Kulicke & Soffa Industries, Inc. Reports Results for its Fourth Quarter and Fiscal Year 2010

Kulicke & Soffa Industries, Inc. (NASDAQ: KLIC) ("K&S” or the "Company”) today announced results for its fourth fiscal quarter and year ended October 2, 2010. This press release contains both GAAP results and non-GAAP measures.

For its fourth fiscal quarter of 2010, the Company reported net revenue of $259.3 million and net income of $56.1 million, or $0.78 per diluted share. On a non-GAAP basis* for its fourth quarter, the Company reported net income of $63.8 million, or $0.89 per diluted share.

Commenting on the results, Bruno Guilmart, President and Chief Executive Officer, said, "In fiscal 2010 we saw significant increases in customer demand and revenue growth, driven by a general recovery of the semiconductor industry and compounded by increased business opportunities such as the transition from gold to copper wire, market share gains in LED bonders, increased wedge bonder demand for power management applications, and the launch of our new 'IStack' high performance die bonder.

"Looking forward to the December quarter we forecast revenue to be in the $125 million to $135 million range. The same level of operational flexibility which allowed us to cost effectively ramp throughout fiscal 2010 will carry forward into the December quarter and enable us to reduce our cost accordingly as we produce at these lower revenue levels.”

Key Product Trends

• Ball bonder net revenue increased by 19.9% over the June quarter.
  
  
  • Demand continues for the K&S copper solution; 57.4% of ball bonders sold during the quarter were configured for copper.
  • 8.4% of ball bonders sold were configured for LED applications.
• The newly released IConn ProCu Wire Bonder will allow for a more efficient industry transition from gold to copper wire through optimized copper wire-bonding processes.
• Heavy wire wedge bonder demand continues to strengthen; increased volumes are anticipated through the December quarter.

Financial Highlights

• Revenue increased 17.2% sequentially, achieving the high end of guidance.
• GAAP operating margin was 21.9%, or 24.3% on a non-GAAP basis.
• GAAP net income was $56.1 million, or $63.8 million on a non-GAAP basis.
• GAAP diluted EPS was $0.78, or $0.89 on a non-GAAP basis.
• Continuing operations generated $19.7 million of net cash.
• Net revenue for the December quarter is expected to be in the $125 million to $135 million range.

Earnings Conference Call Details

A conference call to discuss these results will be held tomorrow, November 11, 2010 beginning at 9:00 a.m. (ET). To access the conference call, interested parties may call (877) 407-8037 or (201) 689-8037, or log on to www.kns.com/investors/events for listen-only mode. A replay will be available approximately one hour after the completion of the call by calling toll-free (877) 660-6853 or internationally (201) 612-7415 and using the following replay access codes: 5521 (account number) and 353660 (replay ID number). A replay will also be available on the K&S website at www.kns.com/investors/events. The replay will be available via phone and website for a limited time.

Discussion of Non-GAAP Measures

This press release contains non-GAAP measures as a supplement to the consolidated financial results presented in accordance with GAAP. The Company believes certain non-GAAP measures provide investors with an additional, useful perspective on the Company’s performance as seen through the eyes of management. Management uses non-GAAP measures along with GAAP financial results for: analyzing the performance of the Company’s businesses; strategic and tactical decision making; and determining compensation. The Company does not consider non-GAAP measures to be a substitute for, or superior to, financial results presented in accordance with GAAP. All of the non-GAAP measures included herein are reconciled to the most directly comparable GAAP results in the following financial statements. These non-GAAP measures may be calculated differently from non-GAAP measures used by other companies. In addition, these non-GAAP measures are not based on a comprehensive set of accounting rules or principles and some of the adjustments reflect the exclusion of items that are recurring and will be reflected in the Company’s GAAP financial results for the foreseeable future.

Exclusions from GAAP Results

The Company excludes the following from its GAAP results in presenting non-GAAP measures:

- Equity-based compensation expenses  The Company recognizes the fair value of its 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 the Company’s equity compensation plans. Equity-based compensation can vary significantly in amount from period to period.

- Other  The exclusion of certain other non-GAAP amounts allows for improved comparisons of the Company’s results to both prior periods and other companies. The Company excludes the following other items from non-GAAP measures as these items are not reflective of the performance of the Company’s ongoing businesses:

• 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.

Non-GAAP Measures

The specific non-GAAP measures included herein are gross profit, gross margin, net income (loss), net margin, and earnings per share ("EPS”). The Company calculates these measures as follows:

- Adjusted Gross Profit and Adjusted Gross Margin  K&S non-GAAP adjusted gross profit and adjusted gross margin exclude the effect of equity-based compensation expense recorded within cost of sales.

- Adjusted Net Income (Loss), Adjusted Net Margin and Adjusted EPS  K&S non-GAAP adjusted net income (loss) and adjusted EPS exclude equity-based compensation; amortization of intangibles; restructuring; impairment of goodwill; Switzerland pension curtailment plan; gain on extinguishment of debt; non-cash interest expense; net tax settlement expense (benefit) and other tax adjustments; and related tax effects on non-GAAP adjustments.

About Kulicke & Soffa

Kulicke & Soffa (NASDAQ: KLIC) is a global leader in the design and manufacture of semiconductor and LED assembly equipment. As a pioneer in this industry, K&S has provided customers with market leading packaging solutions for decades. In recent years, K&S has expanded its product offerings through strategic acquisitions, adding die and wedge bonders and a broader range of expendable tools to its core ball bonding products. Combined with its extensive expertise in process technology, K&S is well positioned to help customers meet the challenges of assembling the next-generation semiconductor and LED devices. (www.kns.com)

Caution Concerning Forward Looking Statements

In addition to historical statements, this press release contains statements relating to future events and our future results. These statements are "forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995, and include, but are not limited to, statements that relate to increasing, continuing or strengthening demand for our products, and our future revenue, cost reductions, and operational flexibility. While these forward-looking statements represent our judgments and future expectations concerning our business, a number of risks, uncertainties and other important factors could cause actual developments and results to differ materially from our expectations. These factors include, but are not limited to: the risk that customer orders already received may be postponed or canceled, generally without charges; the risk that anticipated customer orders may not materialize; the risk that our suppliers may not be able to meet our demands on a timely basis; the volatility in the demand for semiconductors and our products and services; volatile global economic conditions, which could result in, among other things, sharply lower demand for products containing semiconductors and for the Company’s products, and disruption of capital and credit markets; the risk of failure to successfully manage our operations; acts of terrorism and violence; risks, such as changes in trade regulations, currency fluctuations, political instability and war, associated with a substantial foreign customer and supplier base and substantial foreign manufacturing operations; and the factors listed or discussed in Kulicke and Soffa Industries, Inc. 2009 Annual Report on Form 10-K and our other filings with the Securities and Exchange Commission. Kulicke & Soffa Industries, Inc is under no obligation to (and expressly disclaims any obligation to) update or alter its forward-looking statements whether as a result of new information, future events or otherwise.