Kulicke and Soffa Industries Annual Report 2010

FY2010 Annual Report · Kulicke and Soffa Industries
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(cid:23)(cid:5)(cid:4)(cid:21)(cid:12)(cid:15)(cid:23)(cid:15)(cid:9)(cid:21)(cid:15)(cid:21)(cid:24)(cid:6) (cid:9)(cid:22)(cid:5)(cid:6) (cid:20)(cid:3)(cid:11)(cid:24)(cid:3)(cid:6) ((cid:9)(cid:21)(cid:11)(cid:3)(cid:5)(cid:6) (cid:28)(cid:5)(cid:9)(cid:11)(cid:22)(cid:16)(cid:23)(cid:12)(cid:6) (cid:27)(cid:4)(cid:21)(cid:22)(cid:26)(cid:4)(cid:16)(cid:23)(cid:22)(cid:5)(cid:15)(cid:21)(cid:24)(cid:6) (cid:26)(cid:5)(cid:9)(cid:27)(cid:6)
,(cid:4)(cid:10)(cid:15)(cid:26)(cid:9)(cid:5)(cid:21)(cid:15)(cid:4)(cid:6) (cid:23)(cid:9)(cid:6) 5(cid:12)(cid:15)(cid:4)(cid:13)(cid:6) (cid:4)(cid:21)(cid:11)(cid:6) (cid:3)(cid:29)(cid:28)(cid:3)(cid:16)(cid:23)(cid:6) (cid:23)(cid:8)(cid:15)(cid:12)(cid:13)(cid:6) (cid:20)(cid:8)(cid:3)(cid:21)(cid:6) (cid:16)(cid:9)(cid:27)(cid:28)(cid:10)(cid:3)(cid:23)(cid:3)(cid:11)(cid:6) (cid:15)(cid:21)(cid:6) (cid:23)(cid:8)(cid:3)(cid:6) (cid:3)(cid:4)(cid:5)(cid:10)(cid:25)(cid:6)
(cid:28)(cid:4)(cid:5)(cid:23)(cid:6) (cid:9)(cid:26)(cid:6) (cid:17)(cid:18)(cid:19)(cid:19)(cid:13)(cid:6) (cid:20)(cid:15)(cid:10)(cid:10)(cid:6) (cid:26)(cid:22)(cid:5)(cid:23)(cid:8)(cid:3)(cid:5)(cid:6) (cid:15)(cid:27)(cid:28)(cid:5)(cid:9)(cid:30)(cid:3)(cid:6) (cid:9)(cid:22)(cid:5)(cid:6) (cid:16)(cid:9)(cid:12)(cid:23)(cid:6) (cid:12)(cid:23)(cid:5)(cid:22)(cid:16)(cid:23)(cid:22)(cid:5)(cid:3)(cid:6) (cid:26)(cid:9)(cid:5)(cid:6) (cid:23)(cid:8)(cid:3)(cid:12)(cid:3)(cid:6)
(cid:28)(cid:5)(cid:9)(cid:11)(cid:22)(cid:16)(cid:23)(cid:12) (cid:6)(cid:6)5(cid:11)(cid:11)(cid:15)(cid:23)(cid:15)(cid:9)(cid:21)(cid:4)(cid:10)(cid:10)(cid:25)(cid:13)(cid:6)(cid:20)(cid:3)(cid:6)(cid:16)(cid:9)(cid:21)(cid:23)(cid:15)(cid:21)(cid:22)(cid:3)(cid:11)(cid:6)(cid:20)(cid:15)(cid:23)(cid:8)(cid:6)(cid:9)(cid:22)(cid:5)(cid:6)(cid:16)(cid:9)(cid:27)(cid:28)(cid:4)(cid:21)(cid:25)6(cid:12)(cid:6)(cid:12)(cid:23)(cid:5)(cid:4)(cid:23)(cid:3)(cid:24)(cid:15)(cid:16)(cid:6)
(cid:11)(cid:3)(cid:16)(cid:15)(cid:12)(cid:15)(cid:9)(cid:21)(cid:6)(cid:23)(cid:9)(cid:6)(cid:27)(cid:9)(cid:30)(cid:3)(cid:6)(cid:9)(cid:22)(cid:5)(cid:6)(cid:16)(cid:9)(cid:5)(cid:28)(cid:9)(cid:5)(cid:4)(cid:23)(cid:3)(cid:6)(cid:8)(cid:3)(cid:4)(cid:11)+(cid:22)(cid:4)(cid:5)(cid:23)(cid:3)(cid:5)(cid:12)(cid:6)(cid:26)(cid:5)(cid:9)(cid:27)(cid:6)(cid:23)(cid:8)(cid:3)(cid:6)7(cid:21)(cid:15)(cid:23)(cid:3)(cid:11)(cid:6)(cid:7)(cid:23)(cid:4)(cid:23)(cid:3)(cid:12)(cid:6)
(cid:23)(cid:9)(cid:6) (cid:9)(cid:22)(cid:5)(cid:6) (cid:27)(cid:4)(cid:21)(cid:22)(cid:26)(cid:4)(cid:16)(cid:23)(cid:22)(cid:5)(cid:15)(cid:21)(cid:24)(cid:6) (cid:26)(cid:4)(cid:16)(cid:15)(cid:10)(cid:15)(cid:23)(cid:25)(cid:6) (cid:15)(cid:21)(cid:6) (cid:7)(cid:15)(cid:21)(cid:24)(cid:4)(cid:28)(cid:9)(cid:5)(cid:3)(cid:6) (cid:23)(cid:9)(cid:6) ((cid:3)(cid:6) (cid:16)(cid:10)(cid:9)(cid:12)(cid:3)(cid:5)(cid:6) (cid:23)(cid:9)(cid:6) (cid:9)(cid:22)(cid:5)(cid:6)
(cid:26)(cid:4)(cid:16)(cid:23)(cid:9)(cid:5)(cid:15)(cid:3)(cid:12)(cid:13)(cid:6)(cid:16)(cid:22)(cid:12)(cid:23)(cid:9)(cid:27)(cid:3)(cid:5)(cid:12)(cid:13)(cid:6)(cid:12)(cid:22)(cid:28)(cid:28)(cid:10)(cid:15)(cid:3)(cid:5)(cid:12)(cid:6)(cid:4)(cid:21)(cid:11)(cid:6)(cid:9)(cid:23)(cid:8)(cid:3)(cid:5)(cid:6)(cid:12)(cid:23)(cid:5)(cid:4)(cid:23)(cid:3)(cid:24)(cid:15)(cid:16)(cid:6)(cid:28)(cid:4)(cid:5)(cid:23)(cid:21)(cid:3)(cid:5)(cid:12) (cid:6)(cid:6)$(cid:8)(cid:3)(cid:12)(cid:3)(cid:6)
(cid:21)(cid:3)(cid:16)(cid:3)(cid:12)(cid:12)(cid:4)(cid:5)(cid:25)(cid:6)(cid:9)(cid:28)(cid:3)(cid:5)(cid:4)(cid:23)(cid:15)(cid:9)(cid:21)(cid:4)(cid:10)(cid:6)(cid:16)(cid:8)(cid:4)(cid:21)(cid:24)(cid:3)(cid:12)(cid:6)(cid:20)(cid:15)(cid:10)(cid:10)(cid:6)(cid:16)(cid:9)(cid:21)(cid:23)(cid:15)(cid:21)(cid:22)(cid:3)(cid:6)(cid:23)(cid:9)(cid:6)(cid:8)(cid:3)(cid:10)(cid:28)(cid:6)(cid:22)(cid:12)(cid:6)(cid:15)(cid:27)(cid:28)(cid:5)(cid:9)(cid:30)(cid:3)(cid:6)(cid:9)(cid:22)(cid:5)(cid:6)
(cid:9)(cid:30)(cid:3)(cid:5)(cid:4)(cid:10)(cid:10)(cid:6)(cid:16)(cid:9)(cid:27)(cid:28)(cid:3)(cid:23)(cid:15)(cid:23)(cid:15)(cid:30)(cid:3)(cid:21)(cid:3)(cid:12)(cid:12)(cid:6)(cid:4)(cid:21)(cid:11)(cid:6)(cid:28)(cid:9)(cid:12)(cid:15)(cid:23)(cid:15)(cid:9)(cid:21)(cid:6)(cid:22)(cid:12)(cid:6)(cid:20)(cid:3)(cid:10)(cid:10)(cid:6)(cid:15)(cid:21)(cid:6)(cid:23)(cid:8)(cid:3)(cid:6)(cid:27)(cid:4)(cid:5)(cid:31)(cid:3)(cid:23)(cid:6)(cid:28)(cid:10)(cid:4)(cid:16)(cid:3) 

.(cid:3)(cid:6) (cid:16)(cid:9)(cid:21)(cid:23)(cid:15)(cid:21)(cid:22)(cid:4)(cid:10)(cid:10)(cid:25)(cid:6) (cid:12)(cid:23)(cid:5)(cid:15)(cid:30)(cid:3)(cid:6) (cid:26)(cid:9)(cid:5)(cid:6) (cid:9)(cid:28)(cid:3)(cid:5)(cid:4)(cid:23)(cid:15)(cid:9)(cid:21)(cid:4)(cid:10)(cid:6) (cid:15)(cid:27)(cid:28)(cid:5)(cid:9)(cid:30)(cid:3)(cid:27)(cid:3)(cid:21)(cid:23)(cid:12)(cid:6) (cid:4)(cid:21)(cid:11)(cid:6) (cid:5)(cid:3)(cid:27)(cid:4)(cid:15)(cid:21)(cid:6)
(cid:26)(cid:9)(cid:16)(cid:22)(cid:12)(cid:3)(cid:11)(cid:6) (cid:9)(cid:21)(cid:6) (cid:3)(cid:21)(cid:8)(cid:4)(cid:21)(cid:16)(cid:15)(cid:21)(cid:24)(cid:6) (cid:9)(cid:22)(cid:5)(cid:6) (cid:28)(cid:5)(cid:9)(cid:11)(cid:22)(cid:16)(cid:23)(cid:6) (cid:9)(cid:26)(cid:26)(cid:3)(cid:5)(cid:15)(cid:21)(cid:24)(cid:12)(cid:6) (cid:23)(cid:8)(cid:5)(cid:9)(cid:22)(cid:24)(cid:8)(cid:6) (cid:23)(cid:3)(cid:16)(cid:8)(cid:21)(cid:15)(cid:16)(cid:4)(cid:10)(cid:6)
(cid:10)(cid:3)(cid:4)(cid:11)(cid:3)(cid:5)(cid:12)(cid:8)(cid:15)(cid:28) (cid:6) (cid:6) $(cid:8)(cid:15)(cid:12)(cid:6) (cid:10)(cid:3)(cid:4)(cid:11)(cid:3)(cid:5)(cid:12)(cid:8)(cid:15)(cid:28)(cid:6) (cid:28)(cid:5)(cid:9)(cid:30)(cid:15)(cid:11)(cid:3)(cid:12)(cid:6) (cid:22)(cid:12)(cid:6) (cid:4)(cid:21)(cid:6) (cid:4)(cid:11)(cid:30)(cid:4)(cid:21)(cid:23)(cid:4)(cid:24)(cid:3)(cid:6) (cid:20)(cid:8)(cid:3)(cid:21)(cid:6)
(cid:28)(cid:22)(cid:5)(cid:12)(cid:22)(cid:15)(cid:21)(cid:24)(cid:6)(cid:21)(cid:3)(cid:20)(cid:6)(cid:4)(cid:21)(cid:11)(cid:6)(cid:3)(cid:29)(cid:15)(cid:12)(cid:23)(cid:15)(cid:21)(cid:24)(cid:6)(cid:27)(cid:4)(cid:5)(cid:31)(cid:3)(cid:23)(cid:6)(cid:9)(cid:28)(cid:28)(cid:9)(cid:5)(cid:23)(cid:22)(cid:21)(cid:15)(cid:23)(cid:15)(cid:3)(cid:12) (cid:6)(cid:6)$(cid:8)(cid:3)(cid:6)(cid:15)(cid:21)(cid:11)(cid:22)(cid:12)(cid:23)(cid:5)(cid:25)(cid:6)(cid:8)(cid:4)(cid:12)(cid:6)
(cid:11)(cid:3)(cid:27)(cid:9)(cid:21)(cid:12)(cid:23)(cid:5)(cid:4)(cid:23)(cid:3)(cid:11)(cid:6) (cid:23)(cid:8)(cid:4)(cid:23)(cid:6) (cid:16)(cid:9)(cid:28)(cid:28)(cid:3)(cid:5)(cid:6) (cid:20)(cid:15)(cid:5)(cid:3)(cid:6) ((cid:9)(cid:21)(cid:11)(cid:15)(cid:21)(cid:24)(cid:6) (cid:15)(cid:12)(cid:6) (cid:4)(cid:6) (cid:26)(cid:3)(cid:4)(cid:12)(cid:15)((cid:10)(cid:3)(cid:6) (cid:4)(cid:10)(cid:23)(cid:3)(cid:5)(cid:21)(cid:4)(cid:23)(cid:15)(cid:30)(cid:3)(cid:6) (cid:23)(cid:9)(cid:6)
(cid:24)(cid:9)(cid:10)(cid:11)(cid:13)(cid:6) (cid:4)(cid:21)(cid:11)(cid:6) (cid:15)(cid:21)(cid:6) (cid:17)(cid:18)(cid:19)(cid:18)(cid:6) (cid:20)(cid:3)(cid:6) (cid:12)(cid:4)(cid:20)(cid:6) (cid:28)(cid:9)(cid:20)(cid:3)(cid:5)(cid:26)(cid:22)(cid:10)(cid:6) (cid:11)(cid:3)(cid:27)(cid:4)(cid:21)(cid:11)(cid:6) (cid:26)(cid:9)(cid:5)(cid:6) (cid:9)(cid:22)(cid:5)(cid:6) (cid:24)(cid:5)(cid:9)(cid:22)(cid:21)(cid:11)0
((cid:5)(cid:3)(cid:4)(cid:31)(cid:15)(cid:21)(cid:24)(cid:6) (cid:16)(cid:9)(cid:28)(cid:28)(cid:3)(cid:5)(cid:6) (cid:16)(cid:4)(cid:28)(cid:4)((cid:10)(cid:3)(cid:6) (cid:28)(cid:5)(cid:9)(cid:11)(cid:22)(cid:16)(cid:23)(cid:12) (cid:6) (cid:6) -(cid:21)(cid:15)(cid:23)(cid:15)(cid:4)(cid:10)(cid:10)(cid:25)(cid:13)(cid:6) (cid:9)(cid:22)(cid:5)(cid:6) (cid:16)(cid:9)(cid:28)(cid:28)(cid:3)(cid:5)(cid:6) (cid:12)(cid:9)(cid:10)(cid:22)(cid:23)(cid:15)(cid:9)(cid:21)(cid:6)
(cid:20)(cid:4)(cid:12)(cid:6) (cid:9)(cid:26)(cid:26)(cid:3)(cid:5)(cid:3)(cid:11)(cid:6) (cid:4)(cid:12)(cid:6) (cid:4)(cid:21)(cid:6) (cid:4)(cid:11)(cid:11)0(cid:9)(cid:21)(cid:6) (cid:31)(cid:15)(cid:23)(cid:6) (cid:26)(cid:9)(cid:5)(cid:6) (cid:9)(cid:22)(cid:5)(cid:6) (cid:16)(cid:22)(cid:12)(cid:23)(cid:9)(cid:27)(cid:3)(cid:5)(cid:12)6(cid:6) (cid:21)(cid:3)(cid:20)(cid:6) (cid:4)(cid:21)(cid:11)(cid:6) (cid:3)(cid:29)(cid:15)(cid:12)(cid:23)(cid:15)(cid:21)(cid:24)(cid:6)
((cid:9)(cid:21)(cid:11)(cid:3)(cid:5)(cid:12)8(cid:6) (cid:8)(cid:9)(cid:20)(cid:3)(cid:30)(cid:3)(cid:5)(cid:13)(cid:6) (cid:20)(cid:3)(cid:6) (cid:5)(cid:3)(cid:16)(cid:3)(cid:21)(cid:23)(cid:10)(cid:25)(cid:6) (cid:4)(cid:21)(cid:21)(cid:9)(cid:22)(cid:21)(cid:16)(cid:3)(cid:11)(cid:6) (cid:15)(cid:27)(cid:28)(cid:5)(cid:9)(cid:30)(cid:3)(cid:11)(cid:6) (cid:16)(cid:4)(cid:28)(cid:4)((cid:15)(cid:10)(cid:15)(cid:23)(cid:15)(cid:3)(cid:12)(cid:6)
(cid:23)(cid:8)(cid:5)(cid:9)(cid:22)(cid:24)(cid:8)(cid:6) (cid:23)(cid:8)(cid:3)(cid:6) (cid:15)(cid:21)(cid:23)(cid:5)(cid:9)(cid:11)(cid:22)(cid:16)(cid:23)(cid:15)(cid:9)(cid:21)(cid:6) (cid:9)(cid:26)(cid:6) (cid:23)(cid:8)(cid:3)(cid:6) (cid:20)(cid:9)(cid:5)(cid:10)(cid:11)6(cid:12)(cid:6) (cid:27)(cid:9)(cid:12)(cid:23)(cid:6) (cid:3)(cid:26)(cid:26)(cid:15)(cid:16)(cid:15)(cid:3)(cid:21)(cid:23)(cid:6) (cid:11)(cid:3)(cid:11)(cid:15)(cid:16)(cid:4)(cid:23)(cid:3)(cid:11)(cid:6)
(cid:16)(cid:9)(cid:28)(cid:28)(cid:3)(cid:5)(cid:6)((cid:9)(cid:21)(cid:11)(cid:15)(cid:21)(cid:24)(cid:6)(cid:12)(cid:9)(cid:10)(cid:22)(cid:23)(cid:15)(cid:9)(cid:21)(cid:13)(cid:6)(cid:23)(cid:8)(cid:3)(cid:6)(cid:6)(cid:6)(cid:6)(cid:6)(cid:6)(cid:6)(cid:6)(cid:6)(cid:6)(cid:6)(cid:6)(cid:6)(cid:6)(cid:6)(cid:6)(cid:6)(cid:6)(cid:6)(cid:6)(cid:6)(cid:6)(cid:6)(cid:6)(cid:6)(cid:6)(cid:6)(cid:6)(cid:16)(cid:9)(cid:22)(cid:28)(cid:10)(cid:3)(cid:11)(cid:6)(cid:20)(cid:15)(cid:23)(cid:8)(cid:6)(cid:9)(cid:22)(cid:5)(cid:6)
(cid:21)(cid:3)(cid:20)(cid:6),(cid:22)9:5(cid:6)*;(cid:6)(cid:6)(cid:6)(cid:6)(cid:16)(cid:4)(cid:28)(cid:15)(cid:10)(cid:10)(cid:4)(cid:5)(cid:25) (cid:6)(cid:6)$(cid:8)(cid:3)(cid:6)(cid:6)(cid:6)(cid:6)(cid:6)(cid:6)(cid:6)(cid:6)(cid:6)(cid:6)(cid:6)(cid:6)(cid:6)(cid:6)(cid:6)(cid:6)(cid:6)(cid:6)(cid:6)(cid:6)(cid:6)(cid:6)(cid:6)(cid:6)(cid:6)(cid:6)(cid:6)(cid:6)(cid:4)(cid:21)(cid:11)(cid:6)(cid:6)(cid:6),(cid:22)9:5(cid:6)*;(cid:6)

-,(cid:9)(cid:21)(cid:21)(cid:6)(cid:6)(cid:6)(cid:6)(cid:6)9(cid:5)(cid:9),(cid:22)
(cid:2)(cid:3)

-,(cid:9)(cid:21)(cid:21)(cid:6)(cid:6)(cid:6)9(cid:5)(cid:9),(cid:22)
(cid:2)(cid:3)

$4

$4

(cid:23)(cid:8)(cid:3)(cid:6)

(cid:22)(cid:28)(cid:9)(cid:21)(cid:6)

(cid:28)(cid:5)(cid:9)(cid:16)(cid:3)(cid:12)(cid:12)(cid:6)

(cid:11)(cid:3)(cid:16)(cid:4)(cid:11)(cid:3)(cid:12)(cid:6)

(cid:4)(cid:11)(cid:11)(cid:15)(cid:23)(cid:15)(cid:9)(cid:21)(cid:6)

(cid:9)(cid:26)(cid:6)
(cid:3)(cid:29)(cid:28)(cid:4)(cid:21)(cid:11)(cid:6)
(cid:3)(cid:27)((cid:3)(cid:11)(cid:11)(cid:3)(cid:11)(cid:6) ((cid:9)(cid:21)(cid:11)(cid:15)(cid:21)(cid:24)(cid:6) (cid:16)(cid:4)(cid:28)(cid:4)((cid:15)(cid:10)(cid:15)(cid:23)(cid:15)(cid:3)(cid:12)(cid:6)
(cid:23)(cid:8)(cid:5)(cid:9)(cid:22)(cid:24)(cid:8)(cid:6)
(cid:9)(cid:26)(cid:6)
(cid:12)(cid:28)(cid:3)(cid:16)(cid:15)(cid:4)(cid:10)(cid:15)3(cid:3)(cid:11)(cid:6)
(cid:16)(cid:9)(cid:21)(cid:23)(cid:5)(cid:9)(cid:10)(cid:12)(cid:6)
(cid:12)(cid:28)(cid:3)(cid:16)(cid:15)(cid:26)(cid:15)(cid:16)(cid:4)(cid:10)(cid:10)(cid:25)(cid:6) (cid:4)(cid:11)(cid:4)(cid:28)(cid:23)(cid:3)(cid:11)(cid:6) (cid:26)(cid:9)(cid:5)(cid:6) (cid:16)(cid:9)(cid:28)(cid:28)(cid:3)(cid:5)(cid:6)
(cid:20)(cid:15)(cid:5)(cid:3) (cid:6) (cid:6) .(cid:3)(cid:6) (cid:15)(cid:21)(cid:23)(cid:3)(cid:21)(cid:11)(cid:6) (cid:23)(cid:9)(cid:6) (cid:16)(cid:9)(cid:21)(cid:23)(cid:15)(cid:21)(cid:22)(cid:4)(cid:10)(cid:10)(cid:25)(cid:6)
((cid:22)(cid:15)(cid:10)(cid:11)(cid:6)(cid:9)(cid:21)(cid:6)(cid:9)(cid:22)(cid:5)(cid:6)(cid:23)(cid:3)(cid:16)(cid:8)(cid:21)(cid:15)(cid:16)(cid:4)(cid:10)(cid:6)(cid:4)(cid:11)(cid:30)(cid:4)(cid:21)(cid:23)(cid:4)(cid:24)(cid:3)(cid:12)(cid:6)
(cid:4)(cid:21)(cid:11)(cid:6) (cid:27)(cid:4)(cid:15)(cid:21)(cid:23)(cid:4)(cid:15)(cid:21)(cid:6) (cid:9)(cid:22)(cid:5)(cid:6) (cid:16)(cid:9)(cid:27)(cid:27)(cid:4)(cid:21)(cid:11)(cid:15)(cid:21)(cid:24)(cid:6)
(cid:28)(cid:9)(cid:12)(cid:15)(cid:23)(cid:15)(cid:9)(cid:21)(cid:6)(cid:15)(cid:21)(cid:6)(cid:16)(cid:9)(cid:28)(cid:28)(cid:3)(cid:5) (cid:6)

-(cid:21)(cid:6) (cid:4)(cid:11)(cid:11)(cid:15)(cid:23)(cid:15)(cid:9)(cid:21)(cid:6)
(cid:23)(cid:9)(cid:6) (cid:16)(cid:5)(cid:3)(cid:4)(cid:23)(cid:15)(cid:21)(cid:24)(cid:6) (cid:21)(cid:3)(cid:20)(cid:6)
(cid:27)(cid:4)(cid:5)(cid:31)(cid:3)(cid:23)(cid:6) (cid:9)(cid:28)(cid:28)(cid:9)(cid:5)(cid:23)(cid:22)(cid:21)(cid:15)(cid:23)(cid:15)(cid:3)(cid:12)(cid:6) (cid:15)(cid:21)(cid:6) (cid:16)(cid:9)(cid:28)(cid:28)(cid:3)(cid:5)(cid:13)(cid:6)
(cid:9)(cid:22)(cid:5)(cid:6) /1(cid:2)(cid:6) (cid:27)(cid:4)(cid:5)(cid:31)(cid:3)(cid:23)(cid:6) (cid:28)(cid:9)(cid:12)(cid:15)(cid:23)(cid:15)(cid:9)(cid:21)(cid:6) (cid:8)(cid:4)(cid:12)(cid:6)
(cid:24)(cid:5)(cid:9)(cid:20)(cid:21) (cid:6) (cid:6) $(cid:8)(cid:3)(cid:6) (cid:6) (cid:6) (cid:6) (cid:6) (cid:6) (cid:6) (cid:6) (cid:6) (cid:6) (cid:6) (cid:6) (cid:26)(cid:4)(cid:27)(cid:15)(cid:10)(cid:25)(cid:6) (cid:9)(cid:26)(cid:6)
/1(cid:2)(cid:6)(cid:20)(cid:15)(cid:5)(cid:3)(cid:6)((cid:9)(cid:21)(cid:11)(cid:3)(cid:5)(cid:12)(cid:13)(cid:6)(cid:15)(cid:21)(cid:23)(cid:5)(cid:9)(cid:11)(cid:22)(cid:16)(cid:3)(cid:11)(cid:6)(cid:15)(cid:21)(cid:6)
4(cid:4)(cid:5)(cid:16)(cid:8)(cid:6) (cid:17)(cid:18)(cid:18)’(cid:13)(cid:6) (cid:9)(cid:26)(cid:26)(cid:3)(cid:5)(cid:12)(cid:6) (cid:23)(cid:8)(cid:3)(cid:6) (cid:15)(cid:21)(cid:11)(cid:22)(cid:12)(cid:23)(cid:5)(cid:25)(cid:6)
(cid:16)(cid:22)(cid:12)(cid:23)(cid:9)(cid:27)(cid:15)3(cid:3)(cid:11)(cid:6) (cid:12)(cid:9)(cid:10)(cid:22)(cid:23)(cid:15)(cid:9)(cid:21)(cid:12)(cid:6) (cid:26)(cid:9)(cid:5)(cid:6) (cid:23)(cid:8)(cid:3)(cid:6) (cid:24)(cid:5)(cid:9)(cid:20)(cid:15)(cid:21)(cid:24)(cid:6) /1(cid:2)(cid:6) (cid:27)(cid:4)(cid:5)(cid:31)(cid:3)(cid:23) (cid:6) (cid:6) .(cid:3)(cid:6) (cid:4)(cid:5)(cid:3)(cid:6) (cid:20)(cid:3)(cid:10)(cid:10)(cid:6)
(cid:28)(cid:9)(cid:12)(cid:15)(cid:23)(cid:15)(cid:9)(cid:21)(cid:3)(cid:11)(cid:6)(cid:23)(cid:9)(cid:6)(cid:28)(cid:4)(cid:5)(cid:23)(cid:15)(cid:16)(cid:15)(cid:28)(cid:4)(cid:23)(cid:3)(cid:6)(cid:15)(cid:21)(cid:6)(cid:23)(cid:8)(cid:15)(cid:12)(cid:6)(cid:3)(cid:29)(cid:16)(cid:15)(cid:23)(cid:15)(cid:21)(cid:24)(cid:6)(cid:27)(cid:4)(cid:5)(cid:31)(cid:3)(cid:23)6(cid:12)(cid:6)(cid:9)(cid:21)(cid:24)(cid:9)(cid:15)(cid:21)(cid:24)(cid:6)(cid:24)(cid:5)(cid:9)(cid:20)(cid:23)(cid:8) 

-,(cid:9)(cid:21)(cid:21)(cid:2)(cid:3)

!(cid:22)(cid:5)(cid:6) (cid:20)(cid:3)(cid:11)(cid:24)(cid:3)(cid:6) ((cid:9)(cid:21)(cid:11)(cid:15)(cid:21)(cid:24)(cid:6) (cid:28)(cid:5)(cid:9)(cid:11)(cid:22)(cid:16)(cid:23)(cid:12)(cid:6) (cid:8)(cid:4)(cid:30)(cid:3)(cid:6) (cid:28)(cid:5)(cid:9)(cid:30)(cid:15)(cid:11)(cid:3)(cid:11)(cid:6) (cid:4)(cid:16)(cid:16)(cid:3)(cid:12)(cid:12)(cid:6) (cid:23)(cid:9)(cid:6) (cid:4)(cid:6) (cid:10)(cid:4)(cid:5)(cid:24)(cid:3)(cid:5)(cid:6)
(cid:27)(cid:4)(cid:5)(cid:31)(cid:3)(cid:23)(cid:6) (cid:23)(cid:8)(cid:4)(cid:21)(cid:6) (cid:28)(cid:5)(cid:9)(cid:30)(cid:15)(cid:11)(cid:3)(cid:11)(cid:6) ((cid:25)(cid:6) (cid:23)(cid:5)(cid:4)(cid:11)(cid:15)(cid:23)(cid:15)(cid:9)(cid:21)(cid:4)(cid:10)(cid:6) (cid:20)(cid:15)(cid:5)(cid:3)(cid:6) ((cid:9)(cid:21)(cid:11)(cid:15)(cid:21)(cid:24) (cid:6) (cid:6) !(cid:22)(cid:5)(cid:6) (cid:20)(cid:3)(cid:11)(cid:24)(cid:3)(cid:6)
((cid:9)(cid:21)(cid:11)(cid:15)(cid:21)(cid:24)(cid:6) (cid:28)(cid:5)(cid:9)(cid:11)(cid:22)(cid:16)(cid:23)(cid:12)(cid:6) (cid:4)(cid:5)(cid:3)(cid:6) (cid:28)(cid:5)(cid:3)(cid:11)(cid:9)(cid:27)(cid:15)(cid:21)(cid:4)(cid:21)(cid:23)(cid:10)(cid:25)(cid:6) (cid:22)(cid:12)(cid:3)(cid:11)(cid:6) (cid:15)(cid:21)(cid:6) (cid:28)(cid:9)(cid:20)(cid:3)(cid:5)(cid:6) (cid:27)(cid:4)(cid:21)(cid:4)(cid:24)(cid:3)(cid:27)(cid:3)(cid:21)(cid:23)(cid:6)
(cid:26)(cid:9)(cid:5)(cid:6) (cid:20)(cid:15)(cid:5)(cid:3)(cid:10)(cid:3)(cid:12)(cid:12)(cid:13)(cid:6) (cid:4)(cid:22)(cid:23)(cid:9)(cid:27)(cid:9)(cid:23)(cid:15)(cid:30)(cid:3)(cid:6) (cid:4)(cid:21)(cid:11)(cid:6) (cid:4)(cid:10)(cid:23)(cid:3)(cid:5)(cid:21)(cid:4)(cid:23)(cid:15)(cid:30)(cid:3)(cid:6) (cid:3)(cid:21)(cid:3)(cid:5)(cid:24)(cid:25)(cid:6)
(cid:11)(cid:3)(cid:30)(cid:15)(cid:16)(cid:3)(cid:12)(cid:6)
(cid:4)(cid:28)(cid:28)(cid:10)(cid:15)(cid:16)(cid:4)(cid:23)(cid:15)(cid:9)(cid:21)(cid:12) (cid:6)(cid:6)5(cid:12)(cid:6)(cid:23)(cid:8)(cid:3)(cid:6)(cid:21)(cid:3)(cid:16)(cid:3)(cid:12)(cid:12)(cid:15)(cid:23)(cid:25)(cid:6)(cid:26)(cid:9)(cid:5)(cid:6)(cid:28)(cid:9)(cid:20)(cid:3)(cid:5)(cid:6)(cid:3)(cid:26)(cid:26)(cid:15)(cid:16)(cid:15)(cid:3)(cid:21)(cid:16)(cid:25)(cid:6)(cid:16)(cid:9)(cid:21)(cid:23)(cid:15)(cid:21)(cid:22)(cid:3)(cid:12)(cid:13)(cid:6)(cid:23)(cid:8)(cid:15)(cid:12)(cid:6)
(cid:27)(cid:4)(cid:5)(cid:31)(cid:3)(cid:23)(cid:6)(cid:28)(cid:5)(cid:3)(cid:12)(cid:3)(cid:21)(cid:23)(cid:12)(cid:6)(cid:12)(cid:23)(cid:5)(cid:9)(cid:21)(cid:24)(cid:6)(cid:24)(cid:5)(cid:9)(cid:20)(cid:23)(cid:8)(cid:6)(cid:9)(cid:28)(cid:28)(cid:9)(cid:5)(cid:23)(cid:22)(cid:21)(cid:15)(cid:23)(cid:15)(cid:3)(cid:12) (cid:6)

(cid:14)(cid:15)(cid:21)(cid:4)(cid:10)(cid:10)(cid:25)(cid:13)(cid:6) (cid:9)(cid:22)(cid:5)(cid:6) (cid:3)(cid:29)(cid:28)(cid:3)(cid:21)(cid:11)(cid:4)((cid:10)(cid:3)(cid:6) (cid:23)(cid:9)(cid:9)(cid:10)(cid:12)(cid:6) (cid:11)(cid:15)(cid:30)(cid:15)(cid:12)(cid:15)(cid:9)(cid:21)(cid:6) (cid:21)(cid:9)(cid:23)(cid:6) (cid:9)(cid:21)(cid:10)(cid:25)(cid:6) ((cid:5)(cid:9)(cid:4)(cid:11)(cid:3)(cid:21)(cid:12)(cid:6) (cid:9)(cid:22)(cid:5)(cid:6)
(cid:28)(cid:5)(cid:9)(cid:11)(cid:22)(cid:16)(cid:23)(cid:6) (cid:28)(cid:9)(cid:5)(cid:23)(cid:26)(cid:9)(cid:10)(cid:15)(cid:9)(cid:13)(cid:6)
(cid:15)(cid:23)(cid:6) (cid:24)(cid:3)(cid:21)(cid:3)(cid:5)(cid:4)(cid:23)(cid:3)(cid:12)(cid:6) (cid:16)(cid:9)(cid:21)(cid:12)(cid:15)(cid:12)(cid:23)(cid:3)(cid:21)(cid:23)(cid:6) (cid:16)(cid:5)(cid:9)(cid:12)(cid:12)0(cid:16)(cid:25)(cid:16)(cid:10)(cid:15)(cid:16)(cid:4)(cid:10)(cid:6) (cid:4)(cid:21)(cid:11)(cid:6)
(cid:5)(cid:3)(cid:16)(cid:22)(cid:5)(cid:5)(cid:15)(cid:21)(cid:24)(cid:6) (cid:3)(cid:4)(cid:5)(cid:21)(cid:15)(cid:21)(cid:24)(cid:12)(cid:6) (cid:23)(cid:8)(cid:4)(cid:23)(cid:6) (cid:12)(cid:22)(cid:28)(cid:28)(cid:9)(cid:5)(cid:23)(cid:6) (cid:9)(cid:22)(cid:5)(cid:6) (cid:26)(cid:15)(cid:29)(cid:3)(cid:11)(cid:6) (cid:3)(cid:29)(cid:28)(cid:3)(cid:21)(cid:12)(cid:3)(cid:12) (cid:6) (cid:6) (cid:14)(cid:22)(cid:5)(cid:23)(cid:8)(cid:3)(cid:5)(cid:27)(cid:9)(cid:5)(cid:3)(cid:13)(cid:6)
(cid:16)(cid:5)(cid:9)(cid:12)(cid:12)(cid:6) (cid:11)(cid:15)(cid:30)(cid:15)(cid:12)(cid:15)(cid:9)(cid:21)(cid:4)(cid:10)(cid:6) (cid:16)(cid:9)(cid:10)(cid:10)(cid:4)((cid:9)(cid:5)(cid:4)(cid:23)(cid:15)(cid:9)(cid:21)(cid:6) ((cid:3)(cid:23)(cid:20)(cid:3)(cid:3)(cid:21)(cid:6) (cid:9)(cid:22)(cid:5)(cid:6) (cid:3)+(cid:22)(cid:15)(cid:28)(cid:27)(cid:3)(cid:21)(cid:23)(cid:6) (cid:4)(cid:21)(cid:11)(cid:6)
(cid:3)(cid:29)(cid:28)(cid:3)(cid:21)(cid:11)(cid:4)((cid:10)(cid:3)(cid:6) (cid:23)(cid:9)(cid:9)(cid:10)(cid:12)(cid:6) (cid:11)(cid:15)(cid:30)(cid:15)(cid:12)(cid:15)(cid:9)(cid:21)(cid:12)(cid:6) (cid:28)(cid:5)(cid:9)(cid:30)(cid:15)(cid:11)(cid:3)(cid:12)(cid:6) (cid:4)(cid:6) (cid:22)(cid:21)(cid:15)+(cid:22)(cid:3)(cid:6) (cid:28)(cid:3)(cid:5)(cid:12)(cid:28)(cid:3)(cid:16)(cid:23)(cid:15)(cid:30)(cid:3)(cid:6) (cid:9)(cid:21)(cid:6)
(cid:12)(cid:9)(cid:10)(cid:30)(cid:15)(cid:21)(cid:24)(cid:6)(cid:21)(cid:3)(cid:20)(cid:6)(cid:15)(cid:21)(cid:11)(cid:22)(cid:12)(cid:23)(cid:5)(cid:25)(cid:6)(cid:16)(cid:8)(cid:4)(cid:10)(cid:10)(cid:3)(cid:21)(cid:24)(cid:3)(cid:12) (cid:6)(cid:6)

-(cid:21)(cid:6) (cid:12)(cid:22)(cid:27)(cid:27)(cid:4)(cid:5)(cid:25)(cid:13)(cid:6) (cid:9)(cid:22)(cid:5)(cid:6) (cid:24)(cid:9)(cid:4)(cid:10)(cid:12)(cid:6) (cid:5)(cid:3)(cid:27)(cid:4)(cid:15)(cid:21)(cid:6) (cid:23)(cid:8)(cid:3)(cid:6) (cid:12)(cid:4)(cid:27)(cid:3)<(cid:6) (cid:11)(cid:3)(cid:30)(cid:3)(cid:10)(cid:9)(cid:28)(cid:6) (cid:4)(cid:21)(cid:11)(cid:6) (cid:11)(cid:3)(cid:10)(cid:15)(cid:30)(cid:3)(cid:5)(cid:6) (cid:23)(cid:8)(cid:3)(cid:6)
((cid:3)(cid:12)(cid:23)(cid:6) (cid:3)+(cid:22)(cid:15)(cid:28)(cid:27)(cid:3)(cid:21)(cid:23)(cid:6) (cid:4)(cid:21)(cid:11)(cid:6) (cid:12)(cid:22)(cid:28)(cid:28)(cid:9)(cid:5)(cid:23)(cid:15)(cid:21)(cid:24)(cid:6) (cid:16)(cid:9)(cid:21)(cid:12)(cid:22)(cid:27)(cid:4)((cid:10)(cid:3)(cid:12)(cid:6) (cid:15)(cid:21)(cid:6) (cid:23)(cid:8)(cid:3)(cid:6) (cid:15)(cid:21)(cid:11)(cid:22)(cid:12)(cid:23)(cid:5)(cid:25)(cid:6) (cid:4)(cid:21)(cid:11)(cid:6)
(cid:16)(cid:9)(cid:21)(cid:23)(cid:15)(cid:21)(cid:22)(cid:3)(cid:6)(cid:23)(cid:9)(cid:6)(cid:26)(cid:9)(cid:16)(cid:22)(cid:12)(cid:6)(cid:9)(cid:22)(cid:5)(cid:6)(cid:3)(cid:26)(cid:26)(cid:9)(cid:5)(cid:23)(cid:12)(cid:6)(cid:9)(cid:21)(cid:6)(cid:15)(cid:27)(cid:28)(cid:5)(cid:9)(cid:30)(cid:15)(cid:21)(cid:24)(cid:6)(cid:9)(cid:28)(cid:3)(cid:5)(cid:4)(cid:23)(cid:15)(cid:21)(cid:24)(cid:6)(cid:28)(cid:3)(cid:5)(cid:26)(cid:9)(cid:5)(cid:27)(cid:4)(cid:21)(cid:16)(cid:3)(cid:6)
(cid:4)(cid:21)(cid:11)(cid:6) (cid:27)(cid:4)(cid:29)(cid:15)(cid:27)(cid:15)3(cid:15)(cid:21)(cid:24)(cid:6) (cid:12)(cid:8)(cid:4)(cid:5)(cid:3)(cid:8)(cid:9)(cid:10)(cid:11)(cid:3)(cid:5)(cid:6) (cid:30)(cid:4)(cid:10)(cid:22)(cid:3) (cid:6) (cid:6) .(cid:8)(cid:15)(cid:10)(cid:3)(cid:6) (cid:20)(cid:3)(cid:6) (cid:22)(cid:21)(cid:11)(cid:3)(cid:5)(cid:12)(cid:23)(cid:4)(cid:21)(cid:11)(cid:6) (cid:23)(cid:8)(cid:3)(cid:6)
(cid:16)(cid:25)(cid:16)(cid:10)(cid:15)(cid:16)(cid:4)(cid:10)(cid:6) (cid:21)(cid:4)(cid:23)(cid:22)(cid:5)(cid:3)(cid:6) (cid:9)(cid:26)(cid:6) (cid:9)(cid:22)(cid:5)(cid:6) ((cid:22)(cid:12)(cid:15)(cid:21)(cid:3)(cid:12)(cid:12)(cid:13)(cid:6) (cid:20)(cid:3)(cid:6) ((cid:3)(cid:10)(cid:15)(cid:3)(cid:30)(cid:3)(cid:6) (cid:23)(cid:8)(cid:3)(cid:6) (cid:9)(cid:28)(cid:28)(cid:9)(cid:5)(cid:23)(cid:22)(cid:21)(cid:15)(cid:23)(cid:15)(cid:3)(cid:12)(cid:6) (cid:15)(cid:21)(cid:6)
(cid:26)(cid:5)(cid:9)(cid:21)(cid:23)(cid:6)(cid:9)(cid:26)(cid:6)(cid:22)(cid:12)(cid:6)(cid:4)(cid:5)(cid:3)(cid:6)(cid:26)(cid:4)(cid:5)(cid:6)(cid:24)(cid:5)(cid:3)(cid:4)(cid:23)(cid:3)(cid:5)(cid:6)(cid:23)(cid:8)(cid:4)(cid:21)(cid:6)(cid:4)(cid:23)(cid:6)(cid:4)(cid:21)(cid:25)(cid:6)(cid:9)(cid:23)(cid:8)(cid:3)(cid:5)(cid:6)(cid:28)(cid:9)(cid:15)(cid:21)(cid:23)(cid:6)(cid:15)(cid:21)(cid:6)(cid:23)(cid:8)(cid:3)(cid:6),(cid:9)(cid:27)(cid:28)(cid:4)(cid:21)(cid:25)6(cid:12)(cid:6)
(cid:8)(cid:15)(cid:12)(cid:23)(cid:9)(cid:5)(cid:25) (cid:6) (cid:6) .(cid:3)(cid:6) (cid:4)(cid:5)(cid:3)(cid:6) (cid:4)(cid:10)(cid:10)(cid:6) (cid:26)(cid:9)(cid:16)(cid:22)(cid:12)(cid:3)(cid:11)(cid:6) (cid:9)(cid:21)(cid:6) ((cid:5)(cid:15)(cid:21)(cid:24)(cid:15)(cid:21)(cid:24)(cid:6) (cid:23)(cid:9)(cid:6) (cid:27)(cid:4)(cid:5)(cid:31)(cid:3)(cid:23)(cid:6) (cid:23)(cid:8)(cid:3)(cid:6) ((cid:3)(cid:12)(cid:23)(cid:6)
(cid:23)(cid:3)(cid:16)(cid:8)(cid:21)(cid:9)(cid:10)(cid:9)(cid:24)(cid:25)(cid:6) (cid:12)(cid:9)(cid:10)(cid:22)(cid:23)(cid:15)(cid:9)(cid:21)(cid:12)(cid:6) (cid:26)(cid:9)(cid:5)(cid:6) (cid:9)(cid:22)(cid:5)(cid:6) (cid:16)(cid:22)(cid:12)(cid:23)(cid:9)(cid:27)(cid:3)(cid:5)(cid:12)(cid:6) (cid:20)(cid:8)(cid:15)(cid:10)(cid:3)(cid:13)(cid:6) (cid:4)(cid:23)(cid:6) (cid:23)(cid:8)(cid:3)(cid:6) (cid:12)(cid:4)(cid:27)(cid:3)(cid:6) (cid:23)(cid:15)(cid:27)(cid:3)(cid:13)(cid:6)
(cid:15)(cid:27)(cid:28)(cid:5)(cid:9)(cid:30)(cid:15)(cid:21)(cid:24)(cid:6)(cid:9)(cid:22)(cid:5)(cid:6)((cid:22)(cid:12)(cid:15)(cid:21)(cid:3)(cid:12)(cid:12)(cid:6)(cid:4)(cid:21)(cid:11)(cid:6)(cid:9)(cid:28)(cid:3)(cid:5)(cid:4)(cid:23)(cid:15)(cid:9)(cid:21)(cid:4)(cid:10)(cid:6)(cid:27)(cid:9)(cid:11)(cid:3)(cid:10)(cid:12) (cid:6)

(cid:7)(cid:15)(cid:21)(cid:16)(cid:3)(cid:5)(cid:3)(cid:10)(cid:25)(cid:13)(cid:6)

=(cid:5)(cid:22)(cid:21)(cid:9)(cid:6);(cid:22)(cid:15)(cid:10)(cid:27)(cid:4)(cid:5)(cid:23)
9(cid:5)(cid:3)(cid:12)(cid:15)(cid:11)(cid:3)(cid:21)(cid:23)(cid:6)#(cid:6),(cid:8)(cid:15)(cid:3)(cid:26)(cid:6)1(cid:29)(cid:3)(cid:16)(cid:22)(cid:23)(cid:15)(cid:30)(cid:3)(cid:6)!(cid:26)(cid:26)(cid:15)(cid:16)(cid:3)(cid:5)

Selected Financial Highlights
(Continuing Operations Only)

Fiscal year 
(in thousands, except per share amounts)

Statement of Operations Data:
Net revenue

Research and development expense

Interest income (expense), net

Income (loss) from continuing operations after tax

2010

2009 *

2008 *

2007 *

2006

 $   762,784   $   225,240   $    328,050   $    370,526   $    380,296 

56,660

53,483

59,917

49,085

36,290

(7,930)

795 
 $   142,142   $   (63,612)  $    (24,721)  $      17,212   $      61,534 

(3,869)

(7,082)

2,346 

Income (loss) per share from continuing operations, Basic

Income (loss) per share from continuing operations, Diluted

 $         2.01   $       (1.02)  $        (0.46)  $          0.31   $          1.12 
 $         1.92   $       (1.02)  $        (0.46)  $          0.27   $          0.91 

Balance Sheet Data:
Working capital excluding discontinued operations
Property, plant and equipment, net
Total assets excluding discontinued operations
Long-term debt
Shareholders' equity

Other Selected Data:
Capital expenditures

Depreciation and amortization expense
Return on Invested Capital **

 $   347,560   $   172,401   $    165,543   $    219,755   $    156,237 
23,471
36,900
261,109
335,614
195,000
151,415
 $   322,480   $   170,803   $    125,396   $    111,286   $      79,306 

36,046
412,635
92,217

34,108
383,779
222,446

30,059
580,169
98,475

 $       6,271   $       5,263   $        7,851   $        5,573   $        8,610 
 $     17,531   $     21,225   $        7,563   $        9,654   $        8,281 
63.9%

-19.6%

47.7%

16.1%

-5.4%

Notes:
The financial data presented above should be read in conjunction with the consolidated financial statements, related notes, and other financial information 
included and incorporated by reference herein.  See Item 7. “Management’s Analysis of Financial Condition and Results of Operations” and Item 8. 
"Financial Statements and Supplementary Data" of our Annual Report on Form 10-K for the fiscal year ended October 2, 2010 included herein.

In addition to historical information, this report, including the chief executive officer's letter to shareholders on the previous page, contains statements relating 
to future events or our future results.  These statements are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and 
Section 21E of the Securities Exchange Act of 1934 and are subject to the safe harbor provisions created by these statutes.  See Item 1A. “Risk Factors” and 
Item 7. “Management’s Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the fiscal year ended October 2, 
2010 for a discussion of important factors that could cause actual results to differ significantly from those expressed or implied by forward-looking statements 
contained in this report.

* As adjusted for ASC No. 470.20, Debt, Debt With Conversion Options .

** The Company defines Return On Invested Capital ("ROIC") as Operating Income (Loss) divided by adjusted net Invested Capital. All amounts represent 
continuing operations only. Net Invested Capital is defined as Total Assets less Current Liabilities.  We believe ROIC is a useful measure in providing 
investors with information regarding our performance.  ROIC is a widely accepted measure of earning efficiency in relation to capital employed. We believe 
that increasing the return on capital employed, as measured by ROIC, is an effective way to sustain and increase shareholder value. Reconciliation to the most 
comparable U.S. GAAP measurements are shown on the following page of this report.

Reconciliation of Return on Invested Capital
(Continuing Operations Only)

Fiscal year 
(Dollar amounts in thousands)

Numerator:
Income (loss) from operations

   Add: Depreciation / Amortization

   Less: Gain on sale of assets

   Less: Correction of prior years

   Add: U.S. pension plan termination

2010

2009 *

2008 *

2007 *

2006

 $  148,035   $   (73,524)  $    (24,632)
7,563

17,531

21,225

9,654

 $     17,512 

 $     64,767 

               -                   -                    -                    -   

               -                   -                    -                    -   

8,281

4,544 

4,301 

               -                   -   

9,152 

                -                    -   

Adjusted income (loss) from operations

(a)

 $  165,566   $   (52,299)  $      (7,917)

 $     27,166 

 $     64,203 

Denominator:
Balance Sheet Data:
Cash, cash equivalents and investments
Non-cash assets
Total Assets
   Less: Current liabilities
   Add: Current portion of long-term debt
Net invested capital
   Less: Cash exceeding $75.0 million
   Less: Liability for uncertain tax provisions

 $  181,334 
398,835
580,169
125,130 
               -   
455,039 

 $  144,841 
267,794
412,635
123,060 
48,964 
338,539 
     106,334         69,841 
         1,968           1,699 

 $   186,081 
149,533
335,614
125,264 
72,412 
282,762 
      111,081 
        24,002 

 $   169,910 
213,869
383,779
120,249 

 $   157,283 
103,826
261,109
78,292 

                -                    -   

182,817 
263,530 
        94,910 
        82,283 
                -                   -   

Adjusted net invested capital

(b)

 $  346,737 

 $  266,999 

 $   147,679 

 $   168,620 

 $   100,534 

Return on Invested Capital

(a) / (b)

47.7%

-19.6%

-5.4%

16.1%

63.9%

* As adjusted for ASC No. 470.20, Debt, Debt With Conversion Options .

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

(Mark One)
(cid:1)

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the ﬁscal year ended October 2, 2010
OR

□

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

For the transition period from

to
Commission ﬁle number 0-121

.

KULICKE AND SOFFA INDUSTRIES, INC.

(Exact Name of Registrant as Speciﬁed in Its Charter)

PENNSYLVANIA
(State or other jurisdiction of
incorporation or organization)

6 Serangoon North Avenue 5
#03-16
Singapore
(Address of principal executive offices)

23-1498399
(IRS Employer
Identiﬁcation No.)

554910
(Zip Code)

(215) 784-6000
(Registrants telephone number, including area code)

N/A
(Former name, former address and former ﬁscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK, WITHOUT PAR VALUE
(Title of each class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as deﬁned in Rule 405 of the Securities Act. Yes (cid:3) No (cid:1)
Indicate by check mark if the registrant is not required to ﬁle reports pursuant to Section 13 or Section 15(d) of the Exchange Act.
Yes (cid:3) No (cid:1)
Indicate by check mark whether the registrant (1) has ﬁled all reports required to be ﬁled by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to ﬁle such reports), and (2) has
been subject to such ﬁling requirements for the past 90 days. Yes (cid:1) No (cid:3)
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter
period that the registrant was required to submit and post such ﬁles). Yes (cid:3) No (cid:3)
Indicate by check mark if disclosure of delinquent ﬁlers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of the registrant’s knowledge, in deﬁnitive proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. □
Indicate by check mark whether the registrant is a large accelerated ﬁler, an accelerated ﬁler, or a smaller reporting company. See deﬁnition
of ‘‘large accelerated ﬁler,’’ ‘‘accelerated ﬁler’’ and ‘‘smaller reporting company’’ in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated ﬁler □ Accelerated ﬁler (cid:1)

Non-accelerated ﬁler □
(Do not check if a smaller reporting company)

Smaller reporting company □

Indicate by check mark whether the registrant is a shell company (as deﬁned in Rule 12b-2 of the Exchange Act). Yes (cid:3) No (cid:1)
As of April 2, 2010, the aggregate market value of the registrant’s common stock held by non-affiliates of the registrant was approximately
$507.8 million based on the closing sale price as reported on The NASDAQ Global Market (Reference is made to Part II, Item 5 herein for
a statement of assumptions upon which this calculation is based).
As of December 5, 2010 there were 70,984,802 shares of the registrant’s common stock, without par value, outstanding.

Documents Incorporated by Reference
Portions of the registrant’s Proxy Statement for the 2011 Annual Meeting of Shareholders to be ﬁled on or about December 30, 2010 are
incorporated by reference into Part II, Item 5 and Part III, Items 10, 11, 12, 13 and 14 herein of this Report. Such Proxy Statement, except
for the parts therein which have been speciﬁcally incorporated by reference, shall not be deemed ‘‘ﬁled’’ for the purposes of this Report on
Form 10-K.

KULICKE AND SOFFA INDUSTRIES, INC.
2010 Annual Report on Form 10-K

Table of Contents

Part I

Item 1.

Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Item 1A.

Risks Related to Our Business and Industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Item 1B. Unresolved Staff Comments. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Item 2.

Item 3.

Item 4.

Item 5.

Item 6.

Item 7.

Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

[Removed and Reserved]. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Part II

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Selected Consolidated Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Management’s Discussion and Analysis of Financial Condition and Results of
Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Item 7A. Quantitative and Qualitative Disclosures about Market Risk . . . . . . . . . . . . . . . . . . . .

Item 8.

Item 9.

Financial Statements and Supplementary Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Item 9A.

Controls and Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Item 9B. Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Part III

Item 10.

Directors, Executive Officers and Corporate Governance . . . . . . . . . . . . . . . . . . . . . .

Item 11.

Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Item 12.

Security Ownership of Certain Beneﬁcial Owners and Management and Related
Stockholder Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Item 13.

Certain Relationships and Related Transactions and Director Independence . . . . . . . . . .

Item 14.

Principal Accounting Fees and Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Item 15.

Exhibits and Financial Statement Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Part IV

Page

1

11

20

20

20

20

21

22

24

50

50

85

85

85

86

86

86

87

87

88

94

i

Forward-Looking Statements

PART I

In addition to historical information, this ﬁling contains statements relating to future events or our future
results. These statements are forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, as amended (the ‘‘Securities Act’’) and Section 21E of the Securities Exchange Act of 1934, as
to the safe harbor provisions created by statute. Such
amended (the ‘‘Exchange Act’’), and are subject
forward-looking statements include, but are not limited to, statements that relate to our future revenue, cost
reductions, operational ﬂexibility, product development, demand forecasts, competitiveness, operating
expenses, cash ﬂows, proﬁtability, gross margins, and beneﬁts expected as a result of (among other factors):

•

•

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.

Generally, words such as ‘‘may,’’ ‘‘will,’’ ‘‘should,’’ ‘‘could,’’ ‘‘anticipate,’’ ‘‘expect,’’ ‘‘intend,’’ ‘‘estimate,’’
‘‘plan,’’ ‘‘continue,’’ ‘‘goal’’ and ‘‘believe,’’ or the negative of or other variations on these and other similar
expressions identify forward-looking statements. These forward-looking statements are made only as of the
date of this ﬁling. We do not undertake to update or revise the forward-looking statements, whether as a result
of new information, future events or otherwise.

Forward-looking statements are based on current expectations and involve risks and uncertainties. Our future
results could differ signiﬁcantly from those expressed or implied by our forward-looking statements. These
risks and uncertainties
the heading
‘‘Risk Factors’’ within this Annual Report on Form 10-K for the ﬁscal year ended October 2, 2010 and our
other reports and registration statements ﬁled from time to time with the Securities and Exchange
Commission. This discussion should be read in conjunction with the Consolidated Financial Statements and
Notes included in this report, as well as our audited ﬁnancial statements included in this Annual Report.

those described below and under

include, without

limitation,

We operate in a rapidly changing and competitive environment. New risks emerge from time to time and it is
not possible for us to predict all risks that may affect us. Future events and actual results, performance and
achievements could differ materially from those set
forth in, contemplated by or underlying the
forward-looking statements, which speak only as of the date on which they were made. Except as required by
law, we assume no obligation to update or revise any forward-looking statement to reﬂect actual results or
changes in, or additions to, the factors affecting such forward-looking statements. Given those risks and
uncertainties, investors should not place undue reliance on forward-looking statements as predictions of actual
results.

Item 1. BUSINESS

Unless otherwise indicated, the amounts and discussion contained in this Form 10-K relate to continuing
operations only and accordingly do not include amounts attributable to our Wire business, which we
sold on September 29, 2008.

Kulicke and Soffa Industries, Inc. (the ‘‘Company’’ or ‘‘K&S’’) designs, manufactures and sells capital
equipment and expendable tools used to assemble semiconductor devices, including integrated circuits (‘‘IC’’),
high and low powered discrete devices, light-emitting diodes (‘‘LEDs’’), and power modules. We also service,
maintain, repair and upgrade our equipment. Our customers primarily consist of semiconductor device
manufacturers, outsourced semiconductor
electronics
manufacturers and automotive electronics suppliers.

assembly and test providers

(‘‘OSAT’’), other

We operate two main business segments, Equipment and Expendable Tools. Our goal is to be the technology
leader and the lowest cost supplier in each of our major product lines. Accordingly, we invest in research and
the leading edge of semiconductor assembly
engineering projects intended to enhance our position at
technology. We also remain focused on our cost structure,
through consolidating operations, moving
manufacturing to Asia, moving our supply chain to lower cost suppliers and designing higher performing,
lower cost equipment. Cost reduction efforts are an important part of our normal ongoing operations, and are
expected to generate savings without compromising overall product quality and service levels.

1

On October 3, 2008, we completed the acquisition of substantially all of the assets and assumption of certain
liabilities of Orthodyne Electronics Corporation (‘‘Orthodyne’’). In connection with the Orthodyne acquisition,
we issued 7.1 million common shares with an estimated value on that date of $46.2 million and paid
$87.0 million in cash including capitalized acquisition costs. The Orthodyne wedge bonding business is the
leading supplier of both heavy wire wedge bonders and wedges (the expendable tools used in wedge bonding)
for the power semiconductor and hybrid module markets.

On September 29, 2008, we completed the sale of our Wire business for net proceeds of $149.9 million to
W.C. Heraeus GmbH (‘‘Heraeus’’). The ﬁnancial results of the Wire business have been included in
discontinued operations in the consolidated ﬁnancial statements for all periods presented.

K&S was incorporated in Pennsylvania in 1956. Our principal offices are located at 6 Serangoon
North Avenue 5, #03-16, Singapore 554910 and our telephone number in the United States is (215) 784-6000.
We maintain a website with the address www.kns.com. We are not including the information contained on our
website as a part of, or incorporating it by reference into, this ﬁling. We make available free of charge (other
than an investor’s own Internet access charges) on or through our website our annual reports on Form 10-K,
quarterly reports on Form 10-Q, current reports on Form 8-K, and any amendments to these reports, as soon
as reasonably practicable after the material is electronically ﬁled with or otherwise furnished to the Securities
and Exchange Commission (‘‘SEC’’). Our annual reports on Form 10-K, quarterly reports on Form 10-Q,
current reports on Form 8-K, and amendments to those reports are also available on the SEC website at
www.sec.gov and at the SEC’s Public Reference Room at 100 F Street NE Washington DC 20549.

Our year end for ﬁscal 2010, 2009 and 2008 was October 2, 2010, October 3, 2009, and September 27, 2008,
respectively.

Business Environment

The semiconductor business environment is highly volatile, driven by both internal cyclical dynamics as well
as macroeconomic forces. Over the long term, semiconductor consumption has historically grown, and is
forecast to continue to grow. This growth is driven, in part, by regular advances in device performance and by
price declines that result from improvements in manufacturing technology. In order to exploit these trends,
semiconductor manufacturers, both integrated device manufacturers (‘‘IDMs’’) and OSATs, periodically
aggressively invest in latest generation capital equipment. This buying pattern often leads to periods of excess
supply and reduced capital spending — the so called semiconductor cycle. Macroeconomic factors also affect
the industry, primarily through their effect on business and consumer demand for electronic devices, as well as
other products
and
telecommunication equipment.

automobiles, white goods,

that have

signiﬁcant

electronic

such as

content

this segment

Our Equipment segment reﬂects the industry’s cyclical dynamics and is therefore also highly volatile. The
ﬁnancial performance of
is affected, both positively and negatively, by semiconductor
manufacturers’ expectations of capacity requirements and their plans for upgrading their production
capabilities. Volatility of this segment is further inﬂuenced by the relative mix of IDM and OSAT customers
in any period, since changes in the mix of sales to IDMs and OSATs can affect our products’ average selling
prices and gross margins due to differences in volume purchases and machine conﬁgurations required by each
type of customer.

Our Expendable Tools segment is less volatile than our Equipment segment, since sales of expendable tools
are directly tied to semiconductor unit consumption rather than their expected growth rate.

Though the semiconductor industry’s cycle can be independent of the general economy, global economic
impact on demand for semiconductor units and ultimately demand for
conditions may have a direct
semiconductor capital equipment and expendable tools. Business conditions in the semiconductor industry
improved signiﬁcantly during ﬁscal 2010 after a dramatic deterioration in the global economy and a
corresponding reduction in semiconductor production activity during ﬁscal 2009. We expect overall demand to
be lower during the ﬁrst quarter of ﬁscal 2011 as compared to the fourth quarter of ﬁscal 2010. Our visibility
into future demand beyond that is generally limited and forecasting is difficult. There can be no assurances
regarding levels of demand for our products and we believe historic industry-wide volatility will persist.

2

To mitigate possible negative effects of this industry-wide volatility on our ﬁnancial position, we have
de-leveraged and strengthened our balance sheet. During ﬁscal 2010, we reduced our debt by $49.0 million,
and ended ﬁscal 2010 with cash and investments totaling $181.3 million. As of October 2, 2010, our total
cash, cash equivalents and investments exceeded the face value of our total debt by $71.3 million. We believe
a strong cash position allows us to continue making longer term investments in product development and in
cost reduction activities throughout the semiconductor cycle.

Technology Leadership

We compete largely by offering our customers the most advanced equipment and expendable tools available
for the wire, wedge and die bonding processes. Our equipment is typically the most productive, has the
highest levels of process capability, and as a result, has the lowest cost of ownership available in their
respective markets. Our expendable tools are designed to optimize the performance of the equipment in which
they are used. We believe our technology leadership contributes to the leading market share positions of our
various wire bonder and expendable tools products. To maintain our competitive advantage, we invest in
product development activities to produce a stream of improvements to existing products and to deliver
next-generation products. These investments often focus as much on improvements in the semiconductor
assembly process as on speciﬁc pieces of assembly equipment or expendable tools. In order to generate these
improvements, we often work in close collaboration with customers, end users, and other industry members.
In addition to producing technical advances,
these collaborative development efforts strengthen customer
relationships and enhance our reputation as a technology leader and solutions provider.

K&S’s leadership in the industry’s use of copper wire, instead of gold, for the wire bonding process is an
example of the beneﬁts of collaborative efforts. By working with customers, material suppliers, and suppliers
of equipment used around the wire bonding process, we have developed a series of robust, high yielding
production processes that have made copper wire commercially viable, signiﬁcantly reducing the cost of
assembling an integrated circuit. Many of our customers started large scale conversion of their output to
copper wire in ﬁscal 2010. We expect this conversion process to continue throughout the industry for the next
several years, potentially driving a signiﬁcant wire bonder replacement cycle as we believe much of the
industries’ installed base is not suitable for copper bonding. Based on our industry leading copper bonding
processes, we believe the market share for wire bonders conﬁgured for copper wire is much higher than our
already leading market share for ball bonders in general.

We also maintain the technology leadership of our equipment by optimizing variants of our products to serve
high growth niche markets. For example, over the last two years we have developed extensions of our main
ball bonding platforms to address opportunities in LED assembly. We estimate the LED device market to be
driven by the adoption of LED backlights for ﬂat-screen displays as well as other LED applications in general
lighting. In ﬁscal 2009, we launched two products optimized for these applications. These products represent
our ﬁrst product offerings speciﬁcally aimed at this high growth market, and since their introduction we have
captured signiﬁcant market share.

Another example of our developing equipment for high growth niche markets is our AT Premier. This machine
utilizes a modiﬁed wire bonding process to mechanically place bumps on devices, while still in a wafer
format, for variants of the ﬂip chip assembly process. Typical applications include complimentary metal-oxide
semiconductor (‘‘CMOS’’) image sensors, surface acoustical wave (‘‘SAW’’) ﬁlters and high brightness LEDs.

Our focus on technology leadership also extends to die bonding. We offer a new die bonding platform, our
iStackPS offers best-in-class
state of the art
throughput and accuracy, and we believe iStackPS is positioned to lead the market for its targeted applications.

iStackPS die bonder for advanced stacked die applications.

We bring the same technology focus to our expendable tools business, driving tool design and manufacturing
technology to optimize the performance and process capability of the equipment in which our tools are used.
For all our equipment products, expendable tools are an integral part of their process capability. We believe
our unique ability to simultaneously develop both equipment and tools is one of the reasons for our
technology leadership position.

3

Products and Services

We supply a range of bonding equipment and expendable tools. The following table reﬂects net revenue by
business segment for ﬁscal 2010, 2009 and 2008:

(dollar amounts in thousands)
Equipment
Expendable Tools
Total

. . . . . . . . . . . . .
. . . . . . . .
. . . . . . . . . . . . . . . . .

Fiscal 2010
$691,988
70,796
$762,784

% of Fiscal
2010 Net
Revenue

Fiscal 2009
90.7% $170,536
54,704
9.3%
100.0% $225,240

% of Fiscal
2009 Net
Revenue

Fiscal 2008
75.7% $271,019
57,031
24.3%
100.0% $328,050

% of Fiscal
2008 Net
Revenue
82.6%
17.4%
100.0%

See Note 12 to our Consolidated Financial Statements included in Item 8 of this report for our ﬁnancial
results by business segment.

Equipment Segment

We manufacture and sell a line of ball bonders, heavy wire wedge bonders, stud bumpers, and die bonders
that are sold to semiconductor device manufacturers, OSATs, other electronics manufacturers and automotive
electronics suppliers. Ball bonders are used to connect very ﬁne wires, typically made of gold or copper,
between the bond pads of the semiconductor device, or die, and the leads on its package. Wedge bonders use
either aluminum wire or ribbon to perform the same function in packages that cannot use gold or copper wire
because of either high electrical current requirements or other package reliability issues. Stud bumpers
mechanically apply bumps to die, typically while still in the wafer format, for some variants of the ﬂip chip
assembly process. Die bonders are used to attach a die to the substrate or lead frame which will house the
semiconductor device. We believe our equipment offers competitive advantages by providing customers with
high productivity/throughput, superior package quality/process control, and as a result, a lower cost of
ownership.

Our principal Equipment segment products include:

Business Unit

Ball bonders

Wedge bonders

Product Name

Typical Served Market

IConnPS

IConnPS ProCu

IConnPS LA

ConnXPS

ConnXPS LED
ConnXPS VLED
ConnXPS LA

AT Premier

Advanced and ultra ﬁne pitch applications using either
gold or copper wire
Advanced copper wire applications demanding high
productivity
Large area applications
Cost performance, low pin count applications using either
gold or copper wire
LED applications
Vertical LED applications
Large area applications
Stud bumping applications (high brightness LED and
image sensor)

3600Plus

7200Plus

7200HD

7600HD

Power hybrid and automotive modules using either
aluminum wire or ribbon

Power semiconductors using either aluminum wire or
ribbon

Smaller power packages using either aluminum wire or
ribbon

Power semiconductors including smaller power packages
using either aluminum wire or ribbon

Die bonder

iStackPS

Advanced stacked die and ball grid array applications

4

Ball Bonders

Automatic ball bonders represent the largest portion of our semiconductor equipment business. Our main
product platform for ball bonding is the Power Series (‘‘PS’’) — a family of assembly equipment that is setting
new standards for performance, productivity, upgradeability, and ease of use. Our Power Series consists of our
IConnPS high-performance ball bonders, and our ConnXPS cost-performance ball bonders, both of which can
be conﬁgured for either gold or copper wire. In addition, targeted speciﬁcally at the fast growing LED market,
the Power Series includes our ConnXPS LED and our ConnXPS VLED. Targeted for large area applications,
the Power Series includes our IConnPS LA and ConnXPS LA. In November 2010, we introduced the IConnPS
ProCu which offers a signiﬁcant new level of capability for customers transitioning from gold to copper wire
bonding.

Our Power Series products have advanced industry performance standards. Our ball bonders are capable of
performing very ﬁne pitch bonding, as well as creating the sophisticated wire loop shapes needed in the
assembly of advanced semiconductor packages. Our ball bonders can also be converted for use to copper
applications through kits we sell separately, a capability that is increasingly important as bonding with copper
continues to grow as an alternative to gold.

Heavy Wire Wedge Bonders

We are the leaders in the design and manufacture of heavy wire wedge bonders for the power semiconductor
and automotive power module markets. Wedge bonders may use either aluminum wire or aluminum ribbon to
connect semiconductor chips in power packages, power hybrids and automotive modules for products such as
motor control modules or inverters for hybrid cars. In addition, we see some potential use for our wedge
bonder products in select solar applications.

Our portfolio of wedge bonding products includes:

•

•

•

•

The 3600Plus: high speed, high accuracy wire bonders designed for power modules, automotive
packages and other large wire multi-chip module applications.

The 7200Plus: dual head wedge bonder designed speciﬁcally for power semiconductor applications.

The 7200HD: wedge bonder designed for smaller power packages using either aluminum wire or
ribbon.

The 7600HD: wedge bonder targeted for small power packages.

While wedge bonding traditionally utilized aluminum wire, all of our wedge bonders are also available
modiﬁed to bond aluminum ribbon using our proprietary PowerRibbon(cid:4) process. Ribbon offers device makers
performance advantages over traditional round wire and is being increasingly used for high current packages
and automotive applications.

Die Bonders

Our die bonder, the iStackPS, was launched in March of 2009 and focuses on stacked die applications for both
memory and subcontract assembly customers.

iStackPS is targeted at stacked die and high end ball grid array (‘‘BGA’’) applications. In these applications,
we expect up to 40% productivity increases compared to current generation machines. In addition, iStackPS
has demonstrated superior accuracy and process control.

Other Equipment Products and Services

We also sell manual wire bonders, and we offer spare parts, equipment repair, training services, and upgrades
for our equipment through our Support Services business unit.

5

Expendable Tools Segment

We manufacture and sell a variety of expendable tools for a broad range of semiconductor packaging
applications. Our principal Expendable Tools segment products include:

•

•

•

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
including for use on our competitors’
capillaries suitable for a broad range of applications,
equipment. In addition, our capillaries are used with both gold and copper wire.

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.

Customers

Our major customers include IDMs and OSAT companies, industrial manufacturers and automotive electronics
suppliers. Revenue from our customers may vary signiﬁcantly from year-to-year based on their capital
investments, operating expense budgets, and overall industry trends.

The following table reﬂects our top ten customers, based on net revenue, for each of the last three ﬁscal years:

Fiscal 2010

Fiscal 2009

Fiscal 2008

1.

2.

3.

4.
5.
6.

7.

Advance Semiconductor
Engineering*
Siliconware Precision
Industries, Ltd.*
Haoseng Industrial Co.,
Ltd.**
Amkor Technology, Inc.
Texas Instruments, Inc.
United Test And Assembly
Center
First Technology China,
Ltd.**
ST Microelectronics
HANA Micron

8.
9.
10. Renesas Semiconductor

1.

2.
3.

4.

5.
6.

Advance Semiconductor
Engineering*
Amkor Technology, Inc.
Siliconware Precision
Industries, Ltd.
Haoseng Industrial Co.,
Ltd.**
Texas Instruments, Inc.
First Technology China,
Ltd.**
Techno Alpha Co.**
ST Microelectronics
Samsung

7.
8.
9.
10. Micron Technology
Incorporated

1.

2.
3.

4.

5.
6.

Advance Semiconductor
Engineering*
Amkor Technology, Inc.
Siliconware Precision
Industries, Ltd.
Haoseng Industrial Co.,
Ltd.**
Texas Instruments, Inc.
First Technology China,
Ltd.**
Techno Alpha Co.**
ST Microelectronics
Samsung

7.
8.
9.
10. Micron Technology
Incorporated

Represents more than 10% of net revenue for the applicable ﬁscal year.

*
** Distributor of our products.

Approximately 98.6%, 97.0%, and 95.6% and of our net revenue for ﬁscal 2010, 2009 and 2008, respectively,
were for shipments to customer locations outside of the United States, primarily in the Asia/Paciﬁc region, and
we expect sales outside of the United States to continue to represent a substantial majority of our future net
revenue.

See Note 12 to our Consolidated Financial Statements included in Item 8 of this report for sales to customers
by geographic location.

6

Sales and Customer Support

We believe long-term customer relationships are critical to our success, and comprehensive sales and customer
support are an important means of establishing those relationships. To maintain these relationships, we utilize
multiple distribution channels using either our own employees, manufacturers’ representatives, distributors, or
a combination of the three, depending on the product, region, or end-use application. In all cases, our goal is
to position our sales and customer support resources near our customers’ facilities so as to provide support for
customers in their own language and consistent with local customs. Our sales and customer support resources
are located primarily in Taiwan, China, Korea, Malaysia, the Philippines, Japan, Singapore, Thailand, the
United States, and Germany. Supporting these local resources, we have technology centers offering additional
process expertise in China, Singapore, Japan, Israel, the United States, and Switzerland.

By establishing relationships with semiconductor manufacturers, OSATs,
and vertically integrated
manufacturers of electronic systems, we gain insight into our customers’ future semiconductor packaging
strategies. These insights assist us in our efforts to develop products and processes that address our customers’
future assembly requirements.

Backlog

Because of the volatility of customer demand, customer changes in delivery schedules, or cancellations and
potential delays in product shipments, our backlog as of any particular date may not be indicative of revenue
for any succeeding period. Our backlog consists of customer orders that are scheduled for shipment within the
next 12 months. A majority of our orders are subject to cancellation or deferral by our customers with limited
or no penalties.

The following table reﬂects our backlog as of October 2, 2010 and October 3, 2009:

(in thousands)
Backlog . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

As of

October 2,
2010
$252,459

October 3,
2009
$42,181

Manufacturing

We believe excellence in manufacturing can create a competitive advantage, both by producing at lower costs
and by providing superior responsiveness to changes in customer demand. To achieve these goals, we manage
our manufacturing operations through a single organization and believe that fewer, larger factories allow us to
capture economies of scale and generate cost savings through lower manufacturing costs.

Equipment

Our equipment manufacturing activities consist mainly of integrating outsourced parts and subassemblies and
testing ﬁnished products to customer speciﬁcations. While we largely utilize an outsource model, allowing us
to minimize our ﬁxed costs and capital expenditures, for certain low-volume, high customization parts, we
manufacture subassemblies ourselves. Just-in-time inventory management has reduced our manufacturing cycle
times and lowered our on-hand inventory requirements.

Our ball bonder and die bonder manufacturing and assembly is performed at our facility in Singapore. In
addition, we operate a subassembly manufacturing and supply management facility in Malaysia. During ﬁscal
2009, we announced plans to move manufacturing of wedge bonders from Irvine, California to Singapore.
This transition is underway and is expected to be completed in 2011. When the transition from California to
Singapore is complete, we will manufacture all of our equipment in Asia.

We have ISO 9001 certiﬁcation for our equipment manufacturing facilities in Singapore, Irvine, California,
and Switzerland (legacy model die bonders and spares manufacturing), and our subassembly manufacturing
facility in Malaysia. In addition, we have ISO 14001 certiﬁcations for our equipment manufacturing facilities
in Singapore and Irvine, California.

7

Expendable Tools

We manufacture saw blades and capillaries at our facility in Suzhou, China. The capillaries are made using
blanks produced at our facility in Yokneam, Israel. We outsource the production of our bonding wedges. Both
the Suzhou and Yokneam facilities are ISO 9001 and ISO 14001 certiﬁed.

Research and Product Development

Many of our customers generate technology roadmaps describing their projected packaging technology
requirements. Our research and product development activities are focused on delivering robust production
solutions to those projected requirements. We accomplish this by regularly introducing improved versions of
existing products or by developing next-generation products. We follow this product development
lines. Research and development expense was $56.7 million,
methodology in all our major product
$53.5 million, and $59.9 million during ﬁscal 2010, 2009 and 2008, respectively.

Intellectual Property

Where circumstances warrant, we apply for patents on inventions governing new products and processes
developed as part of our ongoing research, engineering, and manufacturing activities. We currently hold a
number of United States patents, many of which have foreign counterparts. We believe the duration of our
patents often exceeds the life cycles of the technologies disclosed and claimed in the patents. Additionally, we
believe much of our important technology resides in our trade secrets and proprietary software.

Competition

for semiconductor equipment and packaging materials products is intensely competitive.
The market
Signiﬁcant competitive factors in the semiconductor equipment market
include price, speed/throughput,
production yield, process control, delivery time and customer support, each of which contribute to lower the
overall cost per package being manufactured. Our major equipment competitors include:

•

Ball bonders: ASM Paciﬁc Technology and Shinkawa

• Wedge bonders: F&K Delvotec, Hesse & Knipps and Cho-Onpa

•

Die bonders: ASM Paciﬁc Technology, BE Semiconductor Industries N.V., Hitachi, Shinkawa and
Canon

Signiﬁcant competitive factors in the semiconductor packaging materials industry include performance, price,
delivery, product life, and quality. Our signiﬁcant expendable tools competitors include:

•

•

•

Capillaries: PECO and Small Precision Tools, Inc.

Saw blades: Disco Corporation

Bonding wedges: Small Precision Tools, Inc.

In each of the markets we serve, we face competition and the threat of competition from established
competitors and potential new entrants, some of which may have greater ﬁnancial, engineering, manufacturing,
and marketing resources.

Environmental Matters

We are subject to various federal, state, local and foreign laws and regulations governing, among other things,
the generation, storage, use, emission, discharge, transportation and disposal of hazardous materials and the
health and safety of our employees. In addition, we are subject to environmental laws which may require
investigation and cleanup of any contamination at facilities we own or operate or at third party waste disposal
sites we use or have used.

We have in the past, and expect to in the future, incur costs to comply with environmental laws. We are not,
however, currently aware of any material costs or liabilities relating to environmental matters, including any
claims or actions under environmental laws or obligations to perform any cleanups at any of our facilities or
any third party waste disposal sites, that we expect to have a material adverse effect on our business, ﬁnancial
condition or operating results. However, it is possible that material environmental costs or liabilities may arise
in the future.

8

Employees

As of October 2, 2010, we had approximately 2,250 regular full-time employees and 700 temporary workers
worldwide.

Executive Officers of the Company

The following table reﬂects certain information regarding our executive officers as of October 2, 2010. Our
executive officers are appointed by, and serve at the discretion of, the Board of Directors.

Name

Bruno Guilmart
C. Scott Kulicke
Christian Rheault
Charles Salmons
Shay Torton
Ran Bareket
Jason Livingston
Tek Chee (‘‘TC’’) Mak
Michael J. Morris

Age

49
61
45
55
49
44
40
56
41

First Became
an Officer
(calendar year)

Position

2010
1980
2005
1992
2005
2009
2009
2006
2009

President and Chief Executive Officer
Retired, Chief Executive Officer
Senior Vice President, Business Operations
Senior Vice President, Engineering
Senior Vice President, Worldwide Operations
Vice President and interim Principal Accounting Officer
Former Vice President of Wedge Bonder business unit
Vice President, Worldwide Sales
Vice President and Chief Financial Officer

Bruno Guilmart joined the Company as President and Chief Executive Officer (‘‘CEO’’) and a member of the
Company’s Board of Directors on October 1, 2010. Mr. Guilmart is located at the Company’s headquarters in
Singapore. Before joining K&S, Mr. Guilmart was CEO of Lattice Semiconductor. Prior to joining Lattice in
June 2008, Mr. Guilmart was CEO of Unisem group. Mr. Guilmart was, until his appointment with Unisem,
President and CEO of Advanced Interconnect Technologies (‘‘AIT’’), a company acquired by Unisem in
July 2007. Prior to AIT, Mr. Guilmart was senior vice president for worldwide sales and marketing at
Chartered Semiconductor Manufacturing. Mr. Guilmart holds a Master’s degree in Electronics and Business
Management and a Bachelor degree in Electrical Engineering from the Paris XI Institute of Technology in
France.

C. Scott Kulicke served as Chief Executive Officer and a member of the Company’s Board of Directors from
1980 until his retirement on October 9, 2010. In addition, he served as Chairman of the Board of Directors
from 1984 until May 2010.

Christian Rheault was appointed Senior Vice President, Business Operations in November 2010 after serving
as Senior Vice President, Marketing since November 2007. In addition, Mr. Rheault served as Vice President,
Equipment segment during 2006. Prior to that time, he served as Vice President and General Manager of our
Ball Bonder Business Unit and Director of Strategic Marketing and Vice President, General Manager of the
Microelectronics Business Unit. Mr. Rheault holds an Electrical Engineering degree from Laval University,
Canada and a DSA (Business Administration Diploma) from Sherbrooke University, Canada.

2004 − September

Charles Salmons has served as Senior Vice President, Engineering since March 2008, after serving as Senior
Vice President, Acquisition Integration (September 2006 − March 2008), Senior Vice President, Wafer Test
(November
Development
(September 2002 − November 2004), Senior Vice President Operations (1999 to 2004), General Manager, Ball
Bonder operations (1998 − 1999), and Vice President of Operations (1994 − 1998). Mr. Salmons holds a
Bachelor of Arts degree in Economics from Temple University and a Master of Business Administration
degree from LaSalle University.

President,

Product

Senior

2006),

Vice

Shay Torton has served as Senior Vice President, Worldwide Operations since 2009 after serving as
Vice President, Worldwide Operations and Supply Chain (2005 − 2009), Vice President, China Operations and
K&S Suzhou General Manager (2002 − 2005), Vice President and General Manager, Materials Business Unit
(2001 − 2002), K&S Bonding Wire Business Unit Managing Director-Singapore (1997) and General Manager,
K&S Bonding Wire-U.S. (1996). Mr. Torton holds a Bachelor of Science degree in Industrial Engineering and
Management from the Israel Institute of Technology.

9

Ran Bareket was appointed interim Principal Accounting Officer in July 2009. Prior to this appointment,
Mr. Bareket served as our Vice President and Corporate Controller since July 2006. In addition, he served as
Vice President of Financial Operations and Director of Worldwide Financial Operations since 2005. In
connection with the relocation of the Company’s headquarters from the U.S. to Singapore, the Corporate
Controller position will be transitioned to Singapore and Mr. Bareket is expected to leave the Company on
January 1, 2011. Mr. Bareket holds a Bachelor of Arts degree in Accounting/Management from Tel Aviv
Management College in Israel and a Master of Business Administration from Pennsylvania State University.

Jason Livingston served as Vice President of the K&S Wedge Bonder business unit from October 2009 until
his resignation on October 31, 2010, after serving as Vice President of Finance for the Wedge Bonding
Business Unit. Mr. Livingston joined K&S through the acquisition of Orthodyne Electronics, where he served
as Chief Financial Officer since April 1998. Prior to joining Orthodyne Electronics, Mr. Livingston was with
McGladrey & Pullen, LLP. Mr. Livingston is a CPA and holds a Bachelor of Arts degree in Accounting from
California State University.

Tek Chee (‘‘TC’’) Mak has served as Vice President of Worldwide Sales since September 2006 after serving as
Vice President of Sales for the Equipment and Expendable Tools businesses since November 2004. Prior to
that time, he served as Vice President of Asia Sales since February 2001. Mr. Mak holds a Higher Diploma of
Electronic Engineering from Hong Kong Polytechnic University.

Michael J. Morris has served as Vice President and Chief Financial Officer (‘‘CFO’’) since August 2009. In
connection with the relocation of the Company’s headquarters from the U.S. to Singapore, the CFO position
will be transitioned to Singapore and Mr. Morris is expected to leave the Company on January 21, 2011.
Mr. Morris previously served as Vice President of Finance and Treasurer. Before joining K&S in
October 2006, Mr. Morris was Assistant Treasurer at Constellation Energy Group. Prior
to joining
Constellation in 2005, Mr. Morris held various positions of increasing responsibility at the Treasurer’s Office
of General Motors. Mr. Morris holds a Bachelor of Arts degree in Economics from the University of
Pennsylvania and a Master of Business Administration from the University of Michigan.

10

Item 1A. RISKS RELATED TO OUR BUSINESS AND INDUSTRY

Our operating results and ﬁnancial condition are adversely impacted by volatile worldwide economic
conditions.

Though the semiconductor industry’s cycle can be independent of the general economy, global economic
conditions may have direct
impact on demand for semiconductor units and ultimately demand for
semiconductor capital equipment and expendable tools. Accordingly, our business and ﬁnancial performance is
impacted, both positively and negatively, by ﬂuctuations in the macroeconomic environment. During the
ﬁrst half of ﬁscal 2009, we saw a dramatic deterioration in the global economy and a corresponding reduction
in semiconductor production activity; however, business conditions in the semiconductor industry began to
improve by the end of ﬁscal 2009 and continued to accelerate through most of ﬁscal 2010. We expect demand
to soften, at least in early ﬁscal 2011. Our visibility into future demand beyond that is generally limited and
forecasting is difficult. There can be no assurances regarding levels of demand for our products and we
believe historic industry-wide volatility will persist.

The semiconductor industry is volatile with sharp periodic downturns and slowdowns. Cyclical industry
downturns are made worse by volatile global economic conditions.

Our operating results are signiﬁcantly affected by the capital expenditures of semiconductor manufacturers,
both IDMs and OSATs. Expenditures by our customers depend on the current and anticipated market demand
for semiconductors and products that use semiconductors, including personal computers, telecommunications
equipment,
for
semiconductor devices or in general economic conditions reduce demand for our products and materially and
adversely affect our business, ﬁnancial condition and operating results.

and automotive goods. Signiﬁcant downturns

in the market

electronics

consumer

The semiconductor industry is volatile, with periods of rapid growth followed by industry-wide retrenchment.
These periodic downturns and slowdowns have adversely affected our business, ﬁnancial condition and
operating results. Downturns have been characterized by, among other things, diminished product demand,
excess production capacity, and accelerated erosion of selling prices. Historically these downturns have
severely and negatively affected the industry’s demand for capital equipment, including assembly equipment
and, to a lesser extent, expendable tools. There can be no assurances regarding levels of demand for our
products. In any case, we believe the historical volatility of our business, both upward and downward, will
persist.

We may experience increasing price pressure.

Typically our average selling prices have declined over time. We seek to offset this decline by continually
reducing our cost structure by consolidating operations in lower cost areas, reducing other operating costs, and
by pursuing product strategies focused on product performance and customer service. These efforts may not be
able to fully offset price declines; therefore, our ﬁnancial condition and operating results may be materially
and adversely affected.

Our quarterly operating results ﬂuctuate signiﬁcantly and may continue to do so in the future.

In the past, our quarterly operating results have ﬂuctuated signiﬁcantly. We expect quarterly results will
continue to ﬂuctuate. Although these ﬂuctuations are partly due to the volatile nature of the semiconductor
industry, they also reﬂect other factors, many of which are outside of our control.

Some of the factors that may cause our net revenue and operating margins to ﬂuctuate signiﬁcantly from
period to period are:

•

•

market downturns;

the mix of products we sell because, for example:

(cid:5)

(cid:5)

certain lines of equipment within our business segments are more proﬁtable than others; and

some sales arrangements have higher gross margins than others;

11

•

•

•

•

•

•

•

cancelled or deferred orders;

competitive pricing pressures may force us to reduce prices;

higher than anticipated costs of development or production of new equipment models;

the availability and cost of the components for our products;

delays in the development and manufacture of our new products and upgraded versions of our
products and market acceptance of these products when introduced;

customers’ delay in purchasing our products due to anticipation that we or our competitors may
introduce new or upgraded products; and

our competitors’ introduction of new products.

Many of our expenses, such as research and development, selling, general and administrative expenses, and
interest expense, do not vary directly with our net revenue. Our research and development efforts include
long-term projects lasting a year or more, which require signiﬁcant investments. In order to realize the beneﬁts
of these projects, we believe that we must continue to fund them during periods when our revenue has
declined. As a result, a decline in our net revenue would adversely affect our operating results as we continue
to make these expenditures. In addition, if we were to incur additional expenses in a quarter in which we did
not experience comparable increased net revenue, our operating results would decline. In a downturn, we may
have excess inventory, which could be written off. Some of the other factors that may cause our expenses to
ﬂuctuate from period-to-period include:

•

•

•

•

timing and extent of our research and development efforts;

severance, restructuring, and other costs of relocating facilities;

inventory write-offs due to obsolescence; and

an increase in the cost of labor or materials.

Because our net revenue and operating results are volatile and difficult to predict, we believe consecutive
period-to-period comparisons of our operating results may not be a good indication of our future performance.

We may not be able to rapidly develop, manufacture and gain market acceptance of new and enhanced
products required to maintain or expand our business.

We believe our continued success depends on our ability to continuously develop and manufacture new
products and product enhancements on a timely and cost-effective basis. We must introduce these products
and product enhancements into the market in a timely manner in response to customers’ demands for higher
performance assembly equipment and leading-edge materials customized to address rapid technological
advances in integrated circuits, and capital equipment designs. Our competitors may develop new products or
enhancements to their products that offer improved performance and features, or lower prices which may
render our products less competitive. The development and commercialization of new products requires
signiﬁcant capital expenditures over an extended period of time, and some products we seek to develop may
never become proﬁtable. In addition, we may not be able to develop and introduce products incorporating new
technologies in a timely manner that will satisfy our customers’ future needs or achieve market acceptance.

Substantially all of our sales and manufacturing operations are located outside of the United States, and
we rely on independent foreign distribution channels for certain product lines; all of which subject us to
risks, including risks from changes in trade regulations, currency ﬂuctuations, political instability and war.

Approximately 98.6%, 97.0%, and 95.6% of our net revenue for ﬁscal 2010, 2009 and 2008, respectively,
were for shipments to customers located outside of the United States, primarily in the Asia/Paciﬁc region. Our
future performance will depend on our ability to continue to compete in foreign markets, particularly in the
Asia/Paciﬁc region. Some of these economies have been highly volatile, resulting in signiﬁcant ﬂuctuation in
local currencies, and political and economic instability. These conditions may continue or worsen, which may
materially and adversely affect our business, ﬁnancial condition and operating results.

12

We also rely on non-United States suppliers for materials and components used in our products, and
substantially all of our manufacturing operations are located in countries other than the United States. We
manufacture our ball and die bonders in Singapore, our saw blades and capillaries in China, certain bonder
subassemblies in Malaysia and capillary blanks in Israel. We manufacture wedge bonder components in
California, Singapore and Malaysia. In addition, we have sales, service and support personnel in China, Israel,
Japan, Korea, Malaysia,
the Philippines, Singapore, Switzerland, Taiwan, Thailand, United States and
Germany. We also rely on independent foreign distribution channels for certain of our product lines. As a
result, a major portion of our business is subject to the risks associated with international, and particularly
Asia/Paciﬁc, commerce, such as:

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

risks of war and civil disturbances or other events that may limit or disrupt manufacturing and
markets;

seizure of our foreign assets, including cash;

longer payment cycles in foreign markets;

international exchange restrictions;

restrictions on the repatriation of our assets, including cash;

signiﬁcant foreign and United States taxes on repatriated cash;

difficulties of staffing and managing dispersed international operations;

possible disagreements with tax authorities regarding transfer pricing regulations;

episodic events outside our control such as, for example, outbreaks of inﬂuenza;

tariff and currency ﬂuctuations;

changing political conditions;

labor work stoppages and strikes in our factories or the factories of our suppliers;

foreign governments’ monetary policies and regulatory requirements;

less protective foreign intellectual property laws; and

legal systems which are less developed and may be less predictable than those in the United States.

Because most of our foreign sales are denominated in U.S. dollars, an increase in value of the U.S. dollar
against foreign currencies will make our products more expensive than those offered by some of our foreign
competitors. In addition, a weakening of the U.S. dollar against foreign currencies could make our costs in
non-U.S. locations more expensive to fund. Our ability to compete overseas may be materially and adversely
affected by a strengthening of the U.S. dollar against foreign currencies.

Our international operations also depend upon favorable trade relations between the United States and those
foreign countries in which our customers, subcontractors and materials suppliers have operations. A
protectionist trade environment in either the United States or those foreign countries in which we do business,
such as a change in the current tariff structures, export compliance or other trade policies, may materially and
adversely affect our ability to sell our products in foreign markets.

We are exposed to ﬂuctuations in currency exchange rates that could negatively impact our ﬁnancial
results and cash ﬂows.

Because nearly all of our business is conducted outside the United States, we face exposure to adverse
movements in foreign currency exchange rates which could have a material adverse impact on our ﬁnancial
results and cash ﬂows. Historically, our primary exposures have related to net working capital exposures
denominated in currencies other than the foreign subsidiaries’ functional currency, and remeasurement of our
foreign subsidiaries’ net monetary assets from the subsidiaries’ local currency into the subsidiaries’ functional
currency. In general, an increase in the value of the U.S. dollar could require certain of our foreign
subsidiaries to record translation and remeasurement gains. Conversely, a decrease in the value of the U.S.
dollar could require certain of our foreign subsidiaries to record losses on translation and remeasurement. An

13

cash ﬂows. Our primary exposures

increase in the value of the U.S. dollar could increase the cost to our customers of our products in those
markets outside the United States where we sell in U.S. dollars, and a weakened U.S. dollar could increase
the cost of local operating expenses and procurement of raw materials, both of which could have a adverse
effect on our
Japanese Yen, Singapore Dollar,
Malaysian Ringgit, Chinese Yuan, Swiss Franc, Philippine Peso, Taiwan Dollar, South Korean Won, Israeli
Shekel and Euro. Our board of directors has granted management with limited authority to enter into foreign
term impact currency
exchange forward contracts and other instruments designed to minimize the short
ﬂuctuations have on our business. We have not entered into foreign exchange forward contracts but may enter
into foreign exchange forward contracts or other instruments in the future. Our attempts to hedge against these
risks may not be successful and may result in a material adverse impact on our ﬁnancial results and cash
ﬂows.

include

the

We may not be able to consolidate manufacturing and other facilities without incurring unanticipated costs
and disruptions to our business.

As part of our ongoing efforts to further reduce our cost structure, we continue to migrate manufacturing and
other facilities to Asia. We may incur signiﬁcant and unexpected costs, delays and disruptions to our business
during this process. Because of unanticipated events,
including the actions of governments, suppliers,
employees or customers, we may not realize the synergies, cost reductions and other beneﬁts of any
consolidation to the extent or within the timeframe we currently expect.

Our business depends on attracting and retaining management, marketing and technical employees as well
as on the succession of senior management.

Our future success depends on our ability to hire and retain qualiﬁed management, marketing, ﬁnance,
accounting and technical employees, including senior management, primarily in Asia. In September 2010, as
previously announced, C. Scott Kulicke retired from his position as CEO and Bruno Guilmart succeeded
Mr. Kulicke as CEO on October 1, 2010. Additionally on November 16, 2010, we appointed Jonathan H.
Chou as Senior Vice President and CFO effective December 13, 2010 and notiﬁed Michael J. Morris, our
current CFO that in connection with the relocation of our headquarters to Singapore, Mr. Chou has been hired
to serve as our CFO. Both Mr. Guilmart and Mr. Chou have not been previously affiliated with us; thus, if we
are not successful in effectively transitioning the CEO and CFO responsibilities to them, our business could be
adversely impacted. We may decide to move additional senior management positions to Singapore. We also
plan to move additional ﬁnance and accounting positions to Singapore. We may experience unanticipated costs
and disruptions to our business as we continue to move management, ﬁnance and accounting positions from
the U.S.
to Asia. If we are unable to continue to attract and retain the managerial, marketing, ﬁnance,
accounting and technical personnel we require, and if we are unable to effectively provide for the succession
of senior management, our business, ﬁnancial condition and operating results may be materially and adversely
affected.

Difficulties in forecasting demand for our product
excesses.

lines may lead to periodic inventory shortages or

We typically operate our business with limited visibility of future demand. As a result, we sometimes
experience inventory shortages or excesses. We generally order supplies and otherwise plan our production
based on internal forecasts for demand. We have in the past, and may again in the future, fail to accurately
forecast demand for our products. This has led to, and may in the future lead to, delays in product shipments
or, alternatively, an increased risk of inventory obsolescence. If we fail to accurately forecast demand for our
products, our business, ﬁnancial condition and operating results may be materially and adversely affected.

Alternative packaging technologies may render some of our products obsolete.

Alternative packaging technologies have emerged that may improve device performance or reduce the size of
an IC package, as compared to traditional wire bonding. These technologies include ﬂip chip and chip scale
packaging. Some of these alternative technologies eliminate the need for wires to establish the electrical
connection between a die and its package. The semiconductor industry may, in the future, shift a signiﬁcant
part of its volume into alternative packaging technologies, such as those discussed above, which do not

14

employ our products. If a signiﬁcant shift to alternative packaging technologies were to occur, demand for our
equipment and related packaging materials may be materially and adversely affected.

Because a small number of customers account for most of our sales, our net revenue could decline if we
lose a signiﬁcant customer.

The semiconductor manufacturing industry is highly concentrated, with a relatively small number of large
semiconductor manufacturers and their subcontract assemblers and vertically integrated manufacturers of
electronic systems purchasing a substantial portion of our semiconductor assembly equipment and packaging
materials. Sales to a relatively small number of customers account for a signiﬁcant percentage of our net
revenue. Sales as a percent of net revenue to our largest customer were 23.0%, 17.7%, and 9.9%, for ﬁscal
2010, 2009, and 2008, respectively.

We expect a small number of customers will continue to account for a high percentage of our net revenue for
the foreseeable future. Thus, our business success depends on our ability to maintain strong relationships with
our customers. Any one of a number of factors could adversely affect these relationships. If, for example,
during periods of escalating demand for our equipment, we were unable to add inventory and production
capacity quickly enough to meet the needs of our customers, they may turn to other suppliers making it more
difficult for us to retain their business. Similarly, if we are unable for any other reason to meet production or
delivery schedules, particularly during a period of escalating demand, our relationships with our key customers
could be adversely affected. If we lose orders from a signiﬁcant customer, or if a signiﬁcant customer reduces
its orders substantially, these losses or reductions may materially and adversely affect our business, ﬁnancial
condition and operating results.

We depend on a small number of suppliers for raw materials, components and subassemblies. If our
suppliers do not deliver their products to us, we would be unable to deliver our products to our customers.

Our products are complex and require raw materials, components and subassemblies having a high degree of
reliability, accuracy and performance. We rely on subcontractors to manufacture many of these components
and subassemblies and we rely on sole source suppliers for many components and raw materials. As a result,
we are exposed to a number of signiﬁcant risks, including:

•

•

•

•

•

•

•

•

•

decreased control over the manufacturing process for components and subassemblies;

changes in our manufacturing processes, in response to changes in the market, which may delay our
shipments;

our inadvertent use of defective or contaminated raw materials;

the relatively small operations and limited manufacturing resources of some of our suppliers, which
may limit their ability to manufacture and sell subassemblies, components or parts in the volumes
we require and at acceptable quality levels and prices;

the reliability or quality issues with certain key subassemblies provided by single source suppliers as
to which we may not have any short term alternative;

shortages caused by disruptions at our suppliers and subcontractors for a variety of reasons,
including work stoppage or ﬁre, earthquake, ﬂooding or other natural disasters;

delays in the delivery of raw materials or subassemblies, which, in turn, may delay shipments to our
customers;

loss of suppliers as a result of consolidation of suppliers in the industry; and

loss of suppliers because of their bankruptcy or insolvency.

If we are unable to deliver products to our customers on time for these or any other reasons, or we are unable
to meet customer expectations as to cycle time, or we are unable to maintain acceptable product quality or
reliability, our business, ﬁnancial condition and operating results may be materially and adversely affected.

15

We may acquire or divest businesses or enter into joint ventures or strategic alliances, which may
materially affect our business, ﬁnancial condition and operating results.

We continually evaluate our portfolio of businesses and may decide to buy or sell businesses or enter into
joint ventures or other strategic alliances. We may be unable to successfully integrate acquired businesses with
our existing businesses and successfully implement, improve and expand our systems, procedures and controls
to accommodate these acquisitions. These transactions place additional constraints on our management and
current labor force. Additionally, these transactions require signiﬁcant resources from our legal, ﬁnance and
business teams. In addition, we may divest existing businesses, which would cause a decline in revenue and
may make our ﬁnancial results more volatile. If we fail
to integrate and manage acquired businesses
successfully or to manage the risks associated with divestitures, joint ventures or other alliances, our business,
ﬁnancial condition and operating results may be materially and adversely affected.

The market price of our common shares and our earnings per share may decline as a result of any
acquisitions or divestitures.

The market price of our common shares may decline as a result of any acquisitions or divestitures made by us
if we do not achieve the perceived beneﬁts of such acquisitions or divestitures as rapidly or to the extent
anticipated by ﬁnancial or industry analysts or if the effect on our ﬁnancial results is not consistent with the
expectations of ﬁnancial or industry analysts. In addition,
the failure to achieve expected beneﬁts and
unanticipated costs relating to our acquisitions could reduce our future earnings per share.

We may be unable to continue to compete successfully in the highly competitive semiconductor equipment
and packaging materials industries.

The semiconductor equipment and packaging materials industries are very competitive. In the semiconductor
equipment industry, signiﬁcant competitive factors include performance, quality, customer support and price.
In the semiconductor packaging materials industry, competitive factors include price, delivery and quality.

In each of our markets, we face competition and the threat of competition from established competitors and
potential new entrants. In addition, established competitors may combine to form larger, better capitalized
companies. Some of our competitors have or may have signiﬁcantly greater ﬁnancial, engineering,
manufacturing and marketing resources. Some of these competitors are Asian and European companies that
have had, and may continue to have, an advantage over us in supplying products to local customers who
appear to prefer to purchase from local suppliers, without regard to other considerations.

We expect our competitors to improve their current products’ performance, and to introduce new products and
materials with improved price and performance characteristics. Our competitors may independently develop
technology similar to or better than ours. New product and material introductions by our competitors or by
new market entrants could hurt our sales. If a particular semiconductor manufacturer or subcontract assembler
selects a competitor’s product or materials for a particular assembly operation, we may not be able to sell
products or materials to that manufacturer or assembler for a signiﬁcant period of time. Manufacturers and
assemblers sometimes develop lasting relationships with suppliers and assembly equipment providers in our
industry and often go years without requiring replacement. In addition, we may have to lower our prices in
response to price cuts by our competitors, which may materially and adversely affect our business, ﬁnancial
condition and operating results. If we cannot compete successfully, we could be forced to reduce prices and
could lose customers and experience reduced margins and proﬁtability.

Our success depends in part on our intellectual property, which we may be unable to protect.

restrictions (such as nondisclosure and conﬁdentiality provisions)

Our success depends in part on our proprietary technology. To protect this technology, we rely principally on
contractual
in our agreements with
employees, subcontractors, vendors, consultants and customers and on the common law of trade secrets and
proprietary ‘‘know-how.’’ We also rely, in some cases, on patent and copyright protection. We may not be
successful in protecting our technology for a number of reasons, including the following:

•

employees, subcontractors, vendors, consultants and customers may violate their contractual
agreements, and the cost of enforcing those agreements may be prohibitive, or those agreements may
be unenforceable or more limited than we anticipate;

16

•

•

foreign intellectual property laws may not adequately protect our intellectual property rights; and

our patent and copyright claims may not be sufficiently broad to effectively protect our technology;
our patents or copyrights may be challenged, invalidated or circumvented; or we may otherwise be
unable to obtain adequate protection for our technology.

In addition, our partners and alliances may have rights to technology developed by us. We may incur
signiﬁcant expense to protect or enforce our intellectual property rights. If we are unable to protect our
intellectual property rights, our competitive position may be weakened.

Third parties may claim we are infringing on their intellectual property, which could cause us to incur
signiﬁcant litigation costs or other expenses, or prevent us from selling some of our products.

Industry participants often develop products and features similar

The semiconductor industry is characterized by rapid technological change, with frequent introductions of new
products and technologies.
to those
introduced by others, creating a risk that their products and processes may give rise to claims they infringe on
the intellectual property of others. We may unknowingly infringe on the intellectual property rights of others
and incur signiﬁcant liability for that infringement. If we are found to have infringed on the intellectual
property rights of others, we could be enjoined from continuing to manufacture, market or use the affected
product, or be required to obtain a license to continue manufacturing or using the affected product. A license
could be very expensive to obtain or may not be available at all. Similarly, changing or re-engineering our
products or processes to avoid infringing the rights of others may be costly, impractical or time consuming.

Occasionally, third parties assert that we are, or may be, infringing on or misappropriating their intellectual
property rights. In these cases, we defend, and will continue to defend, against claims or negotiate licenses
where we consider these actions appropriate. Intellectual property cases are uncertain and involve complex
legal and factual questions. If we become involved in this type of litigation, it could consume signiﬁcant
resources and divert our attention from our business.

We may be materially and adversely affected by environmental and safety laws and regulations.

We are subject to various federal, state, local and foreign laws and regulations governing, among other things,
the generation,
transportation and disposal of hazardous material,
investigation and remediation of contaminated sites and the health and safety of our employees. Increasingly,
impact of manufacturing operations and the risk to
public attention has focused on the environmental
neighbors of chemical releases from such operations.

storage, use, emission, discharge,

Proper waste disposal plays an important role in the operation of our manufacturing plants. In many of our
facilities we maintain wastewater treatment systems that remove metals and other contaminants from process
wastewater. These facilities operate under permits that must be renewed periodically. A violation of those
permits may lead to revocation of the permits, ﬁnes, penalties or the incurrence of capital or other costs to
comply with the permits, including potential shutdown of operations.

Compliance with existing or future, land use, environmental and health and safety laws and regulations may:
(1) result in signiﬁcant costs to us for additional capital equipment or other process requirements, (2) restrict
our ability to expand our operations and/or (3) cause us to curtail our operations. We also could incur
signiﬁcant costs, including cleanup costs, ﬁnes or other sanctions and third-party claims for property damage
or personal injury, as a result of violations of or liabilities under such laws and regulations. Any costs or
liabilities to comply with or imposed under these laws and regulations could materially and adversely affect
our business, ﬁnancial condition and operating results.

We may be unable to generate enough cash to repay our debt.

Our ability to make payments on our indebtedness and to fund planned capital expenditures and other
activities will depend on our ability to generate cash in the future. If our 0.875% Subordinated Convertible
Notes are not converted to shares of our common stock, we will be required to make annual cash interest
payments of $1.0 million in each ﬁscal 2011 and 2012 (assuming we do not purchase any outstanding 0.875%
Subordinated Convertible Notes). As of October 2, 2010, a principal payment of $110.0 million on the 0.875%
Subordinated Convertible Notes is due in June 2012. Our ability to make payments on our indebtedness is

17

affected by the volatile nature of our business, and general economic, competitive and other factors that are
beyond our control,
including volatile global economic conditions. Our indebtedness poses risks to our
business, including that:

•

•

insufficient cash ﬂow from operations to repay our outstanding indebtedness when it becomes due
may force us to sell assets, or seek additional capital, which we may be unable to do at all or on
terms favorable to us; and

our level of indebtedness may make us more vulnerable to economic or industry downturns.

We may not generate cash in an amount sufficient
to enable us to service interest, principal and other
payments on our debt, including the 0.875% Subordinated Convertible Notes, or to fund our other liquidity
needs. We are not restricted under the agreements governing our existing indebtedness from incurring
additional debt in the future. If new debt is added to our current levels, our leverage and our debt service
obligations would increase and the related risks described above could intensify.

We have the ability to issue additional equity securities, which would lead to dilution of our issued and
outstanding common shares.

The issuance of additional equity securities or securities convertible into equity securities will result
in
dilution of our existing shareholders’ equity interests in us. Our board of directors has the authority to issue,
without vote or action of shareholders, preferred shares in one or more series, and has the ability to ﬁx the
rights, preferences, privileges and restrictions of any such series. Any such series of preferred shares could
contain dividend rights, conversion rights, voting rights, terms of redemption, redemption prices, liquidation
preferences or other rights superior to the rights of holders of our common shares. In addition, we are
authorized to issue, without shareholder approval, up to an aggregate of 200 million common shares, of which
approximately 70.5 million shares were outstanding as of October 2, 2010. We are also authorized to issue,
without shareholder approval, securities convertible into either common shares or preferred shares.

Weaknesses in our internal controls and procedures could result in material misstatements in our ﬁnancial
statements.

Pursuant to the Sarbanes-Oxley Act, management is responsible for establishing and maintaining adequate
internal control over ﬁnancial reporting. Our internal controls over ﬁnancial reporting are processes designed
to provide reasonable assurance regarding the reliability of ﬁnancial reporting and the preparation of ﬁnancial
statements in accordance with U.S. generally accepted accounting principles. A material weakness is a control
deﬁciency, or combination of control deﬁciencies, that results in a more than remote likelihood that a material
misstatement of annual or interim ﬁnancial statements will not be prevented or detected.

Our internal controls may not prevent all potential errors or fraud, because any control system, no matter how
well designed and implemented, can only provide reasonable and not absolute assurance that the objectives of
the control system will be achieved. We or our independent registered public accountants may identify
material weaknesses in our internal controls which could adversely affect our ability to ensure proper ﬁnancial
reporting and could affect investor conﬁdence in us and the price of our common shares.

Accounting methods, including but not limited to the accounting method for convertible debt securities with
net share settlement, such as our 0.875% Convertible Subordinated Notes, are subject to change.

In calculating our diluted earnings per share, we recognize interest expense at the stated coupon rate, and
shares potentially issuable upon conversion of our 0.875% Convertible Subordinated Notes are excluded from
the calculation of diluted earnings per share until
the market price of our common shares exceeds the
conversion price (i.e., the conversion price is ‘‘in the money’’). Once the conversion price is in the money, the
shares that we would issue upon assumed conversion of the debt would be included in the calculation of fully
diluted earnings per share using the ‘‘treasury stock’’ method. No separate value is attributed to the conversion
feature of the debt at the time of issuance.

Beginning ﬁscal 2010, we implemented the Financial Accounting Standards Board (‘‘FASB’’) Accounting
Standards Codiﬁcation (‘‘ASC’’) No. 470.20, Debt, Debt With Conversion Options (‘‘ASC 470.20’’).
ASC 470.20 speciﬁes that issuers of convertible debt instruments that may be settled in cash upon conversion

18

should separately account for the liability and equity components in a manner that will reﬂect the entity’s
nonconvertible debt borrowing rate when interest cost is recognized in subsequent periods.

This change in the accounting method for convertible debt securities has and will continue to have an adverse
impact on our reported and future results of operations.

Other Risks

Our ability to recognize tax beneﬁts on future domestic U.S. tax losses and our existing U.S. net operating
loss position may be limited.

the potential future utilization of our Tax Beneﬁts for U.S.

We have generated net operating loss carry-forwards and other
tax purposes
(‘‘Tax Beneﬁts’’) that can be used to reduce our future federal income tax obligations. Under the Tax Reform
Act of 1986,
tax purposes may be limited
following an ownership change. An ownership change is generally deﬁned as a greater than 50% point
increase in equity ownership by 5% shareholders in any three-year period under Section 382 of the Internal
Revenue Code. An ownership change may signiﬁcantly limit our ability to fully utilize our net operating
losses which could materially and adversely affect our ﬁnancial condition and operating results.

tax attributes for U.S.

Potential changes to U.S. and foreign tax laws could increase our income tax expense.

We are subject to income taxes in the U. S. and many foreign jurisdictions. There have been proposals to
reform U.S. tax laws that would signiﬁcantly impact how U.S. multinational corporations, such as us, are
taxed on foreign earnings. It is unclear whether these proposed tax revisions will be enacted, or, if enacted,
what the scope of the revisions will be. Changes in U.S. and foreign tax laws, if enacted, could materially and
adversely affect our ﬁnancial condition and operating results.

Anti-takeover provisions in our articles of incorporation and bylaws, and under Pennsylvania law may
discourage other companies from attempting to acquire us.

Some provisions of our articles of incorporation and bylaws as well as Pennsylvania law may discourage
some transactions where we would otherwise experience a fundamental change. For example, our articles of
incorporation and bylaws contain provisions that:

•

•

•

classify our board of directors into four classes, with one class being elected each year;

permit our board to issue ‘‘blank check’’ preferred shares without shareholder approval; and

prohibit us from engaging in some types of business combinations with a holder of 20% or more of
our voting securities without super-majority board or shareholder approval.

Further, under
the Pennsylvania Business Corporation Law, because our shareholders approved bylaw
provisions that provide for a classiﬁed board of directors, shareholders may remove directors only for cause.
These provisions and some other provisions of the Pennsylvania Business Corporation Law could delay, defer
or prevent us from experiencing a fundamental change and may adversely affect our common shareholders’
voting and other rights.

Terrorist attacks, or other acts of violence or war may affect the markets in which we operate and our
proﬁtability.

Terrorist attacks may negatively affect our operations. There can be no assurance that there will not be further
terrorist attacks against the United States or United States businesses. Terrorist attacks or armed conﬂicts may
directly impact our physical facilities or those of our suppliers or customers. Our primary facilities include
administrative, sales and research and development facilities in the United States and manufacturing facilities
in the United States, Singapore, China, Malaysia and Israel. Additional terrorist attacks may disrupt the global
insurance and reinsurance industries with the result that we may not be able to obtain insurance at historical
terms and levels for all of our
facilities. Furthermore, additional attacks may make travel and the
transportation of our supplies and products more difficult and more expensive and ultimately affect the sales of
our products in the United States and overseas. Additional attacks or any broader conﬂict, could negatively
impact our domestic and international sales, our supply chain, our production capability and our ability to

19

deliver products to our customers. Political and economic instability in some regions of the world could
negatively impact our business. The consequences of terrorist attacks or armed conﬂicts are unpredictable, and
we may not be able to foresee events that could have an adverse effect on our business.

Item 1B. UNRESOLVED STAFF COMMENTS

None.

Item 2. PROPERTIES

The following table reﬂects our major facilities as of October 2, 2010:

Facility

Singapore

Suzhou, China

Irvine, California

Approximate
Size

Function

Products Manufactured

Lease
Expiration Date

129,944 sq. ft.(1) Corporate headquarters,

manufacturing, technology
center

151,891 sq. ft.(1) Manufacturing, technology
center

121,805 sq. ft.(1) Manufacturing, technology
center

Wire and die bonders

July 2013

Capillaries, dicing blades

October 2022(4)

Wedge bonders

September 2013

Fort Washington, Pennsylvania

88,000 sq. ft.(1)

Technology center, sales and
service, corporate ﬁnance

Not applicable

September 2028(3)

Berg, Switzerland

Yokneam, Israel

71,344 sq. ft.(2) Manufacturing, technology
center

Die bonder sub-assembly and
spares

N/A

53,820 sq. ft.(1) Manufacturing, technology
center

Capillary blanks (semi-ﬁnish)

January 2013

Petaling Jaya, Malaysia

37,200 sq. ft.(1)

Subassembly manufacturing
and supply chain management

Equipment subassembly

August 2012

(1) Leased.
(2) Owned.
(3)
(4)

Includes lease extension periods at the Company’s option. Initial lease expires September 2018.
Includes lease extension periods at the Company’s option. Initial lease expires October 2017.

In addition, we rent space for sales and service offices and administrative functions in: Taiwan, China, Korea,
Malaysia, the Philippines, Japan, Singapore, Thailand, and Germany. We believe our facilities are generally in
good condition and suitable to the extent of utilization needed.

Item 3. LEGAL PROCEEDINGS

From time to time, we may be a plaintiff or defendant in cases arising out of our business. We cannot be
assured of the results of any pending or future litigation, but we do not believe resolution of these matters will
materially or adversely affect our business, ﬁnancial condition or operating results.

Item 4.

[REMOVED AND RESERVED]

20

PART II

Item 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER

MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Our common stock is traded on The Nasdaq Global Market (‘‘Nasdaq’’) under the symbol ‘‘KLIC.’’ The
following table reﬂects the ranges of high and low sale prices for our common stock as reported on Nasdaq
for the periods indicated:

First Quarter . . . . . . . . . . . . . . . . . . . .
Second Quarter . . . . . . . . . . . . . . . . . .
Third Quarter . . . . . . . . . . . . . . . . . . .
Fourth Quarter . . . . . . . . . . . . . . . . . .

Fiscal 2010

Fiscal 2009

High
$6.30
$7.67
$9.58
$8.87

Low
$4.03
$4.55
$6.13
$5.27

High
$4.71
$2.67
$5.04
$6.68

Low
$1.11
$1.15
$2.11
$3.00

On December 5, 2010, there were approximately 380 holders of record of the shares of outstanding common
stock. The payment of dividends on our common stock is within the discretion of our board of directors;
however, we have not historically paid any dividends on our common stock. In addition, we do not expect to
declare dividends on our common stock in the near future, since we intend to retain earnings to ﬁnance our
business.

For
the purpose of calculating the aggregate market value of shares of our common stock held by
non-affiliates, as shown on the cover page of this report, we have assumed all of our outstanding shares were
held by non-affiliates except for shares held by our directors and executive officers. However, this does not
necessarily mean that all directors and executive officers of the Company are,
in fact, affiliates of the
Company, or there are no other persons who may be deemed to be affiliates of the Company. Further
information concerning the beneﬁcial ownership of our executive officers, directors and principal shareholders
will be included in our Proxy Statement for the 2011 Annual Meeting of Shareholders to be ﬁled with the
Securities and Exchange Commission on or about December 30, 2010.

Equity Compensation Plan Information

The information required hereunder will appear under the heading ‘‘Equity Compensation Plans’’ in our Proxy
Statement for the 2011 Annual Meeting of Shareholders which information is incorporated herein by
reference.

Recent Sales of Unregistered Securities and Use of Proceeds

None.

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

None.

21

Item 6. SELECTED CONSOLIDATED FINANCIAL DATA
The following table reﬂects selected historical consolidated ﬁnancial data derived from the consolidated
ﬁnancial statements of Kulicke and Soffa Industries, Inc. and subsidiaries as of and for each of the ﬁve ﬁscal
years ended 2010, 2009, 2008, 2007 and 2006.

As of October 4, 2009, we adopted Financial Accounting Standards Board (‘‘FASB’’) Accounting Standards
Codiﬁcation (‘‘ASC’’) No. 470.20, Debt, Debt With Conversion Options (‘‘ASC 470.20’’) on a retrospective
basis for all prior periods. Fiscal 2009 includes the assets of Orthodyne which were acquired on October 3,
2008. Our Wire business was sold on September 29, 2008; therefore, ﬁscal 2008, 2007 and 2006 have been
reclassiﬁed to reﬂect our Wire business as a discontinued operation.

This data should be read in conjunction with our consolidated ﬁnancial statements, including notes and other
ﬁnancial information included elsewhere in this report or current reports on Form 8-K ﬁled previously by us
in respect of the ﬁscal years identiﬁed in the column headings of the tables below.

(in thousands, except per share amounts)
Statement of Operations Data:
Net revenue:

2010

2009*

Fiscal
2008*

2007*

2006*

Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expendable Tools . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total net revenue. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$691,988
70,796
762,784

$170,536
54,704
225,240

$271,019
57,031
328,050

$316,718
53,808
370,526

$319,788
60,508
380,296

Cost of sales:

Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expendable Tools . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total cost of sales(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Operating expenses:

Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expendable Tools . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impairment of goodwill: Equipment. . . . . . . . . . . . . . . . . . . . . . . . . .
U.S. pension plan termination: Equipment . . . . . . . . . . . . . . . . . . . . . .
Gain on sale of assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total operating expenses(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Income (loss) from operations:

Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expendable Tools . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gain on sale of assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest income (expense), net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gain on extinguishment of debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income (loss) from continuing operations before income taxes . . . . . . . . . . .
Provision (beneﬁt) for income taxes from continuing operations(2) . . . . . . . . .
Income (loss) from continuing operations . . . . . . . . . . . . . . . . . . . . . . . .
Income (loss) from discontinued operations, net of tax(3)
. . . . . . . . . . . . . .
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Per Share Data:
Income (loss) per share from continuing operations(4)
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income (loss) per share from discontinued operations, net of tax:
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income (loss) per share:(5)
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Weighted average shares outstanding:(5)
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance Sheet Data:
Cash, cash equivalents, investments and restricted cash . . . . . . . . . . . . . . .
Working capital excluding discontinued operations . . . . . . . . . . . . . . . . . .
Total assets excluding discontinued operations . . . . . . . . . . . . . . . . . . . . .
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Shareholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

399,042
28,069
427,111

155,625
32,013
—
—
—
187,638

137,321
10,714
—
(7,930)
—
140,105
(2,037)
142,142
—
$142,142

111,103
25,294
136,397

135,465
24,193
2,709
—
—
162,367

(78,741)
5,217
—
(7,082)
3,965
(76,641)
(13,029)
(63,612)
22,011
$ (41,601)

$
$

$
$

$
$

2.01
1.92

$
$

(1.02)
(1.02)

— $
— $

0.35
0.35

2.01
1.92

$
$

(0.67)
(0.67)

165,499
28,758
194,257

122,302
26,971
—
9,152
—
158,425

(25,934)
1,302
—
(3,869)
170
(28,331)
(3,610)
(24,721)
23,441
$ (1,280)

$
$

$
$

$
$

(0.46)
(0.46)

0.44
0.44

(0.02)
(0.02)

188,055
27,035
215,090

113,444
24,480
—
—
—
137,924

15,219
2,293
—
2,346
2,802
22,660
5,448
17,212
18,874
$ 36,086

$
$

$
$

$
$

0.31
0.27

0.33
0.28

0.64
0.55

178,599
28,474
207,073

89,684
23,316
—
—
(4,544)
108,456

51,505
8,718
4,544
795
4,040
69,602
8,068
61,534
(9,364)
$ 52,170

$
$

$
$

$
$

1.12
0.91

(0.17)
(0.14)

0.95
0.78

70,012
73,548

62,188
62,188

53,449
53,449

56,221
68,274

55,089
68,881

$181,334
347,560
580,169
98,475
$322,480

$144,841
172,401
412,635
92,217
$170,803

$186,081
165,543
335,614
151,415
$125,396

$169,910
219,755
383,779
222,446
$111,286

$157,283
156,237
261,109
195,000
$ 79,306

22

As adjusted for ASC No. 470.20, Debt, Debt With Conversion Options.

*
(1) During ﬁscal 2010 and 2009, we recorded $2.4 and $7.4 million, respectively, in operating expense for

restructuring-related severance.
During ﬁscal 2010, 2009, 2008, 2007 and 2006, we recorded $17.4 million, $2.7 million, $2.2 million,
$4.4 million and $8.4 million, respectively, in operating expense for incentive compensation.
During ﬁscal 2006, we recorded the following charges in continuing operations:
$3.5 million in cost of
sales and $0.8 million in operating expenses for the cumulative adjustment to correct immaterial errors in
the consolidated ﬁnancial statements.

(2) The

are

following

the most

income
factors which
taxes:
implementation of our international restructuring plan in ﬁscal 2010, 2008, 2007, and 2006;
volatility in our earnings each ﬁscal year and variation in earnings among various tax jurisdictions in
which we operate; changes in assumptions regarding repatriation of earnings; changes in tax legislation
and our provision for various tax exposure items.

signiﬁcant

provision

affect

our

for

(3) Reﬂects the operations of the Company’s Wire business (sold ﬁscal 2009) and Test business (sold

March 2006).

(4) For ﬁscal 2010, $1.5 million of net

income applicable to participating securities and the related

participating securities were excluded from the computation of basic income per share.

(5) For ﬁscal 2010, 2007 and 2006 the exercise of dilutive stock options and expected vesting of
performance-based restricted stock (ﬁscal 2010 and 2007 only) and conversion of the Convertible
Subordinated Notes were assumed.
those periods, $0.3 million, $1.3 million and
$1.4 million, respectively, of after-tax interest expense related to our Convertible Subordinated Notes was
added to the Company’s net income to determine diluted earnings per share. Due to the Company’s net
loss from continuing operations for ﬁscal 2009 and 2008, potentially dilutive shares were not assumed
since the effect would have been anti-dilutive.

In addition for

23

Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

In addition to historical information, this ﬁling contains statements relating to future events or our future
results. These statements are forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, as amended (the ‘‘Securities Act’’) and Section 21E of the Securities Exchange Act of 1934, as
amended (the ‘‘Exchange Act’’), and are subject
to the safe harbor provisions created by statute. Such
forward-looking statements include, but are not limited to, statements that relate to our future revenue, cost
reductions, operational ﬂexibility, product development, demand forecasts, competitiveness, operating
expenses, cash ﬂows, proﬁtability, gross margins, and beneﬁts expected as a result of (among other factors):

•

•

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.

Generally, words such as ‘‘may,’’ ‘‘will,’’ ‘‘should,’’ ‘‘could,’’ ‘‘anticipate,’’ ‘‘expect,’’ ‘‘intend,’’ ‘‘estimate,’’
‘‘plan,’’ ‘‘continue,’’ ‘‘goal’’ and ‘‘believe,’’ or the negative of or other variations on these and other similar
expressions identify forward-looking statements. These forward-looking statements are made only as of the
date of this ﬁling. We do not undertake to update or revise the forward-looking statements, whether as a result
of new information, future events or otherwise.

Forward-looking statements are based on current expectations and involve risks and uncertainties. Our future
results could differ signiﬁcantly from those expressed or implied by our forward-looking statements. These
risks and uncertainties
the heading
‘‘Risk Factors’’ in this Annual Report on Form 10-K for the ﬁscal year ended October 2, 2010 and our other
reports and registration statements ﬁled from time to time with the Securities and Exchange Commission. This
discussion should be read in conjunction with the Consolidated Financial Statements and Notes included in
this report, as well as our audited ﬁnancial statements included in the Annual Report.

those described below and under

include, without

limitation,

We operate in a rapidly changing and competitive environment. New risks emerge from time to time and it is
not possible for us to predict all risks that may affect us. Future events and actual results, performance and
achievements could differ materially from those set
forth in, contemplated by or underlying the
forward-looking statements, which speak only as of the date on which they were made. Except as required by
law, we assume no obligation to update or revise any forward-looking statement to reﬂect actual results or
changes in, or additions to, the factors affecting such forward-looking statements. Given those risks and
uncertainties, investors should not place undue reliance on forward-looking statements as predictions of actual
results.

Introduction

Unless otherwise indicated, the amounts and discussion contained in this Form 10-K relate to continuing
operations only and accordingly do not include amounts attributable to our Wire business, which we
sold on September 29, 2008.

Kulicke and Soffa Industries, Inc. (the ‘‘Company’’ or ‘‘K&S’’) designs, manufactures and sells capital
equipment and expendable tools used to assemble semiconductor devices, including integrated circuits (‘‘IC’’),
high and low powered discrete devices, light-emitting diodes (‘‘LEDs’’), and power modules. We also service,
maintain, repair and upgrade our equipment. Our customers primarily consist of semiconductor device
manufacturers, outsourced semiconductor
electronics
manufacturers and automotive electronics suppliers.

assembly and test providers

(‘‘OSAT’’), other

We operate two main business segments, Equipment and Expendable Tools. Our goal is to be the technology
leader and the lowest cost supplier in each of our major product lines. Accordingly, we invest in research and
the leading edge of semiconductor assembly
engineering projects intended to enhance our position at
technology. We also remain focused on our cost structure,
through consolidating operations, moving
manufacturing to Asia, moving our supply chain to lower cost suppliers and designing higher performing,
lower cost equipment. Cost reduction efforts are an important part of our normal ongoing operations, and are
expected to generate savings without compromising overall product quality and service levels.

24

On October 3, 2008, we completed the acquisition of substantially all of the assets and assumption of certain
liabilities of Orthodyne Electronics Corporation (‘‘Orthodyne’’). In connection with the Orthodyne acquisition,
we issued 7.1 million common shares with an estimated value on that date of $46.2 million and paid
$87.0 million in cash including capitalized acquisition costs. The Orthodyne wedge bonding business is the
leading supplier of both heavy wire wedge bonders and heavy wire wedges (the expendable tools used in
wedge bonding) for the power semiconductor and hybrid module markets.

On September 29, 2008, we completed the sale of our Wire business for net proceeds of $149.9 million to
W.C. Heraeus GmbH (‘‘Heraeus’’). The ﬁnancial results of the Wire business have been included in
discontinued operations in the consolidated ﬁnancial statements for all periods presented.

Business Environment

The semiconductor business environment is highly volatile, driven by both internal cyclical dynamics as well
as macroeconomic forces. Over the long term, semiconductor consumption has historically grown, and is
forecast to continue to grow. This growth is driven, in part, by regular advances in device performance and by
price declines that result from improvements in manufacturing technology. In order to exploit these trends,
semiconductor manufacturers, both integrated device manufacturers (‘‘IDMs’’) and OSATs, periodically
aggressively invest in latest generation capital equipment. This buying pattern often leads to periods of excess
supply and reduced capital spending — the so called semiconductor cycle. Macroeconomic factors also affect
the industry, primarily through their effect on business and consumer demand for electronic devices, as well as
other products
and
telecommunication equipment.

automobiles, white goods,

that have

signiﬁcant

electronic

such as

content

this segment

Our Equipment segment reﬂects the industry’s cyclical dynamics and is therefore also highly volatile. The
is affected, both positively and negatively, by semiconductor
ﬁnancial performance of
manufacturers’ expectations of capacity requirements and their plans for upgrading their production
capabilities. Volatility of this segment is further inﬂuenced by the relative mix of IDM and OSAT customers
in any period, since changes in the mix of sales to IDMs and OSATs can affect our products’ average selling
prices and gross margins due to differences in volume purchases and machine conﬁgurations required by each
type of customer.

Our Expendable Tools segment is less volatile than our Equipment segment, since sales of expendable tools
are directly tied to semiconductor unit consumption rather than their expected growth rate.

Though the semiconductor industry’s cycle can be independent of the general economy, global economic
conditions may have a direct
impact on demand for semiconductor units and ultimately demand for
semiconductor capital equipment and expendable tools. Business conditions in the semiconductor industry
improved signiﬁcantly during ﬁscal 2010 after a dramatic deterioration in the global economy and a
corresponding reduction in semiconductor production activity during ﬁscal 2009. We expect overall demand to
be lower during the ﬁrst quarter of ﬁscal 2011 as compared to the fourth quarter of ﬁscal 2010. Our visibility
into future demand beyond that is generally limited and forecasting is difficult. There can be no assurances
regarding levels of demand for our products and we believe historic industry-wide volatility will persist.

To mitigate possible negative effects of this industry-wide volatility on our ﬁnancial position, we have
de-leveraged and strengthened our balance sheet. During ﬁscal 2010, we reduced our debt by $49.0 million,
and ended ﬁscal 2010 with cash, cash equivalents, and investments totaling $181.3 million. As of October 2,
2010, our total cash, and investments exceeded the face value of our total debt by $71.3 million. We believe a
strong cash position allows us to continue making longer term investments in product development and in cost
reduction activities throughout the semiconductor cycle.

Technology Leadership

We compete largely by offering our customers the most advanced equipment and expendable tools available
for the wire, wedge and die bonding processes. Our equipment is typically the most productive, has the
highest levels of process capability, and as a result, has the lowest cost of ownership available in their
respective markets. Our expendable tools are designed to optimize the performance of the equipment in which
they are used. We believe our technology leadership contributes to the leading market share positions of our
various wire bonder and expendable tools products. To maintain our competitive advantage, we invest in

25

product development activities to produce a stream of improvements to existing products and to deliver
next-generation products. These investments often focus as much on improvements in the semiconductor
assembly process as on speciﬁc pieces of assembly equipment or expendable tools. In order to generate these
improvements, we often work in close collaboration with customers, end users, and other industry members.
In addition to producing technical advances,
these collaborative development efforts strengthen customer
relationships and enhance our reputation as a technology leader and solutions provider.

K&S’s leadership in the industry’s use of copper wire, instead of gold, for the wire bonding process is an
example of the beneﬁts of collaborative efforts. By working with customers, material suppliers, and suppliers
of equipment used around the wire bonding process, we have developed a series of robust, high yielding
production processes that have made copper wire commercially viable, signiﬁcantly reducing the cost of
assembling an integrated circuit. Many of our customers started large scale conversion of their output to
copper wire in ﬁscal 2010. We expect this conversion process to continue throughout the industry for the next
several years, potentially driving a signiﬁcant wire bonder replacement cycle as we believe much of the
industries’ installed base is not suitable for copper bonding. Based on our industry leading copper bonding
processes, we believe the market share for wire bonders conﬁgured for copper wire is much higher than our
already leading market share for ball bonders in general.

We also maintain the technology leadership of our equipment by optimizing variants of our products to serve
high growth niche markets. For example, over the last two years we have developed extensions of our main
ball bonding platforms to address opportunities in LED assembly. We estimate the LED device market to be
driven by the adoption of LED backlights for ﬂat-screen displays as well as other LED applications in general
lighting. In ﬁscal 2009, we launched two products optimized for these applications. These products represent
our ﬁrst product offerings speciﬁcally aimed at this high growth market, and since their introduction we have
captured signiﬁcant market share.

Another example of our developing equipment for high growth niche markets is our AT Premier. This machine
utilizes a modiﬁed wire bonding process to mechanically place bumps on devices, while still in a wafer
format, for variants of the ﬂip chip assembly process. Typical applications include complimentary metal-oxide
semiconductor (‘‘CMOS’’) image sensors, surface acoustical wave (‘‘SAW’’) ﬁlters and high brightness LEDs.

Our focus on technology leadership also extends to die bonding. We offer a new die bonding platform, our
iStackPS offers best-in-class
state of the art
throughput and accuracy, and we believe iStackPS is positioned to lead the market for its targeted applications.

iStackPS die bonder for advanced stacked die applications.

We bring the same technology focus to our expendable tools business, driving tool design and manufacturing
technology to optimize the performance and process capability of the equipment in which our tools are used.
For all our equipment products, expendable tools are an integral part of their process capability. We believe
our unique ability to simultaneously develop both equipment and tools is one of the reasons for our
technology leadership position.

Products and Services

We supply a range of bonding equipment and expendable tools. Our Equipment segment represented 90.7%,
75.7% and 82.6% of total net revenue for ﬁscal 2010, 2009 and 2008. Accordingly, our Expendable Tools
segment represented 9.3%, 24.3% and 17.4% of total net revenue for ﬁscal 2010, 2009 and 2008.

Equipment Segment

We manufacture and sell a line of ball bonders, heavy wire wedge bonders, stud bumpers, and die bonders
their OSATs, other electronics manufacturers and
that are sold to semiconductor device manufacturers,
automotive electronics suppliers. Ball bonders are used to connect very ﬁne wires, typically made of gold or
copper, between the bond pads of the semiconductor device, or die, and the leads on its package. Wedge
bonders use either aluminum wire or ribbon to perform the same function in packages that cannot use gold or
copper wire because of either high electrical current requirements or other package reliability issues. Stud
bumpers mechanically apply bumps to die, typically while still in the wafer format, for some variants of the
ﬂip chip assembly process. Die bonders are used to attach a die to the substrate or lead frame which will

26

house the semiconductor device. We believe our equipment offers competitive advantages by providing
customers with high productivity/throughput, superior package quality/process control, and as a result, a lower
cost of ownership.

Our principal Equipment segment products include:

Business Unit
Ball bonders

Product Name

Typical Served Market

IConnPS

Advanced and ultra ﬁne pitch applications using either
gold or copper wire

IConnPS ProCu

Advanced copper wire applications demanding high
productivity

IConnPS LA

Large area applications

ConnXPS

Cost performance, low pin count applications using either
gold or copper wire

ConnXPS LED
ConnXPS VLED
ConnXPS LA

LED applications

Vertical LED applications

Large area applications

AT Premier

Stud bumping applications (high brightness LED and
image sensor)

Wedge bonders

Die bonder

3600Plus

7200Plus

7200HD

7600HD

iStackPS

Power hybrid and automotive modules using either
aluminum wire or ribbon

Power semiconductors using either aluminum wire or
ribbon

Smaller power packages using either aluminum wire or
ribbon

Power semiconductors including smaller power packages
using either aluminum wire or ribbon

Advanced stacked die and ball grid array applications

Ball Bonders
Automatic ball bonders represent the largest portion of our semiconductor equipment business. Our main
product platform for ball bonding is the Power Series (‘‘PS’’) — a family of assembly equipment that is setting
new standards for performance, productivity, upgradeability, and ease of use. Our Power Series consists of our
IConnPS high-performance ball bonders, and our ConnXPS cost-performance ball bonders, both of which can
be conﬁgured for either gold or copper wire. In addition, targeted speciﬁcally at the fast growing LED market,
the Power Series includes our ConnXPS LED and our ConnXPS VLED. Targeted for large area applications,
the Power Series includes our IConnPS LA and ConnXPS LA. In November 2010, we introduced the IConnPS
ProCu which offers a signiﬁcant new level of capability for customers transitioning from gold to copper wire
bonding.

Our Power Series products have advanced industry performance standards. Our ball bonders are capable of
performing very ﬁne pitch bonding, as well as creating the sophisticated wire loop shapes needed in the
assembly of advanced semiconductor packages. Our ball bonders can also be converted for use to copper
applications through kits we sell separately, a capability that is increasingly important as bonding with copper
continues to grow as an alternative to gold.

Heavy Wire Wedge Bonders
We are the leaders in the design and manufacture of heavy wire wedge bonders for the power semiconductor
and automotive power module markets. Wedge bonders may use either aluminum wire or aluminum ribbon to
connect semiconductor chips in power packages, power hybrids and automotive modules for products such as
motor control modules or inverters for hybrid cars. In addition, we see some potential use for our wedge
bonder products in select solar applications.

27

Our portfolio of wedge bonding products includes:

•

•

•

•

The 3600Plus: high speed, high accuracy wire bonders designed for power modules, automotive
packages and other large wire multi-chip module applications.

The 7200Plus:
applications.

dual head wedge bonder designed speciﬁcally for power

semiconductor

The 7200HD: wedge bonder designed for smaller power packages using either aluminum wire or
ribbon.

The 7600HD: wedge bonder targeted for small power packages.

While wedge bonding traditionally utilized aluminum wire, all of our wedge bonders are also available
modiﬁed to bond aluminum ribbon using our proprietary PowerRibbon(cid:4) process. Ribbon offers device makers
performance advantages over traditional round wire and is being increasingly used for high current packages
and automotive applications.

Die Bonders

Our die bonder, the iStack, was launched in March of 2009, and focuses on stacked die applications for both
memory and OSAT customers.

iStack is targeted at stacked die and high end ball grid array (BGA) applications. In these applications, we
expect up to 40% productivity increases compared to current generation machines. In addition, iStack has
demonstrated superior accuracy and process control.

Other Equipment Products and Services

We also sell manual wire bonders, and we offer spare parts, equipment repair, training services, and upgrades
for our equipment through our Support Services business unit.

Expendable Tools Segment

We manufacture and sell a variety of expendable tools for a broad range of semiconductor packaging
applications. Our principal Expendable Tools segment products include:

•

•

•

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. In addition, our capillaries are used with both gold and copper wire.

expendable tools used in wedge bonders. Like capillaries, their speciﬁc features
Bonding wedges:
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.

Critical Accounting Policies

The preparation of consolidated ﬁnancial statements requires us to make assumptions, estimates and judgments
that affect
the reported amounts of assets and liabilities, net revenue and expenses during the reporting
periods, and disclosures of contingent assets and liabilities as of the date of the consolidated ﬁnancial
statements. On an on-going basis, we evaluate estimates, including but not limited to, those related to accounts
receivable, reserves for excess and obsolete inventory, carrying value and lives of ﬁxed assets, goodwill and
intangible assets, valuation allowances for deferred tax assets and deferred tax liabilities, repatriation of
un-remitted foreign subsidiary earnings, equity-based compensation expense, restructuring, and warranties. We
base our estimates on historical experience and on various other assumptions that we believe to be reasonable.
As a result, we make judgments regarding the carrying values of our assets and liabilities that are not readily
apparent from other sources. Actual results may differ from these estimates under different assumptions or
conditions.

28

We believe the following critical accounting policies, which have been reviewed with the Audit Committee of
our board of directors, affect our more signiﬁcant judgments and estimates used in the preparation of our
consolidated ﬁnancial statements.

Revenue Recognition

In accordance with Accounting Standards Codiﬁcation (‘‘ASC’’) No. 605, Revenue Recognition, we recognize
revenue when persuasive evidence of an arrangement exists, delivery has occurred or services have been
rendered, the price is ﬁxed or determinable, the collectibility is reasonably assured, and equipment installation
obligations have been completed and customer acceptance, when applicable, has been received or otherwise
released from installation or customer acceptance obligations. In the event terms of the sale provide for a
customer acceptance period, revenue is recognized upon the expiration of the acceptance period or customer
acceptance, whichever occurs ﬁrst. Our standard terms are Ex Works (our factory), with title transferring to
our customer at our loading dock or upon embarkation. We have a small percentage of sales with other terms,
and revenue is recognized in accordance with the terms of the related customer purchase order. Revenue
related to services is recognized upon performance of the services requested by a customer order. Revenue for
extended maintenance service contracts with a term more than one month is recognized on a prorated
straight-line basis over the term of the contract.

Our business is subject to contingencies related to customer orders as follows:

•

Right of Return: A large portion of our revenue comes from the sale of machines used in the
semiconductor assembly process. Other product sales relate to consumable products, which are sold
in high-volume quantities, and are generally maintained at
low stock levels at our customer’s
facility. Customer returns have historically represented a very small percentage of customer sales on
an annual basis.

• Warranties: Our equipment is generally shipped with a one-year warranty against manufacturing
the related
is recognized. The reserve for estimated warranty expense is based upon historical

defects. We establish reserves for estimated warranty expense when revenue for
equipment
experience and management’s estimate of future expenses.

•

Conditions of Acceptance: Sales of our consumable products generally do not have customer
acceptance terms. In certain cases, sales of our equipment have customer acceptance clauses which
may require the equipment to perform in accordance with customer speciﬁcations or when installed
at the customer’s facility. In such cases, if the terms of acceptance are satisﬁed at our facility prior
to shipment, the revenue for the equipment will be recognized upon shipment. If the terms of
acceptance are satisﬁed at our customers’ facilities, the revenue for the equipment will be not be
recognized until acceptance, which typically consists of installation and testing, is received from the
customer.

Shipping and handling costs billed to customers are recognized in net revenue. Shipping and handling costs
are included in cost of sales.

Allowance for Doubtful Accounts

We maintain allowances for doubtful accounts for estimated losses resulting from our customers’ failure to
make required payments. If the ﬁnancial condition of our customers were to deteriorate, resulting in an
impairment of their ability to make payments, additional allowances may be required. We are subject to
concentrations of customers and sales to a few geographic locations, which could also impact the collectibility
of certain receivables. If global economic conditions deteriorate or political conditions were to change in some
of the countries where we do business, it could have a signiﬁcant impact on our results of operations, and our
ability to realize the full value of our accounts receivable.

Inventories

Inventories are stated at the lower of cost (on a ﬁrst-in ﬁrst-out basis) or market value. We generally provide
reserves for obsolete inventory and for inventory considered to be in excess of demand. In addition, we
typically record as accrued expense inventory purchase commitments in excess of demand. Demand is

29

generally deﬁned as eighteen months forecasted consumption for non-Wedge bonder equipment, twenty-four
months consumption for Wedge bonder equipment and all spare parts, and twelve months consumption for
expendable tools. The forecasted demand is based upon internal projections, historical sales volumes, customer
order activity and a review of consumable inventory levels at customers’ facilities. We communicate forecasts
of our future demand to our suppliers and adjust commitments to those suppliers accordingly. If required, we
reserve the difference between the carrying value of our inventory and the lower of cost or market value,
based upon assumptions about future demand, market conditions and cyclical market changes. If actual market
conditions are less favorable than projections, additional inventory reserves may be required.

Income Taxes

Deferred income taxes are determined using the liability method in accordance with ASC No. 740, Income
Taxes (‘‘ASC 740’’). We record a valuation allowance to reduce our deferred tax assets to the amount we
expect is more likely than not to be realized. While we have considered future taxable income and our
ongoing tax planning strategies in assessing the need for the valuation allowance, if we were to determine that
we would be able to realize our deferred tax assets in the future in excess of our net recorded amount, an
adjustment to the deferred tax asset would increase income in the period such determination was made.
Likewise, should we determine that we would not be able to realize all or part of our net deferred tax assets
in the future, an adjustment to the deferred tax asset would decrease income in the period such determination
was made.

In accordance with ASC 740, we utilize a two-step approach for evaluating uncertain tax positions. Step one
or recognition, requires us to determine if the weight of available evidence indicates a tax position is more
likely than not to be sustained upon audit, including resolution of related appeals or litigation processes, if
any. Step two or measurement, is based on the largest amount of beneﬁt, which is more likely than not to be
realized on settlement with the taxing authority.

Equity-Based Compensation

We account for equity-based compensation under the provisions of ASC No. 718, Compensation, Stock
Compensation (‘‘ASC 718’’). ASC 718 requires the recognition of the fair value of equity-based compensation
in net income. The fair value of our stock option awards are estimated using a Black-Scholes option valuation
model. Compensation expense associated with market-based restricted stock is determined using a
Monte-Carlo valuation model, and compensation expense associated with time-based and performance-based
restricted stock is determined based on the number of shares granted and the fair value on the date of grant.

The calculation of equity-based compensation costs requires we estimate the number of awards that will be
forfeited during the vesting period. We have estimated forfeitures at the time of grant based upon historical
experience, and review the forfeiture rates periodically and make adjustments as necessary. In addition, the
fair value of equity-based awards is amortized over the vesting period of the award and we elected to use the
straight-line method for awards granted after the adoption of ASC 718. In general, equity-based awards vest
annually over a three year period. Our 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. Estimated
attainment percentages and the corresponding equity-based compensation expense reported may vary from
period to period.

30

RECENT ACCOUNTING PRONOUNCEMENTS

See Note 1 to the consolidated ﬁnancial statements in Item 8 for a description of certain recent accounting
pronouncements including the expected dates of adoption and effects on our consolidated results of operations
and ﬁnancial condition.

Presentation of non-GAAP measures

Adjusted net income (loss), adjusted diluted net income (loss) per share and quarterly adjusted return on
invested capital (‘‘ROIC’’) are supplemental measures of our performance that are not presented in accordance
with U.S. generally accepted accounting principles (‘‘GAAP’’). We believe certain non-GAAP measures
provide investors with an additional, useful perspective on our performance as seen through the eyes of
management. Beginning ﬁscal 2009, we have used non-GAAP measures along with GAAP ﬁnancial results
for: analyzing the performance of our businesses; strategic and tactical decision making; and determining
compensation. We do not consider non-GAAP measures to be a substitute for, or superior to, ﬁnancial results
presented in accordance with GAAP. All of the non-GAAP measures included herein were reconciled to the
most directly comparable GAAP results in the ﬁnancial statements. These non-GAAP measures may be
calculated differently from non-GAAP measures used by other companies. In addition,
these non-GAAP
measures are not based on a comprehensive set of accounting rules or principles and some of the adjustments
reﬂect the exclusion of items that are recurring and will be reﬂected in the our GAAP ﬁnancial results for the
foreseeable future.

We exclude the following from our GAAP results in presenting non-GAAP measures:

Equity-based compensation expenses

We recognize the fair value of our equity-based compensation in expense. Equity-based compensation consists
of common stock, stock options and performance-based, market-based and time-based restricted stock granted
under our equity compensation plans. Equity-based compensation can vary signiﬁcantly in amount from period
to period.

Other

We believe the exclusion of certain other amounts allows for improved comparisons of our results to both
prior periods and other companies. We exclude the following other items from non-GAAP measures:

•

•

•

•

•

•

•

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

Tax Adjustment

Non-GAAP measures are tax adjusted using the GAAP tax rate associated with each quarterly period. The tax
rate is calculated by dividing each quarter’s GAAP tax expense (beneﬁt), adjusted for discrete quarterly items,
by the GAAP operating income (loss) for that quarter. Non-GAAP year-to-date measures are calculated by
summing the associated quarterly non-GAAP measures, without further tax adjustments.

The speciﬁc non-GAAP measures included herein are: adjusted gross proﬁt, adjusted gross margin, adjusted
net income (loss), adjusted net margin, and adjusted earnings per share (‘‘EPS’’). We calculate these measures
as follows:

Adjusted Gross Proﬁt and Adjusted Gross Margin

Our non-GAAP adjusted gross proﬁt and adjusted gross margin exclude the effects of equity-based
compensation expense recorded within cost of sales.

31

Adjusted Net Income (Loss), Adjusted Net Margin and Adjusted EPS

income (loss), adjusted net margin and adjusted EPS exclude equity-based
Our non-GAAP adjusted net
compensation; 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 related tax effects on non-GAAP adjustments.

The following table reﬂects certain GAAP results and the corresponding non-GAAP ﬁnancial measures for
ﬁscal 2010 and 2009:

Fiscal

Unaudited
(in thousands, except per share amounts)
Gross proﬁt (GAAP results) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
− Equity-based compensation expense . . . . . . . . . . . . . . . . . . . . . .
Gross proﬁt (Non-GAAP measures) . . . . . . . . . . . . . . . . . . . . . . .

Income (loss) from operations (GAAP results) . . . . . . . . . . . . . . . .
− Amortization of intangibles . . . . . . . . . . . . . . . . . . . . . . . . . . . .
− Equity-based compensation expense . . . . . . . . . . . . . . . . . . . . . .
− Restructuring . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
− Impairment of goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
− Switzerland pension plan curtailment. . . . . . . . . . . . . . . . . . . . . .
− Net tax settlement beneﬁt and other tax adjustments . . . . . . . . . . .
Income (loss) from operations (Non-GAAP measures) . . . . . . . . . . .

2010
$335,673
207
$335,880

$148,035
9,545
7,565
2,402
—
—
—
$167,547

2009*
$ 88,843
64
$ 88,907

$(73,524)
11,092
1,387
10,959
2,709
(1,446)
1,812
$(47,011)

Weighted average shares outstanding (GAAP & Non-GAAP)

Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

70,012
73,548

62,188
62,188

Income (loss) per share from continuing operations (GAAP results)

Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Adjustments to net income (loss) per share

Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Income (loss) per share from continuing operations (Non-GAAP

measures)
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$
$

$
$

$
$

2.01
1.92

0.37
0.35

2.38
2.27

$
$

$
$

$
$

(1.02)
(1.02)

0.24
0.24

(0.78)
(0.78)

*

As adjusted for ASC No. 470.20, Debt, Debt With Conversion Options.

32

The following table reﬂects our adjusted ROIC for three months ended October 2, 2010:

Three months ended
October 2, 2010

Income from operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustment: Depreciation and amortization(1). . . . . . . . . . . . . . . . . .
Adjusted income from operations. . . . . . . . . . . . . . . . . . . . . . . . . .
Adjusted income from operations, annualized(2) . . . . . . . . . . . . . . . .
Cash, cash equivalents, restricted cash and investments . . . . . . . . . . .
Adjustment: cash, cash equivalents, restricted cash and investments(3) .
Adjusted cash, cash equivalents and investments . . . . . . . . . . . . . . .
Total assets excluding cash, cash equivalents and investments . . . . . .
Adjusted total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Add: taxes payable(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjusted current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjusted net invested capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ROIC(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 56,675
4,273
60,948

$ 181,334
(106,334)

$ 125,130
1,968

$243,792

$ 75,000
398,835
473,835

127,098
$346,737

70.3%

(1) Depreciation and amortization are excluded from the ROIC calculation.
(2) ROIC is calculated as non-GAAP adjusted income from operations, annualized by multiplying the current
quarter’s non-GAAP income from operations by 4, then divided by adjusted net invested capital. Adjusted
income from operations is not intended to forecast the Company’s future income from operations.

(3) Management estimates minimum cash requirement is $75.0 million.
(4) Adjusted current liabilities includes tax liabilities classiﬁed as current in prior periods but reclassed to
long term liabilities as a result of our adoption of ASC 740.10 during the ﬁrst quarter of ﬁscal 2008.

Results of Operations for ﬁscal 2010 and 2009

The following table reﬂects our income (loss) from operations for ﬁscal 2010 and 2009:

Fiscal

(dollar amounts in thousands)
Net revenue . . . . . . . . . . . . . . . . . . . .
Cost of sales. . . . . . . . . . . . . . . . . . . .
Gross proﬁt . . . . . . . . . . . . . . . . . . . .

Selling, general and administrative . . . . .
Research and development . . . . . . . . . .
Impairment of goodwill . . . . . . . . . . . .
Operating expenses . . . . . . . . . . . . . . .
Income (loss) from operations . . . . . . . .

2010
$762,784
427,111
335,673

130,978
56,660
—
187,638
$148,035

2009
$225,240
136,397
88,843

106,175
53,483
2,709
162,367
$ (73,524)

$ Change
$537,544
290,714
246,830

24,803
3,177
(2,709)
25,271
$221,559

% Change
238.7%
213.1%
277.8%

23.4%
5.9%
-100.0%
15.6%
301.3%

Bookings and Backlog

A booking is recorded when a customer order is reviewed and it is determined that all speciﬁcations can be
met, production (or service) can be scheduled, a delivery date can be set, and the customer meets our credit
requirements. Our backlog consists of customer orders that are scheduled for shipment within the next
12 months. A majority of our orders are subject to cancellation or deferral by our customers with limited or
no penalties. Also, customer demand for our products can vary dramatically without prior notice. Because of
the volatility of customer demand, possibility of customer changes in delivery schedules or cancellations and
potential delays in product shipments, our backlog as of any particular date may not be indicative of net
revenue for any succeeding period.

33

The following table reﬂects our bookings in ﬁscal 2010 and 2009:

(in thousands)
Bookings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2010
$973,062

2009
$208,234

Fiscal

The following table reﬂects our backlog as of October 2, 2010 and October 3, 2009:

(in thousands)
Backlog . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

As of

October 2,
2010
$252,459

October 3,
2009
$42,181

Net Revenue

Approximately 98.6% and 97.0% of our net revenue for ﬁscal 2010 and 2009, respectively, was for shipments
to customer locations outside of the United States, primarily in the Asia/Paciﬁc region, and we expect sales
outside of the United States to continue to represent a substantial majority of our future revenue.

The following table reﬂects net revenue by business segment for ﬁscal 2010 and 2009:

(dollar amounts in thousands)
Equipment . . . . . . . . . . . . . . . . . . . . .
Expendable Tools . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . .

2010
$691,988
70,796
$762,784

2009
$170,536
54,704
$225,240

$ Change
$521,452
16,092
$537,544

% Change
305.8%
29.4%
238.7%

Fiscal

Equipment

The following table reﬂects the components of Equipment net revenue change from ﬁscal 2010 to 2009:

(in thousands)
Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Price
$669

Fiscal 2010 vs. 2009
Volume
$520,783

$ Change
$521,452

For ﬁscal 2010, higher Equipment net revenue was due to a 413.9% increase in volume for ball bonders and
157.8% increase in volume for wedge bonders. The volume increases were due to higher semiconductor unit
demand and increased capacity utilization rates of our customers, which in turn increased demand for capital
equipment. In addition, customer investment
in new copper bonding capability has driven a signiﬁcant
proportion of our ball bonder business.

Expendable Tools

The following table reﬂects the components of Expendable Tools net revenue change from ﬁscal 2010 to
2009:

(in thousands)
Expendable Tools . . . . . . . . . . . . . . . . . . . . . . . . . .

Price
$(752)

Fiscal 2010 vs. 2009
Volume
$16,844

$ Change
$16,092

The increase in Expendable Tools net revenue from ﬁscal 2009 to 2010 was due to volume increases in all
our Expendable Tools businesses. Since Expendable Tools products are consumables used for the connections
of Integrated Circuits (‘‘IC’’) units, as overall consumer demand for electronic equipment has increased, so
has the demand for IC units. As a result, volume increased for our Expendable Tools. Our non-wedge bonder
Tools volume increased 31.3% while Blades volume increased 40.1%. Our wedge bonder tools net revenue
also increased 25.7%.

34

Gross Proﬁt

The following table reﬂects gross proﬁt by business segment for ﬁscal 2010 and 2009:

(dollar amounts in thousands)
Equipment . . . . . . . . . . . . . . . . . . . . .
Expendable Tools . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . .

2010
$292,946
42,727
$335,673

2009
$59,433
29,410
$88,843

$ Change
$233,513
13,317
$246,830

% Change
392.9%
45.3%
277.8%

Fiscal

The following table reﬂects gross proﬁt as a percentage of net revenue by business segment for ﬁscal 2010
and 2009:

Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expendable Tools . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Equipment

Fiscal

2010
42.3%
60.4%
44.0%

2009
34.9%
53.8%
39.4%

Basis Point
Change
740
660
460

The following table reﬂects the components of Equipment gross proﬁt change from ﬁscal 2010 to 2009:

(in thousands)
Equipment . . . . . . . . . . . . . . . . . . . . .

Price
$669

Cost
$(220)

Volume
$233,064

$ Change
$233,513

For ﬁscal 2010, gross proﬁt increased signiﬁcantly due to volume increases for ball bonders and wedge
bonders. The higher semiconductor unit demand during the current year increased capacity utilization rates of
our customers, which in turn increased demand for capital equipment.

Fiscal 2010 vs. 2009

Expendable Tools

The following table reﬂects the components of Expendable Tools gross proﬁt change from ﬁscal 2010 to
2009:

Fiscal 2010 vs. 2009

(in thousands)
Expendable Tools . . . . . . . . . . . . . . . .

Price
$(752)

Cost
$6,216

Volume
$7,853

$ Change
$13,317

The net increase in Expendable Tools gross proﬁt from ﬁscal 2009 to 2010 was primarily due to volume
increases in all Expendable Tools businesses. Since Expendable Tools products are consumables used for the
connections of IC units, as overall consumer demand for electronic equipment increased, so has the demand
for IC units. As a result, volume has increased for our Expendable Tools segment. Tools volume increased
31.3%, while Blades volume increased 40.1%. The increase in the gross proﬁt was also due to lower cost
from better absorption of ﬁxed manufacturing costs as our volumes were higher. Consolidating our capillary
tools manufacturing from Israel to China also contributed to our cost reductions and resulted in improved
gross proﬁt.

Operating Expenses

The following table reﬂects operating expenses as a percentage of net revenue for ﬁscal 2010 and 2009:

Selling, general and administrative . . . . . . . . . . . . . . .
Research and development . . . . . . . . . . . . . . . . . . . .
Impairment of goodwill . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Fiscal

2010
17.2%
7.4%
0.0%
24.6%

2009
47.1%
23.7%
1.2%
72.0%

Basis Point
Change
2,990
1,630
120
4,740

35

Selling, general and administrative (‘‘SG&A’’)

An increase in SG&A expenses of $24.8 million during ﬁscal 2010 as compared to ﬁscal 2009 was primarily
due to:

•

•

•

•

•

•

•

$14.7 million higher incentive compensation expense driven by current ﬁscal year net income as
compared to a net loss during ﬁscal 2009;

$5.4 million increase in sales commissions due to higher net revenue for the current ﬁscal year;

$5.2 million higher equity-based compensation expense due to the following:

•

•

•

$2.3 million related to higher estimated percentage attainments for performance-based restricted
stock, of which $0.3 million related to compensation as a result of the retirement of our
Chief Executive Officer;

$1.5 million related to market-based restricted stock granted during ﬁscal 2010, of which
$0.9 million related to compensation as a result of the retirement of our Chief Executive
Officer, and;

$1.4 million related to time-based restricted stock granted during ﬁscal 2010.

$4.7 million higher consulting, employee staffing and travel related costs, of which $1.9 million
relates to the retirement of our Chief Executive Officer and the hiring of his replacement;

$4.1 million higher factory transition costs for the move of additional production to Asia from
Irvine, California and Israel;

$1.9 million pension expense related to a current year increase in our pension obligation primarily
related to sales representatives in Taiwan, and;

$1.0 million unfavorable foreign currency variance.

These increases in SG&A were partially offset by:

•

•

$8.6 million lower severance costs related to prior ﬁscal year headcount reductions, and;

$2.9 million lower depreciation and amortization expense due to certain intangible assets and ﬁxed
assets becoming fully depreciated.

Research and development (‘‘R&D’’)

The $3.2 million increase of R&D expense during ﬁscal 2010 compared to ﬁscal 2009 was mostly attributable
to:

•

•

$2.1 million higher R&D expense related to set up costs for our Israel technology center; and

$0.8 million higher equity-based compensation expense due to higher estimated percentage
attainments for performance-based restricted stock and time-based restricted stock granted during
ﬁscal 2010.

Impairment of goodwill

Due to the earlier than anticipated end of product life cycle for our EasyLine and SwissLine die bonders,
during ﬁscal 2009, we recorded a non-cash goodwill impairment charge of $2.7 million which reduced the
value of the die bonder goodwill to zero.

36

Income (Loss) from Operations

The following table reﬂects income (loss) from operations by business segment for ﬁscal 2010 and 2009:

(dollar amounts in thousands)
Equipment . . . . . . . . . . . . . . . . . . . . .
Expendable Tools . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . .

2010
$137,321
10,714
$148,035

2009*
$(78,741)
5,217
$(73,524)

$ Change
$216,062
5,497
$221,559

% Change
274.4%
105.4%
301.3%

Fiscal

*

As adjusted for ASC No. 470.20, Debt, Debt With Conversion Options.

Equipment

For ﬁscal 2010, higher Equipment income from operations was due to signiﬁcantly improved volume for ball
bonders and wedge bonders. In addition for ﬁscal 2010, the higher semiconductor unit-demand during the
current year increased capacity utilization rates of our customers, which in turn increased demand for capital
equipment.

Expendable Tools

The increase in Expendable Tools income from operations from ﬁscal 2009 to 2010 was due to volume
increases in all our Expendable Tools businesses. Accordingly, the net increase in Expendable Tools gross
proﬁt from ﬁscal 2009 to 2010 was primarily due to volume increases in all Expendable Tools businesses. In
addition, the increase in the gross proﬁt was due to lower cost from better absorption of ﬁxed manufacturing
costs as our volumes were higher. Consolidating our capillary tools manufacturing from Israel to China also
contributed to our cost reductions and resulted in improved gross proﬁt.

Interest Income and Expense

The following table reﬂects interest income and interest expense for ﬁscal 2010 and 2009:

(dollar amounts in thousands)
Interest income . . . . . . . . . . . . . . . . . .
Interest expense . . . . . . . . . . . . . . . . .
Interest expense: non-cash*. . . . . . . . . .

2010

$

403
(1,348)
(6,985)

2009*
$ 1,106
(1,594)
(6,594)

$ Change
$(703)
246
(391)

% Change
-63.6%
-15.4%
5.9%

Fiscal

*

Fiscal 2009 adjusted for ASC No. 470.20, Debt, Debt With Conversion Options.

The decline in interest income during ﬁscal 2010 was due to lower rates of return on invested cash balances
because of lower prevailing interest rates. The decrease in interest expense during ﬁscal 2010 was attributable
to the retirement of our 1.0% Convertible Subordinated Notes.

37

Gain on Extinguishment of Debt

There were no purchases of Convertible Subordinated Notes during ﬁscal 2010. The following table reﬂects
purchases of our Convertible Subordinated Notes during ﬁscal 2009:

(in thousands)
0.5% Convertible Subordinated Notes(1):
Face value purchased . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred ﬁnancing costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Recognized gain, net of deferred ﬁnancing costs . . . . . . . . . . . . . . . . . . . . . . . . .

1.0% Convertible Subordinated Notes:(2)
Face value purchased . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred ﬁnancing costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Recognized gain, net of deferred ﬁnancing costs . . . . . . . . . . . . . . . . . . . . . . . . .
Gain on extinguishment of debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Fiscal
2009

$43,050
42,839
18
193

$16,036
12,158
106
3,772
$ 3,965

(1) Fiscal 2009 repurchase transactions occurred prior to redemption on November 30, 2008.
(2) Activity during ﬁscal 2009 reﬂects repurchases pursuant to a tender offer.

Provision (Beneﬁt) for Income Taxes for ﬁscal 2010 and 2009

The following table reﬂects the provision (beneﬁt) for income taxes and the effective tax rate from continuing
operations for ﬁscal 2010 and 2009:

(dollar amounts in thousands)
Income (loss) from continuing operations before taxes . . . . . . . . . . .
Beneﬁt for income taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income (loss) from continuing operations . . . . . . . . . . . . . . . . . . . .
Effective tax rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2010
$140,105
(2,037)
$142,142

-1.5%

2009*
$(76,641)
(13,029)
$(63,612)
17.0%

Fiscal

*

As adjusted for ASC No. 470.20, Debt, Debt With Conversion Options.

Our effective tax rate of -1.5% for ﬁscal 2010 is lower than the U.S. statutory rate of 35.0% primarily due to
certain domestic and foreign valuation allowance releases, permanent items, state taxes, and federal alternative
minimum taxes. We continue to maintain a valuation allowance against a majority of our state deferred tax
assets and deferred tax assets in certain foreign jurisdictions as the realization of these assets is not more
likely than not given uncertainty of future earnings in these jurisdictions.

Our effective tax rate of 17.0% for ﬁscal 2009 is lower than the U.S. statutory rate of 35.0% primarily due to
settlements of certain foreign income tax exposures,
losses in foreign jurisdictions with tax holidays,
permanent items, state taxes, and increases in the valuation allowance.

Our future effective tax rate would be affected if earnings were lower than anticipated in countries where we
have lower statutory rates and higher than anticipated in countries where we have higher statutory rates, by
changes in the valuation of our deferred tax assets and liabilities, or by changes in tax laws, regulations,
accounting principles, or interpretations thereof. We regularly assess the effects resulting from these factors to
determine the adequacy of our provision for income taxes.

38

Income from Discontinued Operations, net of tax

We committed to a plan of disposal for our Wire business in ﬁscal 2008, and on September 29, 2008,
completed the sale of certain assets and liabilities associated with the Wire business. Included in discontinued
operations for ﬁscal 2009 are net proceeds of $149.9 million and a net gain of $22.0 million, net of tax,
related to the Wire sale.

The following table reﬂects operating results of the Wire business discontinued operations for ﬁscal 2009:

(in thousands)
Net revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Income (loss) before tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gain on sale of Wire business before tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income from discontinued operations before tax. . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income from discontinued operations, net of tax. . . . . . . . . . . . . . . . . . . . . . . . . .

Fiscal
2009
$ —

$ (319)
23,026
22,707
(696)
$22,011

Results of Operations for ﬁscal 2009 and 2008

The following table reﬂects our loss from operations for ﬁscal 2009 and 2008:

Fiscal

(in thousands)
Net revenue . . . . . . . . . . . . . . . . . . . .
Cost of sales. . . . . . . . . . . . . . . . . . . .
Gross proﬁt . . . . . . . . . . . . . . . . . . . .

Selling, general and administrative . . . . .
Research and development . . . . . . . . . .
Impairment of goodwill . . . . . . . . . . . .
U.S. pension plan termination . . . . . . . .
Operating expenses . . . . . . . . . . . . . . .
Loss from operations . . . . . . . . . . . . . .

2009
$225,240
136,397
88,843

106,175
53,483
2,709
—
162,367
$ (73,524)

2008
$328,050
194,257
133,793

89,356
59,917
—
9,152
158,425
$ (24,632)

$ Change
$(102,810)
(57,860)
(44,950)

16,819
(6,434)
2,709
(9,152)
3,942
$ (48,892)

% Change
-31.3%
-29.8%
-33.6%

18.8%
-10.7%
0.0%
0.0%
43.1%
-198.5%

Bookings and Backlog

The following table reﬂects our bookings in ﬁscal 2009 and 2008:

(in thousands)
Bookings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2009
$208,234

2008
$291,994

Fiscal

The following table reﬂects our backlog as of October 3, 2009 and September 27, 2008:

(in thousands)
Backlog . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

As of

October 3,
2009
$42,181

September 27,
2008
$49,508

39

Net Revenue

Approximately 97.0% and 95.6% of our net revenue for ﬁscal 2009 and 2008, respectively, was from
shipments to customer locations outside of the United States, primarily in the Asia/Paciﬁc region.

The following table reﬂects net revenue by business segment for ﬁscal 2009 and 2008:

(dollar amounts in thousands)
Equipment . . . . . . . . . . . . . . . . . . . . .
Expendable Tools . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . .

2009
$170,536
54,704
$225,240

2008
$271,019
57,031
$328,050

$ Change
$(100,483)
(2,327)
$(102,810)

% Change
-37.1%
-4.1%
-31.3%

Fiscal

Equipment

The following table reﬂects the components of Equipment net revenue change from ﬁscal 2009 to 2008:

(in thousands)
Equipment . . . . . . . . . . . . . . . . . . . . .

Price
$(5,901)

Volume
$(120,824)

Orthodyne
$26,242

$ Change
$(100,483)

Fiscal 2009 vs. 2008

The decrease in net revenue from ﬁscal 2008 to ﬁscal year 2009 was mainly due to a 45.8% decrease in
volume for Ball Bonders, 52.7% decrease in volume for Die Bonders and 31.8% decrease in Support Services.
The ﬁscal 2009 decrease in volume was mainly due to a decline in global demand for assembly equipment
during the ﬁrst half of ﬁscal 2009 driven by the global economic downturn. As overall consumer demand for
electronic equipment declined, so did factory utilization of our OSAT and IDM customers. The overall volume
decrease was partially offset by net revenue from our Wedge Bonder Equipment business acquired during
ﬁscal year 2009.

Expendable Tools

The following table reﬂects the components of Expendable Tools net revenue change from ﬁscal 2009 to
2008:

(in thousands)
Expendable Tools . . . . . . . . . . . . . . . .

Price
$2

Fiscal 2009 vs. 2008

Volume
$(17,764)

Orthodyne
$15,437

$ Change
$(2,327)

The net decrease in Expendable Tools revenue from ﬁscal 2008 to 2009 was due to volume decreases in both
our Tools and Blades businesses. Tools volumes decreased 31.0%, while Blades volumes decreased 30.6%.
Our Expendable Tools products are consumables used for the connections of IC units; therefore, as overall
consumer demand for electronic equipment declined in the ﬁrst half of ﬁscal 2009, due to the economic
downturn, the demand for IC units also declined. As a result, volume declined for our Expendable Tools
segment. Offsetting this volume decrease was the net revenue from our newly acquired Wedge bonder Tools
business.

Gross Proﬁt

The following table reﬂects gross proﬁt by business segment for ﬁscal 2009 and 2008:

(dollar amounts in thousands)
Equipment . . . . . . . . . . . . . . . . . . . . .
Expendable Tools . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . .

2009
$59,433
29,410
$88,843

2008
$105,520
28,273
$133,793

$ Change
$(46,087)
1,137
$(44,950)

% Change
-43.7%
4.0%
-33.6%

Fiscal

40

The following table reﬂects gross proﬁt as a percentage of net revenue by business segment for ﬁscal 2009
and 2008:

Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expendable Tools . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Equipment

Fiscal

2009
34.9%
53.8%
39.4%

2008
38.9%
49.6%
40.8%

Basis Point
Change
(408)
419
(134)

The following table reﬂects the components of Equipment gross proﬁt change from ﬁscal 2009 to 2008:

(in thousands)
Equipment . . . . . . . . . . .

Price
$(5,901)

Cost
$1,201

Fiscal 2009 vs. 2008
Volume
$(49,298)

Orthodyne
$7,911

$ Change
$(46,087)

The decrease in gross proﬁt from ﬁscal 2008 to 2009 was mainly due to decrease in volume for Ball Bonders
and Die Bonders as well as decline in Support Services. The ﬁscal 2009 decrease in volume was mainly due
to a decline in global demand for assembly equipment during the ﬁrst half of ﬁscal 2009 driven by the global
economic downturn. As overall consumer demand for electronic equipment declined, so did the factory
utilization of our OSAT and IDM customers. The decrease in gross proﬁt was partially offset by gross proﬁt
from our Wedge Bonder Equipment business acquired during ﬁscal 2009. The improvement
is
primarily due to cost reduction efforts related to material purchases.

in cost

Expendable Tools

The following table reﬂects the components of Expendable Tools gross proﬁt change from ﬁscal 2009 to
2008:

(in thousands)
Expendable Tools . . . . . .

Price
$2

Cost
$(970)

Fiscal 2009 vs. 2008
Volume
$(8,818)

Orthodyne
$10,923

$ Change
$1,137

The net increase in Expendable Tools gross proﬁt from ﬁscal 2008 to 2009 was primarily due to the newly
acquired Wedge Bonder Tools business, offset by volume decreases in both our Tools and Blades businesses.
The decrease in both Tools and Blades volume in ﬁscal 2009 was due to the economic downturn during the
ﬁrst half of ﬁscal 2009, which decreased demand for IC units. The increase in cost was primarily due to ﬁxed
manufacturing costs not being fully absorbed by the lower volumes during ﬁscal 2009.

Operating Expenses

The following table reﬂects operating expenses as a percentage of net revenue for ﬁscal 2009 and 2008:

Selling, general and administrative . . . . . . . . . . . . . . .
Research and development . . . . . . . . . . . . . . . . . . . .
Impairment of goodwill . . . . . . . . . . . . . . . . . . . . . .
U.S. pension plan termination . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Fiscal

2009
47.1%
23.7%
1.2%
0.0%
72.0%

2008
27.2%
18.3%
0.0%
2.8%
48.3%

Basis Point
Change
1,990
548
120
(279)
2,379

The SG&A increase of $16.8 million during ﬁscal 2009 as compared to ﬁscal 2008 was primarily due to:

•

•

•

$29.8 million of expense related to our Wedge bonder business acquired during ﬁscal 2009 of which
$10.9 million related to amortization of intangible assets and $1.9 million was for severance;

$4.0 million of severance costs related to our ﬁscal 2009 plan to reduce our global workforce;

$2.7 million expense related to contractual commitments for former Test facilities;

41

•

•

$1.8 million of legal expense; and

$1.7 million of factory transition expense related to moving additional production to Singapore,
China and Malaysia.

These increases in SG&A were partially offset by:

•

•

•

•

$20.3 million of overall cost reductions due mainly to our ﬁscal 2009 global workforce reduction;

$2.3 million of lower foreign currency exchange losses;

$1.4 million curtailment of our Switzerland pension plan in ﬁscal 2009; and

$1.3 million lower incentive compensation and equity-based compensation expense.

Research and development (‘‘R&D’’)

The $6.4 million decrease of R&D expense during ﬁscal 2009 compared to 2008 was mostly attributable to:

•

•

$15.6 million of lower Equipment segment costs due to reduced headcount, and

$1.6 million less prototype spending with the releases of our latest ball bonder and die bonder
product platforms.

These decreases were partially offset by $10.8 million of R&D costs related to our Wedge Bonder business
acquired during ﬁscal 2009.

Impairment of goodwill

Due to the earlier than anticipated end of product life cycle for our EasyLine and SwissLine die bonders,
during ﬁscal 2009, we recorded a non-cash goodwill impairment charge of $2.7 million which reduced the
value of the die bonder goodwill to zero.

U.S. pension plan termination

Fiscal 2008 operating expenses included a one-time, non-cash expense of $9.2 million related to the
termination of our U.S. pension plan.

Income (Loss) from Operations

The following table reﬂects income (loss) from operations by business segment for ﬁscal 2009 and 2008:

(dollar amounts in thousands)
Equipment . . . . . . . . . . . . . . . . . . . . .
Expendable Tools . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . .

2009
$(78,741)
5,217
$(73,524)

2008
$(25,934)
1,302
$(24,632)

$ Change
$(52,807)
3,915
$(48,892)

% Change
203.6%
300.7%
198.5%

Fiscal

Equipment

The higher net loss from operations from ﬁscal 2008 to 2009 was mainly due to decreases in volume for Ball
Bonders and Die Bonders as well as decline in Support Services. In addition, higher operating expenses for
Wedge bonder amortization of intangibles and severance increased the Equipment net loss.

Expendable Tools

The higher Expendable Tools net income from operations from ﬁscal 2008 to 2009 was primarily due to the
newly acquired Wedge bonder Tools business partially offset by our Tools and Blades businesses. In addition,
lower operating expenses due to overall cost reduction measures increased our Expendable Tools net income.

42

Interest Income and Expense

The following table reﬂects interest income and interest expense for ﬁscal 2009 and 2008:

(dollar amounts in thousands)
Interest income . . . . . . . . . . . . . . . . . .
Interest expense . . . . . . . . . . . . . . . . .
Interest expense: non-cash*. . . . . . . . . .

2009
$ 1,106
(1,594)
(6,594)

2008
$ 4,732
(1,985)
(6,616)

$ Change
$(3,626)
391
22

% Change
-76.6%
-19.7%
-0.3%

Fiscal

* As adjusted for ASC No. 470.20, Debt, Debt With Conversion Options.

The decline in interest income during ﬁscal 2009 was due to lower rates of return on invested cash balances
and overall lower average cash balances. The decrease in interest expense during ﬁscal 2009 was attributable
to the retirement of our 0.5% Convertible Subordinated Notes and repurchase of $16.0 million (face value) of
our 1.0% Convertible Subordinated Notes.

Gain on Extinguishment of Debt

The following table reﬂects purchases of our Convertible Subordinated Notes during ﬁscal 2009 and 2008:

(in thousands)
0.5% Convertible Subordinated Notes:(1)
Face value purchased . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred ﬁnancing costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Recognized gain, net of deferred ﬁnancing costs . . . . . . . . . . . . . . .

1.0% Convertible Subordinated Notes:(2)
Face value purchased . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred ﬁnancing costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Recognized gain, net of deferred ﬁnancing costs . . . . . . . . . . . . . . .
Gain on extinguishment of debt . . . . . . . . . . . . . . . . . . . . . . . . . . .

Fiscal

2009

2008

$43,050
42,839
18
193

$16,036
12,158
106
3,772
$ 3,965

$4,000
3,815
15
170

$ —
—
—
—
$ 170

(1) Fiscal 2009 repurchase transactions occurred prior to redemption on November 30, 2008.
(2) Activity during ﬁscal 2009 reﬂects repurchases pursuant to a tender offer.

Beneﬁt for Income Taxes for ﬁscal 2009 and 2008

The following table reﬂects the provision (beneﬁt) for income taxes and the effective tax rate from continuing
operations for ﬁscal 2009 and 2008:

(dollar amounts in thousands)
Loss from continuing operations before taxes. . . . . . . . . . . . . . . . . .
Beneﬁt for income taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss from continuing operations . . . . . . . . . . . . . . . . . . . . . . . . . .

2009*
$(76,641)
(13,029)
$(63,612)

2008*
$(28,331)
(3,610)
$(24,721)

Effective tax rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

17.0%

12.7%

Fiscal

*

As adjusted for ASC No. 470.20, Debt, Debt With Conversion Options.

43

Our provision for income taxes from continuing operations for ﬁscal 2009 reﬂects an income tax beneﬁt of
$13.0 million which primarily consists of $12.4 million of net income tax beneﬁt for the settlement of certain
foreign income tax exposures and $0.4 million for the reduction in deferred tax liabilities related to potential
repatriation of foreign earnings. These amounts are offset by $0.2 million for state taxes, $0.1 million for
income tax related to foreign operations, $0.1 million for foreign withholding taxes and $0.1 million of other
U.S. current and deferred taxes.

Our income tax beneﬁt for ﬁscal 2008 reﬂects income tax expense on foreign income tax exposures, foreign
withholding taxes, repatriation of foreign earnings, federal alternative minimum taxes and state taxes offset by
income tax beneﬁts related to the termination of the pension plan and income tax beneﬁts on loses in foreign
jurisdictions.

Our effective tax rate of 17.0% for ﬁscal 2009 is lower than the U.S. statutory rate of 35% primarily due to
settlements of certain foreign income tax exposures,
losses in foreign jurisdictions with tax holidays,
permanent items, state taxes, and increases in the valuation allowance. We continue to maintain a valuation
allowance against certain deferred tax assets which, based on an analysis of positive and negative evidence are
more likely than not to not be realized. This evidence includes analysis of past results, uncertainty with
respect to the impact of restructuring of certain international operations, projections of future results and the
signiﬁcant historic volatility of our Equipment segment.

Our future effective tax rate would be affected if earnings were lower than anticipated in countries where we
have lower statutory rates and higher than anticipated in countries where we have higher statutory rates, by
changes in the valuation of our deferred tax assets and liabilities, or by changes in tax laws, regulations,
accounting principles, or interpretations thereof. We regularly assess the effects resulting from these factors to
determine the adequacy of our provision for income taxes.

Income from Discontinued Operations, net of tax

We committed to a plan of disposal for our Wire business in ﬁscal 2008, and on September 29, 2008,
completed the sale of certain assets and liabilities associated with the Wire business. Included in discontinued
operations for ﬁscal 2009 are net proceeds of $149.9 million and a net gain of $22.0 million, net of tax,
related to the Wire sale.

The following table reﬂects operating results of the Wire business discontinued operations for ﬁscal 2009 and
2008:

(in thousands)
Net revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2009
$ —

Income (loss) before tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gain on sale of Wire business before tax . . . . . . . . . . . . . . . . . . . .
Income from discontinued operations before tax. . . . . . . . . . . . . . . .
Income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income from discontinued operations, net of tax. . . . . . . . . . . . . . . .

$ (319)
23,026
22,707
(696)
$22,011

Fiscal

2008
$423,971

$ 23,690
—
23,690
(249)
$ 23,441

44

LIQUIDITY AND CAPITAL RESOURCES

During ﬁscal 2010, our working capital needs were funded through cash from operating activities. Our net
increase in cash was primarily due to ﬁscal 2010 net income partially offset by cash used to repay our
Convertible Subordinated Notes that matured and were redeemed during ﬁscal 2010.

The following table reﬂects cash, cash equivalents,
October 2, 2010 and October 3, 2009:

restricted cash, and short-term investments as of

(dollar amounts in thousands)
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . .
Restricted cash(1) . . . . . . . . . . . . . . . . . . . . . . . . . . .
Short-term investments . . . . . . . . . . . . . . . . . . . . . . .
Total cash and investments . . . . . . . . . . . . . . . . . . . .

As of

October 2,
2010
$178,112
237
2,985
$181,334

October 3,
2009
$144,560
281
—
$144,841

$ Change
$33,552
(44)
2,985
$36,493

Percentage of total assets . . . . . . . . . . . . . . . . . . . . .

31.3%

35.1%

(1) Fiscal 2010 and 2009 restricted cash related to customs requirements in Malaysia and China, respectively.

The following table reﬂects summary Consolidated Statement of Cash Flow information for ﬁscal 2010 and
2009:

(in thousands)
Cash ﬂows provided by (used in):
Operating activities, continuing operations. . . . . . . . . . . . . . . . . . . .
Operating activities, discontinued operations . . . . . . . . . . . . . . . . . .
Operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Investing activities, continuing operations . . . . . . . . . . . . . . . . . . . .
Investing activities, discontinued operations. . . . . . . . . . . . . . . . . . .
Investing activities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Effect of exchange rate on cash and cash equivalents . . . . . . . . . . . .

Changes in cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . .
Cash and cash equivalents, beginning of period . . . . . . . . . . . . . . . .
Cash and cash equivalents, end of period . . . . . . . . . . . . . . . . . . . .
Restricted cash and short-term investments . . . . . . . . . . . . . . . . . . .
Total cash and investments . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Fiscal

2010

2009

$ 87,638
(1,839)
85,799

(4,591)
(1,838)
(6,429)
(46,121)
303

33,552
144,560
178,112
3,222
$181,334

$ (51,406)
(2,116)
(53,522)

(51,453)
149,857
98,404
(45,439)
185

(372)
144,932
144,560
281
$144,841

Fiscal 2010

Continuing Operations

Net cash provided by operating activities was primarily a result of net income of $142.1 million plus non-cash
adjustments of $30.3 million partially offset by a net increase in net working capital of $84.8 million. The net
increase in working capital was primarily driven by increases in accounts receivable and inventory offset by
increases in accounts payable.

Net cash used in investing activities of $4.6 million was comprised of capital expenditures of $6.3 million and
purchases of investments of $3.0 million partially offset by $3.9 million of net proceeds from the sale of our
building in Israel and $0.7 million of net proceeds from the sale of a portion of land in Berg, Switzerland.

45

Net cash used in ﬁnancing activities was due to the maturity and redemption of our 1.0% Convertible
Subordinated Notes for $49.0 million partially offset by proceeds from stock option exercises of $2.9 million.

Discontinued Operations

Net cash used in operating activities was primarily facility payments related to our former Test business of
$1.8 million.

Net cash used in investing activities of $1.8 million was the result of the sale of our Wire business.

Fiscal 2009

Continuing Operations

Net cash used in operating activities was primarily a result of a $63.6 million net loss partially offset by other
non-cash adjustments and increases in net working capital. The net increase in working capital were primarily
driven by changes in income taxes payable, accounts receivable, and accounts payable.

Net cash used in investing activities of $51.5 million was primarily due to the purchase of Orthodyne for
$87.0 million and capital purchases of $5.3 million partially offset by net changes in restricted cash of
$34.7 million.

Net cash used in ﬁnancing activities was due to the purchase and retirement of our convertible subordinated
notes for $84.4 million partially offset by our sale of 8.0 million shares of our common stock for
$38.7 million.

Discontinued Operations

Net cash used in operating activities was primarily facility payments related to our former Test business of
$1.8 million and $0.3 million of shutdown activities for our former Wire business.

Net cash provided by investing activities of $149.9 million was the result of the sale of our Wire business.

Fiscal 2011 Liquidity and Capital Resource Outlook

We expect our ﬁscal 2011 capital expenditures to be $13.0 to $14.0 million. Expenditures are anticipated to be
primarily used for
the expansion of our manufacturing operations infrastructure in Asia and various
R&D projects.

We believe that our existing cash and investments, anticipated cash ﬂows from operations and available credit
facility will be sufficient to meet our liquidity and capital requirements for at least the next twelve months.
Our liquidity is affected by many factors, some based on normal operations of our business and others related
to global economic conditions and industry uncertainties, which we cannot predict. We also cannot predict
economic conditions and industry downturns or the timing, strength or duration of recoveries. We will
continue to use our cash for working capital needs, general corporate purposes, and to repay and/or reﬁnance
our Convertible Subordinated Notes.

We may seek, as we believe appropriate, additional debt or equity ﬁnancing which would provide capital for
corporate purposes, working capital funding, additional liquidity needs or to fund future growth opportunities.
The timing and amount of potential capital requirements cannot be determined at this time and will depend on
including our actual and projected demand for our products, semiconductor and
a number of factors,
semiconductor capital equipment
industry conditions, competitive factors, and the condition of ﬁnancial
markets.

46

Convertible Subordinated Notes

The following table reﬂects debt, consisting of Convertible Subordinated Notes, as of October 2, 2010 and
October 3, 2009:

Rate

Payment dates of each year

Conversion
price

Maturity date

0.875% June 1 and December 1
Debt discount on 0.875% Convertible Subordinated Notes due June 2012
1.000% June 30 and December 30

June 1, 2012

$12.84

$14.36

Redeemed June 30, 2010

As of

October 2,
2010

October 3,
2009*

(in thousands)

$110,000
(11,525)
—
$ 98,475

$110,000
(17,783)
48,964
$141,181

The following table reﬂects additional
October 2, 2010:

information regarding our Convertible Subordinated Notes as of

Description

Maturity date

Par value

Fair value as of
October 2, 2010(1)

0.875% Convertible Subordinated Notes(2). . . .

June 1, 2012

(in thousands)

$110,000
$110,000

$102,025
$102,025

In accordance with ASC 820, we rely upon quoted market prices.

(1)
(2) We determined our corporate rating was not necessary; therefore, our 0.875% Convertible Subordinated

Notes are not rated.

The following table reﬂects amortization expense related to issuance costs from our Subordinated Convertible
Notes for ﬁscal 2010, 2009, and 2008:

(in thousands)
Amortization expense related to issue costs . . . . . . . . .

2010
$718

Fiscal
2009*
$791

2008*
$1,236

*

As adjusted for ASC No. 470.20, Debt, Debt With Conversion Options.

0.875% Convertible Subordinated Notes

On June 6, 2007, we issued $110.0 million aggregate principal amount of 0.875% Convertible Subordinated
Notes due 2012. Net proceeds from the issuance were $106.4 million. Debt issuance costs of $3.6 million
were incurred in connection with the issuance of the 0.875% Convertible Subordinated Notes and are
amortized to expense over 60 months.

Holders of the 0.875% Convertible Subordinated Notes may convert their notes based on an initial conversion
rate of approximately 69.6621 shares per $1,000 principal amount of notes (equal to an initial conversion
price of approximately $14.355 per share) only under speciﬁc circumstances. The initial conversion rate will
be adjusted for certain events.

1.00% Convertible Subordinated Notes

During ﬁscal 2010 our outstanding 1.0% Notes matured in June 2010 and were redeemed.

During ﬁscal 2009, we repurchased $3.0 million (face value) of our 1.0% Convertible Subordinated Notes for
net cash of $2.0 million and recognized a net gain of $1.0 million. In addition during ﬁscal 2009, we
conducted a tender offer and purchased $13.0 million (face value) of our 1.0% Convertible Subordinated
Notes for net cash of $10.1 million and recognized a net gain of $2.8 million, net of unamortized deferred
ﬁnancing costs.

47

0.50% Convertible Subordinated Notes

During ﬁscal 2009, we purchased in the open market $43.1 million (face value) of our 0.5% Convertible
Subordinated Notes for net cash of $42.8 million. A net gain of $0.2 million was recognized during ﬁscal
2009 related to these repurchases. The remaining 0.5% Convertible Subordinated Notes matured
November 2008 and were redeemed.

In addition during ﬁscal 2008, we purchased in the open market $4.0 million (face value) of the outstanding
notes for net cash of $3.8 million and recognized a net gain of $0.2 million, net of unamortized deferred
ﬁnancing costs related to these repurchases.

Other Obligations and Contingent Payments

Under GAAP, certain obligations and commitments are not required to be included in the Consolidated
Balance Sheets and Statements of Operations. These obligations and commitments, while entered into in the
normal course of business, may have a material impact on our liquidity. Certain of the following commitments
as of October 2, 2010 are appropriately not included in the Consolidated Balance Sheets and Statements of
Operations included in this Form 10-K; however,
they have been disclosed in the following table for
additional information.

The following table identiﬁes obligations and contingent payments under various arrangements as of
October 2, 2010:

(in thousands)
Contractual Obligations:

Payments due by ﬁscal period

Total

Less than
1 year

1 − 3 years

3 − 5 years

More than
5 years

Due date
not
determinable

$4,659
1,941

1,968

Convertible Subordinated Notes,

par value(1). . . . . . . . . . . . . . $110,000

$110,000

Current and long-term liabilities:
Pension plan obligations . . . . . .
Severance . . . . . . . . . . . . . . . .
Facility accrual related to

4,659
5,169

$

2,947

281

discontinued operations (Test)

3,061

1,734

1,327

Obligations related to Chief

Executive Officer transition(2) .

Operating lease retirement

3,024

2,201

823

obligations . . . . . . . . . . . . . .
Long-term income taxes payable .

2,226
1,968

Total Obligations and Contingent

Payments reﬂected on the
Consolidated Financial
Statements . . . . . . . . . . . . . . . . $130,107

140

669

$ 622

$ 795

$

7,022

$113,100

$ 622

$ 795

$8,568

Contractual Obligations:

Inventory purchase obligations(3). $ 99,231
Operating lease obligations(4) . . .
32,596
1,926
Cash paid for interest . . . . . . . .

$ 99,231
8,710
963

$ 11,846
963

Commercial Commitments:

Standby Letters of Credit(5) . . . .

95

95

$5,295

$6,745

$ —

Total Obligations and Contingent
Payments not reﬂected on the
Consolidated Financial
Statements . . . . . . . . . . . . . . . . $133,848

$108,999

$ 12,809

$5,295

$6,745

$ —

(1) Does not reﬂect debt discount of $11.5 million related to our 0.875% Notes.

48

(2)

In connection with the September 2010 retirement of our Chief Executive Officer (‘‘CEO’’), we entered
into a three year consulting arrangement with him. In addition, in connection with the employment
agreement for our recently hired CEO, we are obligated to pay certain bonus and relocation payments.
(3) We order inventory components in the normal course of our business. A portion of these orders are
non-cancelable and a portion may have varying penalties and charges in the event of cancellation. The
signiﬁcant increase in inventory purchase obligations is attributable to anticipated higher sales.

(4) We have minimum rental commitments under various leases (excluding taxes, insurance, maintenance and
repairs, which are also paid by us) primarily for various facility and equipment leases, which expire
periodically through 2018 (not including lease extension options, if applicable).

(5) We provide standby letters of credit which represent obligations in lieu of security deposits for employee

beneﬁt programs and a customs bond.

Credit Facility

On September 29, 2010, Kulicke and Soffa Global Holding Corporation (‘‘GHC’’), our wholly-owned
(the ‘‘Facilities Agreement’’) with
subsidiary, entered into a Short Term Credit Facilities Agreement
DBS Bank Ltd. Labuan Branch (‘‘DBS Bank’’). In accordance with the Facilities Agreement, DBS Bank has
agreed to make available to GHC the following banking facilities:

(i)

a short term loan facility of up to $12.0 million (the ‘‘STL Facility’’); and

(ii) a revolving credit facility of up to $8.0 million (the ‘‘RC Facility’’).

interest at

the STL Facility bear

The STL Facility is an uncommitted facility, and therefore, cancellable by DBS Bank at any time in its sole
the Singapore Interbank Offered Rate
discretion. Borrowings under
(‘‘SIBOR’’) plus 1.5%. The RC Facility is a committed facility and is available to GHC until September 10,
2013, the maturity date. Borrowings under the RC Facility bear interest at SIBOR plus 2.5%. The Facilities
Agreement has been entered into in order to provide support, if needed, to fund GHC’s working capital
requirements. There are currently no outstanding amounts under the Facilities Agreement. The Facilities
Agreement contains customary representations and warranties and covenants for agreements of this nature,
including covenants that require GHC to maintain a positive net worth and to maintain all of our material
operating accounts with DBS Bank Ltd, Singapore. Events of default under the Facilities Agreement include:
(i) the failure to make payments when due, (ii) breach of covenants, (iii) breach of representations and
warranties, (iv) insolvency, and (v) any material adverse change in GHC or our ﬁnancial condition which
would affect GHC’s ability to perform its obligations under the Facilities Agreement and the related security
documents. We have agreed to guarantee GHC’s obligations under the Facilities Agreement pursuant to a
Guaranty Agreement, dated as September 29, 2010, by and between us and DBS Bank.

In connection with the Facilities Agreement, on September 29, 2010, GHC and DBS Bank entered into a
Debenture, pursuant to which GHC granted a security interest in substantially all of its assets, which include
most of our consolidated accounts receivable and inventory, to secure the obligations under the Facilities
Agreement.

Orthodyne Earnout

On October 3, 2008, we completed the acquisition of certain assets of Orthodyne and agreed to pay
Orthodyne an additional amount in the future based upon the gross proﬁt realized by the acquired business
over a three year period from date of acquisition pursuant to an Earnout Agreement (the ‘‘Earnout’’). A former
owner of Orthodyne was employed by us until his resignation on October 31, 2010. Payment from the
Earnout is not contingent upon his employment. As of October 2, 2010, the maximum payout under the
Earnout was $10.0 million; however, we estimated that our maximum exposure would not exceed
$2.8 million. As of October 2, 2010, no Earnout was accrued.

Off-Balance Sheet Arrangements

We currently do not have any off-balance sheet arrangements such as derivatives, indirect guarantees of
indebtedness, contingent interests, or obligations associated with variable interest entities.

49

Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk

As of October 2, 2010, we held $3.0 million of available-for-sale investments which subject us to interest rate
risk. Our available-for-sale securities consist of ﬁxed income investments (such as corporate bonds,
commercial paper, time deposits and U.S. Treasury and Agency securities, or mutual funds that invest in these
instruments). We continually monitor our exposure to changes in interest rates and credit ratings of issuers
with respect to any available-for-sale securities and target an average life to maturity of less than eighteen
months. Accordingly, we believe that the effects to us of changes in interest rates and credit ratings of issuers
are limited and would not have a material impact on our ﬁnancial condition or results of operations.

Foreign Currency Risk

Our international operations are exposed to changes in foreign currency exchange rates due to transactions
denominated in currencies other than the location’s functional currency. We are also exposed to foreign
currency ﬂuctuations that
the remeasurement of net monetary assets of those operations whose
functional currency, the U.S. dollar, differs from their respective local currencies, most notably in Israel,
Malaysia, Singapore and Switzerland. In addition to net monetary remeasurement, we have exposures related
to the translation of subsidiary ﬁnancial statements from their functional currency, the local currency, into our
reporting currency, the U.S. dollar, most notably in China and Japan. Our U.S. operations also have foreign
currency exposure due to net monetary assets denominated in currencies other than the U.S. dollar.

impact

Based on our overall currency rate exposure as of October 2, 2010, a near term 10% appreciation or
depreciation in the foreign currency portfolio to the U.S. dollar could impact on our ﬁnancial position, results
of operations or cash ﬂows by $3.0 to $4.0 million. Our board of directors has granted management the
authority to enter into foreign exchange forward contracts and other instruments designed to minimize the
short term impact currency ﬂuctuations have on our business. We may enter into foreign exchange forward
contracts and other instruments in the future; however, our attempts to hedge against these risks may not be
successful and may result in a material adverse impact on our ﬁnancial results and cash ﬂow.

Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The consolidated ﬁnancial statements of Kulicke and Soffa Industries, Inc. listed in the index appearing under
Item 15 (a)(1) herein are ﬁled as part of this Report under this Item 8.

50

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of Kulicke and Soffa Industries, Inc.:

in our opinion,

in all material respects,

In our opinion, the consolidated ﬁnancial statements listed in the index appearing under Item 15(a)(1) present
fairly, in all material respects, the ﬁnancial position of Kulicke and Soffa Industries, Inc., and its subsidiaries
(the ‘‘Company’’) at October 2, 2010 and October 3, 2009, and the results of their operations and their cash
ﬂows for each of the three years in the period ended October 2, 2010 in conformity with accounting principles
the ﬁnancial statement
generally accepted in the United States of America. In addition,
schedule listed in the index appearing under Item 15(a)(2) presents fairly,
the
information set forth therein when read in conjunction with the related consolidated ﬁnancial statements. Also
in our opinion, the Company maintained, in all material respects, effective internal control over ﬁnancial
reporting as of October 2, 2010, based on criteria established in Internal Control — Integrated Framework
issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’s
management is responsible for these ﬁnancial statements and ﬁnancial statement schedule, for maintaining
effective internal control over ﬁnancial reporting and for its assessment of the effectiveness of internal control
over ﬁnancial reporting,
included in Management’s Report on Internal Control Over Financial Reporting
appearing under Item 9A. Our responsibility is to express opinions on these ﬁnancial statements, on the
ﬁnancial statement schedule, and on the Company’s internal control over ﬁnancial reporting based on our
integrated audits. We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the ﬁnancial statements are free of material misstatement and
whether effective internal control over ﬁnancial reporting was maintained in all material respects. Our audit of
the ﬁnancial statements included examining, on a test basis, evidence supporting the amounts and disclosures
in the ﬁnancial statements, assessing the accounting principles used and signiﬁcant estimates made by
management, and evaluating the overall ﬁnancial statement presentation. Our audit of internal control over
ﬁnancial reporting included obtaining an understanding of internal control over ﬁnancial reporting, assessing
the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of
internal control based on the assessed risk. Our audits also included performing such other procedures as we
considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our
opinions.

As discussed in Note 6 to the consolidated ﬁnancial statements, the Company changed the manner in which it
accounts for convertible debt instruments that may be settled in cash upon conversion (including partial cash
settlements) in ﬁscal 2010.

A company’s internal control over ﬁnancial reporting is a process designed to provide reasonable assurance
regarding the reliability of ﬁnancial reporting and the preparation of ﬁnancial statements for external purposes
in accordance with generally accepted accounting principles. A company’s internal control over ﬁnancial
reporting includes those policies and procedures that (i) pertain to the maintenance of records that,
in
reasonable detail, accurately and fairly reﬂect the transactions and dispositions of the assets of the company;
(ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of ﬁnancial
statements in accordance with generally accepted accounting principles, and that receipts and expenditures of
the company are being made only in accordance with authorizations of management and directors of the
company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use, or disposition of the company’s assets that could have a material effect on the ﬁnancial
statements.

Because of its inherent
internal control over ﬁnancial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.

limitations,

/s/ PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania
December 9, 2010

51

KULICKE AND SOFFA INDUSTRIES, INC.

CONSOLIDATED BALANCE SHEETS
(in thousands)

ASSETS

Current Assets:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restricted cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Short-term investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts and notes receivable, net of allowance for doubtful accounts of $980

and $1,378, respectively . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inventories, net. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid expenses and other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
TOTAL CURRENT ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Property, plant and equipment, net. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current Liabilities:
Current portion of long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued expenses and other current liabilities . . . . . . . . . . . . . . . . . . . . . . . .
Income taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
TOTAL CURRENT LIABILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Long-term debt. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
TOTAL LIABILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Commitments and contingent liabilities (Note 13)

SHAREHOLDERS’ EQUITY:
Preferred stock; without par value:
Authorized − 5,000 shares; issued − none . . . . . . . . . . . . . . . . . . . . . . . . . . .
Common stock, no par value:
Authorized 200,000 shares; issued 75,429 and 74,370, respectively; Outstanding
70,475 and 69,415 shares, respectively . . . . . . . . . . . . . . . . . . . . . . . . . . .
Treasury stock, at cost, 4,954 shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated deﬁcit
Accumulated other comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . .
TOTAL SHAREHOLDERS’ EQUITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY . . . . . . . . . . . . . . .

As of

October 2,
2010

October 3,
2009*

$178,112
237
2,985

196,035
73,893
15,985
5,443
472,690

30,059
26,698
39,111
11,611
$580,169

$

—
82,353
41,498
1,279
125,130

98,475
20,355
13,729
257,689

$ 144,560
281
—

95,779
41,489
11,566
1,786
295,461

36,046
26,698
48,656
5,774
$ 412,635

$ 48,964
39,908
32,576
1,612
123,060

92,217
16,282
10,273
241,832

—

—

423,715
(46,356)
(55,670)
791
322,480
$580,169

413,092
(46,356)
(197,812)
1,879
170,803
$ 412,635

*

As adjusted for ASC No. 470.20, Debt, Debt With Conversion Options

The accompanying notes are an integral part of these consolidated ﬁnancial statements.

52

KULICKE AND SOFFA INDUSTRIES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)

Net revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross proﬁt. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Selling, general and administrative . . . . . . . . . . . . . . . . . . . . . . .
Research and development . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impairment of goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
U.S. pension plan termination . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2010
$762,784
427,111
335,673

130,978
56,660
—
—
187,638

Fiscal
2009*
$225,240
136,397
88,843

106,175
53,483
2,709
—
162,367

2008*
$328,050
194,257
133,793

89,356
59,917
—
9,152
158,425

Income (loss) from operations . . . . . . . . . . . . . . . . . . . . . . . . . .

148,035

(73,524)

(24,632)

Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest expense. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gain on extinguishment of debt . . . . . . . . . . . . . . . . . . . . . . . . .
Income (loss) from continuing operations before income taxes . . . .
Beneﬁt for income taxes from continuing operations . . . . . . . . . . .
Income (loss) from continuing operations . . . . . . . . . . . . . . . . . .
Income from discontinued operations, net of tax . . . . . . . . . . . . . .
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

403
(8,333)
—
140,105
(2,037)
142,142
—
$142,142

1,106
(8,188)
3,965
(76,641)
(13,029)
(63,612)
22,011
$ (41,601)

Income (loss) per share from continuing operations:
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Income per share from discontinued operations:
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Net income (loss) per share:
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Weighted average shares outstanding:
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$
$

$
$

$
$

2.01
1.92

$
$

(1.02)
(1.02)

— $
— $

0.35
0.35

2.01
1.92

$
$

(0.67)
(0.67)

4,732
(8,601)
170
(28,331)
(3,610)
(24,721)
23,441
$ (1,280)

$
$

$
$

$
$

(0.46)
(0.46)

0.44
0.44

(0.02)
(0.02)

70,012
73,548

62,188
62,188

53,449
53,449

*

As adjusted for ASC No. 470.20, Debt, Debt With Conversion Options

The accompanying notes are an integral part of these consolidated ﬁnancial statements.

53

KULICKE AND SOFFA INDUSTRIES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 142,142
Less: Income from discontinued operations. . . . . . . . . . . . . . . . . . . . .
—
Income (loss) from continuing operations . . . . . . . . . . . . . . . . . . . . . .
142,142
Adjustments to reconcile income (loss) from continuing operations to

$ (41,601)
22,011
(63,612)

$ (1,280)
23,441
(24,721)

2010

Fiscal
2009*

2008*

net cash provided by (used in) operating activities:

Depreciation and amortization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity-based compensation and employee beneﬁts . . . . . . . . . . . . . . . .
Amortization of debt discount and debt issuance costs . . . . . . . . . . . . .
Provision for inventory valuation . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Provision for doubtful accounts. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impairment of goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gain on extinguishment of debt . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Switzerland pension plan curtailment . . . . . . . . . . . . . . . . . . . . . . . . .
U.S. pension plan termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Changes in operating assets and liabilities, net of businesses acquired or

sold:

17,531
8,949
6,976
1,519
(4,735)
32
—
—
—
—

Accounts and notes receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inventory. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid expenses and other current assets . . . . . . . . . . . . . . . . . . . . . .
Accounts payable, accrued expenses and other current liabilities . . . . . .
Income taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash provided by (used in) continuing operations . . . . . . . . . . . .
Net cash provided by (used in) discontinued operations. . . . . . . . . . .
Net cash provided by (used in) operating activities . . . . . . . . . . . . . .

(101,098)
(34,065)
(4,654)
54,080
(322)
1,283
87,638
(1,839)
85,799

21,225
2,198
6,593
8,154
(6,806)
291
2,709
(3,965)
(1,446)
—

(16,566)
2,333
7,979
13,996
(25,633)
1,144
(51,406)
(2,116)
(53,522)

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment. . . . . . . . . . . . . . . . . . . . .
Purchase of investments classiﬁed as available-for-sale . . . . . . . . . . . . .
Proceeds from sales of investments classiﬁed as available-for-sale . . . . .
Proceeds from sale of property, plant, and equipment . . . . . . . . . . . . . .
Changes in restricted cash, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Purchase of Orthodyne . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash used in continuing operations . . . . . . . . . . . . . . . . . . . . . .
Net cash provided by (used in) discontinued operations. . . . . . . . . . .
Net cash provided by (used in) investing activities . . . . . . . . . . . . . .

(6,271)
(5,263)
(2,985)
(2,406)
—
8,536
4,621
—
34,719
44
— (87,039)
(51,453)
149,857
98,404

(4,591)
(1,838)
(6,429)

7,563
6,578
6,616
3,999
(3,151)
361
—
(170)
—
9,152

60,984
6,949
(5,130)
(44,033)
1,598
341
26,936
1,126
28,062

(7,851)
(31,331)
44,583
—
(35,000)
—
(29,599)
(193)
(29,792)

CASH FLOWS FROM FINANCING ACTIVITIES:
(48,964)
Payments on borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,872
Proceeds from exercise of stock options . . . . . . . . . . . . . . . . . . . . . . .
(29)
Net proceeds from sale of common stock . . . . . . . . . . . . . . . . . . . . . .
(46,121)
Net cash provided by (used in) ﬁnancing activities . . . . . . . . . . . . . .
303
Effect of exchange rate changes on cash and cash equivalents . . . . . . . .
33,552
Changes in cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . .
Cash and cash equivalents at beginning of period . . . . . . . . . . . . . . . .
144,560
Cash and cash equivalents at end of period. . . . . . . . . . . . . . . . . . . . . $ 178,112

(84,358)
223
38,696
(45,439)
185
(372)
144,932
$144,560

(3,831)
549
—
(3,282)
(627)
(5,639)
150,571
$144,932

CASH PAID DURING THE PERIOD FOR:
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $

1,452
3,119

$
1,708
$ 11,032

$
$

1,971
4,704

*

As adjusted for ASC No. 470.20, Debt, Debt With Conversion Options

The accompanying notes are an integral part of these consolidated ﬁnancial statements.

54

KULICKE AND SOFFA INDUSTRIES, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(in thousands)

Balances as of September 29, 2007* .

.

.

.

.

.

.

.

Common Stock

Shares Amount
53,218

$318,389 $(46,118)

Treasury
Stock

Accumulated
Deﬁcit
$(155,738)

Accumulated
Other
Comprehensive
Income (Loss)
$(5,247)

Shareholders’
Equity
$111,286

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.

.
.

.
.
.
.

plan .

(Note 11) .

Employer contribution to the Company’s 401(k)
. .
.
.
.
.
.
.
.

.
.
.
.
Issuance of stock for services rendered .
.
.
Exercise of stock options .
.
Equity-based compensation expense .
.
.
Impact of Income Taxes, General adoption
.

.
.
.
Impact of Debt, Debt With Conversion Options
.
.
.
.
.
.
.
.
.
.

.
Components of comprehensive income: .
Net income(1)
.
.
.
.
.
.
.
Translation adjustment
.
.
.
Unrealized loss on investments, net
.
.
.
Unamortized pension costs .
.
.
Total comprehensive income .
.
.
.
Balances as of September 27, 2008* .

adoption (Note 6) .

.

.
.
.
.
.
.
.
.

.
.
.
.
.
.
.
.

.
.
.
.
.
.
.
.

.
.
.
.
.
.

. .

. .

.
.

.
.

.
.

.
.

.
.

.
.

.
.

.
.

.

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.

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.

.

.

.

.

.

.

.

.

.

.

.

.

.

. .

plan .

Employer contribution to the Company’s 401(k)
.
.
.
.
.
.
.
.

.
.
.
.
.
.
Issuance of stock for services rendered .
.
.
.
.
Exercise of stock options .
.
.
.
.
Purchase of treasury stock .
.
.
.
.
Equity-based compensation expense .
.
Shares issued for purchase of Orthodyne .
Sale of common stock .
.
.
Impact of Debt, Debt With Conversion Options
.
.
.

.
.
.
.
.
.
.

.
.
.

.
.

.
.

.
.

.
.

.

.

.

.

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.

.

.

.

.

.

.

.

.

.

.

.
.

.
.

.
.

.
.

. . .

adoption (Note 6) .

.
Components of comprehensive loss:
Net loss(1) .
.
.
.
.
Translation adjustment
.
.
Unrealized gain on investments, net .
Switzerland pension plan curtailment
.
.
Unamortized pension costs .
.
Total comprehensive loss .
.
.
.
Balances as of October 3, 2009* .

.
.
.

.
.

.
.

.
.

.
.

.

.
.
.
.
.
.
.

.
.
.
.
.
.
.

.
.
.
.
.
.
.

.
.
.
.
.
.
.

.
.
.
.
.
.
.

.
.
.
.
.
.
.

.
.
.
.

.

.
.
.
.
.
.
.
.

.
.
.
.
.
.
.

.

.
.
.
.
.
.
.

.

.

.

.

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.

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.

.

.

.

.

.

.

.

.

.

.
.
.

.
.
.

.
.
.

. .

plan .

Employer contribution to the Company’s 401(k)
.
.
.
.

.
.
.
.
Issuance of stock for services rendered .
Exercise of stock options .
.
.
Issuance of shares for time-based restricted stock .
.
Equity-based compensation expense .
Costs related to prior year sale of common stock .
.
Components of comprehensive income: .
.
.
.
.
.
Net income . . .
.
.
.
.
.
.
Translation adjustment
.
.
.
.
.
Unamortized pension costs .
.
.
Total comprehensive income .
.
.
.
Balances as of October 2, 2010 .

.
.
.
.
.
.

.
.
.
.
.
.

.
.
.
.
.
.

.
.
.
.
.
.

.
.
.
.
.

.
.
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.

.

.

.

193
107
130

1,174
720
549
4,684

807

(5,102)

3,822

244
(18)
7,230

53,648

$325,516 $(46,118)

$(156,211)

$ 2,209

357
181
156
(44)

7,117
8,000

811
540
461

847
46,221
38,696

(238)

(5,587)

(36,014)

(151)
16
193
(388)

69,415

$413,092 $(46,356)

$(197,812)

$ 1,879

212
114
502
232

1,384
720
2,872
—
5,676
(29)

142,142

1,021
(2,109)

70,475

$423,715 $(46,356)

$ (55,670)

$

791

1,174
720
549
4,684

807

(5,102)
—
3,822
244
(18)
7,230
11,278
$125,396

811
540
461
(238)
847
46,221
38,696

(5,587)

(36,014)
(151)
16
193
(388)
(36,344)
$170,803

1,384
720
2,872
—
5,676
(29)
—
142,142
1,021
(2,109)
141,054
$322,480

*
(1)

As adjusted for ASC No. 470.20, Debt, Debt With Conversion Options
Includes continuing and discontinued operations (see Note 2).

The accompanying notes are an integral part of these consolidated ﬁnancial statements.

55

KULICKE AND SOFFA INDUSTRIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Consolidation

These consolidated ﬁnancial statements include the accounts of Kulicke and Soffa Industries, Inc. and its
subsidiaries (the ‘‘Company’’), with appropriate elimination of intercompany balances and transactions.

As of October 4, 2009, the Company adopted Financial Accounting Standards Board (‘‘FASB’’) Accounting
Standards Codiﬁcation (‘‘ASC’’) No. 470.20, Debt, Debt With Conversion Options (‘‘ASC 470.20’’), which
requires issuers of convertible debt instruments that may be settled in cash upon conversion to initially record
the liability and equity components of the convertible debt separately. The Company adopted the provisions of
ASC 470.20 on a retrospective basis for all prior periods presented (see Note 6).

On October 3, 2008, the Company completed the acquisition of substantially all of the assets and assumption
of certain liabilities of Orthodyne Electronics Corporation (‘‘Orthodyne’’). In connection with the Orthodyne
acquisition,
the Company issued 7.1 million common shares with an estimated value on that date of
$46.2 million and paid $87.0 million in cash including capitalized acquisition costs.

On September 29, 2008,
its Wire business for net proceeds of
$149.9 million to W.C. Heraeus GmbH (‘‘Heraeus’’). The ﬁnancial results of the Wire business have been
included in discontinued operations in the consolidated ﬁnancial statements for all periods presented (see
Note 2).

the Company completed the sale of

Fiscal Year

Each of the Company’s ﬁrst three ﬁscal quarters ends on the Saturday that is 13 weeks after the end of the
immediately preceding ﬁscal quarter. The fourth quarter of each ﬁscal year ends on the Saturday closest to
September 30th. In ﬁscal years consisting of 53 weeks, the fourth quarter will consist of 14 weeks. The ﬁscal
year end for 2010, 2009 and 2008 ended on October 2, 2010, October 3, 2009 and September 27, 2008,
respectively.

Nature of Business

The Company designs, manufactures and sells capital equipment and expendable tools as well as services,
maintains, repairs and upgrades equipment, all used to assemble semiconductor devices. The Company’s
operating results depend upon the capital and operating expenditures of semiconductor manufacturers and
OSATs worldwide which, in turn, depend on the current and anticipated market demand for semiconductors
and products utilizing semiconductors. The semiconductor
industry is highly volatile and experiences
downturns and slowdowns which have a severe negative effect on the semiconductor industry’s demand for
semiconductor capital equipment, including assembly equipment manufactured and sold by the Company and,
to a lesser extent, expendable tools such as those sold by the Company. These downturns and slowdowns have
in the past adversely affected the Company’s operating results. The Company believes such volatility will
continue to characterize the industry and the Company’s operations in the future.

Management Estimates

The preparation of ﬁnancial statements in conformity with generally accepted accounting principles
(‘‘GAAP’’) requires management to make estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at the date of the ﬁnancial statements and the
reported amounts of revenue and expenses during the reporting period. The more signiﬁcant areas involving
the use of estimates in these ﬁnancial statements include, but are not limited to, those related to accounts
receivable, reserves for excess and obsolete inventory, carrying value and lives of ﬁxed assets, goodwill and
intangible assets, valuation allowances for deferred tax assets and deferred tax liabilities, repatriation of
un-remitted foreign subsidiary earnings, equity-based compensation expense, restructuring, and warranties. The
it believes to be
Company estimates on historical experience and on various other assumptions that

56

reasonable. As a result,
the Company makes judgments regarding the carrying values of its assets and
liabilities that are not readily apparent from other sources. Actual results may differ from these estimates
under different assumptions or conditions.

Vulnerability to Certain Concentrations

Financial instruments which may subject the Company to concentrations of credit risk as of October 2, 2010
and October 3, 2009 consisted primarily of short-term investments and trade receivables. The Company
manages credit risk associated with investments by investing its excess cash in highly rated debt instruments
of
institutions, and corporations. The Company has
established investment guidelines relative to diversiﬁcation and maturities designed to maintain safety and
liquidity. These guidelines are periodically reviewed and modiﬁed as appropriate. The Company does not have
any exposure to sub-prime ﬁnancial instruments or auction rate securities.

the U.S. Government and its agencies, ﬁnancial

The Company’s trade receivables result primarily from the sale of semiconductor equipment,
related
accessories and replacement parts, and expendable tools to a relatively small number of large manufacturers in
a highly concentrated industry. Write-offs of uncollectible accounts have historically not been signiﬁcant;
however, the Company closely monitors its customers’ ﬁnancial strength to reduce the risk of loss.

The Company’s products are complex and require raw materials, components and subassemblies having a high
degree of reliability, accuracy and performance. The Company relies on OSATs to manufacture many of these
components and subassemblies and it relies on sole source suppliers for some important components and raw
material inventory.

The Company is also exposed to foreign currency ﬂuctuations that impact the remeasurement of the net
monetary assets of those operations whose functional currencies differ from their respective local currencies,
most notably in Israel, Malaysia, Singapore and Switzerland. In addition to operations in these countries,
Japan and China have exposure related to the translation of their ﬁnancial statements from their respective
functional currencies to the U.S. dollar.

Foreign Currency Translation

The majority of the Company’s business is transacted in U.S. dollars; however, the functional currencies of
some of the Company’s subsidiaries are their local currencies. In accordance with ASC No. 830, Foreign
Currency Matters (‘‘ASC 830’’), for a subsidiary of the Company that has a functional currency other than the
U.S. dollar, gains and losses resulting from the translation of the functional currency into U.S. dollars for
ﬁnancial statement presentation are not included in determining net income (loss), but are accumulated in the
cumulative translation adjustment account as a separate component of shareholders’ equity (accumulated other
comprehensive income (loss)). Under ASC 830, cumulative translation adjustments are not adjusted for
income taxes as they relate to indeﬁnite investments in non-U.S. subsidiaries. Gains and losses resulting from
foreign currency transactions are included in the determination of net income (loss).

Cash Equivalents

The Company considers all highly liquid investments with original maturities of three months or less when
purchased to be cash equivalents.

Investments

as

are

than

cash

other

classiﬁed

‘‘trading,’’

equivalents,

Investments,
or
‘‘held-to-maturity’’, in accordance with ASC No. 820, Investments-Debt & Equity Securities (‘‘ASC 820’’),
and depending upon the nature of the investment, its ultimate maturity date in the case of debt securities, and
to holding the securities. Investments classiﬁed as ‘‘trading’’ are
management’s intentions with respect
reported at fair market value, with unrealized gains or losses included in earnings. Investments classiﬁed as
‘‘available-for-sale’’ are reported at fair market value, with net unrealized gains or losses reﬂected as a
separate component of shareholders’ equity (accumulated other comprehensive income (loss)). The fair market
value of trading and available-for-sale securities is determined using quoted market prices at the balance sheet
date. Investments classiﬁed as held-to-maturity are reported at amortized cost. Realized gains and losses are
determined on the basis of speciﬁc identiﬁcation of the securities sold.

‘‘available-for-sale’’

57

Allowance for Doubtful Accounts

The Company maintains allowances for doubtful accounts for estimated losses resulting from its customers’
failure to make required payments. If the ﬁnancial condition of the Company’s customers were to deteriorate,
resulting in an impairment of their ability to make payments, additional allowances may be required. The
Company is also subject to concentrations of customers and sales to a few geographic locations, which could
also impact the collectibility of certain receivables. If global economic conditions deteriorate or political
conditions were to change in some of the countries where the Company does business, it could have a
signiﬁcant impact on the results of operations, and the Company’s ability to realize the full value of its
accounts receivable.

Inventories

Inventories are stated at
the lower of cost (on a ﬁrst-in ﬁrst-out basis) or market value. The Company
generally provides reserves for obsolete inventory and for inventory considered to be in excess of demand. In
addition, the Company generally records as accrued expense inventory purchase commitments in excess of
demand. Demand is generally deﬁned as eighteen months future consumption for non-Wedge bonder
equipment, twenty-four months consumption for Wedge bonder equipment and all spare parts, and twelve
months consumption for expendable tools. The forecasted demand is based upon internal projections, historical
sales volumes, customer order activity and a review of consumable inventory levels at customers’ facilities.
The Company communicates forecasts of its future demand to its suppliers and adjusts commitments to those
suppliers accordingly. If required, the Company reserves the difference between the carrying value of its
inventory and the lower of cost or market value, based upon assumptions about future demand, market
conditions and the next cyclical market upturn. If actual market conditions are less favorable than projections,
additional inventory reserves may be required.

Property, Plant and Equipment

Property, plant and equipment are carried at cost. The cost of additions and those improvements which
increase the capacity or lengthen the useful lives of assets are capitalized while repair and maintenance costs
are expensed as incurred. Depreciation and amortization are provided on a straight-line basis over the
estimated useful lives as follows: buildings 25 to 40 years; machinery and equipment 3 to 10 years; and
leasehold improvements are based on the shorter of the life of lease or life of asset. Purchased computer
software costs related to business and ﬁnancial systems are amortized over a ﬁve year period on a straight-line
basis.

Valuation of Long-Lived Assets

The Company’s long-lived assets are primarily property, plant, intangible assets and equipment and goodwill.
In accordance with the provisions of ASC No. 350, Intangibles, Goodwill and Other (‘‘ASC 350’’) goodwill is
not amortized. ASC 350 also requires that, at least annually, an impairment test be performed to support the
carrying value of goodwill. In addition, whenever events occur that would more likely than not reduce the fair
value of reporting unit below its carrying amount, a goodwill impairment test will be performed. The fair
value of the Company’s goodwill is based upon estimates of future cash ﬂows and other factors.

In accordance with ASC No. 360, Property, Plant & Equipment (‘‘ASC 360’’), the Company’s property, plant
and equipment is tested for impairment based on undiscounted cash ﬂows when triggering events occur, and if
impaired, written-down to fair value based on either discounted cash ﬂows or appraised values. ASC 360 also
provides a single accounting model for long-lived assets to be disposed of by sale and establishes additional
criteria that would have to be met to classify an asset as held for sale. The carrying amount of an asset or
asset group is not recoverable if it exceeds the sum of the undiscounted cash ﬂows expected to result from the
use and eventual disposition of the asset or asset group. Estimates of future cash ﬂows used to test the
recoverability of a long-lived asset or asset group must incorporate the entity’s own assumptions about its use
of the asset or asset group and must factor in all available evidence.

recoverability whenever events or changes in
ASC 360 requires that
circumstances indicate that their carrying amount may not be recoverable. Such events include signiﬁcant

long-lived assets be tested for

58

under-performance relative to the expected historical or projected future operating results; signiﬁcant changes
in the manner of use of the assets; signiﬁcant negative industry or economic trends and signiﬁcant changes in
market capitalization.

Revenue Recognition

the collectibility is reasonably assured, and equipment

In accordance with ASC No. 605, Revenue Recognition, the Company recognizes revenue when persuasive
evidence of an arrangement exists, delivery has occurred or services have been rendered, the price is ﬁxed or
determinable,
installation obligations have been
completed and customer acceptance, when applicable, has been received or otherwise released from
installation or customer acceptance obligations. In the event
terms of the sale provide for a customer
acceptance period, revenue is recognized upon the expiration of the acceptance period or customer acceptance,
whichever occurs ﬁrst. The Company’s standard terms are Ex Works (the Company’s factory), with title
transferring to its customer at the Company’s loading dock or upon embarkation. The Company has a small
percentage of sales with other terms, and revenue is recognized in accordance with the terms of the related
customer purchase order. Revenue related to services is recognized upon performance of the services
requested by a customer order. Revenue for extended maintenance service contracts with a term more than
one month is recognized on a prorated straight-line basis over the term of the contract.

Shipping and handling costs billed to customers are recognized in net revenue. Shipping and handling costs
are included in cost of sales.

Research and Development

The Company charges research and development costs associated with the development of new products to
expense when incurred. In certain circumstances, pre-production machines which the Company intends to sell
are carried as inventory until sold.

Income Taxes

Deferred income taxes are determined using the liability method in accordance with ASC No. 740, Income
Taxes (‘‘ASC 740’’). The Company records a valuation allowance to reduce its deferred tax assets to the
amount it expects is more likely than not to be realized. While the Company has considered future taxable
income and its ongoing tax planning strategies in assessing the need for the valuation allowance, if it were to
determine that it would be able to realize its deferred tax assets in the future in excess of its net recorded
amount, an adjustment to the deferred tax asset would increase income in the period such determination was
made. Likewise, should the Company determine it would not be able to realize all or part of its net deferred
tax assets in the future, an adjustment to the deferred tax asset would decrease income in the period such
determination was made.

In accordance with ASC No. 740 Topic 10, Income Taxes, General (‘‘ASC 740.10’’), the Company accounts
for uncertain tax positions taken or expected to be taken in its income tax return. Under ASC 740.10, the
Company utilizes a two-step approach for evaluating uncertain tax positions. Step one or recognition, requires
a company to determine if the weight of available evidence indicates a tax position is more likely than not to
be sustained upon audit, including resolution of related appeals or litigation processes, if any. Step two or
measurement, is based on the largest amount of beneﬁt, which is more likely than not to be realized on
settlement with the taxing authority.

Equity-Based Compensation

The Company accounts for equity-based compensation under the provisions of ASC No. 718, Compensation,
Stock Compensation (‘‘ASC 718’’). ASC 718 requires the recognition of the fair value of the equity-based
compensation in net income. The fair value of the Company’s stock option awards are estimated using a
Black-Scholes option valuation model. Compensation expense associated with market-based restricted stock is
determined using a Monte-Carlo valuation model, and compensation expense associated with time-based and
performance-based restricted stock is determined based on the number of shares granted and the fair value on
the date of grant. In addition, the calculation of equity-based compensation costs requires that the Company
estimate the number of awards that will be forfeited during the vesting period. The fair value of equity-based
awards is amortized over the vesting period of the award and the Company elected to use the straight-line
method for awards granted after the adoption of ASC 718.

59

Earnings per Share

Earnings per share (‘‘EPS’’) are calculated in accordance with ASC No. 260, Earnings per Share. Basic EPS
include only the weighted average number of common shares outstanding during the period. Diluted EPS
includes the weighted average number of common shares and the dilutive effect of stock options, restricted
stock and share unit awards and convertible subordinated notes outstanding during the period, when such
instruments are dilutive.

260.10.55, Earnings

accordance with ASC No.

In
Share — Implementation & Guidance
(‘‘ASC 260.10.55’’), the Company treats all outstanding unvested share-based payment awards that contain
rights to nonforfeitable dividends as participating in undistributed earnings with common shareholders. Awards
of this nature are considered participating securities and the two-class method of computing basic and diluted
EPS must be applied. The Company adopted ASC 260.10.55 on October 4, 2009 and has retrospectively
adjusted prior period earnings per share (see Note 10).

per

NOTE 2: DISCONTINUED OPERATIONS

On September 29, 2008, the Company completed the sale of certain assets and liabilities associated with its
Wire business. The Company recognized net proceeds of $149.9 million and a net gain of $22.7 million, net
of tax, during ﬁscal 2009. The Company did not recognize any income or loss from discontinued operations
during ﬁscal 2010.

The following table reﬂects operating results of the Wire business discontinued operations for ﬁscal 2009 and
2008:

(in thousands)
Net revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income (loss) before tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gain on sale of Wire business before tax . . . . . . . . . . . . . . . . . . . .
Income from discontinued operations before tax. . . . . . . . . . . . . . . .
Income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income from discontinued operations, net of tax. . . . . . . . . . . . . . . .

2009
$ —
$ (319)
23,026
22,707
(696)
$22,011

2008
$423,971
$ 23,690
—
23,690
(249)
$ 23,441

Fiscal

The following table reﬂects cash ﬂows associated with the Company’s discontinued operations for ﬁscal 2010,
2009 and 2008:

(in thousands)
Cash ﬂows provided by (used in):
Operating activities: Wire business . . . . . . . . . . . . . . .
Operating activities: Test business (sold ﬁscal 2006)(1)
.
Operating cash ﬂows from discontinued operations . . . .
Investing activities: Wire business(2) . . . . . . . . . . . . . .
Net cash provided by discontinued operations . . . . . . .

2010

$ —
(1,839)
$(1,839)
(1,838)
$(3,677)

Fiscal
2009

$

(319)
(1,797)
$ (2,116)
149,857
$147,741

2008

$ 2,680
(1,554)
$ 1,126
(193)
933

$

(1) Represents facility-related costs associated with the Company’s former Test operations which will

continue until ﬁscal 2012.

(2) Fiscal 2010 amount represents ﬁnal settlement of working capital adjustments with Heraeus.

NOTE 3: RESTRUCTURING

During ﬁscal 2010,
the Company committed to a plan to reduce its Irvine, California workforce by
approximately 60 employees over a period of approximately 26 months. As part of this workforce reduction
plan, substantially all of the Company’s California-based wedge bonder manufacturing will be transferred to
the Company’s manufacturing facilities in Kuala Lumpur, Malaysia and Singapore. Certain administrative

60

functions will also be transferred to Malaysia and Singapore. Management determined that it was in the best
interests of the Company to reduce costs by migrating production and certain administrative functions from
California to Asia.

With respect to the California-based wedge bonder transfer to Asia, the Company anticipates $1.1 million of
additional pre-tax expense, which will consist of $0.8 million of severance and $0.3 million of retention costs.
The Company expects substantially all of this expense to be incurred by the end of the second ﬁscal quarter
of 2011, with corresponding cash payments to be incurred from the second ﬁscal quarter of 2011 until the end
of ﬁscal 2012.

In ﬁscal 2009, the Company committed to a plan to reduce its Israel-based workforce by approximately
155 employees by the end of ﬁscal 2010. This workforce reduction plan was a result of substantially all of the
Company’s Israel-based manufacturing has been transferred to the Company’s manufacturing facilities in
Suzhou, China. As part of the Israel-based manufacturing transition to China, in January 2010, the Company
sold its facility in Israel and simultaneously entered into an agreement to leaseback a portion of the building
for ﬁve years with an option to extend the lease. The Company realized a $0.7 million gain on the sale which
is being recognized over the ﬁve year lease term.

During ﬁscal 2009, the Company committed to a plan and reduced its global workforce by approximately
490 employees. These workforce reductions represented approximately 20% of total employees and were
completed to minimize cash usage and reduce employee compensation costs.

The following table reﬂects severance activity for ﬁscal 2010 and 2009:

(in thousands)
Accrual for estimated severance and beneﬁts, beginning of period . . .
Provision for severance and beneﬁts: Equipment segment(1) . . . . . . . .
Provision for severance and beneﬁts: Expendable Tools segment(1) . . .
Provision for severance and beneﬁts required by local law(2) . . . . . . .
Payment of severance and beneﬁts . . . . . . . . . . . . . . . . . . . . . . . . .
Accrual for estimated severance and beneﬁts, end of period(3) . . . . . .

2010
$ 2,413
1,400
921
—
(2,339)
$ 2,395

2009
$ —
4,598
2,804
1,035
(6,024)
$ 2,413

Fiscal

(1) Provision for severance and beneﬁts is the total amount incurred and is included within selling, general

and administrative expenses on the Consolidated Statements of Operations.

(2) The Company had previously recorded approximately $1.0 million related to severance and beneﬁts as

required by local law.

(3) The accrual for estimated severance as of October 2, 2010 and October 3, 2009 was included within
accrued expenses and other current liabilities and other liabilities on the Consolidated Balance Sheet. In
addition to these restructuring amounts, the Company has other severance obligations included within
accrued expenses and other current liabilities and other liabilities on the Consolidated Balance Sheet.

As business has recovered during ﬁscal 2010 from the ﬁscal 2009 global economic downturn and demand for
the Company’s products increased, the Company increased its number of employees primarily related to
manufacturing. The Company expects to continue to consolidate certain of its operations from the United
States and other areas to Asia.

61

NOTE 4: BALANCE SHEET COMPONENTS

The following tables reﬂect the components of signiﬁcant balance sheet accounts as of October 2, 2010 and
October 3, 2009:

(in thousands)
Short term investments, available for sale:

Deposits maturing within one year(1) . . . . . . . . . . . . . . . . . . . . . .

Inventories, net:

Raw materials and supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Work in process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Finished goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Inventory reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Property, plant and equipment, net(2):

Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Buildings and building improvements . . . . . . . . . . . . . . . . . . . . .
Leasehold improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Data processing equipment and software . . . . . . . . . . . . . . . . . . .
Machinery, equipment, furniture and ﬁxtures . . . . . . . . . . . . . . . .

Accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Accrued expenses and other current liabilities:

Wages and beneﬁts(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued customer obligations(4) . . . . . . . . . . . . . . . . . . . . . . . . .
Severance(5)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Commissions and professional fees(6) . . . . . . . . . . . . . . . . . . . . .
Payable to Heraeus(7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Short-term facility accrual related to discontinued operations (Test) .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

As of

October 2,
2010

October 3,
2009

$ 2,985
2,985

$

—
—

$ 41,693
26,682
15,658
84,033
(10,140)
$ 73,893

$ 2,086
11,601
9,966
22,280
37,007
82,940
(52,881)
$ 30,059

$ 15,836
8,918
2,947
6,639
—
1,734
5,424
$ 41,498

$ 30,048
10,788
13,170
54,006
(12,517)
$ 41,489

$ 2,735
14,351
11,695
21,822
40,600
91,203
(55,157)
$ 36,046

$ 10,423
3,508
3,264
2,072
1,857
1,839
9,613
$ 32,576

(1) All short-term investments were classiﬁed as available for sale and were measured at fair value based on
level one measurement, or quoted market prices, as deﬁned by ASC 820. As of October 2, 2010, fair
value approximated the cost basis for short-term investments. The Company did not recognize any
realized gains or losses on the sale of investments during ﬁscal 2010 or 2009.

(2) During ﬁscal 2010, the Company sold its facility in Yokneam, Israel for $4.5 million. Net proceeds of
$3.9 million were received and $0.5 million is held in escrow for taxes. Simultaneous with the sale, the
Company entered into an agreement to leaseback a portion of the building for ﬁve years with an option
to extend the lease. The Company realized a $0.7 million gain on the sale which is being recognized over
the ﬁve year lease term. In addition during ﬁscal 2010, the Company sold a portion of its land in Berg,
Switzerland for net proceeds of $0.7 million. Approximately $6.7 million of fully depreciated property,
plant and equipment were written off during ﬁscal 2010 since the assets were no longer in use.
Includes $1.0 million of accrued bonus and relocation payments in accordance with the employment
agreement for the Company’s recently hired Chief Executive Officer (‘‘CEO’’).

(3)

(4) Represents customer advance payments, customer credit program, accrued warranty expense and accrued

retroﬁt costs.

62

(5) Total severance payable within the next twelve months includes restructuring plan discussed in Note 3

and approximately $0.8 million of other severance not part of the Company’s cost reduction plan.

(6) Fiscal 2010 include $0.3 million of accrued consulting and $0.9 million of liability classiﬁed equity-based
compensation expenses in connection with the September 2010 retirement of the Company’s CEO. An
additional, $0.6 million of accrued consulting and $0.2 million of liability classiﬁed equity-based
compensation expenses are recorded in Other Liabilities related to the long term portion of his agreement
(see Note 7).

(7) Fiscal 2009 amount related to certain open working capital adjustments with Heraeus, which were settled

in ﬁscal 2010.

NOTE 5: GOODWILL AND INTANGIBLE ASSETS

Goodwill

Intangible assets classiﬁed as goodwill are not amortized. The Company performs an annual impairment test
of its goodwill during the fourth quarter of each ﬁscal year, which coincides with the completion of its annual
forecasting process. The Company performed its annual impairment test in the fourth quarter of ﬁscal 2010
and no impairment charge was required.

The Company also tests for impairment between annual tests if a ‘‘triggering’’ event occurs that may have the
effect of reducing the fair value of a reporting unit below its respective carrying value. During ﬁscal 2009,
due to the earlier than anticipated end of product life cycle for the Company’s EasyLine and SwissLine die
bonders, the Company concluded there was a triggering event and tested long-lived assets for impairment. The
Company concluded there was no impairment for long-lived assets tested under ASC 360 on an undiscounted
basis. However, when conducting its goodwill
the Company calculated its potential
impairment charges based on the two-step test identiﬁed in ASC 350 using the estimated fair value of the
respective reporting unit. The Company uses the present value of future cash ﬂows from the respective
reporting units to determine the estimated fair value of the reporting unit and the implied fair value of
goodwill. As a result, the Company recorded a non-cash impairment charge of $2.7 million and reduced the
value of the die bonder goodwill to zero.

impairment analysis,

The following table reﬂects goodwill as of October 2, 2010 and October 3, 2009:

(in thousands)
As of October 2, 2010:
Beginning of period, Goodwill, gross. . . . . . . . . . . . . . . . .
Accumulated impairment losses(1) . . . . . . . . . . . . . . . . . . .
End of period, Goodwill, net . . . . . . . . . . . . . . . . . . . . . .
As of October 3, 2009:
Beginning of period, Goodwill, gross. . . . . . . . . . . . . . . . .
Accumulated impairment losses(1) . . . . . . . . . . . . . . . . . . .
End of period, Goodwill, net . . . . . . . . . . . . . . . . . . . . . .

Equipment
segment

Expendable
Tools
segment

$22,999
(2,709)
$20,290

$22,999
(2,709)
$20,290

$6,408
—
$6,408

$6,408
—
$6,408

Total

$29,407
(2,709)
$26,698

$29,407
(2,709)
$26,698

(1) During ﬁscal 2009, the Company recorded a $2.7 million impairment charge related to its die bonder

goodwill.

Intangible Assets

Intangible assets with determinable lives are amortized over their estimated useful lives. The Company’s
intangible assets consist primarily of wedge bonder developed technology and customer relationships.

63

The following table reﬂects the intangible asset balances as of October 2, 2010 and October 3, 2009:

(dollar amounts in thousands)
Wedge bonder developed technology . . . . . . . . . .
Accumulated amortization. . . . . . . . . . . . . . . . . .
Net wedge bonder developed technology . . . . . .
Wedge bonder customer relationships . . . . . . . . . .
Accumulated amortization. . . . . . . . . . . . . . . . . .
Net wedge bonder customer relationships. . . . . .
Wedge bonder trade name. . . . . . . . . . . . . . . . . .
Accumulated amortization. . . . . . . . . . . . . . . . . .
Net wedge bonder trade name. . . . . . . . . . . .
Wedge bonder other intangible assets . . . . . . . . . .
Accumulated amortization. . . . . . . . . . . . . . . . . .
Net wedge bonder other intangible assets. . . . . .
Net intangible assets . . . . . . . . . . . . . . . .

As of

October 2,
2010
$33,200
(9,486)
23,714
19,300
(7,720)
11,580
4,600
(1,150)
3,450
2,500
(2,133)
367
$39,111

October 3,
2009
$33,200
(4,742)
28,458
19,300
(3,860)
15,440
4,600
(575)
4,025
2,500
(1,767)
733
$48,656

Average
estimated useful
lives (in years)
7.0

5.0

8.0

1.9

The following table reﬂects estimated annual amortization expense related to intangible assets as of October 2,
2010:

(in thousands)
Fiscal 2011. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fiscal 2012. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fiscal 2013. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fiscal 2014. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fiscal 2015 − 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total amortization expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 9,545
9,178
9,178
5,318
5,892
$39,111

NOTE 6: DEBT AND OTHER OBLIGATIONS

The following table reﬂects debt consisting of Convertible Subordinated Notes as of October 2, 2010 and
October 3, 2009:

Rate

Payment dates of each year

Conversion
price

Maturity date

June 1 and December 1

0.875%
Debt discount on 0.875% Convertible Subordinated Notes due June 2012
1.000%

June 30 and December 30

$14.36

$12.84

June 1, 2012

Redeemed June 30, 2010

As of

October 2,
2010

October 3,
2009*

(in thousands)

$110,000
(11,525)
—
$ 98,475

$110,000
(17,783)
48,964
$141,181

*

As adjusted for ASC No. 470.20, Debt, Debt With Conversion Options.

64

The following table reﬂects additional information regarding the Company’s Convertible Subordinated Notes
as of October 2, 2010 and October 3, 2009:

Description

0.875% Convertible Subordinated Notes . . . . . . . . . . . . . . . . . . . . .
1.000% Convertible Subordinated Notes . . . . . . . . . . . . . . . . . . . . .

Fair value as of (1)

October 2,
2010

October 3,
2009

(in thousands)

$102,025
—
$102,025

$ 90,266
47,005
$137,271

(1)

In accordance with ASC 820, the Company relies upon observable market data such as its common stock
price, interest rates, and other market factors.

0.875% Convertible Subordinated Notes

Holders of the 0.875% Convertible Subordinated Notes may convert their notes based on an initial conversion
rate of approximately 69.6621 shares per $1,000 principal amount of notes (equal to an initial conversion
price of approximately $14.355 per share) only under speciﬁc circumstances. The initial conversion rate will
the
be adjusted for certain events. The Company presently intends
0.875% Convertible Subordinated Notes with cash up to the principal amount of the 0.875% Convertible
Subordinated Notes and, with respect to any excess conversion value, with shares of its common stock. The
Company has the option to elect to satisfy the conversion obligations in cash, common stock or a combination
thereof.

to satisfy any conversion of

The 0.875% Convertible Subordinated Notes will not be redeemable at the Company’s option. Holders of the
0.875% Convertible Subordinated Notes will not have the right to require the Company to repurchase their
0.875% Convertible Subordinated Notes prior to maturity except in connection with the occurrence of certain
fundamental change transactions. The 0.875% Convertible Subordinated Notes may be accelerated upon an
event of default as described in the Indenture and will be accelerated upon bankruptcy,
insolvency,
appointment of a receiver and similar events with respect to the Company.

As of October 4, 2009, the Company adopted ASC 470.20, which requires that issuers of convertible debt that
may be settled in cash upon conversion record the liability and equity components of the convertible debt
separately. The Company estimated the liability component of its 0.875% Convertible Subordinated Notes by
assessing the fair value of debt instruments without an associated equity component issued by companies with
similar credit ratings and terms at the time the Company’s 0.875% Convertible Subordinated Notes were
issued. The effective interest rate for non-convertible debt with similar credit ratings and terms was estimated
to be 7.85%. The Company determined the fair value of the equity component of the embedded conversion
option by deducting the fair value of the liability component from the initial proceeds of the convertible debt
instrument. The debt discount will be amortized under the effective interest method from the original issue
date. The Company determined the portion of issuance costs associated with the equity component of the
0.875% Convertible Subordinated Notes was $1.0 million. The issuance costs are amortized under the
effective interest method from the original issue date.

The liability component of the Company’s 0.875% Convertible Subordinated Notes will continue to be
classiﬁed as long-term debt and the equity component of the 0.875% Convertible Subordinated Notes is
classiﬁed as common stock on the Company’s Consolidated Balance Sheets.

65

The following tables reﬂect the effect of the change due to ASC 470.20 on the Consolidated Statements of
Operations for ﬁscal 2009 and 2008:

(in thousands)
Fiscal 2009:
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss from continuing operations before taxes. . . . . . . .
Beneﬁt for income taxes. . . . . . . . . . . . . . . . . . . . . .
Loss from continuing operations . . . . . . . . . . . . . . . .
Diluted loss per share from continuing operations. . . . .
Fiscal 2008:
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss from continuing operations before taxes. . . . . . . .
Beneﬁt for income taxes. . . . . . . . . . . . . . . . . . . . . .
Loss from continuing operations . . . . . . . . . . . . . . . .
Diluted loss per share from continuing operations. . . . .

As
reported

As
adjusted

Effect of
change

$ 2,601
(71,054)
(13,029)
$(58,025)
(0.93)
$

$ 3,499
(23,229)
(3,610)
$(19,619)
(0.37)
$

$ 8,188
(76,641)
(13,029)
$(63,612)
(1.02)
$

$ 8,601
(28,331)
(3,610)
$(24,721)
(0.46)
$

$ 5,587
(5,587)
—
$(5,587)
$ (0.09)

$ 5,102
(5,102)
—
$(5,102)
$ (0.09)

The following table reﬂects the effect of the change due to ASC 470.20 on the Consolidated Balance Sheet as
of October 3, 2009:

(in thousands)
Other assets (debt issuance costs). . . . . . . . . . . . . . . .
Total assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated deﬁcit . . . . . . . . . . . . . . . . . . . . . . . . .
Total shareholders’ equity . . . . . . . . . . . . . . . . . . . . .
Total liabilities and shareholders’ equity . . . . . . . . . . .

As
reported

$

6,215
413,076
110,000
259,615
383,417
(185,479)
153,461
413,076

As
adjusted

$

5,774
412,635
92,217
241,832
413,092
(197,812)
170,803
412,635

Effect of
change

$

(441)
(441)
(17,783)
(17,783)
29,675
(12,333)
17,342
(441)

The following tables reﬂect the effect of the change due to ASC 470.20 on the Consolidated Statement of
Cash Flows for ﬁscal 2009 and 2008:

(in thousands)
Fiscal 2009:
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss from continuing operations . . . . . . . . . . . . . . . .
Amortization of debt discount and debt issuance costs .
Net cash used in continuing operations . . . . . . . . . . . .
Fiscal 2008:
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss from continuing operations . . . . . . . . . . . . . . . .
Amortization of debt discount and debt issuance costs .
Net cash provided by continuing operations. . . . . . . . .

As
reported

As
adjusted

Effect of
change

$(36,014)
(58,025)
1,006
(51,406)

$ 3,822
(19,619)
1,514
26,936

$(41,601)
(63,612)
6,593
(51,406)

$ (1,280)
(24,721)
6,616
26,936

$(5,587)
(5,587)
5,587
—

$(5,102)
(5,102)
5,102
—

66

The following table reﬂects amortization expense related to issue costs from the Company’s Convertible
Subordinated Notes for ﬁscal 2010, 2009, and 2008:

(in thousands)
Amortization expense related to issue costs . . . . . . . . .

2010
$718

Fiscal
2009*
$791

2008*
$1,236

*

As adjusted for ASC No. 470.20, Debt, Debt With Conversion Options.

The Company had no purchases of its Convertible Subordinated Notes during ﬁscal 2010. The following table
reﬂects the Company’s repurchase of its Subordinated Convertible Notes for ﬁscal 2009 and 2008:

(in thousands)
0.5% Convertible Subordinated Notes(1):
Face value purchased . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred ﬁnancing costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Recognized gain, net of deferred ﬁnancing costs . . . . . . . . . . . . . . .
1.0% Convertible Subordinated Notes:(2)
Face value purchased . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred ﬁnancing costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Recognized gain, net of deferred ﬁnancing costs . . . . . . . . . . . . . . .
Gain on early extinguishment of debt . . . . . . . . . . . . . . . . . . . . . . .

Fiscal

2009

2008

$43,050
42,839
18
193

$16,036
12,158
106
3,772
$ 3,965

$4,000
3,815
15
170

$ —
—
—
—
$ 170

(1) Fiscal 2009 repurchase transactions occurred prior to redemption on November 30, 2008.
(2) Activity during ﬁscal 2009 reﬂects repurchases pursuant to a tender offer.

Credit Facility

On September 29, 2010, Kulicke and Soffa Global Holding Corporation (‘‘GHC’’),
the Company’s
wholly-owned subsidiary, entered into a Short Term Credit Facilities Agreement (the ‘‘Facilities Agreement’’)
with DBS Bank Ltd. Labuan Branch (‘‘DBS Bank’’). In accordance with the Facilities Agreement, DBS Bank
has agreed to make available to GHC the following banking facilities:

(i)

a short term loan facility of up to $12.0 million (the ‘‘STL Facility’’); and

(ii) a revolving credit facility of up to $8.0 million (the ‘‘RC Facility’’).

interest at

the STL Facility bear

The STL Facility is an uncommitted facility, and therefore, cancellable by DBS Bank at any time in its sole
discretion. Borrowings under
the Singapore Interbank Offered Rate
(‘‘SIBOR’’) plus 1.5%. The RC Facility is a committed facility and is available to GHC until September 10,
2013, the maturity date. Borrowings under the RC Facility bear interest at SIBOR plus 2.5%. The Facilities
Agreement has been entered into in order to provide support, if needed, to fund GHC’s working capital
requirements. There are currently no outstanding amounts under the Facilities Agreement. The Facilities
Agreement contains customary representations and warranties and covenants for agreements of this nature,
including covenants that require GHC to maintain a positive net worth and to maintain all of its material
operating accounts with DBS Bank Ltd, Singapore. Events of default under the Facilities Agreement include:
(i) the failure to make payments when due, (ii) breach of covenants, (iii) breach of representations and
warranties, (iv) insolvency, and (v) any material adverse change in GHC or the Company’s ﬁnancial condition
which would affect GHC’s ability to perform its obligations under the Facilities Agreement and the related
security documents. The Company has agreed to guarantee GHC’s obligations under the Facilities Agreement
pursuant to a Guaranty Agreement, dated as September 29, 2010, by and between the Company and DBS
Bank.

67

In connection with the Facilities Agreement, on September 29, 2010, GHC and DBS Bank entered into a
Debenture, pursuant to which GHC granted a security interest in substantially all of its assets, which include
most of the Company’s consolidated accounts receivable and inventory, to secure the obligations under the
Facilities Agreement.

NOTE 7: SHAREHOLDERS’ EQUITY

Common Stock

The Company’s matching contributions to the 401(k) retirement income plan are made in the form of issued
and contributed shares of Company common stock (see Note 8).

As of October 4, 2009, the Company adopted ASC 470.20 and accordingly common stock includes the equity
component of the Company’s 0.875% Convertible Subordinated Notes (see Note 6).

In August 2009, the Company sold 8.0 million shares of its common stock in an underwritten public offering
for net proceeds of $38.7 million.

On October 3, 2008, the Company completed the acquisition of substantially all of the assets and assumption
of certain liabilities of Orthodyne Electronics Corporation (‘‘Orthodyne’’). In connection with the Orthodyne
the Company issued 7.1 million common shares with an estimated value on that date of
acquisition,
$46.2 million and paid $87.0 million in cash including capitalized acquisition costs.

Treasury Stock

During ﬁscal 2009 in connection with the exercise of employee stock options, the Company repurchased
44,000 shares of its common stock for $0.2 million.

Accumulated Other Comprehensive Income

The following table reﬂects accumulated other comprehensive income reﬂected on the Consolidated Balance
Sheets as of October 2, 2010 and October 3, 2009:

(in thousands)
Gain from foreign currency translation adjustments. . . . . . . . . . . . . .
Unrecognized actuarial net gain (loss), Switzerland pension plan, net

of tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Switzerland pension plan curtailment . . . . . . . . . . . . . . . . . . . . . . .
Accumulated other comprehensive income . . . . . . . . . . . . . . . . . . .

As of

October 2,
2010
$1,767

(588)
(388)
$ 791

October 3,
2009
$ 746

1,521
(388)
$1,879

The following table reﬂects the components of comprehensive income (loss) for ﬁscal 2010 and 2009:

Fiscal

(in thousands)
Net income (loss)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gain (loss) from foreign currency translation adjustments . . . . . . . . .
Unrealized gain on investments, net of tax . . . . . . . . . . . . . . . . . . .
Unrecognized actuarial net gain (loss), Switzerland pension plan, net

of tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Switzerland pension plan curtailment . . . . . . . . . . . . . . . . . . . . . . .
Other comprehensive income (loss) . . . . . . . . . . . . . . . . . . . . . . . .
Comprehensive income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2010
$142,142
1,021
—

(2,109)
—
$ (1,088)
$141,054

2009*
$(41,601)
(151)
16

193
(388)
$
(330)
$(41,931)

As adjusted for ASC No. 470.20, Debt, Debt With Conversion Options

*
(1) Net income (loss) includes continuing and discontinued operations.

68

Equity-Based Compensation

As of October 2, 2010, the Company had nine equity-based employee compensation plans (the ‘‘Employee
Plan’’) and three director compensation plans (the ‘‘Director Plans’’) (collectively, the ‘‘Plans’’). Under these
Plans, stock options, performance-based share awards (collectively, ‘‘performance-based restricted stock’’),
time-based share awards (collectively, ‘‘time-based restricted stock’’), market-based share awards (collectively,
‘‘market-based restricted stock’’) or common stock have been granted at 100% of the market price of the
Company’s common stock on the date of grant. As of October 2, 2010, the Company’s one active plan, the
2009 Equity Plan, has 6.8 million shares of common stock available for grant to its employees and directors.

•

•

In general, stock options and time-based restricted stock awarded to employees vest annually over a
the
three year period provided the employee remains employed. The Company follows
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
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.

Index. TSR is measured for

Equity-based compensation expense recognized in the Consolidated Statements of Operations for ﬁscal 2010,
2009 and 2008 was based upon awards ultimately expected to vest. In accordance with ASC 718, forfeitures
have been estimated at the time of grant and were based upon historical experience. The Company reviews
the forfeiture rates periodically and makes adjustments as necessary.

The following table reﬂects equity-based compensation expense, which includes restricted stock, stock options
and common stock, for ﬁscal 2010, 2009 and 2008:

The following table reﬂects equity-based compensation expense (reversal of expense), by type of award, for
ﬁscal 2010, 2009 and 2008:

(in thousands)
Cost of sales. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Selling, general and administrative(1) . . . . . . . . . . . . .
Research and development . . . . . . . . . . . . . . . . . . . .
Equity-based compensation expense . . . . . . . . . . . . . .

2010
$ 207
5,846
1,512
$7,565

(in thousands)
Market-based restricted stock(1) . . . . . . . . . . . . . . . . .
Time-based restricted stock . . . . . . . . . . . . . . . . . . . .
Performance-based restricted stock(1)(2) . . . . . . . . . . . .
Stock options . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity-based compensation expense . . . . . . . . . . . . . .

2010
$1,996
2,161
2,029
659
720
$7,565

69

Fiscal
2009

$

64
649
674
$1,387

Fiscal
2009
$ —
672
(1,546)
1,721
540
$ 1,387

2008
$ 252
3,711
1,442
$5,405

2008
$ —
—
946
3,739
720
$5,405

(1) Fiscal 2010 SG&A expense includes $1.2 million ($0.9 million market-based and $0.3 million
performance-based) of liability classiﬁed equity compensation expense related to the retired Chief
Executive Officer. In connection with his retirement, deferred cash payments equal to the difference, if
any, between (i) the fair market value of the shares of common stock of the Company to which he would
have been entitled pursuant to the performance share unit awards granted to him in ﬁscal 2008 and 2009
had he remained employed through June 30, 2011 and (ii) the fair market value of the shares of common
stock of the Company actually received by him pursuant to such awards. The deferred cash payments, if
any, will be paid in February 2012 and July 2011, respectively. An accrual for estimated deferred cash
payments measured at fair value as of October 2, 2010 was included within accrued expenses and other
current liabilities and other liabilities on the Consolidated Balance Sheet.

(2) As the global economy improved from prior year levels during ﬁscal 2010, the Company determined
performance objectives for the performance-based restricted stock issued in ﬁscal 2008 and 2007 would
improve. Accordingly, estimated attainment percentages increased and total compensation expense for the
performance-based restricted stock also increased during ﬁscal 2010. During ﬁscal 2009 in connection
the
with the global
performance-based restricted stock issued in ﬁscal 2008 and 2007 would not be attained at the previous
estimated levels.

the Company determined performance objectives

economic decline,

for

Equity-Based Compensation: employee market-based restricted stock

The following table reﬂects employee market-based restricted stock activity for ﬁscal 2010:

Number of
shares
(in thousands)

Unrecognized
compensation
expense
(in thousands)

Average
remaining
service
period
(in years)

Weighted
average
grant date
fair value
per share

Market-based restricted stock outstanding

as of October 3, 2009 . . . . . . . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited or expired . . . . . . . . . . . . . . . .
Market-based restricted stock outstanding

—
398
(84)

as of October 2, 2010 . . . . . . . . . . . . .

314

$667

1.3

$6.78

No market-based restricted stock vested during ﬁscal 2010.

Equity-Based Compensation: employee time-based restricted stock

The following table reﬂects employee time-based restricted stock activity for ﬁscal 2010 and 2009:

Time-based restricted stock outstanding as
of September 27, 2008 . . . . . . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited or expired . . . . . . . . . . . . . . . .
Time-based restricted stock outstanding as
of October 3, 2009 . . . . . . . . . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited or expired . . . . . . . . . . . . . . . .
Vested . . . . . . . . . . . . . . . . . . . . . . . . .
Time-based restricted stock outstanding as
of October 2, 2010 . . . . . . . . . . . . . . .

Number of
shares
(in thousands)

Unrecognized
compensation
expense
(in thousands)

Average
remaining
service
period
(in years)

Weighted
average
grant date
fair value
per share

—
825
(126)

699
1,288
(48)
(232)

$1,356

2.0

$3.53

5.46

1,707

$5,683

1.4

70

Equity-Based Compensation: employee performance-based restricted stock

No performance-based restricted stock was issued during ﬁscal 2010. The following table reﬂects the
assumptions used to calculate compensation expense related to the Company’s performance-based restricted
stock issued during ﬁscal 2009 and 2008:

Performance-based
restricted stock issued

Fiscal 2009

Fiscal 2008

Assumptions as of October 2, 2010:

Expected forfeiture rate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Estimated attainment of performance goals. . . . . . . . . . . . . . . . . .

Assumptions as of October 3, 2009:

Expected forfeiture rate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Estimated attainment of performance goals. . . . . . . . . . . . . . . . . .

8.8%
85.0%

4.4%
30.0%

Assumptions as of September 27, 2008:

Expected forfeiture rate. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Estimated attainment of performance goals. . . . . . . . . . . . . . . . . .

n/a
n/a

8.8%
44.0%

11.9%
7.0%

9.9%
80.0%

The following table reﬂects employee performance-based restricted stock activity for ﬁscal 2010, 2009 and
2008:

Number of
shares
(in thousands)

Unrecognized
compensation
expense
(in thousands)

Average
remaining
service period
(in years)

Performance-based restricted stock outstanding as of

September 29, 2007. . . . . . . . . . . . . . . . . . . . . .
Granted. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Performance-based restricted stock outstanding as of

September 27, 2008. . . . . . . . . . . . . . . . . . . . . .
Granted. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Performance-based restricted stock outstanding as of

October 3, 2009 . . . . . . . . . . . . . . . . . . . . . . . .
Granted. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited or expired . . . . . . . . . . . . . . . . . . . . . . .
Performance-based restricted stock outstanding as of

472
536
(61)

947
402
(336)

1,013
—
(387)

$1,400

2.0

2,186

1.8

242

1.8

October 2, 2010 . . . . . . . . . . . . . . . . . . . . . . . .

626

$ 228

0.2

No performance-based restricted stock vested during ﬁscal 2010, 2009 or 2008.

Equity-Based Compensation: employee stock options

The following table reﬂects the weighted-average assumptions for the Black-Scholes option pricing model
used to estimate the fair value of stock options granted for ﬁscal 2010, 2009 and 2008:

Expected dividend yield . . . . . . . . . . . . . . . . . . . . . . . . .
Expected stock price volatility . . . . . . . . . . . . . . . . . . . . .
Risk-free interest rate . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expected life (in years) . . . . . . . . . . . . . . . . . . . . . . . . .
Weighted-average fair value at grant date . . . . . . . . . . . . .

2010

NA
61.64%
2.22%
5
$ 3.18

Fiscal
2009

NA
51.18%
2.70%
5
$ 1.61

2008

NA
51.18%
4.24%
5
$ 4.05

71

Expected volatility for 2010 and 2009 was based on historical volatility. Expected volatility for ﬁscal 2008
was based upon historical volatility,
traded options, and the
implied volatility of the convertible feature of the Company’s convertible debt securities. The risk-free interest
rate was calculated using the U.S. Treasury yield curves in effect at the time of grant, commensurate with the
expected life of the options.

implied volatility of the Company’s market

The following table reﬂects employee stock option activity for ﬁscal 2010, 2009 and 2008:

Number of
Shares
(in thousands)

Weighted
Average
Exercise Price

Average
Remaining
Contractual
Life (in Years)

Aggregate
Intrinsic Value
(in thousands)

Options outstanding as of September 29,

2007 . . . . . . . . . . . . . . . . . . . . . . . .
Granted. . . . . . . . . . . . . . . . . . . . . . . .
Exercised . . . . . . . . . . . . . . . . . . . . . .
Forfeited or expired . . . . . . . . . . . . . . .
Options outstanding as of September 27,

2008 . . . . . . . . . . . . . . . . . . . . . . . .
Granted. . . . . . . . . . . . . . . . . . . . . . . .
Exercised . . . . . . . . . . . . . . . . . . . . . .
Forfeited or expired . . . . . . . . . . . . . . .
Options outstanding as of October 3,

2009 . . . . . . . . . . . . . . . . . . . . . . . .
Granted. . . . . . . . . . . . . . . . . . . . . . . .
Exercised . . . . . . . . . . . . . . . . . . . . . .
Forfeited or expired . . . . . . . . . . . . . . .
Options outstanding as of October 2,

2010 . . . . . . . . . . . . . . . . . . . . . . . .
Options vested and expected to vest as of
October 2, 2010 . . . . . . . . . . . . . . . .

Options exercisable as of October 2,

7,009
965
(130)
(1,403)

6,441
160
(156)
(1,904)

4,541
47
(492)
(786)

$10.05
8.59
4.22
11.15

9.71
3.41
2.95
10.09

9.56
6.20
5.72
10.90

3,310

$ 9.80

3,269

$ 9.85

2010 . . . . . . . . . . . . . . . . . . . . . . . .

3,126

$10.10

In the money exercisable options as of

October 2, 2010 . . . . . . . . . . . . . . . .

105

$ 276

9

1,261

$ 910

$ 616

$

1

4.2

4.1

3.9

On average, 15% of stock options granted by the Company become vested each year, and on average, 19% of
stock options granted by the Company are forfeited each year. Intrinsic value of stock options exercised is
determined by calculating the difference between the market value of the Company’s stock price at the time
an option is exercised and the exercise price, multiplied by the number of shares. The intrinsic value of stock
options outstanding and stock options exercisable is determined by calculating the difference between the
Company’s closing stock price on the last trading day of ﬁscal 2010 and the exercise price of in-the-money
stock options, multiplied by the number of underlying shares. During ﬁscal 2010, the Company received
$2.9 million in cash from the exercise of stock options.

As of October 2, 2010, total unrecognized compensation cost related to unvested employee stock options was
$0.2 million, which will be amortized over the weighted average remaining service period of approximately
2.2 years.

72

The following table reﬂects outstanding and exercisable employee stock options as of October 2, 2010:

Range of exercise prices
$2.95 or less . . . . . . . . . . . . . .
$3.06 − $7.31 . . . . . . . . . . . . . .
$7.84 − $8.50 . . . . . . . . . . . . . .
$8.57 − $8.74 . . . . . . . . . . . . . .
$9.64 − $10.07 . . . . . . . . . . . . .
$12.05 − $16.12 . . . . . . . . . . . .

Options Outstanding
Weighted
average
remaining
contractual life
(in years)
2.7
4.9
6.0
6.9
1.9
1.5
4.2

Weighted
average exercise
price
$ 2.77
6.62
8.47
8.72
10.01
13.97
$ 9.80

Options
outstanding
(in thousands)
102
852
495
644
72
1,145
3,310

Options Exercisable

Options
exercisable
(in thousands)

91
702
495
623
70
1,145
3,126

Weighted
average exercise
price
$ 2.95
7.11
8.47
8.72
10.02
13.97
$10.10

Equity-Based Compensation: non-employee directors

The 2007 Equity Plan for Non-Employee Directors (the ‘‘2007 Plan’’) provides for the grant of common
shares to each non-employee director upon initial election to the board and on the ﬁrst business day of each
calendar quarter while serving on the board. The grant to a non-employee director upon initial election to the
board, and each quarterly grant, is that number of common shares closest in value to, without exceeding,
$30,000. For the second, third and fourth quarters of ﬁscal 2009, in light of the Company’s historically low
stock price, the non-employee directors reduced their quarterly stock grant to be that number of common
shares closest in value to, without exceeding $20,000.

The following table reﬂects shares of common stock issued to non-employee directors and the corresponding
fair value for ﬁscal 2010, 2009 and 2008:

(in thousands)
Number of commons shares issued. . . . . . . . . . . . . . . . . . . . .
Fair value based upon market price at time of issue . . . . . . . . .

2010
114
$720

Fiscal
2009
181
$540

2008
107
$720

73

The following table reﬂects non-employee director stock option activity for ﬁscal 2010, 2009 and 2008:

Number
of shares
(in thousands)

Weighted
average
exercise price

Average
remaining
contractual life
(in years)

Aggregate
intrinsic value
(in thousands)

Options outstanding as of September 29,

2007 . . . . . . . . . . . . . . . . . . . . . . . .
Exercised . . . . . . . . . . . . . . . . . . . . .
Forfeited or expired. . . . . . . . . . . . . .

Options outstanding as of September 27,

2008 . . . . . . . . . . . . . . . . . . . . . . . .
Exercised . . . . . . . . . . . . . . . . . . . . .
Forfeited or expired. . . . . . . . . . . . . .

Options outstanding as of October 3,

2009 . . . . . . . . . . . . . . . . . . . . . . . .
Exercised . . . . . . . . . . . . . . . . . . . . .
Terminated or cancelled . . . . . . . . . . .

Options outstanding as of October 2,

2010 . . . . . . . . . . . . . . . . . . . . . . . .
Options vested and expected to vest as of
October 2, 2010 . . . . . . . . . . . . . . . .

Options exercisable as of October 2,

528
—
(50)

478
—
(60)

418
(10)
(60)

348

348

$14.79
—
13.88

14.89
—
12.69

15.21
5.53
39.75

$11.25

$11.25

2010 . . . . . . . . . . . . . . . . . . . . . . . .

348

$11.25

In the money exercisable options as of

October 2, 2010 . . . . . . . . . . . . . . . .

33

$ —

—

21

$180

$ 24

—

3.0

3.0

3.0

No non-employee director stock options were granted during ﬁscal 2010, 2009 or 2008.

NOTE 8: EMPLOYEE BENEFIT PLANS

401(k) Retirement Income Plan

The Company has a 401(k) retirement income plan (the ‘‘Plan’’) for its employees. During the ﬁrst quarter of
ﬁscal 2010, the Plan was modiﬁed to allow for employee contributions and matching Company contributions
up to 4% or 6% of the employee’s contributed amount based upon years of service. During ﬁscal 2009 and
prior years, the Plan allowed for employee contributions and matching Company contributions in varying
percentages, ranging from 50% to 175% up to 6% of the employee’s contributed amount based upon
employee age and years of service.

The following table reﬂects the Company’s matching contributions to the 401(k) retirement income plan which
were made in the form of issued and contributed shares of Company common stock for ﬁscal 2010 and 2009:

(in thousands)
Number of common shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fair value based upon market price at date of distribution . . . . . . . . . . . . .

2010

212
$1,384

2009
357
$811

Fiscal

Pension Plans

On a consolidated basis, pension expense was $3.4 million, $0.4 million, and $10.7 million in ﬁscal 2010,
2009 and 2008, respectively. The total deﬁned beneﬁt pension liability was $4.7 million and $2.3 million at
October 2, 2010 and October 3, 2009, respectively.

Fiscal 2010 pension expense included a charge driven by a current year increase in the Company’s pension
obligation due to higher current year compensation and retirement of certain sales representatives in Taiwan.
In accordance with regulations in Taiwan, the Company sponsors a Taiwan deﬁned-beneﬁt retirement plan

74

covering regular employees hired prior to July 1, 2005. An employee may apply for voluntary retirement
under certain speciﬁed situations. The Taiwan net pension plan liability was $1.3 million as of October 2,
2010.

In accordance with regulations in Switzerland, the Company sponsors a Switzerland pension plan covering
active employees whose minimum beneﬁts are guaranteed. During ﬁscal 2009, the Company reduced its
Switzerland workforce by approximately 70 employees, which triggered a curtailment of the Switzerland
pension plan under ASC No. 715, Topic 30, Compensation — Retirement Beneﬁts, Deﬁned Beneﬁt Plans. As a
result during ﬁscal 2009, the Company recognized a pretax curtailment and settlement gain of $1.4 million.
The Switzerland net pension plan liability was $3.4 million as of October 2, 2010.

Fiscal 2008 included U.S. pension plan expense of $9.2 million, which related to the February 2007
termination of the Company’s U.S. non-contributory deﬁned beneﬁt pension plan which had been frozen since
December 31, 1995.

Other Plans

Some of the Company’s other foreign subsidiaries have retirement plans that are integrated with and
supplement the beneﬁts provided by laws of the various countries. These other plans are not required to report
nor do they determine the actuarial present value of accumulated beneﬁts or net assets available for plan
beneﬁts.

NOTE 9: OTHER FINANCIAL DATA

The following table reﬂects other ﬁnancial data for ﬁscal 2010, 2009 and 2008:

(in thousands)
Selling, general and administrative incentive compensation

2010

expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rent expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Warranty and retroﬁt expense . . . . . . . . . . . . . . . . . . . . .

$17,449
$ 6,662
$ 4,225

Fiscal
2009

$2,740
$6,218
$2,567

2008

$2,167
$5,057
$1,840

NOTE 10: EARNINGS PER SHARE

Basic income (loss) per share is calculated using the weighted average number of shares of common stock
outstanding during the period. In addition, net income applicable to participating securities and the related
participating securities are excluded from the computation of basic income per share.

Diluted income per share is calculated using the weighted average number of shares of common stock
outstanding during the period and, if there is net income during the period, the dilutive impact of common
stock equivalents outstanding during the period. In computing diluted income per share, if convertible debt is
assumed to be converted to common shares, the after-tax amount of interest expense recognized in the period
associated with the convertible debt is added back to net income.

The Company’s 0.875% Convertible Subordinated Notes would not result in the issuance of any dilutive
shares, since the Notes were not convertible and the conversion option was not ‘‘in the money’’ as October 2,
2010 and October 3, 2009. Accordingly, diluted EPS excludes the effect of the conversion of the 0.875%
Convertible Subordinated Notes.

75

The following tables reﬂect reconciliations of the shares used in the basic and diluted net income (loss) per
share computation for ﬁscal 2010, 2009 and 2008:

(in thousands, except per share data)
NUMERATOR:
Income (loss) from continuing

2010

Fiscal
2009*

2008*

Basic

Diluted

Basic

Diluted

Basic

Diluted

operations, net of tax. . . . . . . . . $142,142

$142,142

$(63,612)

$(63,612)

$(24,721)

$(24,721)

Less: income applicable to

participating securities . . . . . . . .
After-tax interest expense . . . . . . .
Income (loss) applicable to

(1,516)
n/a

(1,516)
272

—
n/a

—(1)
—(1)

—
n/a

—(1)
—(1)

common shareholders . . . . . . . . $140,626

$140,898

$(63,612)

$(63,612)

$(24,721)

$(24,721)

DENOMINATOR:
Weighted average shares

outstanding − Basic . . . . . . . . . .

70,012

70,012

62,188

62,188

53,449

53,449

Stock options . . . . . . . . . . . . . . .
Performance-based restricted stock .
Time-based restricted stock . . . . . .
Market-based restricted stock . . . . .
1.000% Convertible Subordinated

Notes . . . . . . . . . . . . . . . . . . .

0.875% Convertible Subordinated

Notes . . . . . . . . . . . . . . . . . . .

Weighted average shares

outstanding − Diluted(2) . . . . . . .

156
110
247
195

2,828

n/a

73,548

—(1)
—(1)
—(1)
n/a

—(1)

n/a

—(1)
—(1)
—(1)
n/a

—(1)

n/a

62,188

53,449

EPS:
Income (loss) per share from

continuing operations − Basic . . . $

2.01

Effect of dilutive shares . . . . . . . .
Income (loss) per share from

continuing operations − Diluted. .

$

(1.02)

$
$

$

2.01
(0.09)

1.92

$

(0.46)

$
$

$

(1.02)
—(1)

(1.02)

$
$

$

(0.46)
—(1)

(0.46)

As adjusted for ASC No. 470.20, Debt, Debt With Conversion Options.

*
(1) Due to the Company’s loss from continuing operations for the period, the effect of participating securities
was excluded from the computation of basic and diluted EPS, and the conversion of convertible
subordinated notes and the related after-tax interest expense was not assumed since the effect would have
been anti-dilutive. In addition, due to the Company’s loss from continuing operations, potentially dilutive
shares were not assumed since the effect would have been anti-dilutive.

(2) Fiscal 2009 exclude 69 dilutive participating securities as the income attributable to these shares was not

included in EPS.

76

The following table reﬂects the number of potentially dilutive shares which were excluded from diluted EPS,
as their inclusion was anti-dilutive for ﬁscal 2010, 2009 and 2008:

(in thousands)
Potentially dilutive shares related to:

Stock options, out of the money . . . . . . . . . . . . . . . . . .
Stock options, in the money but excluded due to the

Company’s net loss . . . . . . . . . . . . . . . . . . . . . . . . .
Performance-based and time-based restricted stock . . . . .
Convertible Subordinated Notes . . . . . . . . . . . . . . . . . .

2010

2,612

—
—
—
2,612

Fiscal
2009

2008

5,982

7,033

31
69
4,625
10,707

253
91
8,624
16,001

NOTE 11: INCOME TAXES

The following table reﬂects income (loss) from continuing operations before income taxes for ﬁscal 2010,
2009 and 2008:

(in thousands)
United States operations . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2010
$ (7,061)
147,166
$140,105

Fiscal
2009*
$(35,380)
(41,261)
$(76,641)

2008*

$

(943)
(27,388)
$(28,331)

*

As adjusted for ASC No. 470.20, Debt, Debt With Conversion Options.

The following table reﬂects the provision (beneﬁt) for income taxes from continuing operations for ﬁscal
2010, 2009 and 2008:

(in thousands)
Current:

Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2010

$

710
594
1,394

Deferred:

Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

247
548
(5,530)
$(2,037)

Fiscal
2009*

$

(263)
150
(6,110)

354
41
(7,201)
$(13,029)

2008*

$

3
78
(540)

(2,993)
(411)
253
$(3,610)

*

As adjusted for ASC No. 470.20, Debt, Debt With Conversion Options.

77

The following table reﬂects the difference between the provision (beneﬁt) for income taxes and the amount
computed by applying the statutory federal income tax rate for ﬁscal 2010, 2009 and 2008:

(in thousands)
Computed income tax (beneﬁt) expense based on U.S.

statutory rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Effect of earnings of foreign subsidiaries subject to different
tax rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Beneﬁts from foreign approved enterprise zones. . . . . . . . .
Effect of permanent items . . . . . . . . . . . . . . . . . . . . . . . .
Beneﬁts of net operating loss and tax credit carryforwards

and changes in valuation allowance. . . . . . . . . . . . . . . .
Foreign operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Settlement of tax audit . . . . . . . . . . . . . . . . . . . . . . . . . .
State income tax expense . . . . . . . . . . . . . . . . . . . . . . . .
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2010

Fiscal
2009*

2008*

$ 49,037

$(26,821)

$(9,923)

(15,564)
(33,790)
1,125

(9,381)
7,131
—
(1,554)
959
$ (2,037)

2,945
11,839
731

13,887
(2,514)
(12,510)
777
(1,363)
$(13,029)

1,835
4,928
742

(3,120)
1,176
—
2,783
(2,031)
$(3,610)

*

As adjusted for ASC No. 470.20, Debt, Debt With Conversion Options.

Undistributed earnings of certain foreign subsidiaries for which taxes have not been provided approximate
$192.8 million as of October 2, 2010. Such undistributed earnings are considered to be indeﬁnitely reinvested
in foreign operations.

Undistributed earnings of approximately $83.1 million are not considered to be indeﬁnitely reinvested in
the Company
foreign operations. As part of the global restructuring that occurred during ﬁscal 2006,
determined that these earnings would be repatriated during the domestic net operating loss carryforward period
and this taxable income related to these earnings could be offset with the utilization of the net operating loss
carryforwards. As of October 2, 2010, the Company had provided a deferred tax liability of approximately
$15.9 million for withholding taxes associated with future repatriation of earnings for certain subsidiaries.

78

The following table reﬂects the net deferred tax balance, composed of the tax effects of cumulative temporary
differences for ﬁscal 2010 and 2009:

Fiscal

(in thousands)
Inventory reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other accruals and reserves. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred revenue. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total short-term deferred tax asset . . . . . . . . . . . . . . . . . . . . . . . . . . .

2010
$ 1,551
6,136
90
(2,334)
$ 5,443

Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total short-term deferred tax liability . . . . . . . . . . . . . . . . . . . . . . . . .

$

—

—

2009*

$

827
4,423
23
(3,487)
$ 1,786

66

66

$

Net short-term deferred tax asset . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 5,443

$ 1,720

Domestic tax credit carryforwards . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net operating loss carryforwards . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total long-term deferred tax asset(1) . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 3,866
44,183
2,970
7,386
$ 58,405
(25,522)

$ 3,224
50,780
1,579
5,757
$ 61,340
(32,712)

$ 32,883

$ 28,628

Repatriation of foreign earnings, including foreign withholding taxes . . .
Non-cash interest on debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciable assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid expenses and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total long-term deferred tax liability . . . . . . . . . . . . . . . . . . . . . . . . .

$ 39,396
4,752
1,424
—
$ 45,572

$ 33,658
6,858
1,838
59
$ 42,413

Net long-term deferred tax liability . . . . . . . . . . . . . . . . . . . . . . . . .

$ 12,689

$ 13,785

Total net deferred tax liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 7,246

$ 12,065

*

(1)

As adjusted for ASC No. 470.20, Debt, Debt With Conversion Options and an adjustment to the prior
year domestic net operating loss with no material impact to the ﬁnancial statement position.
Included in other assets on the Consolidated Balance Sheets are deferred tax assets of $7.7 million and
$2.5 million as of October 2, 2010 and as of October 3, 2009, respectively.

As of October 2, 2010, the Company has U.S. federal net operating loss carryforwards, foreign net operating
loss carryforwards, state net operating loss carryforwards, and tax credit carryforwards of approximately
$38.1 million, $99.7 million, $152.7 million, and $3.9 million, respectively, that will reduce future taxable
income. These carryforwards can be utilized in the future, prior to expiration of certain carryforwards in ﬁscal
years 2011 through 2030 with the exception of certain foreign net operating losses and U.S. credits that have
no expiration date. Federal and Pennsylvania tax law limits the time during which carryforwards may be
applied against future taxes and Pennsylvania tax law limits the utilization of state net operating loss
carryforwards to $3.0 million annually.

Of the total net operating losses as of October 2, 2010, approximately $1.9 million were attributable to stock
option exercises. If the tax beneﬁts associated with the Company’s net operating carryforwards are recognized
in the future, the amounts attributable to stock option exercises will be recorded as additional paid in capital
in shareholders’ equity.

The Company continues to evaluate the realizability of all of its net deferred tax assets at each reporting date
and records a beneﬁt for deferred tax assets to the extent it has deferred tax liabilities that provide a source of
income to beneﬁt the deferred tax asset. As a result of this analysis, during the fourth quarter of ﬁscal 2010,
the Company released $0.8 million of its valuation allowance related to federal deferred tax assets with the

79

exception of a valuation allowance against a portion of the company’s deferred tax asset related to certain
federal tax credits. The Company continues to maintain a valuation allowance against a majority of their state
deferred tax assets as the realization of these assets is not more likely then not given uncertainty of future
earnings in these jurisdictions. In addition, the Company reduced the valuation allowance against its net
deferred tax assets for a foreign subsidiary based on future projected income. The Company determined that it
was more likely than not to recognize all of the net deferred tax assets, primarily net operating losses, based
on positive evidence of projected future projected earnings and recorded a tax beneﬁt of approximately
$5.6 million in ﬁscal 2010 for future years.

The following table reﬂects a reconciliation of the beginning and ending unrecognized tax beneﬁts for ﬁscal
2010:

(in thousands)
Unrecognized tax beneﬁt as of October 3, 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . .
Additions for tax positions of current year. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Additions for tax positions of prior years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reductions for tax positions of prior years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Settlements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$6,020
416
124
(147)
—

Unrecognized tax beneﬁt as of October 2, 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . .

$6,413

If recognized, the $6.4 million would impact the Company’s effective tax rate excluding the impact valuation
allowances.

During 2010, the U.S. Internal Revenue Service (‘‘IRS’’) completed an audit of the Company for the period
ended September 30, 2006. The Company responded to various information requests from the IRS and the
audit was closed with no signiﬁcant adjustments to income tax expense.

In October 2007, the tax authority in Israel issued the Company a preliminary assessment of income tax,
withholding tax and interest of $34.3 million (after adjusting for the impact of foreign currency ﬂuctuations)
for ﬁscal 2002 through 2004. The Company provided a non-current income tax liability for uncertain tax
positions on its Consolidated Balance Sheet as of September 27, 2008 related to this assessment for ﬁscal
years 2002 through 2007, as required under FIN 48. On December 24, 2008, the Company, through its Israel
subsidiaries, entered into an agreement with the tax authority in Israel settling the tax dispute for
approximately $12.5 million, which represented withholding taxes, income taxes, and interest related to ﬁscal
2002 through 2004. The settlement of $12.5 million was made net of a $4.5 million reimbursement resulting
in a cash payment of $7.8 million during ﬁscal 2009. Following the payment and settlement of the audit for
ﬁscal 2002 through 2004, the tax authorities in Israel examined the ﬁscal years 2005 and 2006. In addition
during ﬁscal 2009, the Company made a payment of approximately $1.9 million related to income taxes and
interest
the
Company recognized a $12.5 million beneﬁt from income taxes for ﬁscal 2009. The $12.5 million beneﬁt was
a result of reversing the liability for unrecognized tax beneﬁts on the Consolidated Balance Sheet as of
September 27, 2008 that was in excess of the $14.4 million for which the matter was settled. The entire
amount of the reversal impacted the Company’s effective tax rate as indicated above.

to settle the ﬁscal September 30, 2005 and 2006. As a result of the Israel

tax settlements,

The Company recognizes interest and penalties accrued related to unrecognized tax beneﬁts as a component of
income tax expense. There were no additional accruals of interest expense on various uncertain tax positions
during ﬁscal 2010. It is reasonably possible that the amount of the unrecognized tax beneﬁt with respect to
certain unrecognized tax positions will increase or decrease during the next 12 months; however, the Company
does not expect the change to have a material effect on its results of operations or its ﬁnancial position.

The Company ﬁles U.S. Federal income tax returns, as well as, income tax returns in various state and foreign
jurisdictions. For the U.S. Federal income tax returns and most state tax returns, tax years following ﬁscal
2000 remain subject to examination as a result of the generation of net operating loss carryforwards. The
to the foreign jurisdictions in which the company ﬁles vary from
statutes of limitations with respect
jurisdiction to jurisdiction and range from 4 to 6 years.

80

As a result of committing to certain capital investments and employment levels, income from operations in
China, Singapore and Malaysia are subject to reduced tax rates, and in some cases are wholly exempt from
taxes. In China, the Company expects to beneﬁt from a 50% tax holiday through ﬁscal 2012 for a subsidiary.
In connection with certain Singapore operations, the Company is beneﬁting from a 100% tax holiday for
10 years which expired in February 2010. The Company is in ongoing negotiations to extend the tax holiday
in Singapore. One of the Company’s subsidiaries in Malaysia is wholly exempt from taxes through 2014.

NOTE 12: SEGMENT AND GEOGRAPHIC INFORMATION

Segment information

two segments: Equipment and Expendable Tools. The Equipment

segment
The Company operates
manufactures and sells a line of ball bonders, heavy wire wedge bonders and die bonders that are sold to
semiconductor device manufacturers, their outsourced semiconductor assembly and test subcontractors, other
electronics manufacturers and automotive electronics suppliers. The Company also services, maintains, repairs
and upgrades its equipment. The Expendable Tools segment manufactures and sells a variety of expendable
tools for a broad range of semiconductor packaging applications. Fiscal 2008 segment information for both
Equipment and Expendable Tools does not include the Company’s Wedge bonder business acquired during
ﬁscal 2009.

The following table reﬂects operating information by segment for ﬁscal 2010, 2009 and 2008:

(in thousands)
Net revenue
. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equipment
Expendable Tools . . . . . . . . . . . . . . . . . . . . . . . . .
Net revenue . . . . . . . . . . . . . . . . . . . . . . . . . . .

Cost of sales
. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equipment
Expendable Tools . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of sales . . . . . . . . . . . . . . . . . . . . . . . . . .

Gross proﬁt

Equipment
. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expendable Tools . . . . . . . . . . . . . . . . . . . . . . . . .
Gross proﬁt . . . . . . . . . . . . . . . . . . . . . . . . . . .

Operating expenses

Equipment
. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expendable Tools . . . . . . . . . . . . . . . . . . . . . . . . .
Operating expenses . . . . . . . . . . . . . . . . . . . . . .
Impairment of goodwill: Equipment . . . . . . . . . . . . . .
U.S. pension plan termination: Equipment . . . . . . . . . .
Gain on sale of assets
Income (loss) from operations

Equipment
. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expendable Tools . . . . . . . . . . . . . . . . . . . . . . . . .
Income (loss) from operations. . . . . . . . . . . . . . .

2010

$691,988
70,796
762,784

399,042
28,069
427,111

292,946
42,727
335,673

155,625
32,013
187,638
—
—
—

Fiscal
2009

$170,536
54,704
225,240

111,103
25,294
136,397

59,433
29,410
88,843

135,465
24,193
159,658
2,709
—
—

2008

$271,019
57,031
328,050

165,499
28,758
194,257

105,520
28,273
133,793

122,302
26,971
149,273
—
9,152
—

137,321
10,714
$148,035

(78,741)
5,217
$ (73,524)

(25,934)
1,302
$ (24,632)

The following table reﬂects assets by segment, capital expenditures and depreciation expense as of and for
ﬁscal 2010, 2009 and 2008:

(in thousands)
Segment assets:
Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expendable Tools . . . . . . . . . . . . . . . . . . . . . . . . . .
Segment assets . . . . . . . . . . . . . . . . . . . . . . . . . .

October 2,
2010

$493,712
86,457
$580,169

As of
October 3,
2009*

$303,835
108,800
$412,635

September 27,
2008*

$215,532
120,082
$335,614

81

Capital expenditures:
Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expendable Tools . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . .

Depreciation expense

Equipment
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expendable Tools . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation expense . . . . . . . . . . . . . . . . . . . . . . . . .

2010

$4,508
1,763
$6,271

$5,853
2,133
$7,986

Fiscal
2009*

$ 3,245
2,018
$ 5,263

$ 6,551
3,581
$10,132

2008*

$4,698
3,153
$7,851

$3,597
3,783
$7,380

* As adjusted for ASC No. 470.20, Debt, Debt With Conversion Options.

Geographic information

The following table reﬂects destination sales to unaffiliated customers by country for ﬁscal 2010, 2009 and
2008:

(in thousands)
Taiwan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
China . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Korea . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Hong Kong . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Malaysia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Philippines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Japan. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thailand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Singapore. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
All other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2010
$222,919
142,467
88,289
83,713
43,191
35,029
31,651
24,766
22,603
10,470
57,686
$762,784

Fiscal
2009
$ 42,360
38,505
24,256
24,183
11,959
—
12,150
—
10,315
6,860
54,652
$225,240

The following table reﬂects long-lived assets by country for ﬁscal 2010, 2009 and 2008:

(in thousands)
United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Switzerland . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Israel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
China . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Singapore. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
All other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2010
$ 81,849
10,307
2,637
4,207
4,530
3,949
$107,479

Fiscal
2009
$ 90,914
10,793
7,202
3,969
2,121
2,175
$117,174

2008
$ 41,938
81,035
34,897
17,964
32,083
—
26,211
—
13,811
14,306
65,805
$328,050

2008
$13,398
15,782
7,750
4,978
2,228
33,580
$77,716

NOTE 13: GUARANTOR OBLIGATIONS, COMMITMENTS, CONTINGENCIES AND
CONCENTRATIONS

Guarantor Obligations

The Company has issued a standby letter of credit of approximately $0.1 million for employee beneﬁt
programs. The standby letter of credit automatically renews at the end of each ﬁscal year.

82

Warranty Expense

The Company’s equipment is generally shipped with a one-year warranty against manufacturing defects. The
Company establishes reserves for estimated warranty expense when revenue for the related equipment is
recognized. The reserve for estimated warranty expense is based upon historical experience and management’s
estimate of future expenses.

The following table reﬂects the reserve for product warranty which is included in accrued expenses and other
current liabilities on the Consolidated Balances Sheets as of ﬁscal 2010, 2009 and 2008:

(in thousands)
Reserve for product warranty, beginning of year. . . . . .
Orthodyne warranty reserve at the date of acquisition . .
Provision for product warranty expense . . . . . . . . . . .
Product warranty costs incurred . . . . . . . . . . . . . . . . .
Reserve for product warranty, end of year . . . . . . . . . .

2010
$ 1,003
—
3,842
(2,188)
$ 2,657

Fiscal
2009

$

918
150
2,297
(2,362)
$ 1,003

2008
$ 1,975
—
1,315
(2,372)
918
$

Orthodyne Earnout

On October 3, 2008, the Company completed the acquisition of Orthodyne and agreed to pay Orthodyne an
additional amount in the future based upon the gross proﬁt realized by the acquired business over a three year
period from date of acquisition pursuant to an Earnout Agreement (the ‘‘Earnout’’). A former owner of
Orthodyne was employed by the Company until his resignation on October 31, 2010. Payment from the
Earnout is not contingent upon his employment. As of October 2, 2010, the maximum payout under the
Earnout was $10.0 million; however, the Company estimated that its maximum exposure would not exceed
$2.8 million. As of October 2, 2010, no Earnout was accrued.

Other Commitments and Contingencies

The following table reﬂects operating lease obligations not reﬂected on the Consolidated Balance Sheet as of
October 2, 2010:

(in thousands)
Operating lease obligations. . .

Total
$32,596

2011
$8,710

2012
$7,246

2013
$4,600

2014
$2,783

2015 and
thereafter
$9,257

Payments due by ﬁscal year

The Company has minimum rental commitments under various
insurance,
maintenance and repairs, which are also paid by the Company) primarily for various facility and equipment
leases, which expire periodically through 2018 (not including lease extension options, if applicable).

(excluding taxes,

leases

Concentrations

The following table reﬂects signiﬁcant customer concentrations for ﬁscal 2010, 2009 and 2008:

Customer net revenue as a percentage of total Net Revenue
Advanced Semiconductor Engineering . . . . . . . . . . . . . . .
Siliconware Precision Industries Ltd . . . . . . . . . . . . . . . . .
Customer accounts receivable as a percentage of total

Accounts Receivable

Siliconware Precision Industries, Ltd. . . . . . . . . . . . . . . . .
Haoseng Industries Company, Ltd. . . . . . . . . . . . . . . . . . .
Advanced Semiconductor Engineering . . . . . . . . . . . . . . .
Amkor Technology Inc. . . . . . . . . . . . . . . . . . . . . . . . . .

2010

23.0%
10.3%

19.5%
11.0%
*
*

Fiscal
2009

17.7%
*

*
*
32.4%
11.6%

2008

*
*

14.5%
10.2%
*
*

*

Represents less than 10% of net revenue or total accounts receivable, as applicable.

83

NOTE 14: SELECTED QUARTERLY FINANCIAL DATA (unaudited)

The following table reﬂects selected quarterly ﬁnancial data for ﬁscal 2010 and 2009:

(in thousands, except per share amounts)
Net revenue . . . . . . . . . . . . . . . . . . . .
Gross proﬁt. . . . . . . . . . . . . . . . . . . . .
Income from operations . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . .
Net income per share(1):

Fiscal 2010 for the Quarter Ended

January 2
$128,415
$ 56,373
$ 17,986
$ 15,840

April 3
$153,838
$ 67,772
$ 23,322
$ 21,158

July 3
$221,254
$ 99,184
$ 50,052
$ 49,083

October 2
$259,277
$112,344
$ 56,675
$ 56,061

Fiscal 2010
$762,784
$335,673
$148,035
$142,142

Basic . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . .

$
$

0.23
0.21

$
$

0.30
0.28

$
$

0.69
0.65

$
$

0.79
0.78

$
$

2.01
1.92

Weighted average shares outstanding:
Basic . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted. . . . . . . . . . . . . . . . . . . . . . . .

(in thousands, except per share amounts)
Net revenue . . . . . . . . . . . . . . . . . . . .
Gross proﬁt. . . . . . . . . . . . . . . . . . . . .
Income (loss) from operations . . . . . . . .
Income (loss) from discontinued

operations, net of tax . . . . . . . . . . . .
Net income (loss) . . . . . . . . . . . . . . . .
Net income (loss) per share(1):

69,684
73,687

69,806
74,371

70,131
74,960

70,426
71,229

70,012
73,548

Fiscal 2009 for the Quarter Ended

December 27* March 28*
$ 25,232
$ 8,045
$(35,758)

$ 37,416
$ 13,928
$(31,324)

June 27*
$ 52,076
$ 19,669
$(14,482)

October 3*
$110,516
$ 47,201
$ 8,040

$ 22,727
$ 3,139

— $

$
$(34,527)

— $

(716)
$ 5,049

$(15,262)

Fiscal 2009*
$225,240
$ 88,843
$ (73,524)

$ 22,011
$ (41,601)

Basic . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . .

$ (0.32)
(0.32)
$

$
$

(0.57)
(0.57)

$
$

(0.25)
(0.25)

$
$

0.09
0.08

$
$

(1.02)
(1.02)

Weighted average shares outstanding:
Basic . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted. . . . . . . . . . . . . . . . . . . . . . . .

60,451
60,451

61,054
61,054

61,220
61,220

65,754
70,082

62,188
62,188

As adjusted for ASC No. 470.20, Debt, Debt With Conversion Options.

*
(1) EPS for the year may not equal the sum of quarterly EPS due to changes in weighted share calculations.

NOTE 15 — RELATED PARTY TRANSACTIONS

In connection with the Company’s acquisition of Orthodyne, the Company entered into a real property lease
agreement with OE Holdings, Inc. Jason Livingston was the Vice President of the Company’s wedge bonder
division until his resignation in October 2010 and is also a shareholder of OE Holdings, Inc. The lease
agreement dated as of October 3, 2008 has a ﬁve-year term with a ﬁve-year renewal option. Rent was
$124,369 per month in the ﬁrst year and increases 3.0% per year thereafter. If the lease agreement renewal is
term will be at fair market value. The Company is guaranteeing the
exercised, rent during the renewal
obligations of its subsidiary under the lease agreement.

NOTE 16 — SUBSEQUENT EVENT

On November 16, 2010, the Company appointed Jonathan H. Chou as Senior Vice President and Chief Financial
Officer (‘‘CFO’’) effective December 13, 2010 and notiﬁed Michael J. Morris, its current CFO that in connection
with the relocation of the Company’s headquarters to Singapore, Mr. Chou has been hired to serve as CFO.

84

Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND

FINANCIAL DISCLOSURE

None.

Item 9A. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated
the effectiveness of our disclosure controls and procedures as of October 2, 2010. Based on that evaluation,
the Chief Executive Officer and Chief Financial Officer concluded that, as of October 2, 2010 our disclosure
controls and procedures were effective in providing reasonable assurance the information required to be
disclosed by us in reports ﬁled under the Securities Exchange Act of 1934, as amended, is (i) recorded,
processed, summarized and reported within the time periods speciﬁed in the Securities and Exchange
Commission’s rules and forms and (ii) accumulated and communicated to our management, including the
Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding
disclosure.

Management’s Report on Internal Control Over Financial Reporting

The management of Kulicke and Soffa Industries, Inc. (the ‘‘Company’’) is responsible for establishing and
maintaining adequate internal control over ﬁnancial reporting as deﬁned in Rule 13a-15(f) of the Securities
Exchange Act of 1934, as amended. The Company’s internal control over ﬁnancial reporting is a process
designed to provide reasonable assurance regarding the reliability of ﬁnancial reporting and the preparation of
ﬁnancial statements for external purposes in accordance with generally accepted accounting principles. The
Company’s internal control over ﬁnancial reporting includes those policies and procedures that pertain to the
maintenance of records that, in reasonable detail, accurately and fairly reﬂect the transactions and dispositions
of the assets of the Company; provide reasonable assurance that transactions are recorded as necessary to
permit preparation of ﬁnancial statements in accordance with generally accepted accounting principles, provide
reasonable assurance that receipts and expenditures of the Company are being made only in accordance with
authorizations of management and directors of the Company; and provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that
could have a material effect on the ﬁnancial statements.

Because of its inherent
internal control over ﬁnancial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.

limitations,

Management evaluated the Company’s internal control over ﬁnancial reporting as of October 2, 2010. In
making this assessment, management used the framework established in Internal Control-Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (‘‘COSO’’).
Management’s assessment included an evaluation of the design of our internal control over ﬁnancial reporting
and testing of the operational effectiveness of our internal control over ﬁnancial reporting. Management
reviewed the results of its assessment with the Audit Committee of the Company’s Board of Directors. Based
on that assessment and based on the criteria in the COSO framework, management has concluded that, as of
October 2, 2010, the Company’s internal control over ﬁnancial reporting was effective.

The effectiveness of the Company’s internal control over ﬁnancial reporting as of October 2, 2010 has been
audited by PricewaterhouseCoopers LLP, an independent registered public accounting ﬁrm, as stated in its
report, which appears herein.

Item 9B. OTHER INFORMATION

None.

85

PART III

Item 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Information required by Item 401 of Regulation S-K with respect to the directors will appear under the
heading ‘‘ELECTION OF DIRECTORS’’ in the Company’s Proxy Statement for the 2011 Annual Meeting of
Shareholders, which information is incorporated herein by reference. The information required by Item 401 of
Regulation S-K with respect to executive officers appears at the end of Part I, Item 1 of this report under the
heading ‘‘Executive Officers of the Company.’’ The other information required by Item 401 of Regulation S-K
will appear under the heading ‘‘CORPORATE GOVERNANCE’’ in the Company’s Proxy Statement for the
2011 Annual Meeting of Shareholders, which information is incorporated herein by reference.

The information required by Item 405 of Regulation S-K will appear under the heading ‘‘CORPORATE
GOVERNANCE — Section 16(a) Beneﬁcial Ownership Reporting Compliance’’ in the Company’s Proxy
Statement for the 2011 Annual Meeting of Shareholders, which information is incorporated herein by
reference.

The information required by Item 406 of Regulation S-K will appear under the heading ‘‘CORPORATE
GOVERNANCE — Code of Ethics’’ in the Company’s Proxy Statement for the 2011 Annual Meeting of
Shareholders, which information is incorporated herein by reference.

The information required by Item 407(c)(3) of Regulation will appear under the headings ‘‘CORPORATE
GOVERNANCE — Nominating and Governance Committee’’ and ‘‘SHAREHOLDER PROPOSALS’’ in the
Company’s Proxy Statement for the 2011 Annual Meeting of Shareholders, which information is incorporated
herein by reference.

The information required by Items 407(d)(4) and (d)(5) of Regulation S-K will appear under the heading
‘‘CORPORATE GOVERNANCE — Audit Committee’’ in the Company’s Proxy Statement for the 2011
Annual Meeting of Shareholders, which information is incorporated herein by reference.

Item 11. EXECUTIVE COMPENSATION

The information required by Item 402 of Regulation S-K will appear under the heading ‘‘COMPENSATION
OF EXECUTIVE OFFICERS,’’ in the Company’s Proxy Statement
the 2011 Annual Meeting of
Shareholders, which information is incorporated herein by reference.

for

The information required by Item 407(e)(4) of Regulation S-K will appear under the heading ‘‘CORPORATE
GOVERNANCE — Management Development
and Insider
Participation’’ in the Company’s Proxy Statement for the 2011 Annual Meeting of Shareholders, which
information is incorporated herein by reference.

and Compensation Committee

Interlocks

The information required by Item 407(e)(5) of Regulation S-K will appear under the heading ‘‘REPORT OF
THE MANAGEMENT DEVELOPMENT AND COMPENSATION COMMITTEE’’ in the Company’s Proxy
Statement for the 2011 Annual Meeting of Shareholders, which information is incorporated herein by
reference.

Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

AND RELATED STOCKHOLDER MATTERS

The information required hereunder concerning security ownership of certain beneﬁcial owners and
management will appear under the heading ‘‘CORPORATE GOVERNANCE — SECURITY OWNERSHIP
OF CERTAIN BENEFICIAL OWNERS’’ in the Company’s Proxy Statement for the 2011 Annual Meeting of
Shareholders, which information is incorporated herein by reference. The information required hereunder
concerning security ownership of management will appear under the heading ’’ELECTION OF DIRECTORS’’
in the Company’s Proxy Statement for the 2011 Annual Meeting of Shareholders, which information is
incorporated herein by reference. The information required by this item relating to securities authorized for
issuance under equity compensation plans is included under the heading ‘‘EQUITY COMPENSATION PLAN
INFORMATION’’ in the Company’s Proxy Statement for the 2011 Annual Meeting of Shareholders, which is
incorporated herein by reference.

86

Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR

INDEPENDENCE

The information required by Item 404 of Regulation S-K will appear under the heading ‘‘CORPORATE
GOVERNANCE — Certain Relationships and Related Transactions’’ in the Company’s Proxy Statement for
the 2011 Annual Meeting of Shareholders, which information is incorporated herein by reference.

The information required by Section 407(a) of Regulation S-K will appear under the heading ‘‘CORPORATE
GOVERNANCE — Board Matters’’ in the Company’s Proxy Statement for the 2011 Annual Meeting of
Shareholders, which information is incorporated herein by reference.

Item 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

The information required hereunder will appear under the heading ‘‘AUDIT AND RELATED FEES’’ in the
Company’s Proxy Statement for the 2011 Annual Meeting of Shareholders, which information is incorporated
herein by reference.

87

Part IV

Item 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) The following documents are ﬁled as part of this report:

(1) Financial Statements — Kulicke and Soffa Industries, Inc.:

Report of Independent Registered Public Accounting Firm . . . . . . . . . . . . . . . . . . . . . .
Consolidated Balance Sheets as of October 2, 2010 and October 3, 2009 . . . . . . . . . .
Consolidated Statements of Operations for ﬁscal years 2010, 2009 and 2008 . . . . . . . .
Consolidated Statements of Cash Flows for ﬁscal 2010, 2009 and 2008 . . . . . . . . . . .
Consolidated Statements of Changes in Shareholders’ Equity for ﬁscal 2010, 2009 and

2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Notes to Consolidated Financial Statements

(2) Financial Statement Schedules:

Page
51
52
53
54

55
56

Schedule II — Valuation and Qualifying Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . .

93

All other schedules are omitted because they are not applicable or the required information is shown in the
Consolidated Financial Statements or notes thereto.

(3) Exhibits:

EXHIBIT
NUMBER

2(i)

2(ii)

2(iii)

2(iv)

3(i)

3(ii)

4(i)

4(ii)

ITEM

Master Sale and Purchase Agreement between W.C. Heraeus GmbH and the Company,
dated July 31, 2008, incorporated herein by reference to Exhibit 10.1 to the Company’s
Current Report on Form 8-K ﬁled on July 31, 2008.
Amendment No. 1 to the Master Sale and Purchase Agreement between W.C. Heraeus
GmbH and the Company, dated as of September 5, 2008, is incorporated herein by reference
to Exhibit 2.2 to the Company’s Current Report on Form 8-K ﬁled on October 2, 2008.
Asset Purchase Agreement between Orthodyne Electronics Corporation and the Company,
dated July 31, 2008, is incorporated herein by reference to Exhibit 10.2 to the Company’s
Current Report on Form 8-K ﬁled on July 31, 2008.
Amendment to the Asset Purchase Agreement between Orthodyne and the Company, dated
as of October 3, 2008, is incorporated herein by reference to Exhibit 2.2 to the Company’s
Current Report on Form 8-K ﬁled on October 8, 2008.

The Company’s Form of Amended and Restated Articles of Incorporation, dated
December 5, 2007, is 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.

The Company’s Form of Amended and Restated By-Laws, dated August 4, 2010, is
incorporated herein by reference to Exhibit 3(ii) to the Company’s Quarterly Report on
Form 10-Q for the quarterly period ended July 3, 2010.

Specimen Common Share Certiﬁcate of Kulicke and Soffa Industries Inc., is incorporated
herein by reference to Exhibit 4 to the Company’s Form-8A12G/A dated September 11,
1995, SEC ﬁle number 000-00121.

Indenture between the Company and Bank of New York, as Trustee, dated as of June 6,
2007, is incorporated herein by reference to Exhibit 4.1 to the Company’s Current Report on
Form 8-K dated June 6, 2007.

88

EXHIBIT
NUMBER

4(iii)

4(iv)

4(v)

10(i)

10(ii)

10(iii)

10(iv)

10(v)

10(vi)

10(vii)

10(viii)

10(ix)

ITEM

Indenture between the Company and J.P. Morgan Trust Company, National Association, as
Trustee, dated as of June 30, 2004, is incorporated herein by reference to Exhibit 4.1 to the
Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2004,
SEC ﬁle number 000-00121.

Form of Note (included in Exhibit 4(iii)), SEC ﬁle number 000-00121.

Registration Rights Agreement between the Company and Bank of America Securities, LLC
as Initial Purchaser, dated as of June 6, 2007, is incorporated herein by reference to Exhibit
10.1 to the Company’s Current Report on Form 8-K dated June 6, 2007.

2004 Israeli Addendum to the Company’s 1994 Employee Incentive Stock Option and
Non-Qualiﬁed Stock Option Plan (as amended and restated effective March 21, 2003), is
incorporated herein by reference to Exhibit 10(iv) to the Company’s Post-Effective
Amendment No.4 on Form S-1 to the Registration Statement on Form S-3 ﬁled on
December 14, 2004, SEC ﬁle number 333-111478.*

The Company’s 1997 Non-Qualiﬁed Stock Option Plan for Non-Employee Directors (as
amended and restated effective March 21, 2003), is incorporated herein by reference to
Exhibit 10(vi) to the Company’s Annual Report on Form 10-K for the ﬁscal year ended
September 30, 2003, SEC ﬁle number 000-00121.*
2004 Israeli Addendum to the Company’s 1998 Employee Incentive Stock Option and
Non-Qualiﬁed Stock Option Plan (as amended and restated effective March 21, 2003), is
incorporated herein by reference to Exhibit 10(vii) to the Company’s Post-Effective
Amendment No.4 on Form S-1 to the Registration Statement on Form S-3 ﬁled on
December 14, 2004, SEC ﬁle number 333-111478.*
The Company’s 1999 Nonqualiﬁed Employee Stock Option Plan (as amended and restated
effective March 21, 2003), is incorporated herein by reference to Exhibit 10(xv) to the
Company’s Annual Report on Form 10-K for the ﬁscal year ended September 30, 2003, SEC
ﬁle number 000-00121.*
2004 Israeli Addendum to the Company’s 1999 Non-Qualiﬁed Stock Option Plan (as
amended and restated effective March 21, 2003), is incorporated herein by reference to
Exhibit 10(ix) to the Company’s Post-Effective Amendment No.4 on Form S-1 to the
Registration Statement on Form S-3 ﬁled on December 14, 2004, SEC ﬁle number
333-111478.*
The Company’s 2001 Employee Incentive Stock Option and Non-Qualiﬁed Stock Option
Plan (as amended and restated effective March 21, 2003), is incorporated herein by reference
to Exhibit 10(xix) to the Company’s Annual Report on Form 10-K for the ﬁscal year ended
September 30, 2003, SEC ﬁle number 000-00121.*

2004 Israeli Addendum to the Company’s 2001 Employee Incentive Stock Option and
Non-Qualiﬁed Stock Option Plan (as amended and restated effective March 21, 2003), is
incorporated herein by reference to Exhibit 10(xii) to the Company’s Post-Effective
Amendment No.4 on Form S-1 to the Registration Statement on Form S-3 ﬁled on
December 14, 2004, SEC ﬁle number 333-111478.*

The Company’s 2006 Equity Plan, is incorporated herein by reference to Appendix A to the
Company’s Proxy Statement on Schedule 14A for the annual meeting of shareholders on
February 14, 2006.*

Form of Stock Option Award Letter regarding the 2006 Equity Plan, is incorporated herein
by reference to Exhibit 99.1 to the Company’s Current Report on Form 8-K dated October 3,
2006.*

89

EXHIBIT
NUMBER

10(x)

10(xi)

10(xii)

10(xiii)

10(xiv)

10(xv)

10(xvi)

10(xvii)

10(xviii)

10(xix)

10(xx)

10(xxi)

10(xxii)

10(xxiii)

10(xxiv)

10(xxv)

10(xxvi)

ITEM

Form of Performance Share Award Agreement regarding the 2006 Equity Plan, is
incorporated herein by reference to Exhibit 99.2 to the Company’s Current Report on
Form 8-K dated October 3, 2006.*

Form of Performance Share Award Agreement regarding the 2006 Equity Plan, is
incorporated herein by reference to Exhibit 99.2 to the Company’s Current Report on
Form 8-K dated October 2, 2007.*

Officer Incentive Compensation Plan, dated August 2, 2005, is incorporated herein by
reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarterly
period ended June 30, 2005, SEC ﬁle number 000-00121.*

2007 Equity Plan for Non-Employee Directors, is incorporated herein by reference to
Appendix A to the Company’s Proxy Statement on Schedule 14A for the annual meeting of
shareholders on February 13, 2007.*

Earnout Agreement between the Company and Orthodyne Electronics Corporation, dated
July 31, 2008, is incorporated herein by reference to Exhibit 10.3 to the Company’s Current
Report on Form 8-K ﬁled on July 31, 2008.

2008 Equity Plan, is incorporated herein by reference to Appendix A to the Company’s
Proxy Statement on Schedule 14A for the annual meeting of shareholders on February 12,
2008.*
Form of New Employee Inducement Stock Option Grant Letter, is incorporated herein by
reference to Exhibit 4.1 to the Company’s Registration Statement on Form S-8 ﬁled on
December 13, 2007.*
2007 Alphasem Employee Stock Option Plan, is incorporated herein by reference to
Exhibit 4.2 to the Company’s Registration Statement on Form S-8 ﬁled on December 13,
2007.*
Form of Nonqualiﬁed Stock Option Agreement, is incorporated herein by reference to
Exhibit 99.1 to the Company’s Current Report on Form 8-K dated October 8, 2008.*
Form of Incentive Stock Option Agreement, is incorporated herein by reference to
Exhibit 99.2 to the Company’s Current Report on Form 8-K dated October 8, 2008.*
Form of Performance Unit Award Agreement, is incorporated herein by reference to
Exhibit 99.3 to the Company’s Current Report on Form 8-K dated October 8, 2008.*
Form of Performance Unit Award Agreement, is incorporated herein by reference to
Exhibit 99.4 to the Company’s Current Report on Form 8-K, dated October 8, 2008.*
Form of Restricted Stock Agreement Award, is incorporated herein by reference to
Exhibit 99.5 to the Company’s Current Report on Form 8-K dated October 8, 2008.*
Joint Development and Engineering Services Agreement between W.C. Heraeus GmbH and
the Company, dated as of September 29, 2008, is incorporated herein by reference to
Exhibit 10.1 to the Company’s Current Report on Form 8-K ﬁled on October 2, 2008.

Lease Agreement between Orthodyne Electronics Corporation and the Company, dated as of
October 3, 2008, is incorporated herein by reference to Exhibit 99.1 to the Company’s
Current Report on Form 8-K ﬁled on October 8, 2008.

Kulicke and Soffa Industries, Inc. Officer Severance Pay Plan, dated as of March 2009, is
incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on
Form 8-K ﬁled on March 31, 2009.*

Form of Change of Control Agreement, dated as of March 25, 2009, is incorporated herein
by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K ﬁled on
March 31, 2009.*

90

EXHIBIT
NUMBER

10(xxvii)

10(xxviii)

10(xxix)

10(xxx)

10(xxxi)

10(xxxii)

10(xxxiii)

10(xxxiv)

10(xxxv)

10(xxxvi)

10(xxxvii)

10(xxxviii)

10(xxxix)

10(xl)

ITEM

Employment Agreement between the Company and Christian Rheault, dated June 25, 2009,
is incorporated herein by reference to Exhibit 10.1 to the Company’s Quarterly Report on
Form 10-Q for the quarterly period ended June 27, 2009.*

Amendment No. 1 to the Kulicke and Soffa Industries, Inc. 2009 Equity Plan, effective
September 15, 2009, is incorporated herein by reference to Exhibit 10.1 to the Company’s
Current Report on Form 8-K ﬁled on September 18, 2009.*

Amendment No. 2 to the Kulicke and Soffa Industries, Inc. 2009 Equity Plan, effective
September 30, 2009, is incorporated herein by reference to Exhibit 10.1 to the Company’s
Current Report on Form 8-K ﬁled on September 18, 2009.*

Letter Agreement between Michael J. Morris and the Company, dated September 24, 2009,
is incorporated herein by reference to Exhibit 10.2 to the Company’s Current Report on
Form 8-K ﬁled on September 24, 2009.*

Form of Officer Performance Share Award Agreement regarding the 2009 Equity Plan, is
incorporated herein by reference to Exhibit 10(xxxiii) to the Company’s Annual Report on
Form 10-K for the ﬁscal year ended October 3, 2009.*

Form of Officer Restricted Share Award Agreement regarding the 2009 Equity Plan is
incorporated herein by reference to Exhibit 10(xxxiv) to the Company’s Annual Report on
Form 10-K for the ﬁscal year ended October 3, 2009.*
Officer Performance Share Unit Award Agreement regarding the 2009 Equity Plan between
the Company and C. Scott Kulicke, executed January 25, 2010, is incorporated herein by
reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarterly
period ended January 2, 2010.*
Officer Performance Share Unit Award Agreement regarding the 2009 Equity Plan between
the Company and Michael J. Morris, executed January 25, 2010, is incorporated herein by
reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarterly
period ended January 2, 2010.*
Officer Performance Share Unit Award Agreement regarding the 2009 Equity Plan between
the Company and Christian Rheault, executed January 28, 2010, is incorporated herein by
reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the quarterly
period ended January 2, 2010.*
Officer Restricted Stock Award Agreement regarding the 2009 Equity Plan between the
Company and Michael J. Morris, executed January 25, 2010, is incorporated herein by
reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q for the quarterly
period ended January 2, 2010.*
Officer Restricted Stock Award Agreement regarding the 2009 Equity Plan between the
Company and Christian Rheault, executed January 28, 2010, is incorporated herein by
reference to Exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q for the quarterly
period ended January 2, 2010.*

Officer Restricted Stock Award Agreement regarding the 2009 Equity Plan between the
Company and Christian Rheault, executed January 28, 2010, is incorporated herein by
reference to Exhibit 10.6 to the Company’s Quarterly Report on Form 10-Q for the quarterly
period ended January 2, 2010.*

Employment Agreement between the Company and Jason Livingston, dated October 3, 2008,
is incorporated herein by reference to Exhibit 10.7 to the Company’s Quarterly Report on
Form 10-Q for the quarterly period ended January 2, 2010.*

Offer Letter between the Company and Bruno Guilmart dated August 6, 2010, is
incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on
Form 8-K dated August 6, 2010.*

91

EXHIBIT
NUMBER

10(xli)

10(xlii)

10(xliii)

10(xliv)

10(xlv)

10(xlvi)

21
23
31.1

31.2

32.1

32.2

99.1

ITEM

Facilities Agreement between Kulicke and Soffa Global Holding Corporation and DBS Bank
Ltd. Labuan Branch, dated September 29, 2010.

Letter Agreement between the Company and C. Scott Kulicke, dated October 7, 2010, is
incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on
Form 8-K dated October 7, 2010.*

Consulting Agreement between the Company and C. Scott Kulicke, dated October 7, 2010,
is incorporated herein by reference to Exhibit 10.2 to the Company’s Current Report on
Form 8-K dated October 7, 2010.*

Letter Agreement between the Company and Jason Livingston, dated October 18, 2010, is
incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on
Form 8-K dated October 18, 2010.*

Offer Letter between the Company and Jonathan H. Chou, dated November 16, 2010, is
incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on
Form 8-K dated November 16, 2010.*

Letter Agreement between the Company and Michael J. Morris, dated November 16, 2010,
is incorporated herein by reference to Exhibit 10.2 to the Company’s Current Report on
Form 8-K dated November 16, 2010.*
Subsidiaries of the Company.
Consent of PricewaterhouseCoopers LLP (Independent Registered Public Accounting Firm).
Certiﬁcation of Bruno Guilmart, Chief Executive Officer of Kulicke and Soffa Industries,
Inc., pursuant to Rule 13a-14(a) or Rule 15d-14(a).
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).
Certiﬁcation of Bruno Guilmart, 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.
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.
Agreement for Commitment to Make Plan Sufficient, is incorporated herein by reference to
Exhibit 99.1 to the Company’s Current Report on Form 8-K dated May 7, 2007.

*

Indicates a management contract or compensatory plan or arrangement.

92

KULICKE AND SOFFA INDUSTRIES, INC.
Schedule II — Valuation and Qualifying Accounts

(in thousands)
Fiscal 2010:
Allowance for doubtful accounts . . .
Inventory reserve . . . . . . . . . . . . .
Valuation allowance for deferred

Balance
at beginning
of period

Charged to
costs and
expenses

Other
additions
(describe)

Deductions
(describe)

Balance
at end
of period

$ 1,378
$12,517

32
$
$ 1,519

$ —
$ —

$ (430)(1)
$(3,896)(2)

980
$
$10,140

taxes . . . . . . . . . . . . . . . . . . . .

$36,199

$ (1,951)(3)

$ —

$(6,392)(7)

$27,856

Fiscal 2009:
Allowance for doubtful accounts . . .
Inventory reserve . . . . . . . . . . . . .
Valuation allowance for deferred

$ 1,376
$ 6,497

$
291
$ 8,154

$ —
$ (488)(4)

$ (289)(1)
$(1,646)(2)

$ 1,378
$12,517

taxes* . . . . . . . . . . . . . . . . . . .

$16,171

$20,220(3)

$ —

$ (192)(6)

$36,199

Fiscal 2008:
Allowance for doubtful accounts . . .
Inventory reserve . . . . . . . . . . . . .
Valuation allowance for deferred

$ 1,586
$ 8,428

361
$
$ 3,999

(24)
$
$(3,321)(4)

$ (547)(1)
$(2,609)(2)

$ 1,376
$ 6,497

taxes* . . . . . . . . . . . . . . . . . . .

$23,851

$ (2,935)(3)

$(4,745)(5)

$ —

$16,171

As adjusted for ASC No. 470.20, Debt, Debt With Conversion Options.

*
(1) Represents write offs of speciﬁc accounts receivable.
(2) Disposal of excess and obsolete inventory.
(3) Reﬂects increase (decrease) in the valuation allowance primarily associated with the Company’s U.S. and

foreign net operating losses and other deferred tax assets.

(4) Reclassiﬁcation of fully depreciated demonstration and evaluation equipment from inventory to plant,

property and equipment, net.

(5) Primarily reﬂects decrease in valuation allowance as a result of adoption of ASC 740.10.
(6) Represents decrease in valuation allowance applied to reduce die bonder intangible assets, since a portion

of the valuation allowance was originally established in purchase accounting.

(7) Represents the release in valuation allowance for a foreign subsidiary and the domestic partial valuation

allowance release.

93

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

SIGNATURES

KULICKE AND SOFFA INDUSTRIES, INC.

By: /s/ BRUNO GUILMART

Bruno Guilmart
President and Chief Executive Officer

Dated: December 9, 2010

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the
following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature

Title

Date

/s/ BRUNO GUILMART
Bruno Guilmart
(Principal Executive Officer)

/s/ MICHAEL J MORRIS
Michael J Morris
(Chief Financial Officer)

/s/ RAN BAREKET
Ran Bareket
(Principal Accounting Officer)

/s/ BRIAN R. BACHMAN
Brian R. Bachman

/s/ JOHN A. O’STEEN
John A. O’Steen

/s/ GARRETT E. PIERCE
Garrett E. Pierce

/s/ MACDONELL ROEHM, JR.
MacDonell Roehm, Jr.

/s/ BARRY WAITE
Barry Waite

/s/ C. WILLIAM ZADEL
C. William Zadel

President and
Chief Executive Officer (principal executive officer)

December 9, 2010

Vice President and
Chief Financial Officer

December 9, 2010

Vice President and
interim Principal Accounting Officer

December 9, 2010

December 9, 2010

December 9, 2010

December 9, 2010

December 9, 2010

December 9, 2010

December 9, 2010

Director

Director

Director

Director

Director

Director

94

EXHIBIT 21

SUBSIDIARIES OF THE COMPANY(1)

Name

Jurisdiction of Incorporation

Kulicke and Soffa Pte, Limited

Orthodyne Electronics Corporation

Singapore

Delaware

Kulicke and Soffa Global Holdings Corporation

Labuan, Malaysia

Kulicke and Soffa Die Bonding GmbH

Kulicke & Soffa (Asia) Limited

Kulicke and Soffa (Japan) Ltd.

Micro-Swiss Limited

Kulicke and Soffa (Israel) Ltd.

Kulicke and Soffa (Suzhou) Limited

Switzerland

Hong Kong

Japan

Israel

Israel

China

(1) Certain subsidiaries are omitted; however, such subsidiaries, even if combined into one subsidiary, would

not constitute a ‘‘signiﬁcant subsidiary’’ within the meaning of Regulation S-X.

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Exhibit 23

We hereby consent
to the incorporation by reference in the Registration Statements on Form S-3
(Nos. 333-154774 and 333-160426) and Form S-8 (Nos. 333-160010, 333-141805, 333-137777, 333-69441,
and
333-37276,
Soffa Industries, Inc. of our report dated December 9, 2010 relating to the ﬁnancial statements, ﬁnancial
statement schedule and the effectiveness of internal control over ﬁnancial reporting, which appears in this
Form 10-K.

333-153843)

of Kulicke

333-103435,

333-103433,

333-37278,

333-69445

and

/s/ PricewaterhouseCoopers LLP
Philadelphia, Pennsylvania
December 9, 2010

Exhibit 31.1

I, Bruno Guilmart, certify that:

CERTIFICATION

1.

I have reviewed this annual report on Form 10-K of Kulicke and Soffa Industries, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the ﬁnancial statements, and other ﬁnancial information included in this report,
fairly present in all material respects the ﬁnancial condition, results of operations and cash ﬂows of the
registrant as of, and for, the periods presented in this report;

4.

The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure
controls and procedures (as deﬁned in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control
over ﬁnancial reporting (as deﬁned in Exchange Act Rules 13a-15(f) and 15d-15(f))for the registrant and
have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures
to be designed under our supervision, to ensure that material information relating to the registrant,
is made known to us by others within those entities,
including its consolidated subsidiaries,
particularly during the period in which this report is being prepared;

b. Designed such internal control over ﬁnancial reporting, or caused such internal control over ﬁnancial
reporting to be designed under our supervision,
to provide reasonable assurance regarding the
reliability of ﬁnancial reporting and the preparation of ﬁnancial statements for external purposes in
accordance with generally accepted accounting principles;

c.

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in
this report our conclusions about the effectiveness of the disclosure controls and procedures as of the
end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over ﬁnancial reporting that
occurred during the registrant’s most recent ﬁscal quarter (the registrant’s fourth ﬁscal quarter in the
case of an annual report) that has materially affected, or is reasonably likely to materially affect, the
registrant’s internal control over ﬁnancial reporting; and

5.

The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of
internal control over ﬁnancial reporting,
to the registrant’s auditors and the audit committee of the
registrant’s board of directors (or persons performing the equivalent functions):

a. All signiﬁcant deﬁciencies and material weaknesses in the design or operation of internal control
over ﬁnancial reporting which are reasonably likely to adversely affect the registrant’s ability to
record, process, summarize and report ﬁnancial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a

signiﬁcant role in the registrant’s internal control over ﬁnancial reporting.

Date: December 9, 2010

/s/ BRUNO GUILMART
Bruno Guilmart
President and Chief Executive Officer

Exhibit 31.2

I, Michael J. Morris, certify that:

CERTIFICATION

1.

I have reviewed this annual report on Form 10-K of Kulicke and Soffa Industries, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the ﬁnancial statements, and other ﬁnancial information included in this report,
fairly present in all material respects the ﬁnancial condition, results of operations and cash ﬂows of the
registrant as of, and for, the periods presented in this report;

4.

The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure
controls and procedures (as deﬁned in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control
over ﬁnancial reporting (as deﬁned in Exchange Act Rules 13a-15(f) and 15d-15(f))for the registrant and
have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures
to be designed under our supervision, to ensure that material information relating to the registrant,
is made known to us by others within those entities,
including its consolidated subsidiaries,
particularly during the period in which this report is being prepared;

b. Designed such internal control over ﬁnancial reporting, or caused such internal control over ﬁnancial
reporting to be designed under our supervision,
to provide reasonable assurance regarding the
reliability of ﬁnancial reporting and the preparation of ﬁnancial statements for external purposes in
accordance with generally accepted accounting principles;

c.

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in
this report our conclusions about the effectiveness of the disclosure controls and procedures as of the
end of the period covered by this report based on such evaluation; and

d. Disclosed in this report any change in the registrant’s internal control over ﬁnancial reporting that
occurred during the registrant’s most recent ﬁscal quarter (the registrant’s fourth ﬁscal quarter in the
case of an annual report) that has materially affected, or is reasonably likely to materially affect, the
registrant’s internal control over ﬁnancial reporting; and

5.

The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of
internal control over ﬁnancial reporting,
to the registrant’s auditors and the audit committee of the
registrant’s board of directors (or persons performing the equivalent functions):

a. All signiﬁcant deﬁciencies and material weaknesses in the design or operation of internal control
over ﬁnancial reporting which are reasonably likely to adversely affect the registrant’s ability to
record, process, summarize and report ﬁnancial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a

signiﬁcant role in the registrant’s internal control over ﬁnancial reporting.

Date: December 9, 2010

/s/ MICHAEL J. MORRIS
Michael J. Morris
Vice President and Chief Financial Officer

Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Bruno Guilmart, the President and Chief Executive Officer of Kulicke and Soffa Industries, Inc., hereby
certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002, that:

1.

2.

the Annual Report on Form 10-K of Kulicke and Soffa Industries, Inc. for the ﬁscal year ended
October 2, 2010, which this certiﬁcation accompanies, fully complies with the requirements of
Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

information contained in the Fiscal 2010 Form 10-K fairly presents, in all material respects, the
ﬁnancial condition and results of operations of Kulicke and Soffa Industries, Inc.

Dated: December 9, 2010

/s/ BRUNO GUILMART
Bruno Guilmart
President and
Chief Executive Officer

Exhibit 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Michael J. Morris, the Chief Financial Officer of Kulicke and Soffa Industries, Inc., hereby certify, pursuant
to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1.

2.

the Annual Report on Form 10-K of Kulicke and Soffa Industries, Inc. for the ﬁscal year ended
October 2, 2010, which this certiﬁcation accompanies, fully complies with the requirements of
Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

information contained in the Fiscal 2010 Form 10-K fairly presents, in all material respects, the
ﬁnancial condition and results of operations of Kulicke and Soffa Industries, Inc.

Dated: December 9, 2010

/s/ Michael J. Morris
Michael J. Morris
Vice President and Chief Financial Officer

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Company Information 
December 2010 

BOARD OF DIRECTORS 

EXECUTIVE OFFICERS 

CORPORATE HEADQUARTERS 

MacDonell Roehm, Jr. 
Chairman of the Board 
Kulicke & Soffa Industries, Inc. 
Chairman and Chief Executive Officer 
Crooked Creek Capital LLC 

Bruno Guilmart 
President and Chief Executive Officer 

Jonathan H. Chou 
Senior Vice President and Chief Financial 
Officer 

Kulicke and Soffa Industries, Inc. 
6 Serangoon North Avenue 5 
#03-16 
Singapore  554910 

Brian R. Bachman 
Managing Partner 
River Farm LLC 

Bruno Guilmart 
President and Chief Executive Officer 
Kulicke & Soffa Industries, Inc. 

John A. O’Steen 
Retired Executive Vice President,  
Business Development 
Cornerstone Brands, Inc. 

Garrett E. Pierce 
Vice Chairman and Chief Financial 
Officer 
Orbital Sciences Corporation 

Barry Waite 
Retired President and Chief Executive 
Officer 
Chartered Semiconductor Manufacturing 
Ltd. 

C. William Zadel 
Retired Business Executive 
Former Chairman  and Chief Executive 
Officer 
Mykrolis Corporation 

Christian Rheault 
Senior Vice President, Business 
Operations 

Charles Salmons 
Senior Vice President, Engineering 

Shay Torton 
Senior Vice President, Worldwide 
Operations 

David J. Anderson 
Vice President, General Counsel 

Tek Chee (“TC”) Mak 
Vice President, Worldwide Sales 

TECHNOLOGY CENTERS 

Singapore 
Fort Washington, Pennsylvania 
Irvine, California 
Berg, Switzerland 
Yokneam Elite, Israel 
Suzhou, China 

EQUIPMENT MANUFACTURING 
FACILITIES 

Singapore 
Petaling Jaya, Malaysia 
Irvine, California 
Berg, Switzerland 

ADDITIONAL INFORMATION 

An electronic copy of the 2010 Annual 
Report, the 2011 Proxy Statement and 
other filings are available online at: 
http://www.kns.com/investors/proxy 

EXPENDABLE TOOLS 
MANUFACTURING FACILITIES 

Suzhou, China 
Yokneam Elite, Israel 

Copies of the Company’s recent news 
releases and investor packages may be 
obtained by contacting: 
Joseph Elgindy 
Manager, Investor Relations 
215-784-7518 
or by requesting information online at: 
http://www.kns.com/investors 

INDEPENDENT ACCOUNTANTS 

PricewaterhouseCoopers, LLP 
Philadelphia, Pennsylvania 

REGISTRAR AND TRANSFER 
AGENT 

American Stock Transfer & Trust 
6201 15th Avenue 
Brooklyn, NY   11219 
800-937-5449 

NASDAQ Symbol: KLIC 

(cid:8)