x
|
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
|
PENNSYLVANIA
|
23-1498399
|
|
(State
or other jurisdiction of incorporation)
|
(IRS
Employer
|
|
|
Identification
No.)
|
Large
accelerated filer ¨
|
Accelerated
filer x
|
Non-accelerated
filer ¨
|
Smaller
reporting company ¨
|
(Do
not check if a smaller reporting
company)
|
Page
Number
|
||||
PART
I.
|
FINANCIAL
INFORMATION
|
|||
Item
1.
|
FINANCIAL
STATEMENTS (Unaudited)
|
|||
Consolidated
Balance Sheets as of October 3, 2009 and July 3, 2010
|
3 | |||
Consolidated
Statements of Operations for the three and nine months ended June 27, 2009
and July 3, 2010
|
4 | |||
Consolidated
Statements of Cash Flows for the nine months ended June 27, 2009 and July
3, 2010
|
5 | |||
Notes
to the Consolidated Financial Statements
|
6 | |||
Item
2.
|
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
|
27 | ||
Item
3.
|
QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
46 | ||
Item
4.
|
CONTROLS
AND PROCEDURES
|
46 | ||
PART
II.
|
OTHER
INFORMATION
|
|||
Item
1A.
|
RISK
FACTORS
|
47 | ||
Item
6.
|
EXHIBITS
|
47 | ||
SIGNATURES
|
48 |
As
of
|
||||||||
October 3, 2009 *
|
July 3, 2010
|
|||||||
ASSETS
|
||||||||
Current
assets:
|
||||||||
Cash
and cash equivalents
|
$ | 144,560 | $ | 162,840 | ||||
Restricted
cash
|
281 | 226 | ||||||
Accounts
and notes receivable, net of allowance for doubtful accounts of $1,378 and
$507, respectively
|
95,779 | 151,583 | ||||||
Inventories,
net
|
41,489 | 68,833 | ||||||
Prepaid
expenses and other current assets
|
11,566 | 13,956 | ||||||
Deferred
income taxes
|
1,786 | 1,783 | ||||||
Total
current assets
|
295,461 | 399,221 | ||||||
Property,
plant and equipment, net
|
36,046 | 29,715 | ||||||
Goodwill
|
26,698 | 26,698 | ||||||
Intangible
assets
|
48,656 | 41,497 | ||||||
Other
assets
|
5,774 | 9,347 | ||||||
Total
assets
|
$ | 412,635 | $ | 506,478 | ||||
LIABILITIES
AND SHAREHOLDERS' EQUITY
|
||||||||
Current
liabilities:
|
||||||||
Current
portion of long-term debt
|
$ | 48,964 | $ | - | ||||
Accounts
payable
|
39,908 | 80,326 | ||||||
Accrued
expenses and other current liabilities
|
32,576 | 38,197 | ||||||
Income
taxes payable
|
1,612 | 894 | ||||||
Total
current liabilities
|
123,060 | 119,417 | ||||||
Long-term
debt
|
92,217 | 96,861 | ||||||
Deferred
income taxes
|
16,282 | 16,864 | ||||||
Other
liabilities
|
10,273 | 9,330 | ||||||
Total
liabilities
|
241,832 | 242,472 | ||||||
Commitments
and contingencies (Note 12)
|
||||||||
Shareholders'
equity:
|
||||||||
Preferred
stock, no par value:
Authorized 5,000 shares; issued - none |
- | - | ||||||
Common
stock, no par value:
Authorized 200,000 shares; issued 74,370 and 75,203 respectively; outstanding 69,415 and 70,249 shares, respectively |
413,092 | 420,370 | ||||||
Treasury
stock, at cost, 4,954 shares
|
(46,356 | ) | (46,356 | ) | ||||
Accumulated
deficit
|
(197,812 | ) | (111,731 | ) | ||||
Accumulated
other comprehensive income
|
1,879 | 1,723 | ||||||
Total
shareholders' equity
|
170,803 | 264,006 | ||||||
TOTAL
LIABILITIES AND SHAREHOLDERS' EQUITY
|
$ | 412,635 | $ | 506,478 |
Three months ended
|
Nine months ended
|
|||||||||||||||
June
27,
|
July
3,
|
June
27,
|
July
3,
|
|||||||||||||
2009*
|
2010
|
2009*
|
2010
|
|||||||||||||
Net
revenue
|
$ | 52,076 | $ | 221,254 | $ | 114,724 | $ | 503,507 | ||||||||
Cost
of sales
|
32,407 | 122,070 | 73,082 | 280,178 | ||||||||||||
Gross
profit
|
19,669 | 99,184 | 41,642 | 223,329 | ||||||||||||
Selling,
general and administrative
|
21,887 | 34,446 | 79,575 | 90,142 | ||||||||||||
Research
and development
|
12,264 | 14,686 | 40,922 | 41,827 | ||||||||||||
Impairment
of goodwill
|
- | - | 2,709 | - | ||||||||||||
Total
operating expenses
|
34,151 | 49,132 | 123,206 | 131,969 | ||||||||||||
Income
(loss) from operations
|
(14,482 | ) | 50,052 | (81,564 | ) | 91,360 | ||||||||||
Interest
income
|
75 | 104 | 1,022 | 290 | ||||||||||||
Interest
expense
|
(2,011 | ) | (2,153 | ) | (6,114 | ) | (6,341 | ) | ||||||||
Gain
on extinguishment of debt
|
- | - | 3,965 | - | ||||||||||||
Income
(loss) from continuing operations before tax
|
(16,418 | ) | 48,003 | (82,691 | ) | 85,309 | ||||||||||
Benefit
for income taxes from continuing operations
|
(1,156 | ) | (1,080 | ) | (13,314 | ) | (772 | ) | ||||||||
Income
(loss) from continuing operations, net of tax
|
(15,262 | ) | 49,083 | (69,377 | ) | 86,081 | ||||||||||
Income
from discontinued operations, net of tax
|
- | - | 22,727 | - | ||||||||||||
Net
income (loss)
|
$ | (15,262 | ) | $ | 49,083 | $ | (46,650 | ) | $ | 86,081 | ||||||
Income
(loss) per share from continuing operations:
|
||||||||||||||||
Basic
|
$ | (0.25 | ) | $ | 0.69 | $ | (1.14 | ) | $ | 1.22 | ||||||
Diluted
|
$ | (0.25 | ) | $ | 0.65 | $ | (1.14 | ) | $ | 1.15 | ||||||
Income
per share from discontinued operations:
|
||||||||||||||||
Basic
|
$ | 0.00 | $ | 0.00 | $ | 0.37 | $ | 0.00 | ||||||||
Diluted
|
$ | 0.00 | $ | 0.00 | $ | 0.37 | $ | 0.00 | ||||||||
Net
income (loss) per share:
|
||||||||||||||||
Basic
|
$ | (0.25 | ) | $ | 0.69 | $ | (0.77 | ) | $ | 1.22 | ||||||
Diluted
|
$ | (0.25 | ) | $ | 0.65 | $ | (0.77 | ) | $ | 1.15 | ||||||
Weighted
average shares outstanding:
|
||||||||||||||||
Basic
|
61,220 | 70,131 | 60,908 | 69,873 | ||||||||||||
Diluted
|
61,220 | 74,960 | 60,908 | 74,494 |
Nine months ended
|
||||||||
June 27, 2009 *
|
July 3, 2010
|
|||||||
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
||||||||
Net
income (loss)
|
$ | (46,650 | ) | $ | 86,081 | |||
Less:
Income from discontinued operations
|
22,727 | - | ||||||
Income
(loss) from continuing operations
|
(69,377 | ) | 86,081 | |||||
Adjustments
to reconcile income (loss) from continuing operations to net cash provided
by (used in) operating activities:
|
||||||||
Depreciation
and amortization
|
15,608 | 13,258 | ||||||
Amortization
of debt discount and debt issuance costs
|
4,895 | 5,226 | ||||||
Amortization
of gain on sale of building
|
- | (137 | ) | |||||
Equity-based
compensation and employee benefits
|
1,418 | 5,422 | ||||||
Swiss
pension plan curtailment
|
(1,446 | ) | - | |||||
Provision
for doubtful accounts
|
646 | (481 | ) | |||||
Provision
for inventory valuation
|
8,670 | 797 | ||||||
Deferred
taxes
|
(7,201 | ) | (2,237 | ) | ||||
Impairment
of goodwill
|
2,709 | - | ||||||
Gain
on extinguishment of debt
|
(3,965 | ) | - | |||||
Changes
in operating assets and liabilities, net of businesses acquired or
sold:
|
||||||||
Accounts
and notes receivable
|
28,394 | (55,686 | ) | |||||
Inventory
|
1,266 | (28,179 | ) | |||||
Prepaid
expenses and other current assets
|
8,873 | (2,597 | ) | |||||
Accounts
payable and accrued expenses
|
(7,092 | ) | 49,263 | |||||
Income
taxes payable
|
(26,672 | ) | (721 | ) | ||||
Other,
net
|
2,029 | (2,032 | ) | |||||
Net
cash provided by (used in) continuing operations
|
(41,245 | ) | 67,977 | |||||
Net
cash used in discontinued operations
|
(1,699 | ) | (1,488 | ) | ||||
Net
cash provided by (used in) operating activities
|
(42,944 | ) | 66,489 | |||||
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
||||||||
Purchases
of property, plant and equipment
|
(4,398 | ) | (3,371 | ) | ||||
Proceeds
from sale of property, plant and equipment
|
- | 3,958 | ||||||
Proceeds
from sales of investments classified as available-for-sale
|
3,824 | - | ||||||
Purchase
of Orthodyne
|
(87,039 | ) | - | |||||
Changes
in restricted cash, net
|
34,719 | 55 | ||||||
Net
cash provided by (used in) continuing operations
|
(52,894 | ) | 642 | |||||
Net
cash provided by (used in) discontinued operations
|
149,857 | (1,838 | ) | |||||
Net
cash provided by investing activities
|
96,963 | (1,196 | ) | |||||
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
||||||||
Payments
on borrowings
|
(84,358 | ) | (48,964 | ) | ||||
Net
costs from sale of common stock
|
- | (29 | ) | |||||
Proceeds
from exercise of common stock options
|
54 | 1,872 | ||||||
Net
cash provided by (used in) financing activities
|
(84,304 | ) | (47,121 | ) | ||||
Effect
of exchange rate changes on cash and cash equivalents
|
40 | 108 | ||||||
Changes
in cash and cash equivalents
|
(30,245 | ) | 18,280 | |||||
Cash
and cash equivalents at beginning of period
|
144,932 | 144,560 | ||||||
Cash
and cash equivalents at end of period
|
$ | 114,687 | $ | 162,840 | ||||
CASH
PAID FOR:
|
||||||||
Interest
|
$ | 1,463 | $ | 726 | ||||
Income
taxes
|
$ | 1,178 | $ | 1,535 |
Nine months ended
|
||||
(in
thousands)
|
June 27, 2009
|
|||
Net
revenue
|
$ | - | ||
Loss
before tax
|
$ | (319 | ) | |
Gain
on sale of Wire business before tax
|
23,524 | |||
Income
from discontinued operations before tax
|
23,205 | |||
Income
tax expense
|
(478 | ) | ||
Income
from discontinued operations, net of tax
|
$ | 22,727 |
Nine months ended
|
||||||||
(in
thousands)
|
June 27, 2009
|
July 3, 2010
|
||||||
Cash
flows provided by (used in):
|
||||||||
Operating
activities: Wire business
|
$ | (319 | ) | $ | - | |||
Operating
activities: Test business (sold in fiscal 2006) (1)
|
(1,380 | ) | (1,488 | ) | ||||
Investing
activities: Wire business (2)
|
149,857 | (1,838 | ) | |||||
Net
cash provided by (used in) discontinued operations
|
$ | 148,158 | $ | (3,326 | ) |
(1)
|
Represents
facility-related costs associated with the Company’s former Test
operations.
|
(2)
|
Fiscal
2010 amount represents final settlement of working capital adjustments
with Heraeus.
|
Three months ended
|
Nine months ended
|
|||||||||||||||
(in
thousands)
|
June 27, 2009
|
July 3, 2010
|
June 27, 2009
|
July 3, 2010
|
||||||||||||
Accrual
for estimated severance and benefits, beginning of period
|
$ | 2,420 | $ | 2,073 | $ | - | $ | 2,413 | ||||||||
Provision
for severance and benefits: Equipment
segment (1)
|
- | 619 | 4,639 | 787 | ||||||||||||
Provision
for severance and benefits: Expendable Tools segment (1)
|
567 | 427 | 2,677 | 784 | ||||||||||||
Provision
for severance and benefits required by local law (2)
|
1,035 | - | 1,035 | - | ||||||||||||
Payment
of severance and benefits
|
(558 | ) | (447 | ) | (4,887 | ) | (1,312 | ) | ||||||||
Accrual
for estimated severance and benefits, end of
period (3)
|
$ | 3,464 | $ | 2,672 | $ | 3,464 | $ | 2,672 |
(in thousands)
|
Equipment segment
|
Expendable Tools
segment
|
Total
|
|||||||||
As
of October 3, 2009 and July 3, 2010:
|
||||||||||||
Beginning
of period, Goodwill, gross
|
$ | 22,999 | $ | 6,408 | $ | 29,407 | ||||||
Accumulated
impairment losses (1)
|
(2,709 | ) | - | (2,709 | ) | |||||||
End
of period, Goodwill, net
|
$ | 20,290 | $ | 6,408 | $ | 26,698 |
(1)
|
During
the nine months ended June 27, 2009, the Company recorded a $2.7 million
impairment charge related to its die bonder
goodwill.
|
As
of
|
Average
estimated
useful
|
|||||||||||
(in
thousands)
|
October
3, 2009
|
July
3, 2010
|
lives
(in
years)
|
|||||||||
Wedge
bonder developed technology
|
$ | 33,200 | $ | 33,200 | 7.0 | |||||||
Accumulated
amortization
|
(4,742 | ) | (8,300 | ) | ||||||||
Net
wedge bonder developed technology
|
28,458 | 24,900 | ||||||||||
Wedge
bonder customer relationships
|
19,300 | 19,300 | 5.0 | |||||||||
Accumulated
amortization
|
(3,860 | ) | (6,755 | ) | ||||||||
Net
wedge bonder customer relationships
|
15,440 | 12,545 | ||||||||||
Wedge
bonder trade name
|
4,600 | 4,600 | 8.0 | |||||||||
Accumulated
amortization
|
(575 | ) | (1,006 | ) | ||||||||
Net
wedge bonder trade name
|
4,025 | 3,594 | ||||||||||
Wedge
bonder other intangible assets
|
2,500 | 2,500 | 1.9 | |||||||||
Accumulated
amortization
|
(1,767 | ) | (2,042 | ) | ||||||||
Net
wedge bonder other intangible assets
|
733 | 458 | ||||||||||
Net
intangible assets
|
$ | 48,656 | 41,497 |
(in
thousands)
|
||||
Fiscal
2010 (remaining fiscal year)
|
$ | 2,386 | ||
Fiscal
2011
|
9,545 | |||
Fiscal
2012
|
9,178 | |||
Fiscal
2013
|
9,178 | |||
Fiscal
2014-2016
|
11,210 | |||
Total
amortization expense
|
$ | 41,497 |
Three months ended
|
Nine months ended
|
|||||||||||||||
(in
thousands)
|
June 27, 2009 *
|
July 3, 2010
|
June 27, 2009 *
|
July 3, 2010
|
||||||||||||
Net
income (loss) (1)
|
$ | (15,262 | ) | $ | 49,083 | $ | (46,650 | ) | $ | 86,081 | ||||||
Gain
(loss) from foreign currency translation adjustments
|
1,064 | 493 | (377 | ) | (162 | ) | ||||||||||
Unrealized
gain on investments, net of taxes
|
14 | - | 18 | - | ||||||||||||
Unrecognized
actuarial net gain (loss), Switzerland pension plan, net of
tax
|
(8 | ) | (3 | ) | 160 | 6 | ||||||||||
Switzerland
pension plan curtailment
|
(388 | ) | (388 | ) | ||||||||||||
Other
comprehensive income (loss)
|
682 | 490 | (587 | ) | (156 | ) | ||||||||||
Comprehensive
income (loss)
|
$ | (14,580 | ) | $ | 49,573 | $ | (47,237 | ) | $ | 85,925 |
As
of
|
||||||||
(in
thousands)
|
October 3, 2009
|
July 3, 2010
|
||||||
Gain
from foreign currency translation adjustments
|
$ | 746 | $ | 584 | ||||
Unrecognized
actuarial net gain, Switzerland pension plan, net of taxes
|
1,133 | 1,139 | ||||||
Accumulated
other comprehensive income
|
$ | 1,879 | $ | 1,723 |
As
of
|
||||||||
(in
thousands)
|
October 3, 2009
|
July 3, 2010
|
||||||
Inventories,
net:
|
||||||||
Raw
materials and supplies
|
$ | 30,048 | $ | 37,630 | ||||
Work
in process
|
10,788 | 25,366 | ||||||
Finished
goods
|
13,170 | 15,410 | ||||||
54,006 | 78,406 | |||||||
Inventory
reserves
|
(12,517 | ) | (9,573 | ) | ||||
$ | 41,489 | $ | 68,833 | |||||
Property,
plant and equipment, net:
|
||||||||
Land (1)
|
$ | 2,735 | $ | 2,618 | ||||
Buildings
and building improvements (1)
|
14,351 | 11,601 | ||||||
Leasehold
improvements
|
11,695 | 9,481 | ||||||
Data
processing and hardware equipment and software
|
21,822 | 22,229 | ||||||
Machinery
and equipment
|
40,600 | 37,902 | ||||||
91,203 | 83,831 | |||||||
Accumulated
depreciation
|
(55,157 | ) | (54,116 | ) | ||||
$ | 36,046 | $ | 29,715 | |||||
Accrued
expenses and other current liabilities:
|
||||||||
Wages
and benefits
|
$ | 10,423 | $ | 14,949 | ||||
Accrued
customer obligations (2)
|
4,438 | 8,222 | ||||||
Severance (3)
|
3,264 | 3,330 | ||||||
Commissions
and professional fees
|
2,072 | 3,271 | ||||||
Short-term
facility accrual related to discontinued operations (Test)
|
1,839 | 1,880 | ||||||
Payable
to Heraeus (4)
|
1,857 | - | ||||||
Other
|
8,683 | 6,545 | ||||||
$ | 32,576 | $ | 38,197 |
(in
thousands)
|
|||||||||||||||
Payment
Dates
|
Conversion
|
Maturity
|
As
of
|
||||||||||||
Rate
|
of
each year
|
Price
|
Date
|
October
3, 2009 *
|
July
3, 2010
|
||||||||||
1.000
|
% |
June
30 and December 30
|
$ | 12.84 |
Redeemed
June 30, 2010
|
$ | 48,964 | $ | - | ||||||
0.875
|
% |
June
1 and December 1
|
$ | 14.36 |
June
1, 2012
|
110,000 | 110,000 | ||||||||
Debt
discount on 0.875% Convertible Subordinated Notes due June
2012
|
(17,783 | ) | (13,139 | ) | |||||||||||
$ | 141,181 | $ | 96,861 |
Three months ended
|
||||||||||||
(in thousands)
|
June 27, 2009, as
reported
|
June 27, 2009 as
adjusted
|
Effect of
change
|
|||||||||
Interest
expense
|
$ | 607 | $ | 2,011 | $ | 1,404 | ||||||
Loss
from continuing operations before taxes
|
(15,014 | ) | (16,418 | ) | (1,404 | ) | ||||||
Benefit
for income taxes
|
1,156 | 1,156 | - | |||||||||
Loss
from continuing operations
|
$ | (13,858 | ) | $ | (15,262 | ) | $ | (1,404 | ) | |||
Diluted
loss per share from continuing operations
|
$ | (0.23 | ) | $ | (0.25 | ) | $ | (0.02 | ) |
Nine months ended
|
||||||||||||
(in thousands)
|
June 27, 2009, as
reported
|
June 27, 2009 as
adjusted
|
Effect of
change
|
|||||||||
Interest
expense
|
$ | 1,981 | $ | 6,114 | $ | 4,133 | ||||||
Loss
from continuing operations before taxes
|
(78,558 | ) | (82,691 | ) | (4,133 | ) | ||||||
Benefit
for income taxes
|
13,314 | 13,314 | - | |||||||||
Loss
from continuing operations
|
$ | (65,244 | ) | $ | (69,377 | ) | $ | (4,133 | ) | |||
Diluted
loss per share from continuing operations
|
$ | (1.07 | ) | $ | (1.14 | ) | $ | (0.07 | ) |
As of
|
||||||||||||
(in thousands)
|
October 3, 2009, as
reported
|
October 3, 2009, as
adjusted
|
Effect of
change
|
|||||||||
Other
assets (debt issuance costs)
|
$ | 6,215 | $ | 5,774 | $ | (441 | ) | |||||
Total
assets
|
413,076 | 412,635 | (441 | ) | ||||||||
Long-term
debt
|
110,000 | 92,217 | (17,783 | ) | ||||||||
Total
liabilities
|
259,615 | 241,832 | (17,783 | ) | ||||||||
Common
stock
|
383,417 | 413,092 | 29,675 | |||||||||
Accumulated
deficit
|
(185,479 | ) | (197,812 | ) | (12,333 | ) | ||||||
Total
shareholders' equity
|
153,461 | 170,803 | 17,342 | |||||||||
Total
liabilities and shareholders' equity
|
413,076 | 412,635 | (441 | ) |
For the nine months ended
|
||||||||||||
(in thousands)
|
June 27, 2009, as
reported
|
June 27, 2009, as
adjusted
|
Effect of
change
|
|||||||||
Net
loss
|
$ | (42,517 | ) | $ | (46,650 | ) | $ | (4,133 | ) | |||
Loss
from continuing operations
|
(65,244 | ) | (69,377 | ) | (4,133 | ) | ||||||
Amortization
of debt discount and debt issuance costs
|
762 | 4,895 | 4,133 | |||||||||
Net
cash used in continuing operations
|
(41,245 | ) | (41,245 | ) | - |
Three months ended
|
Nine months ended
|
|||||||||||||||
(in
thousands)
|
June 27, 2009 *
|
July 3, 2010
|
June 27, 2009 *
|
July 3, 2010
|
||||||||||||
Amortization
expense related to issue costs
|
$ | 187 | $ | 194 | $ | 601 | $ | 582 |
Nine
Months Ended
|
||||
(in
thousands)
|
June 27, 2009
|
|||
0.5%
Convertible Subordinated Notes (1):
|
||||
Face
value purchased
|
$ | 43,050 | ||
Net
cash
|
42,839 | |||
Deferred
financing costs
|
18 | |||
Recognized
gain, net of deferred financing costs
|
193 | |||
1.0%
Convertible Subordinated Notes: (2)
|
||||
Face
value purchased
|
$ | 16,036 | ||
Net
cash
|
12,158 | |||
Deferred
financing costs
|
106 | |||
Recognized
gain, net of deferred financing costs
|
3,772 | |||
Gain
on early extinguishment of debt
|
$ | 3,965 |
|
·
|
In
general, stock options and time-based restricted stock awarded to
employees vest annually over a three year period provided the employee
remains employed. The Company follows the non-substantive vesting method
for stock options and recognizes compensation expense immediately for
awards granted to retirement eligible employees, or over the period from
the grant date to the date retirement eligibility is
achieved.
|
|
·
|
Performance-based
restricted stock entitles the employee to receive common shares of the
Company on the three-year anniversary of the grant date (if employed by
the Company) if return on invested capital and revenue growth targets set
by the Management Development and Compensation Committee of the Board of
Directors on the date of grant are met. If return on invested capital and
revenue growth targets are not met, performance-based restricted stock
does not vest.
|
|
·
|
Market-based
restricted stock entitles the employee to receive common shares of the
Company on the award vesting date, if market performance objectives which
measure relative total shareholder return (“TSR”) are attained. Relative
TSR is calculated based upon the 90-calendar day average price of the
Company’s stock as compared to specific peer companies that comprise the
Philadelphia Semiconductor Index. TSR is measured for the Company and each
peer company over a performance period, which is generally three years.
Vesting percentages range from 0% to 200% of awards granted. The
provisions of the market-based restricted stock are reflected in the grant
date fair value of the award; therefore, compensation expense is
recognized regardless of whether or not the market condition is ultimately
satisfied. Compensation expense is reversed if the award forfeits prior to
the vesting date.
|
Three months ended
|
Nine months ended
|
|||||||||||||||
(number
of shares in thousands)
|
June 27, 2009
|
July 3, 2010
|
June 27, 2009
|
July 3, 2010
|
||||||||||||
Market-based
restricted stock
|
- | - | - | 398 | ||||||||||||
Performance-based
restricted stock
|
- | - | 403 | - | ||||||||||||
Time-based
restricted stock
|
- | - | 825 | 784 | ||||||||||||
Stock
options
|
- | 10 | 154 | 36 | ||||||||||||
Common
stock
|
43 | 24 | 149 | 89 | ||||||||||||
Equity-based
compensation in shares
|
43 | 34 | 1,531 | 1,307 |
Three months ended
|
Nine months ended
|
|||||||||||||||
(in
thousands)
|
June 27, 2009
|
July 3, 2010
|
June 27, 2009
|
July 3, 2010
|
||||||||||||
Market-based
restricted stock
|
$ | - | $ | 271 | $ | - | $ | 659 | ||||||||
Performance-based
restricted stock
|
52 | 586 | (1,485 | ) | 1,324 | |||||||||||
Time-based
restricted stock
|
193 | 464 | 573 | 1,521 | ||||||||||||
Stock
options
|
411 | 108 | 1,254 | 378 | ||||||||||||
Common
stock
|
120 | 180 | 420 | 540 | ||||||||||||
Equity-based
compensation expense
|
$ | 776 | $ | 1,609 | $ | 762 | $ | 4,422 |
Three months ended
|
Nine months ended
|
|||||||||||||||
(in
thousands)
|
June 27, 2009
|
July 3, 2010
|
June 27, 2009
|
July 3, 2010
|
||||||||||||
Cost
of sales
|
$ | 40 | $ | 44 | $ | 39 | $ | 140 | ||||||||
Selling,
general and administrative
|
499 | 1,231 | 248 | 3,218 | ||||||||||||
Research
and development
|
237 | 334 | 475 | 1,064 | ||||||||||||
Equity-based
compensation expense
|
$ | 776 | $ | 1,609 | $ | 762 | $ | 4,422 |
As of
|
Average remaining
|
||||||||
(dollar
amounts in thousands)
|
June 27, 2009
|
July 3, 2010
|
contractual life in
years
|
||||||
Market-based
restricted stock
|
$ | - | $ | 2,040 |
1.7
|
||||
Performance-based
restricted stock
|
384 | 1,091 |
0.7
|
||||||
Time-based
restricted stock
|
1,737 | 4,069 |
1.9
|
||||||
Stock
options
|
1,327 | 451 |
1.0
|
||||||
Unrecognized
equity-based compensation expense
|
$ | 3,448 | $ | 7,651 |
Three months ended
|
Nine months ended
|
|||||||||||||||
(in
thousands)
|
June 27, 2009
|
July 3, 2010
|
June 27, 2009
|
July 3, 2010
|
||||||||||||
Number
of common shares
|
45 | 53 | 318 | 153 | ||||||||||||
Fair
value based upon market price at date of distribution
|
$ | 164 | $ | 402 | $ | 656 | $ | 1,000 |
Nine months ended
|
||||||||
(dollar amounts in thousands)
|
June 27, 2009 *
|
July 3, 2010
|
||||||
Income
(loss) from continuing operations before taxes
|
$ | (82,691 | ) | $ | 85,309 | |||
Benefit
for income taxes
|
(13,314 | ) | (772 | ) | ||||
Income
(loss) from continuing operations
|
$ | (69,377 | ) | $ | 86,081 | |||
Effective
tax rate
|
16.1 | % | -0.9 | % |
Three months ending
|
Nine months ending
|
|||||||||||||||
(in thousands)
|
June 27, 2009 *
|
July 3, 2010
|
June 27, 2009 *
|
July 3, 2010
|
||||||||||||
Net
revenue
|
||||||||||||||||
Equipment
|
$ | 37,544 | $ | 202,185 | $ | 78,180 | $ | 450,135 | ||||||||
Expendable
Tools
|
14,532 | 19,069 | 36,544 | 53,372 | ||||||||||||
Net
revenue
|
52,076 | 221,254 | 114,724 | 503,507 | ||||||||||||
Cost
of sales
|
||||||||||||||||
Equipment
|
25,612 | 114,169 | 54,833 | 258,780 | ||||||||||||
Expendable
Tools
|
6,795 | 7,901 | 18,249 | 21,398 | ||||||||||||
Cost
of sales
|
32,407 | 122,070 | 73,082 | 280,178 | ||||||||||||
Gross
profit
|
||||||||||||||||
Equipment
|
11,932 | 88,016 | 23,347 | 191,355 | ||||||||||||
Expendable
Tools
|
7,737 | 11,168 | 18,295 | 31,974 | ||||||||||||
Gross
profit
|
19,669 | 99,184 | 41,642 | 223,329 | ||||||||||||
Operating
Expenses
|
||||||||||||||||
Equipment
|
28,793 | 41,248 | 102,507 | 109,546 | ||||||||||||
Expendable
Tools
|
5,358 | 7,884 | 17,990 | 22,423 | ||||||||||||
Operating
expenses
|
34,151 | 49,132 | 120,497 | 131,969 | ||||||||||||
Impairment
of goodwill
|
||||||||||||||||
Equipment
|
- | - | 2,709 | - | ||||||||||||
Income
(loss) from operations
|
||||||||||||||||
Equipment
|
(16,861 | ) | 46,768 | (81,869 | ) | 81,809 | ||||||||||
Expendable
Tools
|
2,379 | 3,284 | 305 | 9,551 | ||||||||||||
Income
(loss) from operations
|
$ | (14,482 | ) | $ | 50,052 | $ | (81,564 | ) | $ | 91,360 |
As of
|
||||||||
(in
thousands)
|
October 3, 2009 *
|
July 3,
2010
|
||||||
Equipment
|
$ | 303,835 | $ | 423,544 | ||||
Expendable
Tools
|
108,800 | 82,934 | ||||||
Segment
assets
|
$ | 412,635 | $ | 506,478 |
Three months ended
|
|||||||||||||||||
June 27, 2009 *
|
July 3, 2010
|
||||||||||||||||
(in thousands, except per share data)
|
Basic
|
Diluted
|
Basic
|
Diluted
|
|||||||||||||
NUMERATOR:
|
|||||||||||||||||
Income
(loss) from continuing operations, net of tax
|
$ | (15,262 | ) | $ | (15,262 | ) | $ | 49,083 | $ | 49,083 | |||||||
Less:
income applicable to participating securities
|
- | - | (1) | (523 | ) | (523 | ) | ||||||||||
After-tax
interest expense
|
- | - | (1) | - | 118 | ||||||||||||
Income
(loss) applicable to common shareholders
|
$ | (15,262 | ) | $ | (15,262 | ) | $ | 48,560 | $ | 48,678 | |||||||
DENOMINATOR:
|
|||||||||||||||||
Weighted
average shares outstanding - Basic (3)
|
61,220 | 61,220 | 70,131 | 70,131 | |||||||||||||
Stock
options
|
- | (1) | 221 | ||||||||||||||
Performance-based
restricted stock
|
- | (1) | 101 | ||||||||||||||
Time-based
restricted stock
|
- | (1) | 357 | ||||||||||||||
Market-based
restricted stock
|
n/a | 463 | |||||||||||||||
1.000
% Convertible Subordinated Notes
|
- | (1) | 3,687 | ||||||||||||||
0.875
% Convertible Subordinated Notes
|
n/a | n/a | |||||||||||||||
Weighted
average shares outstanding - Diluted (2)
|
61,220 | 74,960 | |||||||||||||||
EPS:
|
|||||||||||||||||
Income
(loss) per share from continuing operations - Basic
|
$ | (0.25 | ) | $ | (0.25 | ) | $ | 0.69 | $ | 0.69 | |||||||
Effect
of dilutive shares
|
- | (1) | $ | (0.04 | ) | ||||||||||||
Income
(loss) per share from continuing operations - Diluted
|
$ | (0.25 | ) | $ | 0.65 |
Nine months ended
|
|||||||||||||||||
June 27, 2009 *
|
July 3, 2010
|
||||||||||||||||
(in thousands, except per share data)
|
Basic
|
Diluted
|
Basic
|
Diluted
|
|||||||||||||
NUMERATOR:
|
|||||||||||||||||
Income
(loss) from continuing operations, net of tax
|
$ | (46,650 | ) | $ | (46,650 | ) | $ | 86,081 | $ | 86,081 | |||||||
Less:
income applicable to participating securities
|
- | - | (1) | (922 | ) | (922 | ) | ||||||||||
After-tax
interest expense
|
- | - | (1) | - | 363 | ||||||||||||
Income
(loss) applicable to common shareholders
|
$ | (46,650 | ) | $ | (46,650 | ) | $ | 85,159 | $ | 85,522 | |||||||
DENOMINATOR:
|
|||||||||||||||||
Weighted
average shares outstanding - Basic (3)
|
60,908 | 60,908 | 69,873 | 69,873 | |||||||||||||
Stock
options
|
- | (1) | 173 | ||||||||||||||
Performance-based
restricted stock
|
- | (1) | 78 | ||||||||||||||
Time-based
restricted stock
|
- | (1) | 220 | ||||||||||||||
Market-based
restricted stock
|
n/a | 379 | |||||||||||||||
1.000
% Convertible Subordinated Notes
|
- | (1) | 3,771 | ||||||||||||||
0.875
% Convertible Subordinated Notes
|
n/a | n/a | |||||||||||||||
Weighted
average shares outstanding - Diluted (2)
|
60,908 | 74,494 | |||||||||||||||
EPS:
|
|||||||||||||||||
Income
(loss) per share from continuing operations - Basic
|
$ | (0.77 | ) | $ | (0.77 | ) | $ | 1.22 | $ | 1.22 | |||||||
Effect
of dilutive shares
|
- | (1) | $ | (0.07 | ) | ||||||||||||
Income
(loss) per share from continuing operations - Diluted
|
$ | (0.77 | ) | $ | 1.15 |
Three months ended
|
Nine months ended
|
|||||||||||||||
(in thousands) |
June 27, 2009
|
July 3, 2010
|
June 27, 2009
|
July 3, 2010
|
||||||||||||
|
||||||||||||||||
Potentially
dilutive shares related to:
|
||||||||||||||||
Stock
options, out of the money
|
5,705 | 1,525 | 6,564 | 2,781 | ||||||||||||
Performance-based
and time-based restricted stock
|
198 | - | 17 | |||||||||||||
Convertible
Subordinated Notes
|
3,813 | - | 4,916 | - | ||||||||||||
9,716 | 1,525 | 11,497 | 2,781 |
(in thousands)
|
||||||
Maximum obligation
|
||||||
Nature of guarantee
|
Term of guarantee
|
under guarantee
|
||||
Security
of employee worker compensation benefit programs
|
Expires
October 2010
|
$ | 95 | |||
Security
for customs bond
|
Expires
July 2011
|
100 | ||||
$ | 195 |
Three months ended
|
Nine months ended
|
|||||||||||||||
(in thousands)
|
June 27, 2009
|
July 3, 2010
|
June 27, 2009
|
July 3, 2010
|
||||||||||||
Reserve
for product warranty, beginning of period
|
$ | 568 | $ | 1,670 | $ | 918 | $ | 1,003 | ||||||||
Provision
for product warranty
|
356 | 1,105 | 1,337 | 2,640 | ||||||||||||
Product
warranty costs paid
|
(417 | ) | (572 | ) | (1,748 | ) | (1,440 | ) | ||||||||
Reserve
for product warranty, end of period
|
$ | 507 | $ | 2,203 | $ | 507 | $ | 2,203 |
Nine Months Ended
|
||||||||
June 27, 2009
|
July 3, 2010
|
|||||||
Advanced
Semiconductor Engineering
|
12.3 | % | 28.5 | % |
As of
|
||||||||
October 3, 2009
|
July 3, 2010
|
|||||||
Advanced
Semiconductor Engineering
|
32.4 | % | 13.8 | % | ||||
Siliconware
Precision Industries Co., Ltd.
|
* | 13.4 | % | |||||
Haoseng
Industrial Co. Ltd.
|
* | 10.0 | % | |||||
Amkor
Technology Inc
|
11.6 | % | * |
Item 2.
|
MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
|
·
|
projected growth rates in the
overall semiconductor industry, the semiconductor assembly equipment
market, and the market for semiconductor packaging materials;
and
|
|
·
|
projected demand for ball,
wedge and die bonder equipment and for expendable
tools.
|
Three months ended
|
Nine months ended
|
|||||||||||||||||||||||||||||||
June 27, 2009
|
July 3, 2010
|
June 27, 2009
|
July 3, 2010
|
|||||||||||||||||||||||||||||
(dollar amounts in
thousands)
|
Net Revenues
|
% of Total
Revenue
|
Net
Revenues
|
% of Total
Revenue
|
Net
Revenues
|
% of Total
Revenue
|
Net
Revenues
|
% of Total
Revenue
|
||||||||||||||||||||||||
Equipment
|
$ | 37,544 | 72.1 | % | $ | 202,185 | 91.4 | % | $ | 78,180 | 68.1 | % | $ | 450,135 | 89.4 | % | ||||||||||||||||
Expendable
Tools
|
14,532 | 27.9 | % | 19,069 | 8.6 | % | 36,544 | 31.9 | % | 53,372 | 10.6 | % | ||||||||||||||||||||
$ | 52,076 | 100.0 | % | $ | 221,254 | 100.0 | % | $ | 114,724 | 100.0 | % | $ | 503,507 | 100.0 | % |
Business Unit
|
Product Name
|
Served Market
|
||
Ball
bonders
|
IConn-Power
Series
|
Advanced
and ultra fine pitch applications using either gold or copper
wire
|
||
|
ConnX-Power
Series
|
Cost
performance, low pin count applications using either gold or copper
wire
|
||
|
ConnX-LED Power
Series
|
Surface
mount formatted LED applications
|
||
|
ConnX-VLED Power
Series
|
Vertical
LED applications
|
||
AT
Premier
|
Stud
bumping applications
|
|||
|
|
|
||
Wedge
bonders
|
3600
Plus
|
Power
hybrid and automotive modules
|
||
|
7200
Plus
|
Power
semiconductors
|
||
7600HD
Semiconductor
|
Smaller
power packages
|
|||
|
|
|
||
Die
bonders
|
iStack Power
Series
|
Advanced
stacked die and ball grid array
applications
|
|
·
|
The
3600 Plus wedge bonders: high speed, high accuracy wire bonders
designed for power modules, automotive packages and other large wire
multi-chip module applications.
|
|
·
|
The
7200 Plus wedge bonders: dual head wedge bonder designed
specifically for power semiconductor
applications.
|
|
·
|
The
7600HD Semiconductor wedge bonders: wedge bonder targeted for
small power packages and also intended to extend our product portfolio to
include reel-to-reel type
applications.
|
|
·
|
Capillaries: expendable
tools used in ball bonders. Made of ceramic, a capillary guides the wire
during the ball bonding process. Its features help control the bonding
process. We design and build capillaries suitable for a broad range of
applications, including for use on our competitors’
equipment.
|
|
·
|
Bonding
wedges: expendable tools used in wedge bonders. Like
capillaries, their specific features are tailored to specific
applications. We design and build bonding wedges for use both in our own
equipment and in our competitors’
equipment.
|
|
·
|
Saw blades: expendable
tools used by semiconductor manufacturers to cut silicon wafers into
individual semiconductor die and to cut semiconductor devices that have
been molded in a matrix configuration into individual
units.
|
|
·
|
Amortization
of intangibles
|
|
·
|
Restructuring
|
|
·
|
Impairment
of goodwill
|
|
·
|
Switzerland
pension plan curtailment
|
|
·
|
Gain
on extinguishment of debt
|
|
·
|
Non-cash
interest expense
|
|
·
|
Net
tax settlement expense (benefit) and other tax
adjustments
|
Unaudited
|
Three
months ended
|
Nine
months ended
|
||||||||||||||
June
27,
|
July
3,
|
June
27,
|
July
3,
|
|||||||||||||
(in
thousands, except per share amounts)
|
2009 *
|
2010
|
2009 *
|
2010
|
||||||||||||
Gross
profit (GAAP
results)
|
$ | 19,669 | $ | 99,184 | $ | 41,642 | $ | 223,329 | ||||||||
-
Equity-based compensation expense
|
40 | 44 | 39 | 140 | ||||||||||||
Gross
profit (Non-GAAP
measures)
|
$ | 19,709 | $ | 99,228 | $ | 41,681 | $ | 223,469 | ||||||||
Income
(loss) from continuing operations (GAAP
results)
|
$ | (15,262 | ) | $ | 49,083 | $ | (69,377 | ) | $ | 86,081 | ||||||
-
Equity-based compensation expense
|
776 | 1,609 | 762 | 4,422 | ||||||||||||
-
Amortization of intangibles
|
2,783 | 2,386 | 8,311 | 7,160 | ||||||||||||
-
Restructuring
|
567 | 1,045 | 9,730 | 1,650 | ||||||||||||
-
Impairment of goodwill
|
- | - | 2,709 | - | ||||||||||||
-
Switzerland pension plan curtailment
|
(1,446 | ) | - | (1,446 | ) | - | ||||||||||
-
Non-cash interest expense
|
1,648 | 1,768 | 4,918 | 5,235 | ||||||||||||
-
Gain on extinguishment of debt
|
- | - | (3,965 | ) | - | |||||||||||
-
Net tax settlement benefit and other tax adjustments
|
(1,047 | ) | - | (10,989 | ) | - | ||||||||||
-
Tax effect of non-GAAP adjustments
|
(29 | ) | (248 | ) | (186 | ) | (498 | ) | ||||||||
Income
(loss) from continuing operations (Non-GAAP
measures)
|
$ | (12,010 | ) | $ | 55,643 | $ | (59,533 | ) | $ | 104,050 | ||||||
Weighted
average shares outstanding (GAAP &
Non-GAAP)
|
||||||||||||||||
Basic
|
61,220 | 70,131 | 60,908 | 69,873 | ||||||||||||
Diluted
|
61,220 | 74,960 | 60,908 | 74,494 | ||||||||||||
Income
(loss) per share from continuing operations (GAAP
results)
|
||||||||||||||||
Basic
|
$ | (0.25 | ) | $ | 0.69 | $ | (1.14 | ) | $ | 1.22 | ||||||
Diluted
|
$ | (0.25 | ) | $ | 0.65 | $ | (1.14 | ) | $ | 1.15 | ||||||
Adjustments
to net income (loss) per share
|
||||||||||||||||
Basic
|
$ | 0.05 | $ | 0.10 | $ | 0.16 | $ | 0.26 | ||||||||
Diluted
|
$ | 0.05 | $ | 0.09 | $ | 0.16 | $ | 0.24 | ||||||||
Income
(loss) per share from continuing operations (Non-GAAP
measures)
|
||||||||||||||||
Basic
|
$ | (0.20 | ) | $ | 0.79 | $ | (0.98 | ) | $ | 1.48 | ||||||
Diluted
|
$ | (0.20 | ) | $ | 0.74 | $ | (0.98 | ) | $ | 1.39 |
Unaudited
|
Three months ended
|
|||||||
(dollar amounts in thousands) |
July 3, 2010
|
|||||||
|
||||||||
Income
from operations
|
$ | 50,052 | ||||||
Adjustment:
Depreciation and amortization (1)
|
4,336 | |||||||
Adjusted
income from operations
|
54,388 | |||||||
Adjusted
income from operations, annualized (2)
|
$ | 217,552 | ||||||
Cash,
cash equivalents, restricted cash and investments
|
$ | 163,066 | ||||||
Adjustment:
cash, cash equivalents, restricted cash and investments
(3)
|
(88,066 | ) | ||||||
Adjusted
cash, cash equivalents and investments
|
$ | 75,000 | ||||||
Total
assets excluding cash, cash equivalents, restricted cash and
investments
|
343,412 | |||||||
Adjusted
total assets
|
418,412 | |||||||
Total
current liabilities
|
$ | 119,417 | ||||||
Add:
taxes payable (4)
|
1,552 | |||||||
Adjusted
current liabilities
|
120,969 | |||||||
Adjusted
net invested capital
|
$ | 297,443 | ||||||
ROIC (2)
|
73.1 | % |
Three months ended
|
Nine months ended
|
|||||||||||||||||||||||||||||||
(dollar amounts in
thousands)
|
June 27, 2009
|
July 3, 2010
|
$ Change
|
% Change
|
June 27, 2009
|
July 3, 2010
|
$ Change
|
% Change
|
||||||||||||||||||||||||
Equipment
|
$ | 37,544 | $ | 202,185 | $ | 164,641 | 438.5 | % | $ | 78,180 | $ | 450,135 | $ | 371,955 | 475.8 | % | ||||||||||||||||
Expendable
Tools
|
14,532 | 19,069 | 4,537 | 31.2 | % | 36,544 | 53,372 | 16,828 | 46.0 | % | ||||||||||||||||||||||
$ | 52,076 | $ | 221,254 | $ | 169,178 | 324.9 | % | $ | 114,724 | $ | 503,507 | $ | 388,783 | 338.9 | % |
June 27, 2009 vs. July 3, 2010
|
||||||||||||||||||||||||
Three months ended
|
Nine months ended
|
|||||||||||||||||||||||
(in thousands)
|
Price
|
Volume
|
$ Change
|
Price
|
Volume
|
$ Change
|
||||||||||||||||||
Equipment
|
$ | 122 | $ | 164,519 | $ | 164,641 | $ | 302 | $ | 371,653 | $ | 371,955 |
June 27, 2009 vs. July 3, 2010
|
||||||||||||||||||||||||
Three months ended
|
Nine months ended
|
|||||||||||||||||||||||
(in thousands)
|
Price
|
Volume
|
$ Change
|
Price
|
Volume
|
$ Change
|
||||||||||||||||||
Expendable
Tools
|
$ | 50 | $ | 4,487 | $ | 4,537 | $ | (281 | ) | $ | 17,109 | $ | 16,828 |
Three
months ended
|
Nine
months ended
|
|||||||||||||||||||||||||||||||
(dollar
amounts in
thousands)
|
June
27, 2009
|
July
3, 2010
|
$
Change
|
%
Change
|
June
27, 2009
|
July
3, 2010
|
$
Change
|
%
Change
|
||||||||||||||||||||||||
Equipment
|
$ | 11,932 | $ | 88,016 | $ | 76,084 | 637.6 | % | $ | 23,347 | $ | 191,355 | $ | 168,008 | 719.6 | % | ||||||||||||||||
Expendable
Tools
|
7,737 | 11,168 | 3,431 | 44.3 | % | 18,295 | 31,974 | 13,679 | 74.8 | % | ||||||||||||||||||||||
Total
|
$ | 19,669 | $ | 99,184 | $ | 79,515 | 404.3 | % | $ | 41,642 | $ | 223,329 | $ | 181,687 | 436.3 | % | ||||||||||||||||
Total
gross profit
|
37.8 | % | 44.8 | % | 36.3 | % | 44.4 | % |
Three months ended
|
Basis Point
|
Nine months months ended
|
Basis Point
|
|||||||||||||||||||||
June 27, 2009
|
July 3, 2010
|
Change
|
June 27, 2009
|
July 3, 2010
|
Change
|
|||||||||||||||||||
Equipment
|
31.8 | % | 43.5 | % | 1,170.0 | 29.9 | % | 42.5 | % | 1,260.0 | ||||||||||||||
Expendable
Tools
|
53.2 | % | 58.6 | % | 540.0 | 50.1 | % | 59.9 | % | 980.0 | ||||||||||||||
Total
|
37.8 | % | 44.8 | % | 700.0 | 36.3 | % | 44.4 | % | 810.0 |
June
27, 2009 vs. July 3, 2010
|
||||||||||||||||||||||||||||||||
Three
months ended
|
Nine
months ended
|
|||||||||||||||||||||||||||||||
(in
thousands)
|
Price
|
Cost
|
Volume
|
$
Change
|
Price
|
Cost
|
Volume
|
$
Change
|
||||||||||||||||||||||||
Equipment
|
$ | 122 | $ | (598 | ) | $ | 76,560 | $ | 76,084 | $ | 302 | $ | (87 | ) | $ | 167,793 | $ | 168,008 |
June 27, 2009 vs. July 3, 2010
|
||||||||||||||||||||||||||||||||
Three months ended
|
Nine months ended
|
|||||||||||||||||||||||||||||||
(in thousands)
|
Price
|
Cost
|
Volume
|
$ Change
|
Price
|
Cost
|
Volume
|
$ Change
|
||||||||||||||||||||||||
Expendable
Tools
|
$ | 50 | $ | 1,140 | $ | 2,241 | $ | 3,431 | $ | (281 | ) | $ | 5,857 | $ | 8,103 | $ | 13,679 |
Three months ended
|
Nine months ended
|
|||||||||||||||||||||||||||||||
(dollar amounts in thousands)
|
June 27, 2009
|
July 3, 2010
|
$ Change
|
% Change
|
June 27, 2009
|
July 3, 2010
|
$ Change
|
% Change
|
||||||||||||||||||||||||
Selling,
general and administrative
|
$ | 21,887 | $ | 34,446 | $ | 12,559 | 57.4 | % | $ | 79,575 | $ | 90,142 | $ | 10,567 | 13.3 | % | ||||||||||||||||
Research
and development
|
12,264 | 14,686 | 2,422 | 19.7 | % | 40,922 | 41,827 | 905 | 2.2 | % | ||||||||||||||||||||||
Impairment
of goodwill
|
- | - | - | 0.0 | % | 2,709 | - | (2,709 | ) | -100.0 | % | |||||||||||||||||||||
Total
|
$ | 34,151 | $ | 49,132 | $ | 14,981 | 43.9 | % | $ | 123,206 | $ | 131,969 | $ | 8,763 | 7.1 | % |
Three
months ended
|
Nine
months ended
|
|||||||||||||||||||||||
June
27, 2009
|
July
3, 2010
|
Basis
Point
Change
|
June
27, 2009
|
July
3, 2010
|
Basis
Point
Change
|
|||||||||||||||||||
Selling,
general and administrative
|
42.0 | % | 15.6 | % | (2,643.1 | ) | 69.4 | % | 17.9 | % | (5,149.7 | ) | ||||||||||||
Research
and development
|
23.6 | % | 6.6 | % | (1,696.2 | ) | 35.7 | % | 8.3 | % | (2,739.3 | ) | ||||||||||||
Impairment
of goodwill
|
0.0 | % | 0.0 | % | - | 2.4 | % | 0.0 | % | (240.0 | ) | |||||||||||||
Total
|
65.6 | % | 22.2 | % | (4,339.4 | ) | 107.5 | % | 26.2 | % | (8,129.0 | ) |
|
·
|
$5.6
million higher incentive compensation
expense;
|
|
·
|
$3.6
million higher employee related costs associated with our significant
business ramp during the current
quarter;
|
|
·
|
$2.0
million increase in sales commissions related to our higher net revenue
for the current year period;
|
|
·
|
$1.4
million one-time Switzerland pension plan curtailment which reduced our
prior year’s SG&A expenses;
|
|
·
|
$0.8
million higher factory transition costs related to moving additional
production to Asia; and
|
|
·
|
$0.7
million higher equity-based compensation expense due to the higher
estimated percentage attainment for the performance-based restricted
stock.
|
|
·
|
$11.5
million higher incentive compensation
expense;
|
|
·
|
$4.2
million increase in sales commissions related to our higher net revenue
for the current year period;
|
|
·
|
$3.0
million higher equity-based compensation expense due to the higher
estimated percentage attainment for the performance-based restricted
stock;
|
|
·
|
$2.8
million higher factory transition costs related to moving additional
production to Asia;
|
|
·
|
$1.7
million employee related costs associated with our significant business
ramp during the current year
period;
|
|
·
|
$1.4
million Swiss pension fund curtailment gain which offset prior year’s
SG&A expense; and
|
|
·
|
$1.0
million favorable foreign currency
variance.
|
|
·
|
$5.3
million lower severance costs related to prior year headcount
reductions;
|
|
·
|
$2.6
million lower costs related to our discontinued Test facility
operations;
|
|
·
|
$1.2
million lower intangible amortization and $0.6 million lower
depreciation;
|
|
·
|
$2.2
million lower legal expense incurred in the prior year
period;
|
|
·
|
$1.6
million lower employee related costs due to headcount reductions during
the prior year period; and
|
|
·
|
$1.4
million lower bad debt expense.
|
Three
months ended
|
Nine
months ended
|
|||||||||||||||||||||||||||||||
(dollar
amounts in thousands)
|
June
27, 2009
|
% of
net
revenue
|
July
3, 2010
|
% of
net
revenue
|
June
27, 2009
|
% of
net
revenue
|
July
3, 2010
|
% of
net
revenue
|
||||||||||||||||||||||||
Equipment
|
$ | (16,861 | ) | -44.9 | % | $ | 46,768 | 23.1 | % | $ | (81,869 | ) | -104.7 | % | $ | 81,809 | 18.2 | % | ||||||||||||||
Expendable
Tools
|
2,379 | 16.4 | % | 3,284 | 17.2 | % | 305 | 0.8 | % | 9,551 | 17.9 | % | ||||||||||||||||||||
Total
|
$ | (14,482 | ) | -27.8 | % | $ | 50,052 | 22.6 | % | $ | (81,564 | ) | -71.1 | % | $ | 91,360 | 18.1 | % |
Three
months ended
|
Nine
months ended
|
|||||||||||||||||||||||||||||||
(dollar
amounts in thousands)
|
June
27,
2009
|
July
3,
2010
|
$
Change
|
%
Change
|
June
27,
2009
|
July
3,
2010
|
$
Change
|
%
Change
|
||||||||||||||||||||||||
Interest
income
|
$ | 75 | $ | 104 | $ | 29 | 38.7 | % | $ | 1,022 | $ | 290 | $ | (732 | ) | -71.6 | % | |||||||||||||||
Interest
expense
|
(363 | ) | (385 | ) | (22 | ) | 6.1 | % | (1,196 | ) | (1,106 | ) | 90 | -7.5 | % | |||||||||||||||||
Interest
expense: non-cash
|
(1,648 | ) | (1,768 | ) | (120 | ) | 7.3 | % | (4,918 | ) | (5,235 | ) | (317 | ) | 6.4 | % |
Nine Months Ended
|
||||
(in thousands)
|
June 27, 2009
|
|||
0.5%
Convertible Subordinated Notes (1):
|
||||
Face
value purchased
|
$ | 43,050 | ||
Net
cash
|
42,839 | |||
Deferred
financing costs
|
18 | |||
Recognized
gain, net of deferred financing costs
|
193 | |||
1.0%
Convertible Subordinated Notes: (2)
|
||||
Face
value purchased
|
$ | 16,036 | ||
Net
cash
|
12,158 | |||
Deferred
financing costs
|
106 | |||
Recognized
gain, net of deferred financing costs
|
3,772 | |||
Gain
on early extinguishment of debt
|
$ | 3,965 |
Nine months ended
|
||||||||
(dollar amounts in thousands)
|
June 27, 2009 *
|
July 3, 2010
|
||||||
Income
(loss) from continuing operations before taxes
|
$ | (82,691 | ) | $ | 85,309 | |||
Benefit
for income taxes
|
(13,314 | ) | (772 | ) | ||||
Income
(loss) from continuing operations
|
$ | (69,377 | ) | $ | 86,081 | |||
Effective
tax rate
|
16.1 | % | -0.9 | % |
Nine months ended
|
||||
(in
thousands)
|
June 27, 2009
|
|||
Net
revenue : Wire
|
$ | - | ||
Loss
before tax
|
$ | (319 | ) | |
Gain
on sale of Wire business before tax
|
23,524 | |||
Income
from discontinued operations before tax
|
23,205 | |||
Income
tax expense
|
(478 | ) | ||
Income
from discontinued operations, net of tax
|
$ | 22,727 |
As of
|
||||||||||||
(dollar
amounts in thousands)
|
October 3, 2009
|
July 3, 2010
|
$ Change
|
|||||||||
Cash
and cash equivalents
|
$ | 144,560 | $ | 162,840 | $ | 18,280 | ||||||
Restricted
cash (1)
|
281 | 226 | (55 | ) | ||||||||
Total
cash and cash equivalents
|
$ | 144,841 | $ | 163,066 | $ | 18,225 | ||||||
Percentage
of total assets
|
35.1 | % | 32.2 | % |
Nine months ended
|
||||||||
(in
thousands)
|
June
27, 2009
|
July 3, 2010
|
||||||
Cash
flows provided by (used in):
|
||||||||
Operating
activities, continuing operations
|
$ | (41,245 | ) | $ | 67,977 | |||
Operating
activities, discontinued operations
|
(1,699 | ) | (1,488 | ) | ||||
Operating
activities
|
(42,944 | ) | 66,489 | |||||
Investing
activities, continuing operations
|
(52,894 | ) | 642 | |||||
Investing
activities, discontinued operations
|
149,857 | (1,838 | ) | |||||
Investing
activities
|
96,963 | (1,196 | ) | |||||
Financing
activities
|
(84,304 | ) | (47,121 | ) | ||||
Effect
of exchange rate on cash and cash equivalents
|
40 | 108 | ||||||
Changes
in cash and cash equivalents
|
(30,245 | ) | 18,280 | |||||
Cash
and cash equivalents, beginning of period
|
144,932 | 144,560 | ||||||
Cash
and cash equivalents, end of period
|
114,687 | 162,840 | ||||||
Restricted
cash and short-term investments
|
- | 226 | ||||||
Total
cash and investments
|
$ | 114,687 | $ | 163,066 |
Type
|
Maturity Date
|
Par Value
|
Fair Value as of
July 3, 2010 (1)
|
Standard & Poor's
rating
|
|||||||
(dollar
amounts in thousands)
|
|||||||||||
0.875
% Convertible Subordinated Notes
|
June
1, 2012
|
$ | 110,000 | $ | 102,300 |
Not
rated
|
|||||
Debt
discount on 0.875% Convertible Subordinated Notes due June 2012
*
|
$ | (13,139 | ) | n/a |
Payments due by fiscal period
|
||||||||||||||||||||||||
Less than
|
1 - 3
|
3 - 5
|
More than
|
Due date not
|
||||||||||||||||||||
(in
thousands)
|
Total
|
1 year
|
years
|
years
|
5 years
|
determinable
|
||||||||||||||||||
Contractual
Obligations:
|
||||||||||||||||||||||||
Convertible
Subordinated Notes, par
value (1)
|
$ | 110,000 | $ | - | $ | 110,000 | ||||||||||||||||||
Current
and long-term liabilities:
|
||||||||||||||||||||||||
Facility
accrual related to discontinued operations (Test)
|
3,515 | 1,880 | 1,635 | |||||||||||||||||||||
Switzerland
pension plan obligation
|
1,419 | $ | 1,419 | |||||||||||||||||||||
Long-term
income taxes payable
|
1,552 | 1,552 | ||||||||||||||||||||||
Operating
lease retirement obligations
|
2,131 | 123 | 662 | $ | 593 | $ | 753 | |||||||||||||||||
Post-employment
foreign severance obligations
|
1,713 | 1,713 | ||||||||||||||||||||||
Total
Obligations and Contingent Payments reflected on the Consolidated
Financial Statements
|
$ | 120,330 | $ | 2,003 | $ | 112,297 | $ | 593 | $ | 753 | $ | 4,684 | ||||||||||||
Contractual
Obligations:
|
||||||||||||||||||||||||
Inventory
purchase obligations (2)
|
$ | 144,500 | $ | 144,500 | ||||||||||||||||||||
Operating
lease obligations (3)
|
33,921 | 9,059 | $ | 11,816 | $ | 5,497 | $ | 7,549 | ||||||||||||||||
Cash
paid for interest
|
1,924 | 962 | 962 | |||||||||||||||||||||
Commercial
Commitments:
|
||||||||||||||||||||||||
Standby
Letters of Credit (4)
|
195 | 195 | ||||||||||||||||||||||
Total
Obligations and Contingent Payments not reflected on the Consolidated
Financial Statements
|
$ | 180,540 | $ | 154,716 | $ | 12,778 | $ | 5,497 | $ | 7,549 | $ | - |
Item
3.
|
QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK.
|
Item
4.
|
CONTROLS
AND PROCEDURES
|
(a)
|
Exhibits.
|
Exhibit No.
|
Description
|
|
3(ii)
|
Amended
and Restated By-Laws of Kulicke and Soffa Industries, Inc. dated August 4,
2010.
|
|
31.1
|
Certification
of C. Scott Kulicke, Chief Executive Officer of Kulicke and Soffa
Industries, Inc., pursuant to Rule 13a-14(a) or
Rule15d-14(a).
|
|
31.2
|
Certification
of Michael J. Morris, Chief Financial Officer of Kulicke and Soffa
Industries, Inc., pursuant to Rule 13a-14(a) or Rule
15d-14(a).
|
|
32.1
|
Certification
of C. Scott Kulicke, 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 Michael J. Morris, 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.
|
KULICKE
AND SOFFA INDUSTRIES, INC.
|
|
Date:
August 5, 2010
|
By: /s/ MICHAEL J.
MORRIS
|
Michael
J. Morris
|
|
Vice
President and Chief Financial Officer
|
|
(Chief
Financial Officer and Authorized
Officer)
|