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What changed in KULICKE & SOFFA INDUSTRIES INC's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of KULICKE & SOFFA INDUSTRIES INC's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+299 added−272 removedSource: 10-K (2023-11-16) vs 10-K (2022-11-17)

Top changes in KULICKE & SOFFA INDUSTRIES INC's 2023 10-K

299 paragraphs added · 272 removed · 200 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

66 edited+47 added−24 removed37 unchanged
Biggest changeAs of October 1, 2022, our total cash, cash equivalents and short-term investments were $775.5 million, a $35.7 million increase from the prior fiscal year end. We believe our strong cash position will allow us to continue to invest in product development and pursue non-organic growth opportunities.
Biggest changeDespite the slight decrease from the prior fiscal year end, we believe our strong cash position will allow us to continue to invest in product development, pursue non-organic growth opportunities and return capital to investors through our share repurchase and dividend programs Please see “Part II, Item 7. – Management Discussion and Analysis of Financial Condition - Liquidity and Capital Resources” for more information.
These applications are commonly used in most, if not all, smartphones available today in the market. We also have expanded the use of AT Premier PLUS for wafer level wire bonding for micro-electro-mechanical systems (“MEMS”) and other sensors. Our technology leadership and bonding process know-how have enabled us to develop highly function-specific equipment with high throughput and accuracy.
These applications are commonly used in most, if not all, of the smartphones available today in the market. We also have expanded the use of AT Premier PLUS for wafer level wire bonding for micro-electro-mechanical systems (“MEMS”) and other sensors. Our technology leadership and bonding process know-how have enabled us to develop highly function-specific equipment with high throughput and accuracy.
Raw materials used in our equipment manufacturing are generally available from multiple sources; however, many outsourced parts and components are only available from a single or limited number of sources. Our ball bonder, wedge bonder, AT Premier, APAMA and Katalyst TM bonder manufacturing and assembly is done at our facility in Singapore.
Raw materials used in our equipment manufacturing are generally available from multiple sources; however, many outsourced parts and components are only available from a single or limited number of sources. Our ball bonder, wedge bonder, AT Premier, APAMA TM and Katalyst TM bonder manufacturing and assembly is done at our facility in Singapore.
By reducing the interconnect dimensions, 2.5D ICs and 3D ICs are expected to provide form factor, performance and power efficiency enhancements over traditional flip-chip packages in production today. High-performance processing and memory applications, in addition to mobile devices such as smartphones and tablets, are anticipated to be earlier adopters of this new packaging technology.
By reducing the interconnect dimensions, 2.5D ICs and 3D ICs are expected to provide form factor, performance and power efficiency enhancements over traditional flip-chip packages in production today. High-performance processing and memory applications, in addition to mobile devices such as smartphones and tablets, are earlier adopters of this new packaging technology.
However, this is a highly dynamic situation. As the macroeconomic situation remains highly volatile and the geopolitical situation remains uncertain, there is uncertainty surrounding the operations of our manufacturing locations, our business, our expectations regarding future demand or supply conditions and our near- and long-term liquidity, our financial condition and, consequentially, our operating results could deteriorate.
However, this is a highly dynamic situation. As the macroeconomic situation remains highly volatile and the geopolitical situation remains uncertain, there is uncertainty surrounding the operations of our manufacturing locations, our business, our expectations regarding future demand or supply conditions, our near- and long-term liquidity and our financial condition. Consequently, our operating results could deteriorate.
This forms the foundation for our advanced packaging equipment development. We are also developing and manufacturing advanced packaging bonders for the emerging 2.5-dimensional integrated circuit (“2.5D IC”) and 3-dimensional integrated circuit (“3D IC”) markets.
This forms the foundation for our advanced packaging equipment development. We are also developing and manufacturing advanced packaging solutions for the emerging 2.5-dimensional integrated circuit (“2.5D IC”) and 3-dimensional integrated circuit (“3D IC”) markets.
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. 7 Table of Contents We have incurred in the past, and expect in the future to incur, costs to comply with environmental laws.
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 incurred in the past, and expect in the future to incur, costs to comply with environmental laws.
Following employee feedback in the last survey, the Company has introduced a formalized career progression framework and associated tools to provide clarity and guidance to both managers and employees. The framework provides clarity and tools for employees in the Professional and Management Career tracks on the requisite competencies for advancement to the next career level within the Company.
Following employee feedback in the last employee engagement survey, we introduced a formalized career progression framework and associated tools to provide clarity and guidance to both managers and employees. The framework provides clarity and tools for employees in the Professional and Management Career tracks on the requisite competencies for advancement to the next career level within the Company.
We continue to position our business to leverage our research and development leadership and innovation and to focus our efforts on mitigating volatility, improving profitability and ensuring longer-term growth. We remain focused on operational excellence, expanding our product offerings and managing our business efficiently throughout the business cycles.
We continue to position our business to leverage our research and development leadership and innovation and to focus our efforts on mitigating volatility, improving profitability and ensuring longer-term growth. We remain focused on operational excellence, expanding our product offerings through continuous research and development or acquisitions and managing our business efficiently throughout the business cycles.
The prolonged Ukraine/Russia conflict did not materially impact our financial condition and operating results in fiscal 2022.
The prolonged Ukraine/Russia conflict did not materially impact our financial condition and operating results in fiscal 2023.
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's website at www.sec.gov . Our year end for each of fiscal 2022, 2021 and 2020 was October 1, 2022, October 2, 2021, and October 3, 2020, respectively.
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's website at www.sec.gov . Our year end for each of fiscal 2023, 2022 and 2021 was September 30, 2023, October 1, 2022, and October 2, 2021, respectively.
We value different backgrounds, celebrate unique perspectives, and believe that diversity and inclusion are essential to creating an environment where we can achieve our best innovation essential to the success of the Company. In fiscal 2022, the Company incorporated its Diversity & Inclusion (“D&I”) program into its Environmental, Social and Governance (“ESG”) structure.
We value different backgrounds, celebrate unique perspectives, and believe that diversity and inclusion are essential to creating an environment where we can achieve our best innovation essential to the success of the Company. In fiscal 2022, the Company incorporated its Diversity & Inclusion (“D&I”) program into its ESG structure.
We have Environment, Health and Safety (“EHS”) practices, objectives and performance targets at each of our key manufacturing and R&D sites, which are overseen by an EHS Committee, led by an EHS Manager or a Safety Representative from each key operations function.
Each of our key manufacturing and R&D sites have also established its Environment, Health and Safety (“EHS”) practices, objectives and performance targets, which are overseen by an EHS Committee, led by an EHS Manager or a Safety Representative from each key operations function.
Our Aftermarket Products and Services (“APS”) segment has historically been less volatile than our Capital Equipment segment. The APS sales are more directly tied to semiconductor unit consumption rather than capacity requirements and production capability improvements.
Our Aftermarket Products and Services (“APS”) segment has historically been less volatile than the other reportable segments. APS sales are more directly tied to semiconductor unit consumption rather than capacity requirements and production capability improvements.
Approximately 94.4% and 96.4% of our net revenue for fiscal 2022 and 2021, respectively, was for shipments to customer locations outside of the U.S., primarily in the Asia/Pacific region.
Approximately 91.2% and 94.4% of our net revenue for fiscal 2023 and 2022, respectively, was for shipments to customer locations outside of the U.S., primarily in the Asia/Pacific region.
Furthermore, there is a potential risk of conflict and instability in the relationship between Taiwan and China which could disrupt the operations of our customers and/or suppliers in both Taiwan and China, our manufacturing operations in China, and our future plans in the region.
Furthermore, there is a potential risk of conflict and instability in the relationship between Taiwan and China that could disrupt the operations of our customers and/or suppliers in both Taiwan and China and our manufacturing operations in Taiwan and China.
MiniLEDs are used in TV, IT display, large display, signage display, consumer display and automotive markets. The usage of miniLEDs is expected to grow significantly over the next few years, followed by microLED adoption.
Mini-LEDs are used in TV, IT display, large display, signage display, consumer display and automotive markets. The usage of mini-LEDs is expected to grow significantly over the next few years, followed by micro-LED adoption.
We believe that the semiconductor industry macroeconomics have not changed and we anticipate that the industry’s long-term growth projections will normalize, but the sector is seeing short-term volatility and disruptions due to general inflationary pressures, falling consumer sentiment, or economic downturn caused, directly or indirectly, by various macroeconomic factors, including the prolonged Ukraine/Russia conflict.
Due to general inflationary pressures, declining consumer sentiment, and an economic downturn caused, directly or indirectly, by various macroeconomic factors, including the ongoing Israel-Hamas war and the prolonged Ukraine/Russia conflict, the sector is seeing short-term volatility and disruption. However, we believe that the semiconductor industry macroeconomics have not changed and we anticipate that the industry’s long-term growth projections will normalize.
We follow this product development methodology in all our major product lines. 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 U.S. patents, many of which have foreign counterparts.
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 U.S. patents, many of which have foreign counterparts.
We are not including the information contained on our website as a part of, or incorporating it by reference into, this filing.
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 believe that our existing cash, cash equivalents, short-term investments, existing Facility Agreements, and anticipated cash flows from operations will be sufficient to meet our liquidity and capital requirements, notwithstanding the prolonged Ukraine/Russia conflict or other macroeconomic factors, for at least the next twelve months from the date of filing of this Annual Report on Form 10-K.
We believe that our existing cash, cash equivalents, short-term investments, existing Facility Agreements, and anticipated cash flows from operations will be sufficient to meet our liquidity and capital requirements, notwithstanding the ongoing Israel-Hamas war and the prolonged Ukraine/Russia conflict and other macroeconomic factors, for at least the next twelve months from the date of filing.
During fiscal 2019, we entered into a new market, miniLED for display backlighting and direct emitting display, with the launch of PIXALUX TM . The PIXALUX TM is a high-speed die placement equipment, and one of the most mass production ready solutions for miniLED placement in the market.
During fiscal 2019, we entered into the emerging mini-LED market supporting display backlighting and direct emissive displays, with the launch of PIXALUX TM . The PIXALUX TM is a high-speed die placement equipment, and one of the most mass production ready solutions for mini-LED placement in the market.
The following table reflects our backlog as of October 1, 2022 and October 2, 2021: As of (in thousands) October 1, 2022 October 2, 2021 Backlog $ 510,145 $ 787,241 6 Table of Contents 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.
The following table reflects our backlog as of September 30, 2023 and October 1, 2022: As of (in thousands) September 30, 2023 October 1, 2022 Backlog $ 423,824 $ 510,145 7 Table of Contents 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.
The Company has entered into a written trading plan under Rule 10b5-1 of the Exchange Act to facilitate repurchases under the Program. The Program may be suspended or discontinued at any time and is funded using the Company’s available cash, cash equivalents and short-term investments.
On May 7, 2022, the Company entered into a written trading plan under Rule 10b5-1 of the Exchange Act to facilitate repurchases under the Program. This trading plan was most recently modified on May 29, 2023. The Program may be suspended or discontinued at any time and is funded using the Company’s available cash, cash equivalents and short-term investments.
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 IDMs and OSATs, periodically invest aggressively in latest generation capital equipment.
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 IDMs and OSATs, periodically invest aggressively in latest generation capital equipment.
Diversity is important to the Company and we believe that the combined knowledge and diverse views that our employees contribute across our global locations strengthens our competitive edge.
We are also committed to treating employees with dignity and respect. Diversity is important to the Company and we believe that the combined knowledge and diverse views that our employees contribute across our global locations strengthens our competitive edge.
During the fiscal year ended October 1, 2022, the Company repurchased a total of approximately 2,782.1 thousand shares of common stock at a cost of approximately $132.8 million. The stock repurchases were recorded in the periods they were delivered and accounted for as treasury stock in the Company’s Consolidated Balance Sheets.
During the fiscal year ended September 30, 2023, the Company repurchased a total of approximately 1,515.0 thousand shares of common stock at a cost of approximately $68.1 million. The stock repurchases were recorded in the periods they were delivered and accounted for as treasury stock in the Company’s Consolidated Balance Sheets.
The declaration of any future cash dividend is at the discretion of the Board of Directors, subject to applicable laws, and will depend on the Company’s financial condition, results of operations, capital requirements, business conditions and other factors, as well as a determination that such dividends are in the best interests of the Company’s shareholders. 3 Table of Contents Business Environment The semiconductor business environment is highly volatile and is driven by internal dynamics, both cyclical and seasonal, in addition to macroeconomic forces.
The declaration of any future cash dividend is at the discretion of the Board of Directors, subject to applicable laws, and will depend on the Company’s financial condition, results of operations, capital requirements, business conditions and other factors, as well as a determination that such dividends are in the best interests of the Company’s shareholders.
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.
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 methodology in all our major product lines.
If the Company reissues treasury stock at an amount below its acquisition cost and additional paid-in capital associated with prior treasury stock transactions is insufficient to cover the difference between acquisition cost and the reissue price, this difference is recorded against retained earnings.
If the Company reissues treasury stock at an amount below its acquisition cost and additional paid-in capital associated with prior treasury stock transactions is insufficient to cover the difference between acquisition cost and the reissue price, this difference is recorded against retained earnings. As of September 30, 2023, our remaining stock repurchase authorization under the Program was approximately $181.0 million.
Risk Factors. 2 Table of Contents Share Repurchase Program On August 15, 2017, the Company’s Board of Directors authorized a program (the “Program”) to repurchase up to $100 million of the Company’s common stock on or before August 1, 2020.
For other information, please see “Part I, Item 1A — Risk Factors”. 3 Table of Contents Share Repurchase Program On August 15, 2017, the Company’s Board of Directors authorized a program (the “Program”) to repurchase up to $100 million of the Company’s common stock on or before August 1, 2020.
Significant competitive factors in the semiconductor equipment market include price, speed/throughput, production yield, process control, delivery time, innovation, quality and customer support, each of which contribute to lower the overall cost per package being manufactured. Our major equipment competitors are ASM Pacific Technology, BE Semiconductor Industries N.V., Hanwha Precision Machinery Co., Ltd. and Shinkawa Ltd.
Significant competitive factors in the semiconductor equipment market include price, speed/throughput, production yield, process control, delivery time, innovation, quality and customer support, each of which contribute to lower the overall cost per package being manufactured.
The health and safety of our employees is of paramount importance to the Company, and forms an integral part of our organizational culture.
Safe Workplace We endeavor to provide a safe and healthy workplace for all our employees. The health and safety of our employees is of paramount importance to the Company, and forms an integral part of our organizational culture.
We have provided tools and infrastructure to enable employees the choice and flexibility of a range of flexible work arrangement options that best meet their needs while allowing them to continue to fulfill business objectives.
Work flexibility, which had been critical to our success throughout the COVID-19 pandemic, has now become part of our culture. We have provided tools and infrastructure to enable employees the choice and flexibility of a range of flexible work arrangement options that best meet their needs while allowing them to continue to fulfill the Company’s business objectives.
Sales and Customer Support We believe long-term customer relationships are critical to our success, and comprehensive sales support and customer support are an important means of establishing those relationships. To maintain these relationships, we primarily utilize our direct sales force, as well as distribution channels such as agents and distributors, depending on the product, region, or end-user application.
To maintain these relationships, we primarily utilize our direct sales force, as well as distribution channels such as agents and distributors, depending on the product, region, or end-user application.
The U.S. and several other countries have levied tariffs on certain goods, and have introduced other trade restrictions, which, together with the impact of the COVID-19 pandemic discussed above, has resulted in substantial uncertainties in the semiconductor, LED, memory and automotive markets.
The U.S. and several other countries have levied tariffs on certain goods and have introduced other trade restrictions resulting in substantial uncertainties in the semiconductor, LED, memory and automotive markets.
Dividends On August 30, 2022, June 8, 2022, March 3, 2022 and October 18, 2021, the Board of Directors declared a quarterly dividend of $0.17 per share of common stock. During the fiscal year ended October 1, 2022, the Company declared dividends of $0.68 per share of common stock.
Dividends On August 23, 2023, June 8, 2023, March 2, 2023 and November 16, 2022, the Board of Directors declared a quarterly dividend of $0.19 per share of common stock. During the fiscal year ended September 30, 2023, the Company declared dividends of $0.76 per share of common stock.
By working with customers, material suppliers, and other equipment suppliers, we have developed a series of robust, high-yielding production processes, which have made copper wire widely accepted and significantly reduced the cost of assembling an integrated circuit. Our leadership also has allowed us to maintain a competitive position in the latest generations of ball bonders.
By working with customers, material suppliers, and other equipment suppliers, we have developed a series of robust, high-yielding production processes, which have made the use of copper wire for the bonding process widely accepted and significantly reduced the cost of assembling an integrated circuit.
This training is included in our new hire on-boarding programs with employee-wide refresher trainings conducted every two years. 8 Table of Contents Additionally, as part of our business continuity measures and in response to the COVID-19 pandemic, we have assembled a management-led COVID-19 Committee comprising directors and managers of various key departments to provide global oversight and guidance in implementing site-specific business continuity and risk mitigation plans across our key sites.
As part of our business continuity measures and in response to the COVID-19 pandemic, we assembled a management-led COVID-19 Committee comprising directors and managers of various key departments to provide global oversight and guidance in implementing site-specific business continuity and risk mitigation plans across our key sites.
The capillaries are made using blanks produced at our facilities in China and Israel. We both produce and outsource the production of our bonding wedges. Our China and Israel facilities are ISO 9001 certified. Our China facility is also ISO 14001 and ISO 18001 certified.
The capillaries are produced at our facilities in China and Israel. We both produce and outsource the production of our bonding wedges. Our China and Israel facilities are ISO 9001 certified. Our China facility is also ISO 14001 and ISO 18001 certified. Research and Product Development Many of our customers generate technology roadmaps describing their projected packaging technology requirements.
Diversity & Inclusion We are committed to providing a diverse and collaborative environment that is rich in opportunities and which enables our employees to grow both professionally and personally in their careers within the Company. We are also committed to treating employees with dignity and respect.
As of September 30, 2023, we had 2,877 full-time employees and 148 temporary workers worldwide. Diversity & Inclusion We are committed to providing a diverse and collaborative environment that is rich in opportunities and which enables our employees to grow both professionally and personally in their careers within the Company.
In addition to producing technical advances, these collaborative development efforts strengthen customer relationships and enhance our reputation as a technology leader and solutions provider. In addition to gold, silver alloy wire and aluminum wire, our leadership in the industry’s use of copper wire for the bonding process is an example of the benefits of our collaborative efforts.
In addition to gold, silver alloy wire and aluminum wire, our leadership in the industry’s use of copper wire for the bonding process is an example of the benefits of our collaborative efforts.
The BCP is designed to facilitate the prompt resumption of our business operations and functions arising from an event which impacts or potentially impacts our business operations. As the scale, timing, and impact of disasters and disruptions are unpredictable, the BCP has been designed to be flexible in responding to actual events as they occur.
As the scale, timing, and impact of disasters and disruptions are unpredictable, the BCP has been designed to be flexible in responding to actual events as they occur.
Employee Development We believe in investing in our employees’ professional growth by encouraging them to continually develop their functional and leadership skills and to gain different experiences across the Company as they progress along their career paths and grow within our organization.
Our HR function also includes centers of excellence in Talent Management, Talent Acquisition, HR Shared Services, and Global Compensation and Benefits, ensuring best practices in these important areas. 10 Table of Contents Employee Development We believe in investing in our employees’ professional growth by encouraging them to continually develop their functional and leadership skills and to gain different experiences across the Company as they progress along their career paths and grow within our organization.
Our Capital Equipment segment is primarily affected by the industry’s internal cyclical and seasonal dynamics in addition to broader macroeconomic factors that can positively or negatively affect our financial performance.
Our Ball Bonding Equipment, Wedge Bonding Equipment and Advanced Solutions reportable segments, as well as the remaining operating segments in the “All Others” category, are primarily affected by the industry’s internal cyclical and seasonal dynamics in addition to broader macroeconomic factors that can positively or negatively affect our financial performance.
Our principal offices are located at 23A Serangoon North Avenue 5, #01-01, Singapore 554369 and 1005 Virginia Dr., Fort Washington, PA 19034, and our telephone number in the United States is (215) 784-6000. We maintain a website with the address www.kns.com .
Delivering new levels of value to our customers is a critically important goal. K&S was incorporated in Pennsylvania in 1956. Our principal offices are located at 23A Serangoon North Avenue 5, #01-01, Singapore 554369 and 1005 Virginia Dr., Fort Washington, PA 19034, and our telephone number in the United States is (215) 784-6000.
The BCP provides a structured framework for safeguarding our employees and property, making a financial and operational assessment, protecting our books and records, perpetuating critical business functions, and enabling the continuation of customer transactions.
The BCP provides a structured framework for safeguarding our employees and property, making a financial and operational assessment, protecting our books and records, perpetuating critical business functions, and enabling the continuation of customer transactions. We review and update our BCP on a periodic basis to reflect any changes in our Company’s structure, operations or environment that may affect its continuity.
Employees are encouraged to enroll in the various training courses intended to support their development in the required competency stages as they chart their career progression with the Company. Work flexibility, which had been critical to our success throughout the COVID-19 pandemic, has now become part of our culture.
Employees are encouraged to enroll in the various training courses intended to support their development in the required competency stages as they chart their career progression with the Company.
Environmental and Other Regulatory 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 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. 8 Table of Contents Environmental and Other Regulatory 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 all cases, we are making a concerted effort to develop commonality of subsystems and design practices, in order to improve performance and design efficiencies. We believe this will benefit us as it will increase synergies between the various engineering product groups. Furthermore, we continually research adjacent market segments where our technologies could be used.
We believe this will benefit us as it will increase synergies between our various product engineering groups. Furthermore, we continually research adjacent market segments where our technologies could be used.
Employees may also raise any concerns of legal violation, violation of the Company ’ s codes and policies, improper or unethical business practices, or concealment of any wrong-doing through the whistleblower hotline or website. We take every raised complaint seriously and prohibit any form of retaliation against any employee for lodging a complaint in good faith. 9 Table of Contents
Employees may also confidentially and anonymously raise any concerns of legal violation, violation of the Company ’ s codes and policies, improper or unethical business practices, or concealment of any wrong-doing through the whistleblower hotline or website.
Our leadership in system-in-package (“SiP”), multi-chip module (“MCM”) and heterogeneous integration are well positioned to address the requirements in this emerging and growing trend.
Our leadership in system-in-package (“SiP”), multi-chip module (“MCM”) and heterogeneous integration are well positioned to address the requirements of this emerging and growing trend. Our latest fluxless capable bonding technology allows ultra-fine-pitch interconnects necessary for next-generation chiplet-based advanced packages.
In advancing our leadership in ultra-fine-pitch advanced packaging solution, we are offering fluxless bonding capability in selected advanced packaging equipment. 5 Table of Contents We have also broadened our advanced packaging solutions for mass reflow to include high accuracy flip chip and fan-out wafer level packaging (“FOWLP”) with the Katalyst TM .
In addition to our growing heterogeneous opportunities, we have also broadened our mass reflow advanced packaging solutions to include high-accuracy flip chip and fan-out wafer level packaging (“FOWLP”) with Katalyst TM .
We continually review these policies and benchmark them against market peers to help ensure that we implement leading practices on recruitment, onboarding and employee development. Our HR function also includes centers of excellence in Talent Management, Talent Acquisition, HR Management Information System, and Global Compensation and Benefits, ensuring best practices in these important areas.
We continually review these policies and benchmark them against market peers to help ensure that we implement leading practices on recruitment, onboarding and employee development.
We believe our unique ability to simultaneously develop both equipment and tools is a core strength supporting our products' technological differentiation. Customers Our major customers include IDMs, OSATs, industrial manufacturers and automotive electronics suppliers. Revenue from our customers may vary significantly from year-to-year based on their respective capital investments, operating expense budgets, and overall industry trends.
We believe our unique ability to simultaneously develop both equipment and tools is a core strength supporting our products' technological differentiation. 6 Table of Contents Customers Our major customers include IDMs, OSATs, foundry service providers, and other electronic manufacturers and automotive electronics suppliers.
RAPID™ is the first product in the smart bonder series to address the Industry 4.0 requirements. The key features of this series include real-time process and performance monitoring, real-time equipment health monitoring, advanced data analytics and traceability, predictive maintenance monitoring and analysis, and detection and enhanced post-bond inspection.
The RAPID™ series continues to excel in providing real-time process and performance monitoring, real-time equipment health monitoring, advanced data analytics and traceability, predictive maintenance monitoring and analysis, and detection and enhanced post-bond inspection. We optimize our bonder platforms to deliver variants of our products to serve emerging high-growth markets.
Our business is subject to various other regulations typical of businesses of our type in the jurisdictions in which we operate. Business Continuity Management Plan We have developed and implemented a global Business Continuity Management Plan (“BCP”) for our business operations.
Business Continuity Management Plan We have developed and implemented a global Business Continuity Management Plan (“BCP”) for our business operations. The BCP is designed to facilitate the prompt resumption of our business operations and functions arising from an event which impacts or potentially impacts our business operations.
Significant competitive factors in the semiconductor packaging materials industry include performance, price, delivery, product life, and quality. Our significant tools competitors are Precision Engineering Company, Disco Corporation, Small Precision Tools Co. Ltd. and Chaozhou Three-Circle (Group) Co., Ltd.
Our major equipment competitors are ASM Pacific Technology, Hesse GmbH, Han's Laser Technology Co., Ltd., BE Semiconductor Industries N.V., Hanwha Precision Machinery Co., Ltd., Panasonic Holdings Corporation, Shinkawa Ltd. and Nordson Corporation. Significant competitive factors in the semiconductor packaging materials industry include performance, price, delivery, product life, and quality.
Approximately 56.9% and 55.6% of our net revenue for fiscal 2022 and 2021, re spectively, was for shipments to customers located in China, which is subject to risks and uncertainties related to the respective policies of the governments of China and the U.S.
The shipments to customers headquartered in China are subject to heightened risks and uncertainties related to the respective policies of the governments of China and the U.S.
For other information regarding our concentrations and customers, see “Part II - Item 8. Financial Statements and Supplementary Data - Notes to Consolidated Financial Statements - Note 17: Commitments, Contingencies and Concentrations”. There was no customer with sales representing more than 10% of our net revenue in fiscal 2022.
Revenue from our customers may vary significantly from year-to-year based on their respective capital investments, operating expense budgets, and overall industry trends. For other information regarding our concentrations and customers, please see “Part II, Item 8 — Financial Statements and Supplementary Data — Notes to Consolidated Financial Statements - Note 17: Commitments, Contingencies and Concentrations”.
Upon the consummation of the transaction, we will acquire the designated dispensing assets and the dispensing business of AJAs affiliate, Samurai Spirit Inc., a leading developer and manufacturer of high-precision micro dispensing equipment and solutions in Taiwan. The acquisition is expected to close in fiscal 2023, subject to customary closing conditions, including applicable regulatory approvals.
(“AJA”), including the material business and assets formerly owned by its affiliate, Samurai Spirit Inc., a leading developer and manufacturer of high-precision micro-dispensing equipment and solutions in Taiwan.
Our leading technology for wedge bonder equipment uses ribbon or heavy wire for different applications such as power electronics, automotive and semiconductor applications. The advanced interconnect capabilities of PowerFusion PS ® improve the processing of high-density power packages, due to an expanded bondable area, wider leadframe capability, indexing accuracy and teach mode.
The advanced interconnect capabilities of PowerFusion PS ® improve the processing of high-density power packages, due to an expanded bondable area, wider leadframe capability, indexing accuracy and teach mode. In all cases, we are making a concerted effort to develop commonality of subsystems and design practices, in order to improve performance and design efficiencies.
Human Capital Our Employees Our talented employees are critical to our ability to achieve the Company’s vision to be the leading technology and service provider of innovative interconnect solutions enabling a smart future. As of October 1, 2022, we had 2,944 full-time employees and 223 temporary workers worldwide.
This website reference is provided for convenience only and the content on the referenced website is expressly not incorporated by reference into this Annual Report on Form 10-K. 9 Table of Contents Human Capital Our Employees Our talented employees are critical to our ability to achieve the Company’s vision to be the leading technology and service provider of innovative interconnect solutions enabling a smart future.
We optimize our bonder platforms to deliver variants of our products to serve emerging high-growth markets. For example, we have developed extensions to address opportunities in memory assembly with our RAPID™ MEM, in particular for NAND Flash storage.
For example, we have developed extensions to address opportunities in memory assembly with our RAPID™ MEM, in particular for NAND Flash storage. 5 Table of Contents Our leading technology for wedge bonder equipment uses ribbon or heavy wire for different applications such as power electronics, automotive and semiconductor applications.
There can be no assurances regarding levels of demand for our products and we believe historic industry-wide volatility will persist. In the Asia/Pacific region, our customer base has also become more geographically concentrated as a result of economic and industry conditions.
For example, customers headquartered in the U.S. may require us to deliver our products to their back-end production facilities in China. Our customer base in the Asia/Pacific region has become more geographically concentrated over time as a result of general economic and industry conditions and trends.
Our customers primarily consist of semiconductor device manufacturers, integrated device manufacturers ( “ IDMs ” ), outsourced semiconductor assembly and test providers ( “ OSATs ” ), other electronics manufacturers and automotive electronics suppliers. 1 Table of Contents K&S was incorporated in Pennsylvania in 1956.
Our customers primarily consist of integrated device manufacturers (“IDMs”), outsourced semiconductor assembly and test providers (“OSATs”), foundry service providers, and other electronics manufacturers and automotive electronics suppliers. Our goal is to be the technology leader and the most competitive supplier in terms of cost and performance in each of our major product lines.
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Item 1. BUSINESS Kulicke and Soffa Industries, Inc. ( “ we ” , the “ Company ” or “ K&S ” ) designs, manufactures and sells capital equipment and tools used to assemble semiconductor devices, including integrated circuits ( “ ICs ” ), high and low powered discrete devices, light-emitting diodes ( “ LEDs ” ), and power modules.
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Item 1. BUSINESS Founded in 1951, Kulicke and Soffa Industries, Inc. (“K&S,” “we,” “us,” “our,” or the “Company”) specializes in developing cutting-edge semiconductor and electronics assembly solutions enabling a smarter and more sustainable future.
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In addition, we have a portfolio of equipment that is used to assemble components onto electronic circuit boards. We also service, maintain, repair and upgrade our equipment, and sell consumable aftermarket tools for our and our peer companies’ equipment.
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Our ever-growing range of products and services supports growth and facilitates technology transitions across large-scale markets, such as advanced display, automotive, communications, compute, consumer, data storage, energy storage and industrial.
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Key Events in Fiscal 2022 Signing of definitive agreement for the acquisition of Advanced Jet Automation Co., Ltd. On September 8, 2022, the Company announced that one of its subsidiaries signed a definitive agreement for the acquisition of Advanced Jet Automation Co., Ltd. (“AJA”), a technology company headquartered in Taiwan.
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We design, develop, manufacture and sell capital equipment and consumables and provide services used to assemble semiconductor and electronic devices, such as integrated circuits, power discretes, light-emitting diode (“LEDs”), advanced displays and sensors. We also service, maintain, repair and upgrade our equipment and sell consumable aftermarket solutions and services for our and our peer companies’ equipment.
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COVID-19 Pandemic The COVID-19 pandemic and the resulting containment measures have significantly impacted the global economy, disrupted global supply chains, created volatility in equity market valuations, created significant volatility and disruption in financial markets, and affected unemployment levels. The global COVID-19 response remains dynamic and some countries continue to impose quarantines, containment measures or travel restrictions.
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Accordingly, we invest in research and engineering projects intended to expand our market access and enhance our leadership position in semiconductor, electronics and display assembly. We also remain focused on enhancing our value to customers through higher productivity systems, more autonomous capabilities and continuous improvement and optimization of our operational costs.
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In certain jurisdictions there has been a resurgence of illnesses or the threat of emerging new variants of the virus, which has led to more severe restrictions.
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Current Events Israel - Hamas War On October 7, 2023, an escalated armed conflict between Israel and the Hamas terrorist organization commenced, leading to a series of extended hostilities along Israel’s border with the Gaza Strip. Additionally, since October 8, 2023, the Hezbollah militant group has increased its hostilities against Israel over its northern region, including Haifa.
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In response to the COVID-19 pandemic, we previously had to temporarily close certain offices in the United States, Europe and Asia as well as execute our Business Continuity Plan (“BCP”), which measures have disrupted our business operations.
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Our Company has a manufacturing facility and a business office in Haifa, and our capillaries are manufactured at our facilities in Israel and China. As of the date of this report, our business and manufacturing operations in Israel have not been impacted and no material damage or utilities interruption have been noted at our Israeli facility.
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Our manufacturing locations have returned to normal operations and, as most countries have relaxed the containment measures over the past few months, we have recalibrated our BCP and restarted other activities in conformance with local guidelines. Our BCP has not included significant headcount reductions or changes in our overall liquidity position.
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Trade routes remain open, and our suppliers and business partners in Israel remain operational. Furthermore, save for a handful of employees who have been mobilized as members of the Israeli military reserves to active duty, disruption to our workforce has been minimal. We employ around 70 employees in Israel.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeAs a result, a major portion of our business is subject to the risks associated with international, and particularly Asia/Pacific, commerce, such as: • stringent and frequently changing trade compliance regulations; • less protective foreign intellectual property laws, and the enforcement of patent and other intellectual property rights; • longer payment cycles in foreign markets; • foreign exchange restrictions and capital controls, monetary policies and regulatory requirements; • restrictions or significant taxes on the repatriation of our assets, including cash; • tariff and currency fluctuations; • difficulties of staffing and managing dispersed international operations, including labor work stoppages and strikes in our factories or the factories of our suppliers; • changes in our structure or tax incentive arrangements; • possible disagreements with tax authorities; • episodic events outside our control such as, for example, outbreaks of coronaviruses, influenza or other illnesses; • natural disasters such as earthquakes, fires or floods, including as a result of climate change; • risks of war and civil disturbances, including the Ukraine/Russia conflict, or other events that may limit or disrupt manufacturing, markets and international trade; • act of terrorism that impact our operations, customers or supply chain or that target U.S. interests or U.S. companies; 14 Table of Contents • seizure of our foreign assets, including cash; • the imposition of sanctions of countries in which we do business; • changing political conditions and rising geopolitical tensions; and • legal systems which are less developed and may be less predictable than those in the U.S.
Biggest changeAs a result, a major portion of our business is subject to the risks associated with international commerce, particularly Asia/Pacific region, such as: • stringent and frequently changing trade compliance regulations; • less protective foreign intellectual property laws, and the enforcement of patent and other intellectual property rights; • longer payment cycles in foreign markets; • foreign exchange restrictions and capital controls, monetary policies and regulatory requirements; • restrictions or significant taxes on the repatriation of our assets, including cash; • tariff and currency fluctuations; • difficulties of staffing and managing dispersed international operations, including labor work stoppages and strikes in our factories or the factories of our suppliers; • changes in our structure or tax incentive arrangements; • possible disagreements with tax authorities; • episodic events outside our control such as, for example, outbreaks of coronaviruses, influenza or other illnesses; • natural disasters such as earthquakes, fires or floods, including as a result of climate change; • war, risks and rumors of war and civil disturbances, including the Israel-Hamas war and the Ukraine/Russia conflict, or other events that may limit or disrupt manufacturing, markets and international trade; • act of terrorism that impact our operations, customers or supply chain or that target U.S. interests or U.S. companies; • seizure of our foreign assets, including cash; • the imposition of sanctions of countries in which we do business; • changing political conditions and rising geopolitical tensions; and • legal systems which are less developed and may be less predictable than those in the U.S. 16 Table of Contents In addition, there is a potential risk of conflict and instability in the relationship between Taiwan and China which could disrupt the operations of our customers and/or suppliers in both Taiwan and China, our manufacturing operations in Taiwan and China, and our future plans in the region.
If we lose orders from a significant customer that we are not able to replace, if a significant customer reduces its orders substantially, or if we incur liabilities for not meeting customer commitments, these losses, reductions or liabilities may materially and adversely affect our business, financial condition and operating results.
If we lose orders from a significant customer that we are not able to replace, or if a significant customer reduces its orders substantially, or if we incur liabilities for not meeting customer commitments, these losses, reductions or liabilities may materially and adversely affect our business, financial condition and operating results.
We are also authorized to issue, without shareholder approval (except as required by the rules of the Nasdaq stock market), securities convertible into either common shares or preferred shares. We may issue such shares in connection with financing transactions, joint ventures, mergers and acquisitions or other purposes.
We are also authorized to issue, without shareholder approval (except as required by the rules of the Nasdaq stock market), securities convertible into either common stock or preferred stock. We may issue such shares in connection with financing transactions, joint ventures, mergers and acquisitions or other purposes.
To date, these amendments to the EAR have not had a material direct impact on our business, financial condition or results of operations and we do not expect that they will, although they could have indirect impacts, including increasing tensions in U.S. and Chinese trade relations, potentially leading to negative sentiments towards U.S.-based companies among Chinese consumers.
To date, these amendments to the EAR have not had a material direct impact on our business, financial condition or results of operations and we do not expect that they will, although they could have indirect impact, including increasing tensions in U.S. and Chinese trade relations, potentially leading to negative sentiments towards U.S.-based companies among Chinese consumers.
However, depending on the nature and scope, cybersecurity incidents could result in business disruption; the misappropriation, corruption or loss of confidential information and critical data (of the Company or that belonging to third parties); reputational damage; litigation with third parties; diminution in the value of our investment in research, development and engineering; data privacy issues; and increased cybersecurity protection and remediation costs.
However, depending on its nature and scope, cybersecurity incidents could result in business disruption; misappropriation, corruption or loss of confidential information and critical data (of the Company or that belonging to its third parties); reputational damage; litigation with third parties; diminution in the value of our investment in research, development and engineering; data privacy issues; and increased cybersecurity protection and remediation costs.
Furthermore, even if our operations are unaffected or recover quickly, if our customers or suppliers cannot timely resume their own operations due to a catastrophic event, we may be unable to fulfil our customers’ orders, and may experience reduced or cancelled orders or other disruptions to our supply chain that may adversely affect our results of operations.
Furthermore, even if our operations are unaffected or if we managed to recover our operations quickly, if our customers or suppliers cannot timely resume their own operations due to a catastrophic event, we may be unable to fulfil our customers’ orders, and may experience reduced or cancelled orders or other disruptions to our supply chain that may adversely affect our results of operations.
Although we from time to time have entered into foreign exchange forward contracts to hedge certain foreign currency exposure of our operating expenses, 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.
Although we have entered into foreign exchange forward contracts from time to time to hedge our operating expenses against certain foreign currency exposure, 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.
Changes in our assertion for foreign earnings permanently or non-permanently reinvested as a result of changes in facts and circumstances and challenges by tax authorities to our historic or future tax positions and transfer pricing policies could also significantly adversely impact our future effective tax rate.
Changes in our assertion for foreign earnings, whether permanently or non-permanently reinvested, as a result of changes in facts and circumstances or challenges by tax authorities to our historic or future tax positions and transfer pricing policies, could also significantly adversely impact our future effective tax rate.
Risks Related to Our Shares and Corporate Law We have the ability to issue additional equity securities, which would lead to dilution of our issued and outstanding common shares. We may from time to time issue additional equity securities or securities convertible into equity securities, which would result in dilution of our existing shareholders’ equity interests in us.
Risks Related to Our Shares and Corporate Law We have the ability to issue additional equity securities, which would lead to dilution of our issued and outstanding common stock. We may from time to time issue additional equity securities or securities convertible into equity securities, which would result in dilution of our existing shareholders’ equity interests in us.
This may result in increased costs, enhanced compliance or disclosure obligations and costs, or other adverse impacts on our business, financial condition or results of operations. From time to time, we create and publish voluntary disclosures regarding ESG matters.
This may result in increased costs, enhanced compliance or disclosure obligations and related costs, or other adverse impacts on our business, financial condition or results of operations. From time to time, we create and publish voluntary disclosures regarding ESG matters.
Reductions or other fluctuations in our customers' spending as a result of uncertain conditions and volatility in the macroeconomic environment, including from government, economic or fiscal instability, economic recession, actual or potential inflation, rising interest rates, slower growth in certain geographic regions, global health crises and pandemics, restricted global credit conditions, reduced demand, excess inventory, higher energy prices, or other conditions, could adversely affect our business, financial condition and operating results.
Reductions or other fluctuations in our customers' spending as a result of uncertain conditions and volatility in the macroeconomic environment, including from government, economic or fiscal instability, economic recession, actual or potential inflation, rising interest rates, slower growth in certain geographic regions, global trade issues, global health crises and pandemics, restricted global credit conditions, reduced demand, excess inventory, higher energy prices, or other conditions, could adversely affect our business, financial condition and operating results.
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.
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 stock.
Additionally, our future effective tax rate could be affected by numerous other factors including higher or lower than anticipated foreign earnings in various jurisdictions where we are subjected to tax rates that differ from the U.S. federal statutory tax rate, by changes in the valuation allowances recorded against certain deferred tax balances, or by changes in accounting principles and reporting requirements, or interpretations and application thereof.
Additionally, our future effective tax rate could be affected by numerous other factors including higher or lower than anticipated foreign earnings in various jurisdictions where we are subjected to tax rates that differ from the U.S. federal statutory tax rate, by changes in the valuation allowances recorded against certain deferred tax balances, or by changes in accounting principles and reporting requirements, or including the interpretations and application of such accounting principles and reporting requirements.
We continue to monitor new tax legislation or other developments since significant changes in tax legislation, or in the interpretation of existing legislation, could materially and adversely affect our financial condition and operating results. 21 Table of Contents Other changes in taxation could materially impact our future effective tax rate.
We continue to monitor new tax legislation or other developments since significant changes in tax legislation, or in the interpretation of existing legislation, could materially and adversely affect our financial condition and operating results. 24 Table of Contents Other changes in taxation could materially impact our future effective tax rate.
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; • restrictions on our ability to rely on suppliers due to changes in trade regulation as well as laws and regulations enacted in response to concerns related to climate change, conflict minerals, or responsible sourcing practices; • the inability of suppliers to meet our or other customer demand requirements; • 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 public health emergencies and associated containment measures (such as the COVID-19 pandemic), geopolitical tensions (such as the Ukraine/Russia conflict), significant natural disasters (including as a result of climate change) or significant price changes (including as a result of inflationary pressures); • 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.
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; • restrictions on our ability to rely on suppliers due to changes in trade regulation as well as laws and regulations enacted in response to concerns related to climate change, conflict minerals, or responsible sourcing practices; • the inability of suppliers to meet our or other customer demand requirements; • 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 public health emergencies and associated containment measures, war or geopolitical tensions (such as the Israel-Hamas war, tensions in the Middle East and the Ukraine/Russia conflict), significant natural disasters (including as a result of climate change) or significant price changes (including as a result of inflationary pressures); • 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 cannot compete successfully, we could lose customers and experience reduced margins and profitability. Geographic, Trade and Customer Risks Substantially all of our sales, distribution channels and manufacturing operations are located outside of the U.S., which subjects us to risks, including risks from changes in trade regulations, currency fluctuations, political instability and conflicts.
If we cannot compete successfully, we could lose customers and experience reduced margins and profitability. 15 Table of Contents Geographic, Trade and Customer Risks Substantially all of our sales, distribution channels and manufacturing operations are located outside of the U.S., which subjects us to risks, including risks from changes in trade regulations, currency fluctuations, political instability and conflicts.
Because our net revenue and operating results are volatile and difficult to predict, we believe consecutive period-to-period or year-over-year comparisons of our operating results may not be a good indication of our future performance. Competitive Risks Our average selling prices usually decline over time and may continue to do so.
Because our net revenue and operating results are volatile and difficult to predict, we believe consecutive period-to-period or year-over-year comparisons of our operating results may not be a good indication of our future performance. 14 Table of Contents Competitive Risks Our average selling prices usually decline over time and may continue to do so.
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, or if because of supply chain constraints we are not able to fulfil our customers' orders, they may turn to other suppliers making it more difficult for us to retain their business.
If, for example, during periods of escalating demand for our equipment, we were unable to add inventory or increase our production capacity quickly enough to meet the needs of our customers, or if we are not able to fulfil our customers' orders due to supply chain constraints, they may turn to other suppliers making it more difficult for us to retain their business.
A disruption, infiltration or failure of our information technology systems or any of our data centers as a result of software or hardware malfunctions, computer viruses, cyber-attacks, employee theft or misuse, power disruptions, natural disasters or accidents could cause breaches of data security and loss of critical data, which in turn could materially adversely affect our business.
A disruption, infiltration or failure of our information technology systems owned or used by us or any of our data centers as a result of software or hardware malfunctions, computer viruses, cyber-attacks, employee theft or misuse, power disruptions, natural disasters or accidents could cause breaches of data security and loss of critical data, which in turn could materially adversely affect our business.
If we are unable to continue to attract and retain the managerial, marketing, finance, accounting and technical personnel we require, our business, financial condition and operating results may be materially and adversely affected. Effective succession planning is also important to our long-term success.
If we are unable to continue to attract and retain the managerial, marketing, finance, accounting and technical personnel we require, our business, financial condition and operating results may be materially and adversely affected. 18 Table of Contents Effective succession planning is also important to our long-term success.
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 which do not employ our products.
These technologies include flip chip and wafer-level 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 which do not employ our products.
Our sustainability report, currently in its sixth edition, continues to outline our Company’s strategies, initiatives and performance of ESG topics identified through a materiality assessment to be most relevant to the operations and stakeholders of our Company. The identification, assessment, and disclosure of such matters is complex.
Our sustainability report, currently in its seventh edition and available on our website, continues to outline our Company’s strategies, initiatives and performance of ESG topics identified through a materiality assessment to be most relevant to the operations and stakeholders of our Company. The identification, assessment, and disclosure of such matters is complex.
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.
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. Some of these assertions may not be legitimate.
Some of the factors that may cause our net revenue and operating margins to fluctuate significantly from period to period are: • market downturns; • industry inventory levels; • the mix of products we sell because, for example: ◦ certain lines of equipment or certain aftermarket tools within our business segments are more profitable than others; and ◦ some sales arrangements have higher gross margins than others; • canceled or deferred orders; • variations in sales channel or mix of direct sales and indirect sales; • seasonality; • competitive pricing pressures may force us to reduce prices; • higher than anticipated costs of development, achieving customer acceptance or production of new products; • 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. 12 Table of Contents 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.
Some of the factors that may cause our net revenue and operating margins to fluctuate significantly from period to period are: • market downturns; • industry inventory levels; • the mix of products we sell because, for example: ◦ certain lines of equipment or certain aftermarket tools within our business segments are more profitable than others; and ◦ some sales arrangements have higher gross margins than others; • canceled or deferred orders; • variations in sales channel or mix of direct sales and indirect sales; • seasonality; • competitive pricing pressures may force us to reduce prices; • higher than anticipated costs of development, achieving customer acceptance or production of new products; • 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.
We manufacture our ball, wedge and APAMA bonders in Singapore, our Hybrid and Electronic Assembly solutions in the Netherlands, our dicing blades, capillaries and bonding wedges in China, and our capillary blanks in Israel and China. We also rely on independent foreign distribution channels for certain of our product lines.
We manufacture our ball, wedge and APAMA TM bonders in Singapore, our Hybrid and Electronic Assembly solutions in the Netherlands, our dicing blades, capillaries and bonding wedges in China, our capillaries in Israel and China, and our advanced dispensing equipment in Taiwan. We also rely on independent foreign distribution channels for certain of our product lines.
In addition, we may not be able to successfully complete the implementation of the new ERP system without experiencing difficulties. 20 Table of Contents Any disruptions, delays or deficiencies in the design and implementation or the ongoing maintenance of the new ERP system could adversely affect our ability to process orders, ship products, provide services and customer support, send invoices and track payments, fulfill contractual obligations, accurately maintain books and records, provide accurate, timely and reliable reports on our financial and operating results, including reports required by the SEC such as the evaluation of our internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, and otherwise operate our business.
Any disruptions, delays or deficiencies in the design and implementation or the ongoing maintenance of the new ERP system could adversely affect our ability to process orders, ship products, provide services and customer support, send invoices and track payments, fulfill contractual obligations, accurately maintain books and records, provide accurate, timely and reliable reports on our financial and operating results, including reports required by the SEC such as the evaluation of our internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, and otherwise operate our business.
Over 90% of our net revenue is derived from shipments to customers located outside of the U.S., primarily in the Asia/Pacific region. In the Asia/Pacific region, our customer base remains more geographically concentrated in China as a result of economic and industry conditions.
Our customer base in the Asia/Pacific region has become more geographically concentrated over time as a result of general economic and industry conditions and trends. Over 90% of our net revenue is derived from shipments to customers located outside of the U.S., primarily in the Asia/Pacific region.
Product Risks Alternative packaging technologies may render some of our products obsolete and materially and adversely affect our overall business and financial results. Alternative packaging technologies have emerged that may improve device performance or reduce the size of an integrated circuit package, as compared to traditional wire bonding. These technologies include flip chip and wafer-level packaging.
Product Risks Alternative packaging technologies may render some of our products obsolete and materially and adversely affect our overall business and financial results. Alternative packaging technologies have emerged that may improve device performance, reduce the size of or enhance the number of components inherent in an integrated circuit package, as compared to traditional wire bonding.
If errata (deviations from product specifications) or flaws in design, production, assembly or testing of our products (by us or our suppliers) were to occur, we could experience a rate of failure in our products that would result in materially adverse consequences, including: • incurring warranty expenses; • writing off the value of inventory; • disposing of products that cannot be fixed; • retrofitting products that have been shipped; • providing product replacements or modifications; and • defending against litigation. 17 Table of Contents Continued improvement in manufacturing capabilities, control of material and manufacturing quality and costs and product testing are critical factors in our future growth.
If errata (deviations from product specifications) or flaws in design, production, assembly or testing of our products (by us or our suppliers) were to occur, we could experience a rate of failure in our products that would result in materially adverse consequences, including: • incurring warranty expenses; • writing off the value of inventory; • disposing of products that cannot be fixed; • retrofitting products that have been shipped; • providing product replacements or modifications; and • defending against litigation.
Historically these downturns have severely and negatively affected the industry’s demand for capital equipment, including assembly equipment and, to a lesser extent, tools. In any case, we believe the historical volatility of our business, both upward and downward, will persist. Consequently, our revenues may decline, and our results of operations and financial condition may be adversely affected.
Historically these downturns have severely and negatively affected the industry’s demand for capital equipment, including assembly equipment and, to a lesser extent, tools. In any case, we believe the historical volatility of our business, both upward and downward, will persist.
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; • 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.
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 or post-employment non-competition obligations, and the cost of enforcing those agreements may be prohibitive, or those agreements may be unenforceable or more limited than we anticipate; • foreign intellectual property laws may not adequately protect our intellectual property rights; • 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; and • when our patents expire, or if they are invalidated, narrowed or circumvented, our competitors may be able to utilize the inventions protected by our patents.
Approximately 56.9%, 55.6% and 51.6% of our net revenue for fiscal 2022, 2021, and 2020, respectively, was derived from shipments to customers located in China. We expect our future performance to depend on our ability to continue to compete in foreign markets, particularly in the Asia/Pacific region.
Approximately 38.6%, 45.8% and 43.4% of our net revenue for fiscal 2023, 2022, and 2021, respectively, was derived from shipments to customers headquartered in China. We expect our future performance to depend on our ability to continue to compete in foreign markets, particularly in the Asia/Pacific region.
The implementation and maintenance of the new ERP system has required, and will continue to require, the investment of significant financial and human resources and the implementation may be subject to delays and cost overruns.
The implementation and maintenance of the new ERP system has required, and will continue to require, the investment of significant financial and human resources and the implementation may be subject to delays and cost overruns. In addition, we may not be able to successfully complete the implementation of the new ERP system without experiencing difficulties.
Because nearly all of our business is conducted outside the U.S., 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.
Our ability to compete overseas may therefore be materially and adversely affected by the fluctuations of the U.S. dollar against other currencies. Because nearly all of our business is conducted outside the U.S., 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.
In addition, we are authorized to issue, without shareholder approval, up to an aggregate of 200 million common shares, of which approximately 57.1 million shares were outstanding as of October 1, 2022.
In addition, we are authorized to issue, without shareholder approval, up to an aggregate of 200 million common stock, of which approximately 56.3 million shares were outstanding as of September 30, 2023.
Should we consolidate, we may experience unanticipated events, including the actions of governments, suppliers, employees or customers, which may result in unanticipated costs and disruptions to our business.
As part of our ongoing efforts to drive further efficiency, we may consolidate our manufacturing and other facilities or entities. Should we consolidate, we may experience unanticipated events, including the actions of governments, suppliers, employees or customers, which may result in unanticipated costs and disruptions to our business.
While we observed some easing of the industry-wide supply constraints towards the end of fiscal 2022, we expect constraints to continue and the duration of such constraints or their long-term impact on our business cannot be predicted at this time. 11 Table of Contents As part of our supply chain management, we have increased our inventory levels in an effort to mitigate component shortages.
While we observed some easing of the industry-wide supply constraints towards the end of fiscal 2022 and in fiscal 2023, we expect some constraints to continue and the duration of such constraints or their long-term impact on our business cannot be predicted at this time.
We also hold large amounts of data in data center facilities around the world, primarily in Singapore and the U.S., on which our business depends.
We maintain and rely extensively on information technology systems and network infrastructures for the effective operation of our business. We also hold large amounts of data in data center facilities around the world, primarily in Singapore and the U.S., on which our business depends.
The combination of businesses may result in the loss of key personnel or an interruption of, or loss of momentum in, our existing businesses and/or the acquired business. In addition, we may need to divest existing businesses, which would cause a decline in revenue or profitability and may make our financial results more volatile.
In addition, we may need to divest existing businesses, which would cause a decline in revenue or profitability and may make our financial results more volatile.
We may incur significant expense to protect or enforce our intellectual property rights.
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.
Our operations and business, and those of our customers and suppliers, can be disrupted by natural disasters, public health issues (including the COVID-19 pandemic), cybersecurity incidents, interruptions of service from utilities, or other catastrophic events including as a result of climate change.
Our operations and business, and those of our customers and suppliers, can be disrupted by natural disasters, public health issues, cybersecurity incidents, interruptions of service from utilities, or other catastrophic events including as a result of climate change. For example, we have at times experienced temporary disruptions in our manufacturing processes as a result of power outages.
As Sichuan is a key manufacturing location for the semiconductor and solar panel industries, such power rationing measures impacted factories and suppliers who operate there. The long-term effects of climate change on the global economy and the semiconductor industry in particular are unclear but could be severe, and could exacerbate the other risk factors described herein.
Such temporary suspension of business and services impacted some of the semiconductor factories and suppliers who operate there. The long-term effects of climate change on the global economy and the semiconductor industry in particular are unclear but could be severe, and could exacerbate the other risk factors described herein.
Additionally, if we do not effectively implement the ERP system as planned or the system does not operate as intended, the effectiveness of our internal control over financial reporting could be adversely affected or our ability to assess it adequately could be delayed.
Additionally, if we do not effectively implement the ERP system as planned or the system does not operate as intended, the effectiveness of our internal control over financial reporting could be adversely affected or our ability to assess it adequately could be delayed. 23 Table of Contents Currency and Tax Risks We are exposed to fluctuations in currency exchange rates that could negatively impact our financial results and cash flows.
Our future success depends on our ability to hire and retain qualified management, sales, finance, accounting and technical employees, including senior management. Experienced personnel with the relevant and necessary skill sets in our industry are in high demand and competition for their talents is intense, especially in Asia, where most of the Company’s key personnel are located.
Experienced personnel with the relevant and necessary skill sets in our industry are in high demand and competition for their talents is intense, especially in Asia, where most of the Company’s key personnel are located.
If we are not able to successfully integrate any acquired businesses with ours, the anticipated benefits of the acquisitions may not be realized fully or may take longer than expected to be realized.
If we are not able to successfully integrate any acquired businesses with ours, the anticipated benefits of the acquisitions may not be realized fully or may take longer than expected to be realized. We may also incur higher than expected costs as a result of any acquisitions or experience an overall post-completion process that takes longer than originally anticipated.
For products listed on the CCL, a license may be required as a condition to export depending on the end destination, end use or end user and any applicable license exceptions. 15 Table of Contents In 2020, the U.S.
The CCL sets forth the types of goods and services controlled by the EAR, including civilian science, technology, and engineering dual-use items. For products listed on the CCL, a license may be required as a condition to export depending on the end destination, end use or end user and any applicable license exceptions. In 2020, the U.S.
The semiconductor industry is characterized by rapid technological change, with frequent introductions of new products and technologies. Industry participants often develop products and features similar 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.
Industry participants often develop products and features similar 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.
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 that our quarterly results will continue to fluctuate.
If we fail to accurately forecast demand for our products, our business, 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 that our quarterly results will continue to fluctuate.
Our security procedures, such as virus protection software, data loss protection and our business continuity planning, such as our disaster recovery policies and back-up systems, may not be adequate or implemented properly to fully address the adverse effect of such events, which could adversely impact our operations.
Our security procedures, such as virus protection software, data loss protection and our business continuity planning, such as our disaster recovery policies and back-up systems, may not be adequate or implemented properly to fully address the adverse effect of such events, which could adversely impact our operations. 22 Table of Contents In addition, our business could be adversely affected to the extent we do not make the appropriate level of investment in our technology systems as our technology systems become out-of-date or obsolete and are not able to deliver the type of data integrity and reporting we need to run our business.
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.
We expect that 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.
Information Technology and Enterprise System Risks We may be subject to disruptions or failures in our information technology systems and network infrastructures that could have a material adverse effect on us. We maintain and rely extensively on information technology systems and network infrastructures for the effective operation of our business.
If we become involved in this type of litigation, it could consume significant resources and divert our attention from our business. Information Technology and Enterprise System Risks We may be subject to disruptions or failures in our information technology systems and network infrastructures that could have a material adverse effect on us.
Difficulties in forecasting demand for our product lines may lead to periodic inventory shortages or excesses. We typically operate our business with limited visibility of future demand. We do not have long-term contracts with many of our customers. As a result, demand for our products in future periods is difficult to predict and we sometimes experience inventory shortages or excesses.
Consequently, our revenues may decline, and our results of operations and financial condition may be adversely affected. 13 Table of Contents Difficulties in forecasting demand for our product lines may lead to periodic inventory shortages or excesses. We typically operate our business with limited visibility of future demand. We do not have long-term contracts with many of our customers.
There was no customer with sales representing more than 10% of net revenue in fiscal 2022. Sales to our ten largest customers comprised 49.1% and 62.0% of our net revenue for fiscal 2022 and fiscal 2021, respectively. We expect a small number of customers will continue to account for a high percentage of our net revenue for the foreseeable future.
There was no customer with sales representing more than 10% of net revenue in fiscal 2023. Sales to our ten largest customers comprised 53.5% and 49.1% of our net revenue for fiscal 2023 and fiscal 2022, respectively.
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 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.
Increasing attention to ESG matters, including any targets or other ESG initiatives, could result in additional costs or risks or adversely impact our business Certain investors, shareholder advocacy groups, other market participants, customers and other stakeholder groups have focused increasingly on companies' environmental, social and governance (“ESG”) initiatives, including those concerning climate change, human rights, diversity and inclusion, and shareholder proxy access.
If we fail to integrate and manage acquired businesses successfully or to mitigate the risks associated with divestitures, joint ventures or other alliances, or if the time and costs associated with integration exceeds our expectations, or if our acquired business were to perform poorly, our business, financial condition and operating results may be materially and adversely affected. 20 Table of Contents Increasing attention to ESG matters, including any targets or other ESG initiatives, could result in additional costs or risks or adversely impact our business Certain investors, shareholder advocacy groups, other market participants, customers and other stakeholder groups have focused increasingly on companies' environmental, social and governance (“ESG”) initiatives, including those concerning climate change, greenhouse gas emissions, human rights, diversity and inclusion, and shareholder proxy access.
We generally order supplies and otherwise plan our production based on internal forecasts for demand. We have in the past failed, 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.
As a result, demand for our products in future periods is difficult to predict and 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 failed, and may again in the future fail, to accurately forecast demand for our products.
We may also not be able to obtain product liability or other insurance to fully cover such risks. Any of the foregoing risks, if they were to materialize, could have a material adverse effect on our business, results of operations or financial condition.
Any of the foregoing risks, if they were to materialize, could have a material adverse effect on our business, results of operations or financial condition. 19 Table of Contents Operations and Supply Chain Risks We may not be able to continue to consolidate manufacturing and other facilities or entities without incurring unanticipated costs and disruptions to our business.
Currency and Tax Risks We are exposed to fluctuations in currency exchange rates that could negatively impact our financial results and cash flows. Because most of our foreign sales are denominated in U.S. dollar, 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.
Because most of our foreign sales are denominated in U.S. dollar, 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 other currencies could make our costs in certain non-U.S. locations more expensive to fund.
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.
In these cases, we defend or in some instances dispel, and will continue to defend or dispel, against claims or negotiate licenses where we consider these actions appropriate. Intellectual property cases are uncertain, time-consuming and involve complex legal and factual questions.
Furthermore, when we implement new systems and/or upgrade existing systems, we could be faced with temporary or prolonged disruptions that could adversely affect our business.
Furthermore, when we implement new systems and/or upgrade existing systems, we could be faced with temporary or prolonged disruptions that could adversely affect our business. For example, artificial intelligence (“AI”) may be used to generate cyberattacks with greater scale and efficacy than the traditional threat actors.
If we are unable to protect our intellectual property rights, our competitive position may be weakened. 19 Table of Contents 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.
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. The semiconductor industry is characterized by rapid technological change, with frequent introductions of new products and technologies.
Some of these competitors compete across many of our product lines, while others are primarily focused in a specific product area, sometimes with government assistance or through the support of strategic alliances, all of which could result in lowering the barriers to entry. 13 Table of Contents We expect our competitors to improve their current products’ performance, and to introduce new products and materials with improved price and performance characteristics.
Some of these competitors compete across many of our product lines, while others are primarily focused in a specific product area, all of which could result in lowering the barriers to entry.
As part of our supply chain management, we have increased our inventory levels in an effort to mitigate component shortages, which may increase the 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.
This has led to, and may in the future lead to, delays in product shipments or, alternatively, an increased risk of inventory obsolescence. As part of our supply chain management, we have increased our inventory levels in an effort to mitigate component shortages, which may increase the risk of inventory obsolescence.
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 even during periods when our revenue has declined.
In order to realize the benefits of these projects, we believe that we must continue to fund them even 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.
Additionally, some end users may prefer to avoid the U.S. supply chain to avoid the application of these regulations. Future changes in, and responses to, U.S. trade policy could reduce the competitiveness of our products and cause our sales to decline, and therefore could have a material adverse effect on our business, financial condition or results of operations.
Such further changes may limit our ability to produce products, increase our selling or manufacturing costs, decrease margins, reduce the competitiveness of our products and cause our sales to decline, and therefore could have a material adverse effect on our business, financial condition or results of operations.
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.
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. 25 Table of Contents If our internal controls over financial reporting or our disclosure controls and procedures are not effective, we may not be able to accurately report our financial results or file our periodic reports in a timely manner, which may cause investors to lose confidence in our reported financial information and may lead to a decline in the trading price of our common stock.
For example, we have at times experienced temporary disruptions in our manufacturing processes as a result of power outages. In addition, global climate change can result in natural disasters occurring more frequently, with greater intensity and with less predictability.
In addition, global climate change can result in natural disasters occurring more frequently, with greater intensity and with less predictability. For example, in September 2023, territories in the East Asian monsoon region, including Guangdong, Hong Kong, Fujian and Taiwan, experienced significant typhoons and storm surges, resulting in a temporary suspension of business and services.
To the extent the COVID-19 pandemic adversely affects our business, results of operations and financial conditions, it may also exacerbate the other risks discussed in this section on “Risk Factors”. We depend on our suppliers, including sole source suppliers, for raw materials, components and subassemblies.
The potential effects of these conditions could have a material adverse effect on our business, results of operations and financial condition. 12 Table of Contents We depend on our suppliers, including sole source suppliers, for raw materials, components and subassemblies.
Also, competitors may copy or misappropriate our trade secrets, products or designs either through lawful means of reverse engineering or through unlawful means that we are unable to prove, in either case eroding our market share. In addition, our partners and alliances may have rights to technology developed by us.
Also, competitors may copy or misappropriate our trade secrets, products or designs either through lawful means of reverse engineering or through independent development. We remain vigilant and take note of similar products and solutions offered by our competitors and, based on reasonable efforts, investigate whether any of our competitors’ products or solutions is the outcome of unlawful reverse engineering.
We may also incur higher than expected costs as a result of any acquisitions or experience an overall post-completion process that takes longer than originally anticipated. 18 Table of Contents These transactions place additional demands on our management, our various functional teams and our current labor force.
These transactions place additional demands on our management, our various functional teams and our current labor force. The combination of businesses may result in the loss of key personnel or an interruption of, or loss of momentum in, our existing businesses and/or the acquired business.
Removed
The COVID-19 pandemic has adversely affected our business, and may in the future materially and adversely affect our results of operations and financial condition. The ongoing COVID-19 pandemic and resulting containment measures have significantly impacted the global economy, disrupted global supply chains, created significant volatility and disruption in financial markets, and affected unemployment levels.
Added
The ongoing Israel-Hamas war may adversely affect our business, financial condition or results of operations. On October 7, 2023, an escalated armed conflict between Israel and the Hamas terrorist organization commenced, leading to a series of extended hostilities along Israel’s border with the Gaza Strip.
Removed
The global responses to the COVID-19 pandemic remain dynamic. Some countries continue to impose quarantines, containment measures or travel restrictions, and certain countries, such as China, continue to impose periodic lockdowns in response to rising case numbers.
Added
Additionally, since October 8, 2023, the Hezbollah militant group has increased its hostilities against Israel over its northern region, including Haifa. Many multinational companies in the semiconductor industry have research, design and development centers situated in Israel, including our Company, which has a manufacturing facility and a business office in Haifa.
Removed
In certain jurisdictions, there has been a resurgence of illnesses or threat of emerging new variants of the virus, potentially leading to more severe restrictions in the future.
Added
The intensity, duration and outcome of the ongoing war is uncertain and its continuation or escalation may have a material adverse effect on our business and operations.
Removed
While we continue our normal operations in all of our manufacturing locations, work-from-home practices have been instituted or permitted from time-to-time across our offices worldwide, which have in some cases impacted our non-manufacturing productivity.
Added
While we are currently maintaining business and operations in Israel without material damage or interruptions at our Israeli facility, our assets and operations in Israel could be vulnerable to future property damage, inventory loss, business disruption, and expropriation. We have around 70 employees in Israel.
Removed
We could experience further productivity disruptions in the event of an outage to systems and technologies critical to effect remote work, or from the increased data security and technology risks arising therefrom. The COVID-19 pandemic continues to disrupt our supply chain, including materials, equipment, engineering support and services, especially to, from and within China.
Added
While to our knowledge, there have been no reported casualties or injuries to our employees as of the date of this report, some of our Israeli employees have been mobilized as members of the Israeli military reserves to active duty.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeTechnology center Capital Equipment Israel Haifa 31,000 sq. ft. Manufacturing and technology center APS (1) Each of the facilities listed in this table is leased other than the facilities in Suzhou, China and Fort Washington, Pennsylvania.
Biggest changeTechnology, sales and service center Wedge Bonding Equipment Horsham, Pennsylvania 28,000 sq. ft. Technology center Advanced Solutions Israel Haifa 31,000 sq. ft. Manufacturing and technology center APS Taiwan Taipei 20,000 sq. ft. Manufacturing and technology center All Others (1) Each of the facilities listed in this table is leased other than the facilities in Suzhou, China and Fort Washington, Pennsylvania.
Manufacturing, technology and shared support services center APS The Netherlands Eindhoven 116,000 sq. ft. Manufacturing, technology, sales and service center Capital Equipment United States Fort Washington, Pennsylvania 88,000 sq. ft. Corporate headquarters, technology, sales and service center Capital Equipment Santa Ana, California 65,000 sq. ft. Technology, sales and service center Capital Equipment Horsham, Pennsylvania 28,000 sq. ft.
Manufacturing, technology and shared support services center APS The Netherlands Eindhoven 116,000 sq. ft. Manufacturing, technology, sales and service center All Others United States Fort Washington, Pennsylvania 88,000 sq. ft. Corporate headquarters, technology, sales and service center Ball Bonding Equipment Advanced Solutions Santa Ana, California 65,000 sq. ft.
Item 2. PROPERTIES The following table reflects our major facilities as of October 1, 2022: Country Facility (1) Approximate Size Function Business Segment Singapore Serangoon 221,000 sq. ft. Corporate headquarters, manufacturing, technology, sales and service center Capital Equipment Kranji 148,000 sq. ft. Manufacturing center Capital Equipment China Suzhou 155,000 sq. ft.
Item 2. PROPERTIES The following table reflects our major facilities as of September 30, 2023: Country Facility (1) Approximate Size Function Reportable Segment Singapore Serangoon 251,000 sq. ft. Corporate headquarters, manufacturing, technology, sales and service center Ball Bonding Equipment Wedge Bonding Equipment Advanced Solutions Kranji 148,000 sq. ft. Manufacturing center Advanced Solutions China Suzhou 155,000 sq. ft.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeThe Company may purchase shares of its common stock through open market and privately negotiated transactions at prices deemed appropriate by management. The Company has entered into a written trading plan under Rule 10b5-1 of the Exchange Act to facilitate repurchases under the Program.
Biggest changeOn March 3, 2022, the Board of Directors further increased the share repurchase authorization under the Company’s existing share repurchase program by an additional $400 million to $800 million, and extended its duration through August 1, 2025. The Company may purchase shares of its common stock through open market and privately negotiated transactions at prices deemed appropriate by management.
Further information concerning the beneficial ownership of our executive officers, directors and principal shareholders will be included in our Proxy Statement for the 2023 Annual Meeting of Shareholders to be filed with the Securities and Exchange Commission. Recent Sales of Unregistered Securities and Use of Proceeds None.
Further information concerning the beneficial ownership of our executive officers, directors and principal shareholders will be included in our Proxy Statement for the 2024 Annual Meeting of Shareholders to be filed with the Securities and Exchange Commission. Recent Sales of Unregistered Securities and Use of Proceeds None.
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.” On November 14, 2022, there were approximately 150 holders of record of the shares of outstanding common stock.
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.” On November 13, 2023, there were approximately 145 holders of record of the shares of outstanding common stock.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers The following table summarizes the repurchases of common stock during the three months ended October 1, 2022 (in thousands, except per share amounts): Period Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs (1) July 3, 2022 to July 30, 2022 419 $ 44.92 419 $ 290,519 July 31, 2022 to September 3, 2022 522 $ 46.49 522 $ 266,236 September 4, 2022 to October 1, 2022 418 $ 40.82 418 $ 249,156 For the three months ended October 1, 2022 1,359 1,359 (1) On August 15, 2017, the Company’s Board of Directors authorized a program (the “Program”) to repurchase up to $100 million in total of the Company’s common stock on or before August 1, 2020.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers The following table summarizes the repurchases of common stock during the three months ended September 30, 2023 (in thousands, except per share amounts): Period Total Number of Shares Purchased Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs (1) July 2, 2023 to July 29, 2023 16 $ 57.45 16 $ 189,313 July 30, 2023 to September 2, 2023 48 $ 52.08 48 $ 186,811 September 3, 2023 to September 30, 2023 119 $ 48.39 119 $ 181,042 For the three months ended September 30, 2023 183 183 (1) On August 15, 2017, the Company’s Board of Directors authorized a program (the “Program”) to repurchase up to $100 million in total of the Company’s common stock on or before August 1, 2020.
On August 30, 2022, June 8, 2022, March 3, 2022 and October 18, 2021, the Board of Directors declared a quarterly dividend $0.17 per share of common stock. During the fiscal year ended October 1, 2022, the Company declared dividends of $0.68 per share of common stock.
On August 23, 2023, June 8, 2023, March 2, 2023 and November 16, 2022, the Board of Directors declared a quarterly dividend $0.19 per share of common stock. During the fiscal year ended September 30, 2023, the Company declared dividends of $0.76 per share of common stock.
In 2018, 2019 and 2020, the Board of Directors increased the share repurchase authorization under the Program to $200 million, $300 million and $400 million respectively. On May 3, 2022, the Board of Directors increased the share repurchase authorization under the Program by an additional $400 million to $800 million, and extended its duration through August 1, 2025.
In 2018, 2019 and 2020, the Board of Directors increased the share repurchase authorization under the Program to $200 million, $300 million and $400 million respectively.
The Program may be suspended or discontinued at any time and will be funded using the Company’s available cash, cash equivalents and short-term investments. The timing and amount of repurchase transactions under the Program depend on market conditions as well as corporate and regulatory considerations.
The timing and amount of repurchase transactions under the Program depend on market conditions as well as corporate and regulatory considerations.
Added
On May 7, 2022, the Company entered into a written trading plan under Rule 10b5-1 of the Exchange Act to facilitate repurchases under the Program. This trading plan was most recently modified on May 29, 2023. The Program may be suspended or discontinued at any time and will be funded using the Company’s available cash, cash equivalents and short-term investments.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

52 edited+14 added−28 removed49 unchanged
Biggest changeInterest Income and Expense The following table reflects interest income and interest expense for fiscal 2022 and 2021: Fiscal (dollar amounts in thousands) 2022 2021 $ Change % Change Interest income $ 7,124 $ 2,321 $ 4,803 206.9 % Interest expense $ (208) $ (218) $ 10 (4.6) % Interest income For fiscal 2022, the higher interest income as compared to fiscal 2021 was primarily due to higher weighted average interest rates on cash, cash equivalents and short-term investments.
Biggest changeInterest Income and Expense The following table reflects the interest income and interest expense for fiscal 2023 and 2022: Fiscal (dollar amounts in thousands) 2023 2022 $ Change % Change Interest income $ 32,906 $ 7,124 $ 25,782 361.9 % Interest expense $ (142) $ (208) $ 66 (31.7) % Interest income For fiscal 2023, the higher interest income as compared to fiscal 2022 was primarily due to higher weighted average interest rates on cash, cash equivalents and short-term investments. 35 Table of Contents Provision for Income Taxes The following table reflects the provision for income taxes and the effective tax rate for fiscal 2023 and 2022: Fiscal (dollar amounts in thousands) 2023 2022 Change Provision for income taxes $ 15,053 $ 43,443 $ (28,390) Effective tax rate 20.8 % 9.1 % 11.7 % For fiscal 2023, the decrease in provision for income taxes as compared to fiscal 2022 was primarily due to a decrease in profitability and the increase in effective tax rate was primarily related to the increase in the Global Intangible Low-Taxed Income (“GILTI”), resulting from the capitalization of research and development expenditures as mandated by the U.S.
Expenditures are anticipated to be primarily used for research and development projects, enhancements to our manufacturing operations, improvements to our information technology security, implementation of an enterprise resource planning system and leasehold improvements for our facilities.
Expenditures are anticipated to be primarily used for research and development projects, enhancements to our manufacturing operations, improvements to our information technology security, implementation of our enterprise resource planning system and leasehold improvements for our facilities.
We believe these sources of cash and liquidity are sufficient to meet our additional liquidity needs for the foreseeable future including repayment of outstanding balances under the Facility Agreements, as well as payment of dividends, share repurchases and income taxes.
We believe these sources of cash and liquidity are sufficient to meet our additional liquidity needs for the foreseeable future including repayment of any outstanding balances under our existing Facility Agreements, as well as payment of dividends, share repurchases and income taxes.
Share Repurchase Program On August 15, 2017, the Company’s Board of Directors authorized a program (the “Program”) to repurchase up to $100 million of the Company’s common stock on or before August 1, 2020. In 2018, 2019 and 2020, the Board of Directors increased the share repurchase authorization under the Program to $200 million, $300 million and $400 million, respectively.
Share Repurchase Program On August 15, 2017, the Company’s Board of Directors authorized the Program to repurchase up to $100 million of the Company’s common stock on or before August 1, 2020. In 2018, 2019 and 2020, the Board of Directors increased the share repurchase authorization under the Program to $200 million, $300 million and $400 million, respectively.
On March 3, 2022, the Board of Directors increased the share repurchase authorization under the Program by an additional $400 million to $800 million, and extended its duration through August 1, 2025. The Company has entered into a written trading plan under Rule 10b5-1 of the Exchange Act to facilitate repurchases under the Program.
On March 3, 2022, the Board of Directors increased the share repurchase authorization under the Program by an additional $400 million to $800 million, and extended its duration through August 1, 2025. On May 7, 2022, the Company entered into a written trading plan under Rule 10b5-1 of the Exchange Act to facilitate repurchases under the Program.
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 defects. We establish reserves for estimated warranty expense when revenue for the related equipment is recognized.
Customer returns have historically represented a very small percentage of customer sales on an annual basis. 29 Table of Contents • Warranties : Our equipment is generally shipped with a one-year warranty against manufacturing defects. We establish reserves for estimated warranty expense when revenue for the related equipment is recognized.
Our liquidity is affected by many factors, some based on normal operations of our business and others related to macroeconomic conditions including inflationary pressures, industry-related uncertainties, effects arising from the prolonged Ukraine/Russia conflict, which we cannot predict. We also cannot predict economic conditions and industry downturns or the timing, strength or duration of recoveries.
Our liquidity is affected by many factors, some based on normal operations of our business and others related to macroeconomic conditions including inflationary pressures, industry-related uncertainties, and effects arising from the ongoing Israel-Hamas war and the prolonged Ukraine/Russia conflict, which we cannot predict. We also cannot predict economic conditions and industry downturns or the timing, strength or duration of recoveries.
The MD&A is organized as follows: 25 Table of Contents • Overview: Introduction of our operations, key events, business environment, technology leadership, products and services • Critical Accounting Policies and Estimates • Recent Accounting Pronouncements • Results of Operations • Liquidity and Capital Resources • Other Obligations and Contingent Payments Overview For an overview of our business, see “Part I – Item 1. – Business”.
The MD&A is organized as follows: • Overview: Introduction of our operations, key events, business environment, technology leadership, products and services • Critical Accounting Policies and Estimates • Recent Accounting Pronouncements • Results of Operations • Liquidity and Capital Resources • Other Obligations and Contingent Payments Overview For an overview of our business, please see “Part I, Item 1 — Business”.
For further information on goodwill and other intangible assets, see Note 4 to our consolidated financial statements in Item 8. 27 Table of Contents Income Taxes In accordance with ASC No. 740 , Income Taxes , deferred income taxes are determined using the balance sheet method.
For further information on goodwill and other intangible assets, see Note 4 to our consolidated financial statements in Item 8. Income Taxes In accordance with ASC No. 740 , Income Taxes , deferred income taxes are determined using the balance sheet method.
The Facility Agreements also contain customary events of default, including, without limitation, non-payment of financial obligations when due, cross defaults to other material indebtedness of the Company and any breach of a representation or warranty under the Facility Agreements. As of October 1, 2022, there were no outstanding amounts under the Overdraft Facility.
The Facility Agreements also contain customary events of default, including, without limitation, non-payment of financial obligations when due, cross defaults to other material indebtedness of the Company and any breach of a representation or warranty under the Facility Agreements. As of September 30, 2023, there were no outstanding amounts under the Overdraft Facility.
Other Obligations and Contingent Payments In accordance with U.S. generally accepted accounting principles, certain obligations and commitments as of October 1, 2022 are appropriately not included in the Consolidated Balance Sheets and Statements of Operations in this Form 10-K.
Other Obligations and Contingent Payments In accordance with U.S. generally accepted accounting principles, certain obligations and commitments as of September 30, 2023 are appropriately not included in the Consolidated Balance Sheets and Statements of Operations in this Form 10-K.
If the terms of acceptance are satisfied at our customers’ facilities, the revenue for the equipment will not be recognized until acceptance, which is typically obtained after installation and testing, is received from the customer.
If the terms of acceptance are satisfied at our customers’ facilities, the revenue for the equipment will not be recognized until acceptance, which is typically obtained after installation and testing, is received from the customer. Service revenue is generally recognized over time as the services are performed.
The Program may be suspended or discontinued at any time and is funded using the Company’s available cash, cash equivalents and short-term investments. Under the Program, shares may be repurchased through open market and/or privately negotiated transactions at prices deemed appropriate by management.
This trading plan was most recently modified on May 29, 2023. The Program may be suspended or discontinued at any time and is funded using the Company’s available cash, cash equivalents and short-term investments. Under the Program, shares may be repurchased through open market and/or privately negotiated transactions at prices deemed appropriate by management.
The net cash used in financing activities was primarily due to dividend payments of $33.5 million, and common stock repurchases of $10.4 million. Fiscal 2023 Liquidity and Capital Resource Outlook We expect our fiscal 2023 capital expenditures to be between $70.0 million and $74.0 million. The actual amounts for fiscal 2023 will vary depending on market conditions.
The net cash used in financing activities was primarily due to common stock repurchases of $281.3 million and dividend payments of $39.4 million. Fiscal 2024 Liquidity and Capital Resource Outlook We expect our fiscal 2024 capital expenditures to be between $23.0 million and $27.0 million. The actual amounts for fiscal 2024 will vary depending on market conditions.
As of October 1, 2022, other than the bank guarantee disclosed in Note 10, we did not have any other off-balance sheet arrangements, such as contingent interests or obligations associated with variable interest entities.
As of September 30, 2023, other than the bank guarantee disclosed in Note 10, we did not have any other off-balance sheet arrangements, such as contingent interests or obligations associated with variable interest entities. 39 Table of Contents
The timing and amount of repurchase transactions under the Program depend on market conditions as well as corporate and regulatory considerations. During the fiscal year ended October 1, 2022, the Company repurchased a total of approximately 2,782.1 thousand shares of common stock at a cost of approximately $132.8 million.
The timing and amount of repurchase transactions under the Program depend on market conditions as well as corporate and regulatory considerations. During the fiscal year ended September 30, 2023, the Company repurchased a total of approximately 1,515.0 thousand shares of common stock at a cost of approximately $68.1 million.
The length of time between invoicing and payment is not significant under our payment terms. In instances where the timing of revenue recognition differs from the timing of invoicing, we have determined our contracts generally do not include a significant financing component. Shipping and handling costs billed to customers are recognized in net revenue.
In instances where the timing of revenue recognition differs from the timing of invoicing, we have determined our contracts generally do not include a significant financing component. Shipping and handling costs billed to customers are recognized in net revenue. Shipping and handling costs paid by the Company are included in cost of sales.
The following tables reflect our bookings and backlog for fiscal 2022 and 2021: Fiscal (in thousands) 2022 2021 Bookings $ 1,226,524 $ 2,176,981 As of (in thousands) October 1, 2022 October 2, 2021 Backlog $ 510,145 $ 787,241 The semiconductor industry is volatile and our operating results are adversely impacted by volatile worldwide economic conditions.
The following tables reflect the bookings and backlog for fiscal 2023 and 2022: Fiscal (in thousands) 2023 2022 Bookings $ 656,170 $ 1,226,524 As of (in thousands) September 30, 2023 October 1, 2022 Backlog $ 423,824 $ 510,145 The semiconductor industry is volatile and our operating results are adversely impacted by volatile worldwide economic conditions.
In this event, the Company could seek U.S. borrowing alternatives. We believe that our existing cash, cash equivalents, short-term investments, existing Facility Agreements, and anticipated cash flows from operations will be sufficient to meet our liquidity and capital requirements, notwithstanding the COVID-19 pandemic and macroeconomic headwinds, for the next twelve months and beyond.
We believe that our existing cash, cash equivalents, short-term investments, existing Facility Agreements, and anticipated cash flows from operations will be sufficient to meet our liquidity and capital requirements, notwithstanding the macroeconomic headwinds, for the next twelve months and beyond.
In this unprecedented environment, as a result of the COVID-19 pandemic, the prolonged Ukraine/Russia conflict or for other reasons, 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, including possible acquisitions.
We intend to continue to use our cash for working capital needs and for general corporate purposes. 37 Table of Contents In this unprecedented macroeconomic environment, and as a result of the ongoing Israel-Hamas war and the prolonged Ukraine/Russia conflict or for other reasons, 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, including possible acquisitions.
While the Company anticipates long-term growth in semiconductor consumption, we observed trade-related adverse impacts in demand from China from the fourth quarter of fiscal 2018 through fiscal 2022, and such impacts may increase in severity in fiscal 2023 and/or beyond. Net Revenue Our net revenues for fiscal 2022 decreased as compared to our net revenues for fiscal 2021.
While the Company anticipates long-term growth in semiconductor consumption, we observed trade-related adverse impacts in demand from China, which continues to persist in fiscal 2023 and beyond. 32 Table of Contents Net Revenue Our net revenues for fiscal 2023 decreased as compared to our net revenues for fiscal 2022.
The net change in operating assets and liabilities was primarily driven by an increase in accounts and notes receivable of $221.9 million, inventories of $52.7 million, and prepaid expenses and other current assets of $4.6 million.
The net change in operating assets and liabilities was primarily driven by a decrease in accounts and notes receivable of $152.7 million and prepaid expenses and other current assets of $8.6 million.
Service revenue is generally recognized over time as the services are performed. 26 Table of Contents The Company measures revenue based on the amount of consideration we expect to be entitled to in exchange for products or services. Any variable consideration such as sales incentives are recognized as a reduction of net revenue at the time of revenue recognition.
The Company measures revenue based on the amount of consideration we expect to be entitled to in exchange for products or services. Any variable consideration such as sales incentives are recognized as a reduction of net revenue at the time of revenue recognition. The length of time between invoicing and payment is not significant under our payment terms.
Discussions of fiscal 2020 items and year-to-year comparisons between fiscal 2021 and 2020 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the fiscal year ended October 2, 2021, which was filed with the SEC on November 18, 2021.
Discussions of fiscal 2021 items and year-to-year comparisons between fiscal 2022 and 2021 that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the 2022 Annual Report filed on November 17, 2022, and amended on August 8, 2023 (the “2022 Annual Report”).
Dividends On August 30, 2022, June 8, 2022, March 3, 2022 and October 18, 2021, the Board of Directors declared a quarterly dividend $0.17 per share of common stock. During the fiscal year ended October 1, 2022, the Company declared dividends of $0.68 per share of common stock.
Dividends On August 23, 2023, June 8, 2023, March 2, 2023 and November 16, 2022, the Board of Directors declared a quarterly dividend $0.19 per share of common stock. During the fiscal year ended September 30, 2023, the Company declared dividends of $0.76 per share of common stock.
APS For fiscal 2022, the higher APS gross profit margin as compared to fiscal 2021 was primarily driven by favorable product mix in spares and services offset by less favorable price variance in bonding tools.
APS For fiscal 2023, the lower APS gross profit margin as compared to fiscal 2022 was primarily driven by lower volume, less favorable product mix among the spares, services and bonding tools, and lower average selling prices of bonding tools.
Additionally, as of October 1, 2022, the Company had deferred tax liabilities of $34.0 million and unrecognized tax benefit recorded within the income tax payable for uncertain tax positions of $16.9 million, including related accrued interest of $2.0 million.
Additionally, as of September 30, 2023, the Company had deferred tax liabilities of $37.3 million and unrecognized tax benefit recorded within the income tax payable for uncertain tax positions of $17.7 million, including related accrued interest of $2.8 million.
As part of the annual evaluation, the Company performs an impairment test of its goodwill in the fourth quarter of each fiscal year to coincide with the completion of its annual forecasting and refreshing of its business outlook processes.
The Company’s impairment test is performed by comparing the fair value of a reporting unit with its carrying value, and determining if the carrying amount exceeds its fair value. 30 Table of Contents As part of the annual evaluation, the Company performs an impairment test of its goodwill in the fourth quarter of each fiscal year to coincide with the completion of its annual forecasting and refreshing of its business outlook processes.
LIQUIDITY AND CAPITAL RESOURCES The following table reflects total cash, cash equivalents and short-term investments as of October 1, 2022 and October 2, 2021: As of (dollar amounts in thousands) October 1, 2022 October 2, 2021 Change Cash and cash equivalents $ 555,537 $ 362,788 $ 192,749 Short-term investments 220,000 377,000 (157,000) Total cash, cash equivalents, and short-term investments $ 775,537 $ 739,788 $ 35,749 Percentage of total assets 48.8 % 46.2 % 31 Table of Contents The following table reflects summary Consolidated Statements of Cash Flows information for fiscal 2022 and 2021: Fiscal (in thousands) 2022 2021 Net cash provided by operating activities $ 390,188 $ 300,032 Net cash provided by / (used in) investing activities 133,799 (81,707) Net cash used in financing activities (321,191) (44,258) Effect of exchange rate changes on cash and cash equivalents (10,047) 594 Changes in cash, and cash equivalents $ 192,749 $ 174,661 Cash and cash equivalents, beginning of period 362,788 188,127 Cash and cash equivalents, end of period $ 555,537 $ 362,788 Fiscal 2022 Net cash provided by operating activities consisted of net income of $433.5 million, non-cash adjustments of $22.6 million and a net unfavorable change in operating assets and liabilities of $65.9 million.
LIQUIDITY AND CAPITAL RESOURCES The following table reflects the total cash, cash equivalents and short-term investments as of September 30, 2023 and October 1, 2022: As of (dollar amounts in thousands) September 30, 2023 October 1, 2022 Change Cash and cash equivalents $ 529,402 $ 555,537 $ (26,135) Short-term investments 230,000 220,000 10,000 Total cash, cash equivalents, and short-term investments $ 759,402 $ 775,537 $ (16,135) Percentage of total assets 50.6 % 48.8 % The following table reflects the summarized Consolidated Statements of Cash Flows information for fiscal 2023 and 2022: Fiscal (in thousands) 2023 2022 Net cash provided by operating activities $ 173,404 $ 390,188 Net cash (used in) / provided by investing activities (91,338) 133,799 Net cash used in financing activities (111,876) (321,191) Effect of exchange rate changes on cash and cash equivalents 3,675 (10,047) Changes in cash, and cash equivalents $ (26,135) $ 192,749 Cash and cash equivalents, beginning of period 555,537 362,788 Cash and cash equivalents, end of period $ 529,402 $ 555,537 Fiscal 2023 Net cash provided by operating activities consisted of net income of $57.1 million, non-cash adjustments of $73.8 million and a net favorable change in operating assets and liabilities of $42.4 million.
Interest on the Overdraft Facility is calculated on a daily basis, and the applicable interest rate is calculated at the Secured Overnight Financing Rate (“SOFR”) plus a margin of 1.5% per annum. The Overdraft Facility is an unsecured facility per the terms of the Facility Agreements.
Amounts outstanding under the Overdraft Facility, including interest, are payable upon thirty days written demand by the Bank. Interest on the Overdraft Facility is calculated on a daily basis, and the applicable interest rate is calculated at the Secured Overnight Financing Rate (“SOFR”) plus a margin of 1.5% per annum.
This section of this Form 10-K generally discusses fiscal 2022 and 2021 items and year-to-year comparisons between fiscal 2022 and 2021.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This section of this Form 10-K generally discusses fiscal 2023 and 2022 items and year-to-year comparisons between fiscal 2023 and 2022.
This was partially offset by an increase in accounts payable and accrued expenses and other current liabilities of $182.0 million, and income tax payable of $7.7 million. The increase in accounts payable and accrued expenses and other current liabilities was primarily due to higher purchases due to higher manufacturing activities.
This was partially offset by a decrease in accounts payable and accrued expenses and other current liabilities of $52.3 million, and income tax payable of $29.3 million, and an increase in inventories of $35.8 million. The decrease in accounts and other receivable was primarily due to lower sales in fiscal 2023.
Income from Operations For fiscal 2022, total income from operations was higher as compared to fiscal 2021. This was primarily due to higher gross profit and lower operating expenses in fiscal 2022.
See Note 4: Goodwill and Intangible Assets and Note 6: Equity Investments of the Notes to the Consolidated Financial Statements for further information. Income from Operations For fiscal 2023, total income from operations was lower as compared to fiscal 2022. This was primarily due to lower gross profit and higher operating expenses in fiscal 2023.
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 collectability of certain receivables.
We are subject to concentrations of customers and sales to a few geographic locations, which could also impact the collectability of certain receivables.
The following table presents certain payments due by the Company under contractual obligations with minimum firm commitments as of October 1, 2022: Payments due in (in thousands) Total Less than 1 year 1 - 3 years 3 - 5 years More than 5 years Inventory purchase obligations (1) $ 316,123 316,123 $ — $ — $ — U.S. one-time transition tax payable (2) (reflected on our Balance Sheets) 54,408 6,723 29,414 18,271 — Total $ 370,531 $ 322,846 $ 29,414 $ 18,271 $ — (1) We order inventory components in the normal course of our business.
These amounts are not included in the contractual obligation table below because we are unable to reasonably estimate the timing of these payments at this time. 38 Table of Contents The following table presents certain payments due by the Company under contractual obligations with minimum firm commitments as of September 30, 2023: Payments due in (in thousands) Total Less than 1 year 1 - 3 years 3 - 5 years More than 5 years Inventory purchase obligations (1) $ 182,567 182,567 $ — $ — $ — U.S. one-time transition tax payable (2) (reflected on our Balance Sheets) 47,686 12,606 35,080 — — Total $ 230,253 $ 195,173 $ 35,080 $ — $ — (1) We order inventory components in the normal course of our business.
APS For fiscal 2022, the higher APS income from operations as compared to fiscal 2021 was primarily due to lower operating expenses as explained under “Operating Expenses” above.
For fiscal 2023, the higher Advanced Solutions loss from operations as compared to the prior year period was primarily due to the decrease in revenue and changes in operating expenses as explained under “Net Revenue” and “Operating Expenses” above.
A portion of these orders are non-cancellable and a portion may have varying penalties and charges in the event of cancellation.
A portion of these orders are non-cancellable and a portion may have varying penalties and charges in the event of cancellation. (2) Associated with the U.S. one-time transition tax on certain earnings and profits of our foreign subsidiaries in relation to the TCJA.
(2) Associated with the U.S. one-time transition tax on certain earnings and profits of our foreign subsidiaries in relation to the TCJA. 34 Table of Contents Credit Facilities On February 15, 2019, the Company entered into a Facility Letter and Overdraft Agreement (collectively, the “Facility Agreements”) with MUFG Bank, Ltd., Singapore Branch (the “Bank”).
Credit Facilities On February 15, 2019, the Company entered into a Facility Letter and Overdraft Agreement (collectively, the “Facility Agreements”) with MUFG Bank, Ltd., Singapore Branch (the “Bank”). The Facility Agreements provide the Company and one of its subsidiaries with an overdraft facility of up to $150.0 million (the “Overdraft Facility”) for general corporate purposes.
Shipping and handling costs paid by the Company 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.
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.
The decrease in net revenue is primarily due to lower volume in both Capital Equipment and APS.
The decrease in net revenue is primarily due to lower volume in Ball Bonding Equipment, Wedge Bonding Equipment, Advanced Solutions, APS and All Others, as further outlined in the tables presented immediately below.
If the Company reissues treasury stock at an amount below its acquisition cost and additional paid-in capital associated with prior treasury stock transactions is insufficient to cover the difference between acquisition cost and the reissue price, this difference is recorded against retained earnings. 33 Table of Contents Accelerated Share Repurchase (“ASR”) In addition to the 2,782.1 thousand shares of common stock repurchased under the Program during the fiscal year ended October 1, 2022, on March 9, 2022, the Company entered into an ASR agreement (the “March 2022 ASR Agreement”) with an investment bank counterparty (“Dealer”) to repurchase $150 million of the Company’s common stock.
If the Company reissues treasury stock at an amount below its acquisition cost and additional paid-in capital associated with prior treasury stock transactions is insufficient to cover the difference between acquisition cost and the reissue price, this difference is recorded against retained earnings. As of September 30, 2023, our remaining stock repurchase authorization under the Program was approximately $181.0 million.
Operating Expenses The following table reflects operating expenses for fiscal 2022 and 2021: Fiscal (dollar amounts in thousands) 2022 2021 $ Change % Change Selling, general and administrative $ 141,396 $ 147,061 $ (5,665) (3.9) % Research and development 136,852 137,478 $ (626) (0.5) % Total $ 278,248 $ 284,539 $ (6,291) (2.2) % Selling, General and Administrative (“SG&A”) For fiscal 2022, the lower SG&A expenses as compared to fiscal 2021 was primarily due to $7.1 million net favorable variance in foreign exchange.
Operating Expenses The following table reflects the operating expenses for fiscal 2023 and 2022: Fiscal (dollar amounts in thousands) 2023 2022 $ Change % Change Selling, general and administrative $ 152,982 $ 140,050 $ 12,932 9.2 % Research and development 144,701 136,852 $ 7,849 5.7 % Impairment charges 21,535 1,346 $ 20,189 1499.9 % Total $ 319,218 $ 278,248 $ 40,970 14.7 % Selling, General and Administrative (“SG&A”) For fiscal 2023, the higher SG&A expenses as compared to fiscal 2022 was primarily due to $15.4 million net unfavorable variance in foreign exchange, $2.7 million higher staff costs due to an increase in headcount, $1.7 million higher professional services and $1.2 million higher amortization.
The decrease is primarily due to the repatriation of cash held by the Company’s foreign subsidiaries to the U.S. The Company’s international operations and capital requirements are funded primarily by cash generated by foreign operating activities and cash held by foreign subsidiaries.
The Company’s operations and capital requirements are funded primarily by cash on hand, cash generated by foreign operating activities and cash from our existing Facility Agreements.
This was partially offset by a $2.0 million COVID-19 related grant received from the Singapore government in the prior year period. Research and Development (“R&D”) For fiscal 2022, the lower R&D expenses as compared to fiscal 2021 was primarily due to lower staff costs related to incentive compensation. This is partially offset by higher spending on prototype materials.
These were partially offset by $10.5 million lower sales representative commissions. 34 Table of Contents Research and Development (“R&D”) For fiscal 2023, the higher R&D expenses as compared to fiscal 2022 was primarily due to $4.2 million higher prototype material costs and $3.3 million higher staff costs related to an increase in headcount.
The lower volume was due to a decrease in customer utilization.
The decrease in income tax payable was primarily due to lower profitability.
Our ability to make these expenditures will depend, in part, on our future cash flows, which are determined by our future operating performance and, therefore, subject to prevailing macroeconomic conditions, including the impact from the COVID-19 pandemic, inflationary pressures, geopolitical tensions including the prolonged Ukraine/Russia conflict and other factors, some of which are beyond our control. 32 Table of Contents As of October 1, 2022 and October 2, 2021, approximat ely $499.8 million and $724.5 million of cash, cash equivalents, and short-term investments were held by the Company’s foreign subsidiaries, respectively, with a large portion of the cash amounts expected to be available for use in the U.S. without incurring additional U.S. income tax.
Our ability to make these expenditures will depend, in part, on our future cash flows, which are determined by our future operating performance and, therefore, subject to prevailing macroeconomic conditions, trade tensions, inflationary pressures, geopolitical tensions, including the ongoing Israel-Hamas war, tensions in the Middle East, and the prolonged Ukraine/Russia conflict, and other factors, some of which are beyond our control.
The net cash used in financing activities was primarily due to common stock repurchases of $281.3 million and dividend payments of $39.4 million. Fiscal 2021 Net cash provided by operating activities consisted of net income of $367.2 million, non-cash adjustments of $21.2 million and a net unfavorable change in operating assets and liabilities of $88.3 million.
Fiscal 2022 Net cash provided by operating activities consisted of net income of $433.5 million, non-cash adjustments of $22.6 million and a net unfavorable change in operating assets and liabilities of $65.9 million.
RESULTS OF OPERATIONS Results of Operations for fiscal 2022 and 2021 The following table reflects our income from operations for fiscal 2022 and 2021: Fiscal (dollar amounts in thousands) 2022 2021 $ Change % Change Net revenue $ 1,503,620 $ 1,517,664 $ (14,044) (0.9) % Cost of sales 755,300 820,678 (65,378) (8.0) % Gross profit 748,320 696,986 51,334 7.4 % Selling, general and administrative 141,396 147,061 (5,665) (3.9) % Research and development 136,852 137,478 (626) (0.5) % Operating expenses 278,248 284,539 (6,291) (2.2) % Income from operations $ 470,072 $ 412,447 $ 57,625 14.0 % 28 Table of Contents Bookings and Backlog Our backlog consists of customer orders scheduled for shipment within the next twelve months.
RECENT ACCOUNTING PRONOUNCEMENTS See Note 1 to our 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. 31 Table of Contents RESULTS OF OPERATIONS Results of Operations for fiscal 2023 and 2022 The following table reflects the income from operations for fiscal 2023 and 2022: Fiscal (dollar amounts in thousands) 2023 2022 $ Change % Change Net revenue $ 742,491 $ 1,503,620 $ (761,129) (50.6) % Cost of sales 383,836 755,300 (371,464) (49.2) % Gross profit 358,655 748,320 (389,665) (52.1) % Selling, general and administrative 152,982 140,050 12,932 9.2 % Research and development 144,701 136,852 7,849 5.7 % Impairment charges 21,535 1,346 20,189 1,499.9 % Operating expenses 319,218 278,248 40,970 14.7 % Income from operations $ 39,437 $ 470,072 $ (430,635) (91.6) % Bookings and Backlog Our backlog consists of customer orders scheduled for shipment within the next twelve months.
Gross Profit Margin The following table reflects gross profit as a percentage of net revenue by business segment for fiscal 2022 and 2021: Fiscal 2022 2021 Basis point change Capital Equipment 48.2 % 44.0 % 420 APS 60.4 % 58.2 % 220 Total gross margin 49.8 % 45.9 % 390 Capital Equipment For fiscal 2022, the higher Capital Equipment gross profit margin as compared to fiscal 2021 was primarily driven by favorable price variance due to product mix.
The lower volume was a result of uncertainties in the overall macroeconomic environment, leading to a decline in consumer purchases. 33 Table of Contents Gross Profit Margin The following table reflects the gross profit as a percentage of net revenue by reportable segment for fiscal 2023 and 2022: Fiscal 2023 2022 Basis point change Ball Bonding Equipment 45.6 % 49.0 % (340) Wedge Bonding Equipment 52.1 % 48.1 % 400 Advanced Solutions 37.4 % 33.7 % 370 APS 55.2 % 60.5 % (530) All Others 44.4 % 54.5 % (1,010) Total gross margin 48.3 % 49.8 % (150) Ball Bonding Equipment For fiscal 2023, the lower Ball Bonding Equipment gross profit margin as compared to fiscal 2022 was primarily driven by lower volume of customer purchases resulting from uncertainties in the overall macroeconomic environment and high semiconductor supply chain inventories, less favorable product mix, including lower sales of higher margin products, and less favorable customer mix.
The lower volume was due to a decrease in customer investments as a result of uncertainties in the overall macroeconomic environment, partially offset by favorable price variance due to product mix. 29 Table of Contents APS For fiscal 2022, the lower APS net revenue as compared to fiscal 2021 was primarily due to lower volume in spares, services and bonding tools.
APS For fiscal 2023, the lower APS net revenue as compared to fiscal 2022 was primarily due to lower volume of customer purchases primarily in spares, services and bonding tools. The lower volume was also due to low utilization of our equipment resulting from the decline in consumer and industrial purchases and high semiconductor supply chain inventories.
The net cash used in investing activities was primarily due to net purchases of short-term investments of $35.0 million, the Uniqarta acquisition of $26.3 million, and capital expenditures of $22.8 million, partially offset by proceeds from the sale of an equity-method investment of $2.1 million.
The net cash used in investing activities was due to net purchase of short-term investments of $10.0 million, cash outflow for the AJA acquisition of $36.9 million and capital expenditures of $44.4 million. 36 Table of Contents The net cash used in financing activities was primarily due to common stock repurchases of $69.2 million and dividend payments of $42.0 million.
The following table reflects net revenue by business segment for fiscal 2022 and 2021: Fiscal (dollar amounts in thousands) 2022 2021 $ Change % Change Net revenue % of total net revenue Net revenue % of total net revenue Capital Equipment $ 1,306,468 86.9 % $ 1,312,576 86.5 % $ (6,108) (0.5) % APS 197,152 13.1 % 205,088 13.5 % (7,936) (3.9) % Total net revenue $ 1,503,620 100.0 % $ 1,517,664 100.0 % $ (14,044) (0.9) % Capital Equipment For fiscal 2022, the lower Capital Equipment net revenue as compared to fiscal 2021 was due to lower volume.
The following table reflects the net revenue by reportable segment for fiscal 2023 and 2022: Fiscal (dollar amounts in thousands) 2023 2022 $ Change % Change Net revenue % of total net revenue Net revenue % of total net revenue Ball Bonding Equipment $ 287,465 38.7 % $ 909,428 60.5 % $ (621,963) (68.4) % Wedge Bonding Equipment 175,550 23.6 % 194,086 12.9 % (18,536) (9.6) % Advanced Solutions 72,256 9.7 % 94,683 6.3 % (22,427) (23.7) % APS 160,718 21.7 % 197,152 13.1 % (36,434) (18.5) % All Others 46,502 6.3 % 108,271 7.2 % (61,769) (57.1) % Total net revenue $ 742,491 100.0 % $ 1,503,620 100.0 % $ (761,129) (50.6) % Ball Bonding Equipment For fiscal 2023, the lower Ball Bonding Equipment net revenue as compared to fiscal 2022 was due to lower volume of customer purchases primarily in the General Semiconductor and Memory markets.
Removed
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.
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The lower volume in these end markets was a result of uncertainties in the overall macroeconomic environment, leading to a decline in consumer and industrial purchases. This was exacerbated by the high semiconductor supply chain inventories, which contributed to low utilization of our equipment by our customers, resulting in lower demand for our products.
Removed
These statements are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, 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.
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Wedge Bonding Equipment For fiscal 2023, the lower Wedge Bonding Equipment net revenue as compared to fiscal 2022 was due to lower volume of customer purchases primarily in the General Semiconductor market due to the lower power discrete devices demand, which was partially offset by the higher volume of customer purchases in the automotive and renewable energy market.
Removed
Such forward-looking statements include, but are not limited to, statements with respect to our future revenue increasing, continuing or strengthening, or decreasing or weakening; our capital allocation strategies, including any share repurchases; demand for our products, including replacement demand; our research and development efforts; our ability to identify and realize new growth opportunities; our ability to control costs; and our operational flexibility as a result of (among other factors): • our expectations regarding the potential impacts on our business of the novel coronavirus (“COVID-19”) pandemic, including supply chain disruptions, the economic and public health effects, and governmental and other responses to these impacts; • our expectations regarding the potential impacts on our business of actual or potential inflationary pressures, interest rate and risk premium adjustments, falling consumer sentiment, or economic recession caused, directly or indirectly, by the prolonged Ukraine/Russia conflict, the COVID-19 pandemic, geopolitical tensions, catastrophic events including as a result of climate change and other macroeconomic factors; • our expectations regarding our effective tax rate and our unrecognized tax benefit; • our ability to operate our business in accordance with our business plan; • risks inherent in doing business on an international level, including currency risks, regulatory requirements, political risks, export restrictions and other trade barriers; • projected growth rates in the overall semiconductor industry, the semiconductor assembly equipment market, and the market for semiconductor packaging materials; and • projected demand for our products and services.
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Advanced Solutions For fiscal 2023, the lower Advanced Solutions net revenue as compared to fiscal 2022 was due to timing of revenue recognition for certain customer contracts, which was partially offset by the higher volume of customer purchases in the General Semiconductor market.
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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.
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All Others For fiscal 2023, the lower net revenue in the “All Others” category as compared to fiscal 2022 was primarily due to lower volume of customer purchases in the General Semiconductor market and mini LED transfer solutions market.
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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.
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Wedge Bonding Equipment For fiscal 2023, the higher Wedge Bonding Equipment gross profit margin as compared to fiscal 2022 was primarily driven by favorable product mix, including higher sales of higher margin products.
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These risks and uncertainties include, without limitation, those described below and under the heading “Risk Factors” in this Annual Report on Form 10-K 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 our audited financial statements included in this Annual Report.
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Advanced Solutions For fiscal 2023, the higher Advanced Solutions gross profit margin as compared to fiscal 2022 was primarily due to the reversal of previously accrued customer credit program due to the change in accounting estimates resulting from new information.
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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.
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All Others For fiscal 2023, the lower All Others gross profit margin as compared to fiscal 2022 was primarily due to less favorable product mix. This was partially offset by the reversal of previously accrued customer credit program due to the change in accounting estimates resulting from new information.
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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.
Added
Impairment Charges For fiscal 2023, the Company recognized a non-cash impairment charge of $21.5 million related to goodwill and intangible assets in the Lithography reporting unit, as well as on an investment in a non-marketable equity security. The impairment charge in the prior year period relates to the impairment on an investment in a non-marketable equity security.
Removed
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.
Added
The following tables reflect the income/(loss) from operations by reportable segment for fiscal 2023 and 2022: Fiscal (dollar amounts in thousands) 2023 2022 $ Change % Change Ball Bonding Equipment $ 81,929 $ 385,276 $ (303,347) (78.7) % Wedge Bonding Equipment 63,088 66,649 (3,561) (5.3) % Advanced Solutions (32,530) (15,389) (17,141) (111.4) % APS 47,654 82,473 (34,819) (42.2) % All Others (36,797) 25,732 (62,529) (243.0) % Corporate expenses (83,907) (74,669) (9,238) (12.4) % Total income from operations $ 39,437 $ 470,072 $ (430,635) (91.6) % Ball Bonding Equipment, Wedge Bonding Equipment, Advanced Solutions, APS and All Others For fiscal 2023, the lower Ball Bonding Equipment, Wedge Bonding Equipment, and APS income from operations as compared to the prior year period was primarily due to the decrease in revenue and changes in operating expenses as explained under “Net Revenue” and “Operating Expenses” above.
Removed
The Company’s impairment test is performed by comparing the fair value of a reporting unit with its carrying value, and determining if the carrying amount exceeds its fair value.
Added
For fiscal 2023, the loss from operations in the “All Others” category as compared to the income from operations in prior year period was primarily due to decrease in revenue as explained under “Net Revenue” above, the goodwill impairment charge, integration of newly acquired business and net unfavorable variance in foreign exchange.
Removed
RECENT ACCOUNTING PRONOUNCEMENTS See Note 1 to our 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.
Added
Tax Cuts and Jobs Act of 2017 (“TCJA”) effective in fiscal 2023 and the net release of valuation allowances recorded against certain loss and credit carryforwards in fiscal 2022, partially offset by tax benefits from changes jurisdictional mix of profitability. Please refer to “Note 15: Income Taxes” to our consolidated financial statements in Item 8 for additional information.
Removed
The following tables reflect income from operations by business segment for fiscal 2022 and 2021: Fiscal (dollar amounts in thousands) 2022 2021 $ Change % Change Capital Equipment $ 397,920 $ 355,982 $ 41,938 11.8 % APS 72,152 56,465 15,687 27.8 % Total income from operations $ 470,072 $ 412,447 $ 57,625 14.0 % 30 Table of Contents Capital Equipment For fiscal 2022, the higher Capital Equipment income from operations as compared to fiscal 2021 was primarily due to a higher gross profit as explained under “Gross Profit Margin” above.
Added
The decrease in accounts payable and accrued expenses and other current liabilities was primarily due to higher payments to suppliers, lower material purchases and lower accrued employee compensation that was paid out in the period. The increase in inventories was due to slower utilization in the period and buildup of long lead time materials to fulfill certain customer purchase orders.
Removed
Interest expense For fiscal 2022, the lower interest expense as compared to fiscal 2021 was primarily due to lower levels of average short-term debt outstanding. Please refer to Note 10: Debt and Other Obligations to our consolidated financial statements in Item 8 for a discussion of the Overdraft Facility.
Added
As of September 30, 2023 and October 1, 2022, approximat e ly $576.9 million and $499.8 million of cash, cash equivalents, and short-term investments were held by the Company’s foreign subsidiaries, respectively, with a large portion of the cash amounts expected to be available for use in the U.S. without incurring additional U.S. income tax.
Removed
Provision for Income Taxes The following table reflects the provision for income taxes and the effective tax rate for fiscal 2022 and 2021: Fiscal (dollar amounts in thousands) 2022 2021 Change Provision for income taxes $ 43,443 $ 47,295 $ (3,852) Effective tax rate 9.1 % 11.4 % (2.3) % For fiscal 2022, the lower effective tax rate as compared to fiscal 2021 is primarily due to tax benefits from foreign exchange losses and increase in tax credits generated during the fiscal year.
Added
The Overdraft Facility is an unsecured facility per the terms of the Facility Agreements.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

2 edited+0 added−0 removed8 unchanged
Biggest changeBased on our foreign currency exposure as of October 1, 2022, a 10.0% fluctuation could impact our financial position, results of operations or cash flows by $6.0 to $7.0 million. 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.
Biggest changeBased on our foreign currency exposure as of September 30, 2023, a 10.0% fluctuation could impact our financial position, results of operations or cash flows by $5.0 to $6.0 million. 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.
We have foreign exchange forward contracts with a notional amount of $57.6 million outstanding as of October 1, 2022. 35 Table of Contents
We have foreign exchange forward contracts with a notional amount of $54.6 million outstanding as of September 30, 2023. 40 Table of Contents

Other KLIC 10-K year-over-year comparisons