purchase obligations (1)	$	273,139	$	153,613	$	119,526	$	—	$	—

U.S. one-time transition tax payable (2) (reflected on our Consolidated Condensed Balance Sheets)	$	54,408	6,723		29,414		18,271		—

Total	$	327,547	$	160,336	$	148,940	$	18,271	$	—


Period	Total Number of Shares Repurchased	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs(1)
October 2, 2022 to October 29, 2022	450	$	39.94	450	$	231.2
October 30, 2022 to December 3, 2022	469	$	45.20	469	$	210.0
December 4, 2022 to December 31, 2022	135	$	45.89	135	$	203.8
For the three months ended December 31, 2022	1,054			1,054



Exhibit No.						Description

3.1						The Company's Amended and Restated Articles of Incorporation, dated December 5, 2007, are incorporated herein by reference to Exhibit 3(i) to the Company's Annual Report on Form 10-K for the fiscal year ended September 29, 2007, SEC file number 000-00121.

3.2						The Company's Amended and Restated By-Laws, dated October 22, 2015, are incorporated herein by reference to Exhibit 3(ii) to the Company's Current Report on Form 8-K dated October 22, 2015, SEC file number 000-00121.

31.1						Certification of Fusen Chen, Chief Executive Officer of Kulicke and Soffa Industries, Inc., pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act as adopted pursuant to section 302 of the Sarbanes-Oxley Act of 2002.

31.2						Certification of Lester Wong, Chief Financial Officer of Kulicke and Soffa Industries, Inc., pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Exchange Act as adopted pursuant to section 302 of the Sarbanes-Oxley Act of 2002.

32.1*						Certification of Fusen Chen, Chief Executive Officer of Kulicke and Soffa Industries, Inc., pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2*						Certification of Lester Wong, Chief Financial Officer of Kulicke and Soffa Industries, Inc., pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS						Inline XBRL Instance Document.

101.SCH						Inline XBRL Taxonomy Extension Schema Document.

101.CAL						Inline XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF						Inline XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB						Inline XBRL Taxonomy Extension Label Linkbase Document.

101.PRE						Inline XBRL Taxonomy Extension Presentation Linkbase Document.

104						Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101.INS).

*						This exhibit shall not be deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liability of that Section. Such exhibit shall not be deemed incorporated into any filing under the Securities Act or the Exchange Act.


	KULICKE AND SOFFA INDUSTRIES, INC.

Date: February 2, 2023	By:	/s/ LESTER WONG
		Lester Wong
		Executive Vice President and Chief Financial Officer (principal financial officer and principal accounting officer)


Date: February 2, 2023	By:	/s/ FUSEN CHEN
		Fusen Chen
		President and Chief Executive Officer