KULICKE & SOFFA INDUSTRIES INC

Previous wording

From time to time, our customers may request that we deliver our products to countries where they own or operate production facilities or to countries where they utilize third-party subcontractors or warehouses as part of their supply chain. For example, customers headquartered in the U.S. may require us to deliver our products to their back-end production facilities in China. Our customer base in the Asia/Pacific region has become more geographically concentrated over time as a result of general economic and industry conditions and trends. Approximately 86.3% and 86.2% of our net revenue for the three months ended March 29, 2025 and March 30, 2024, respectively, were for shipments to customer locations outside of the U.S., primarily in the Asia/Pacific region. Approximately 45.8% and 48.6% of our net revenue for the three months ended March 29, 2025 and March 30, 2024, respectively, were for shipments to customers headquartered in China.

Current wording

From time to time, our customers may request that we deliver our products to countries where they own or operate production facilities or to countries where they utilize third-party subcontractors or warehouses as part of their supply chain. For example, customers headquartered in the U.S. may require us to deliver our products to their back-end production facilities in China. Our customer base in the Asia/Pacific region has become more geographically concentrated over time as a result of general economic and industry conditions and trends. Approximately 92.1% and 92.3% of our net revenue for the three months ended June 28, 2025 and June 29, 2024, respectively, were for shipments to customer locations outside of the U.S., primarily in the Asia/Pacific region. Approximately 60.0% and 54.7% of our net revenue for the three months ended June 28, 2025 and June 29, 2024, respectively, were for shipments to customers headquartered in China.

Previous wording

Similarly, approximately 86.8% and 88.1% of our net revenue for the six months ended March 29, 2025 and March 30, 2024, respectively, were for shipments to customer locations outside of the U.S., primarily in the Asia/Pacific region. Approximately 47.3% and 47.4% of our net revenue for the six months ended March 29, 2025 and March 30, 2024, respectively, were for shipments to customers headquartered in China.

Current wording

Similarly, approximately 88.4% and 89.5% of our net revenue for the nine months ended June 28, 2025 and June 29, 2024, respectively, were for shipments to customer locations outside of the U.S., primarily in the Asia/Pacific region. Approximately 51.3% and 49.9% of our net revenue for the nine months ended June 28, 2025 and June 29, 2024, respectively, were for shipments to customers headquartered in China.

Previous wording

To limit potential adverse cyclical, seasonal and macroeconomic effects on our financial position, we have continued our efforts to maintain a strong balance sheet. As of March 29, 2025, our total cash, cash equivalents and short-term investments were $581.5 million, a $4.4 million increase from the prior fiscal year end. We believe our ability to maintain a strong cash position will allow us to continue to invest in product development, pursue non-organic growth opportunities and return capital to investors through our share repurchase and dividend programs. Please see “Liquidity and Capital Resources” for more information.

Current wording

To limit potential adverse cyclical, seasonal and macroeconomic effects on our financial position, we have continued our efforts to maintain a strong balance sheet. As of June 28, 2025, our total cash, cash equivalents and short-term investments were $556.5 million, a $20.7 million decrease from the prior fiscal year end. We believe our ability to maintain a strong cash position will allow us to continue to invest in product development, pursue non-organic growth opportunities and return capital to investors through our share repurchase and dividend programs. Please see “Liquidity and Capital Resources” for more information.

Previous wording

On March 25, 2025, the Board of Directors of the Company approved a strategic plan related to the intended cessation of its Electronics Assembly ("EA") equipment business. The plan includes an intention to wind down the EA equipment business in an effort to prioritize core semiconductor assembly business opportunities and enhance overall through-cycle financial performance. The intended cessation of the EA equipment business is subject to a consultation process with the applicable works council and union representatives, which the Company intends to initiate in its third fiscal quarter of 2025. The wind down activities are ongoing and are expected to be substantially completed by the first half of fiscal 2026, after which there will be some service support activities to serve out the remaining customer obligations. For additional information, see Note 16: Cessation of Business in our Notes to the Consolidated Condensed Financial Statements.

Current wording

On March 25, 2025, the Board of Directors of the Company approved a strategic plan related to the intended cessation of its Electronics Assembly ("EA") equipment business. The plan includes an intention to wind down the EA equipment business in an effort to prioritize core semiconductor assembly business opportunities and enhance overall through-cycle financial performance. The intended cessation of the EA equipment business is subject to a consultation process with the applicable works council and union representatives, which the Company has initiated in the third fiscal quarter of 2025. The wind down activities are ongoing and are expected to be substantially completed by the first half of fiscal 2026, after which there will be some service support activities to serve out the remaining customer obligations. For additional information, see Note 16: Cessation of Business in our Notes to the Consolidated Condensed Financial Statements.

Previous wording

On November 4, 2024, the Company and the Customer entered into a written agreement pursuant to which the Customer had agreed to reimburse the Company for certain costs and expenses that the Company incurred in connection with the Project. Pursuant to the agreement, the Customer agreed to pay $86.2 million to the Company. In the quarter ended December 28, 2024, $15.1 million was included within "Net Revenue" for delivered products and the remaining $71.1 million was included in "Gain relating to cessation of business" in the Consolidated Condensed Statements of Operations. As of the quarter ended March 29, 2025, the Company has received the reimbursement amount from the Customer.

Current wording

On November 4, 2024, the Company and the Customer entered into a written agreement pursuant to which the Customer had agreed to reimburse the Company for certain costs and expenses that the Company incurred in connection with the Project. Pursuant to the agreement, the Customer agreed to pay $86.2 million to the Company. In the quarter ended December 28, 2024, $15.1 million was included within "Net Revenue" for delivered products and the remaining $71.1 million was included in "Gain relating to cessation of business" in the Consolidated Condensed Statements of Operations. In the previous quarter ended March 29, 2025, the Company has received the reimbursement amount from the Customer.

Previous wording

The ongoing tensions in the Middle East and the prolonged Ukraine/Russia conflict have not had a material impact on our financial condition and operating results in fiscal 2025 to date. We believe that our existing cash, cash equivalents, short-term investments, existing Facility Agreements, and anticipated cash flows from operations will be sufficient to meet our liquidity and capital requirements, notwithstanding the ongoing tensions in the Middle East and the prolonged Ukraine/Russia conflict and other macroeconomic factors, for at least the next twelve months from the date of this Quarterly Report. However, this is a highly dynamic situation. As the macroeconomic situation remains highly volatile and the geopolitical situation remains uncertain, there is uncertainty surrounding the operations of our manufacturing locations, our business, our expectations regarding future demand or supply conditions, our near- and long-term liquidity and our financial condition. Consequentially, our operating results could deteriorate.

Current wording

The ongoing tensions in the Middle East, including the Israel-Iran war, and the prolonged Ukraine/Russia conflict have not had a material impact on our financial condition and operating results in fiscal 2025 to date. We believe that our existing cash, cash equivalents, short-term investments, and anticipated cash flows from operations will be sufficient to meet our liquidity and capital requirements, notwithstanding the ongoing tensions in the Middle East and the prolonged Ukraine/Russia conflict and other macroeconomic factors, for at least the next twelve months from the date of this Quarterly Report. However, this is a highly dynamic situation. As the macroeconomic situation remains highly volatile and the geopolitical situation remains uncertain, there is uncertainty surrounding the operations of our manufacturing locations, our business, our expectations regarding future demand or supply conditions, our near- and long-term liquidity and our financial condition. Consequentially, our operating results could deteriorate.

Previous wording

The following tables reflect our income from operations for the three and six months ended March 29, 2025 and March 30, 2024:

Current wording

The following tables reflect our income from operations for the three and nine months ended June 28, 2025 and June 29, 2024:

Previous wording

Our net revenue for the three and six months ended March 29, 2025 decreased as compared to our net revenue for the three and six months ended March 30, 2024. The decrease in net revenue is primarily due to lower volume in Ball Bonding Equipment, APS and All Others and partially offset by the higher volume in Wedge Bonding Equipment and Advanced Solutions, as further outlined in the following tables presented immediately below.

Current wording

Our net revenue for the three and nine months ended June 28, 2025 decreased as compared to our net revenue for the three and nine months ended June 29, 2024. The decrease in net revenue is primarily due to lower volume in Ball Bonding Equipment, APS and All Others and partially offset by the higher volume in Wedge Bonding Equipment and Advanced Solutions, as further outlined in the following tables presented immediately below.

Previous wording

The following tables reflect net revenue for the three and six months ended March 29, 2025 and March 30, 2024:

Current wording

The following tables reflect net revenue for the three and nine months ended June 28, 2025 and June 29, 2024:

Previous wording

For the three and six months ended March 29, 2025, the decrease in Ball Bonding Equipment net revenue as compared to the prior year period was primarily due to lower volume of customer purchases in the general semiconductor and memory end markets as a result of relatively stable factory utilization levels in certain regions.

Current wording

For the three and nine months ended June 28, 2025, the decrease in Ball Bonding Equipment net revenue as compared to the prior year period was primarily due to lower volume of customer purchases in the general semiconductor and memory end markets as a result of relatively stable factory utilization levels in certain regions.

Previous wording

For the three and six months ended March 29, 2025, the increase in Wedge Bonding Equipment net revenue as compared to the prior year period was primarily due to higher volume of customer purchases primarily in the general semiconductor and automotive markets driven by wider Electric Vehicle adoption in certain regions.

Current wording

For the nine months ended June 28, 2025, the increase in Wedge Bonding Equipment net revenue as compared to the prior year period was primarily due to higher volume of customer purchases primarily in the general semiconductor and partially offset by lower customer purchases in the automotive markets.

Previous wording

For the three and six months ended March 29, 2025, the increase in Advanced Solutions net revenue as compared to the prior year period was primarily due to a higher volume of customer purchases in the general semiconductor end markets.

Current wording

For the three months ended June 28, 2025, the decrease in Advanced Solutions net revenue as compared to the prior year period was primarily due to a lower volume of customer purchases in the general semiconductor end markets.

Previous wording

For the three and six months ended March 29, 2025, the decrease in APS net revenue as compared to the prior year period was due to a lower volume of customer purchases primarily in spares and services, and unfavorable pricing from bonding tools.

Current wording

For the three and nine months ended June 28, 2025, the decrease in APS net revenue as compared to the prior year period was due to a lower volume of customer purchases primarily in spares and services, and unfavorable pricing from bonding tools.

Previous wording

For the three and six months ended March 29, 2025, the decrease in All Others net revenue as compared to the prior year period was primarily due to a lower volume of customer purchases in the general semiconductor end market.

Current wording

For the three and nine months ended June 28, 2025, the decrease in All Others net revenue as compared to the prior year period was primarily due to a lower volume of customer purchases in the general semiconductor end market.

Previous wording

The following tables reflect gross profit margin as a percentage of net revenue by reportable segments for the three and six months ended March 29, 2025 and March 30, 2024:

Current wording

The following tables reflect gross profit margin as a percentage of net revenue by reportable segments for the three and nine months ended June 28, 2025 and June 29, 2024:

Previous wording

For the three and six months ended March 29, 2025, the increase in Ball Bonding Equipment gross profit margin as compared to the prior year period was primarily due to a favorable customer mix, including higher sales to customers where we achieve higher average margins.

Current wording

For the three and nine months ended June 28, 2025, the increase in Ball Bonding Equipment gross profit margin as compared to the prior year period was primarily driven by a favorable product mix, including lower sales of lower margin products and a shift in customer mix, including higher sales to customers where we achieve higher average margins.

Previous wording

For the three and six months ended March 29, 2025, the decrease in Wedge Bonding Equipment gross profit margin as compared to the prior year period was primarily driven by a less favorable product mix, including higher sales of lower margin products and a shift in customer mix, including higher sales to customers where we achieve lower average margins.

Current wording

For the three and nine months ended June 28, 2025, the decrease in Wedge Bonding Equipment gross profit margin as compared to the prior year period was primarily driven by a less favorable product mix, including higher sales of lower margin products and a shift in customer mix, including higher sales to customers where we achieve lower average margins.

Previous wording

For the three and six months ended March 29, 2025, the increase in Advanced Solutions gross profit margin as compared to the prior year period was primarily due to the inventory write-down charges in the prior year as a result of the cancellation of Project W and favorable product mix, including higher sales of higher margin products.

Current wording

For the nine months ended June 28, 2025, the increase in Advanced Solutions gross profit margin as compared to the prior year period was primarily due to the inventory write-down charges in the prior year as a result of the cancellation of Project W and favorable product mix, including higher sales of higher margin products.

Previous wording

For the three and six months ended March 29, 2025, the decrease in APS gross profit margin as compared to the prior year period was primarily driven by lower volume from spares and services, and unfavorable pricing from bonding tools.

Current wording

For the three and nine months ended June 28, 2025, the decrease in APS gross profit margin as compared to the prior year period was primarily driven by lower volume from spares and services, and unfavorable pricing from bonding tools, and the spares related inventory write-down charges incurred as a result of the intended cessation of the EA equipment business.

Previous wording

For the three and six months ended March 29, 2025, the decrease in gross profit margin for the “All Others” category as compared to the prior year period was primarily driven by the inventory write-down charges incurred as a result of the intended cessation of the EA equipment business.

Current wording

For the three and nine months ended June 28, 2025, the decrease in gross profit margin for the “All Others” category as compared to the prior year period was primarily driven by the inventory write-down charges incurred as a result of the intended cessation of the EA equipment business.

Previous wording

The following tables reflect operating expenses for the three and six months ended March 29, 2025 and March 30, 2024:

Current wording

The following tables reflect operating expenses for the three and nine months ended June 28, 2025 and June 29, 2024:

Previous wording

For the six months ended March 29, 2025, the higher SG&A expenses as compared to the prior year period were primarily due to $6.7 million higher severance expenses, $1.8 million higher staff cost and $0.5 million higher professional services. This was partially offset by $3.6 million net favorable variance in foreign exchange.

Current wording

For the three months ended June 28, 2025, the higher SG&A expenses as compared to the prior year period were primarily due to $1.0 million net unfavourable variance in foreign exchange and $0.5 million higher staff cost. This was partially offset by $0.5 million lower professional services .

Previous wording

For the three months ended March 29, 2025, the higher SG&A expenses as compared to the prior year period were primarily due to $5.9 million higher severance expenses, $1.4 million higher staff cost, $0.5 million higher professional services and $0.5 million net unfavorable variance in foreign exchange.

Current wording

For the nine months ended June 28, 2025, the higher SG&A expenses as compared to the prior year period were primarily due to $7.2 million higher severance expenses and $2.3 million higher staff cost. This was partially offset by $2.6 million net favourable variance in foreign exchange.

Previous wording

For the three months ended March 29, 2025, the lower R&D expenses as compared to the prior year period were primarily due to $1.1 million lower professional services. This was partially offset by $0.5 million higher staff cost.

Current wording

For the three months ended June 28, 2025, the lower R&D expenses as compared to the prior year period were primarily due to $1.5 million lower prototype materials and $0.6 million lower staff cost.

Previous wording

For the six months ended March 29, 2025, the higher R&D expenses as compared to the prior year period were primarily due to $3.4 million higher staff cost. This was partially offset by $2.5 million lower prototype materials.

Current wording

For the nine months ended June 28, 2025, the lower R&D expenses as compared to the prior year period were primarily due to $4.0 million lower prototype materials. This was partially offset by $2.8 million higher staff cost.

Previous wording

For the six months ended March 29, 2025, the gain relating to cessation of business was primarily due to the $71.1 million reimbursement for certain costs and expenses from the cancellation of Project W, a $3.2 million gain on the disposal of a subsidiary and a $1.7 million gain from the supplier settlement.

Current wording

For the nine months ended June 28, 2025, the gain relating to cessation of business was primarily due to the $71.1 million reimbursement for certain costs and expenses from the cancellation of Project W, a $3.2 million gain on the disposal of a subsidiary and a $1.7 million gain from the supplier settlement.

Previous wording

For the three and six months ended March 29, 2025, the impairment charges in the current period were due to $39.8 million impairment charges on long-lived assets, intangible assets and goodwill related to the intended cessation of the EA equipment business. The impairment charges in the prior year period were due to $44.5 million impairment charges on long-lived assets related to the cancellation of Project W.

Current wording

For the nine months ended June 28, 2025, the impairment charges in the current period were due to $39.8 million impairment charges on long-lived assets, intangible assets and goodwill related to the intended cessation of the EA equipment business. The impairment charges in the prior year period were due to $44.5 million impairment charges on long-lived assets related to the cancellation of Project W.

Previous wording

Our loss from operations for the three and six months ended March 29, 2025 decreased as compared to our loss from operations for the three and six months ended March 30, 2024. The changes in income/(loss) from operations for the respective segments are due to the changes in net revenue, gross profit margin and operating expenses as explained in the respective sections above.

Current wording

The changes in loss from operations for the respective segments are due to the changes in net revenue, gross profit margin and operating expenses as explained in the respective sections above.

Previous wording

The following tables reflect income/(loss) from operations by reportable segments for the three and six months ended March 29, 2025 and March 30, 2024.

Current wording

The following tables reflect loss from operations by reportable segments for the three and nine months ended June 28, 2025 and June 29, 2024.

Previous wording

The following tables reflect interest income and interest expense for the three and six months ended March 29, 2025 and March 30, 2024:

Current wording

The following tables reflect interest income and interest expense for the three and nine months ended June 28, 2025 and June 29, 2024:

Previous wording

For the three and six months ended March 29, 2025, interest income decreased as compared to the prior year period primarily due to a lower average balances of cash, cash equivalents and short-term investments.

Current wording

For the three and nine months ended June 28, 2025, interest income decreased as compared to the prior year period primarily due to a lower weighted interest rate on cash, cash equivalents and short-term investments.

Previous wording

The following table reflects the provision for income taxes and the effective tax rate for the three and six months ended March 29, 2025 and March 30, 2024:

Current wording

The following table reflects the provision for income taxes and the effective tax rate for the three and nine months ended June 28, 2025 and June 29, 2024:

Previous wording

For the three and six months ended March 29, 2025, as compared to the same period ended March 30, 2024, the change in provision for income taxes and effective tax rate was primarily due to the tax effects of the intended cessation of the Company's EA equipment business and the reimbursement from the cancellation of Project W which were recorded as discrete items during fiscal 2025 as well as the one-time charge for the cancellation of Project W and the increase in valuation allowance recorded against certain deferred tax assets, which were recorded as discrete items during fiscal 2024.

Current wording

For the three and nine months ended June 28, 2025, as compared to the same period ended June 29, 2024, the change in provision for income taxes and effective tax rate was primarily due to the tax effects of the intended cessation of the Company's EA equipment business and the reimbursement from the cancellation of Project W which were recorded as discrete items during fiscal 2025 as well as the one-time charge for the cancellation of Project W and the increase in valuation allowance recorded against certain deferred tax assets, which were recorded as discrete items during fiscal 2024.

Previous wording

For the three and six months ended March 29, 2025, the effective tax rate is different than the U.S. federal statutory tax rate primarily due to earnings of foreign subsidiaries subject to tax at different rates than the U.S., tax incentives, tax credits, change in valuation allowances, the impact of global intangible low-taxed income, and the tax impact of the discrete items noted above.

Current wording

For the three and nine months ended June 28, 2025, the effective tax rate is different than the U.S. federal statutory tax rate primarily due to earnings of foreign subsidiaries subject to tax at different rates than the U.S., tax incentives, tax credits, change in valuation allowances, the impact of global intangible low-taxed income, and the tax impact of the discrete items noted above.

Previous wording

The following table reflects a summary of the Consolidated Condensed Statements of Cash Flow information for the six months ended March 29, 2025 and March 30, 2024:

Current wording

The following table reflects a summary of the Consolidated Condensed Statements of Cash Flow information for the nine months ended June 28, 2025 and June 29, 2024:

Previous wording

The increase in net cash provided by operating activities was primarily due to non-cash adjustments to net loss of $89.0 million and a net favourable change in operating assets and liabilities of $12.6 million, partially offset by a net loss of $2.9 million. The non-cash adjustments were primarily due to impairment charges of $39.8 million and an inventory write-down of $28.9 million as a result of the intended cessation of the EA equipment business. The net change in operating assets and liabilities was primarily driven by a decrease in accounts and other receivable of $20.1 million, a decrease in prepaid expenses and other current assets of $7.4 million, and a net increase in accounts payable, accrued expenses and other liabilities of $3.3 million. This was partially offset by an increase in inventories of $11.3 million after excluding the impact of the inventory write-down as shown above, and a decrease in income tax payable of $5.8 million.

Current wording

The increase in net cash provided by operating activities was primarily due to non-cash adjustments to net loss of $105.8 million and a net favourable change in operating assets and liabilities of $6.5 million, partially offset by a net loss of $6.2 million. The non-cash adjustments were primarily due to impairment charges of $39.8 million and an inventory write-down of $31.6 million as a result of the intended cessation of the EA equipment business. The net change in operating assets and liabilities was primarily driven by a decrease in accounts and other receivable of $20.0 million, a decrease in prepaid expenses and other current assets of $4.7 million, and a net increase in accounts payable, accrued expenses and other liabilities of $10.5 million. This was partially offset by an increase in inventories of $21.4 million after excluding the impact of the inventory write-down as shown above, and a decrease in income tax payable of $7.5 million.

Previous wording

The decrease in accounts and other receivable in the six months ended March 29, 2025 was mainly due to lower sales for the period. The decrease in prepaid expenses and other current assets was mainly due to the receipt of tax refunds. The net increase in accounts payable, accrued expenses and other liabilities was primarily due to higher accrued adverse purchase commitments, partially offset by overall lower purchases. The increase in inventories was due to the buildup of long lead time materials to fulfill certain customer purchase orders. The decrease in income tax payable was primarily due to lower profitability which included the net impact from the intended cessation of EA equipment business and reimbursement from the cancellation of Project W which were treated as discrete items.

Current wording

The decrease in accounts and other receivable in the nine months ended June 28, 2025 was mainly due to lower sales for the period. The decrease in prepaid expenses and other current assets was mainly due to the receipt of tax refunds. The net increase in accounts payable, accrued expenses and other liabilities was primarily due to higher accrued employee termination benefits and adverse purchase commitments, partially offset by overall lower purchases. The increase in inventories was due to the buildup of long lead time materials to fulfill certain customer purchase orders. The decrease in income tax payable was primarily due to lower profitability which included the net impact from the intended cessation of EA equipment business and reimbursement from the cancellation of Project W which were treated as discrete items.

Previous wording

Net cash provided by investing activities was due to net maturity of short-term investments of $55.0 million and net cash received from the disposal of a subsidiary of $2.5 million, partially offset by capital expenditures of $12.2 million and investment in a private equity fund of $1.8 million.

Current wording

Net cash provided by investing activities was due to net maturity of short-term investments of $40.0 million and net cash received from the disposal of a subsidiary of $2.5 million, partially offset by capital expenditures of $14.2 million and investment in a private equity fund of $2.3 million.

Previous wording

Net cash used in financing activities was primarily due to common stock repurchases of $58.5 million and dividend payments of $21.8 million.

Current wording

Net cash used in financing activities was primarily due to common stock repurchases of $80.1 million and dividend payments of $32.7 million.

Previous wording

The increase in net cash used in operating activities was primarily due to a net loss of $93.4 million and a net unfavorable change in operating assets and liabilities of $87.2 million, partially offset by non-cash adjustments to net income of $153.1 million. The non-cash adjustments were primarily due to impairment charges of $44.5 million and inventory write-down of $57.3 million as a result of the cancellation of the Project. The net change in operating assets and liabilities was primarily driven by an increase in accounts and other receivable of $36.5 million, an increase in inventories of $28.6 million after excluding the impact of the inventory write-down as shown above, a decrease in income tax payable of $21.7 million and a decrease in accounts payable and accrued expenses and other current liabilities of $7.8 million. This was partially offset by a decrease in prepaid expenses and other current assets of $13.4 million.

Current wording

The increase in net cash used in operating activities was primarily due to a net loss of $81.1 million and a net unfavourable change in operating assets and liabilities of $87.8 million, partially offset by non-cash adjustments to net income of $168.3 million. The non-cash adjustments were primarily due to impairment charges of $44.5 million and inventory write-down of $57.3 million as a result of the cancellation of the Project. The net change in operating assets and liabilities was primarily driven by an increase in accounts and other receivable of $42.4 million, an increase in inventories of $27.0 million after excluding the impact of the inventory write-down as shown above, a decrease in income tax payable of $23.1 million and a decrease in accounts payable and accrued expenses and other current liabilities of $7.8 million. This was partially offset by a decrease in prepaid expenses and other current assets of $18.4 million.