~~Unaudited~~



	Three months ended
	December 28, 2019			December 29, 2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	13,477		$	7,517
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	4,759			4,769
Equity-based compensation and employee benefits	3,609			3,873
Adjustment for doubtful accounts	17			(369		)
Adjustment for inventory valuation	1,060			189
Deferred taxes	966			(648		)
Gain on disposal of property, plant and equipment	—			24
Unrealized foreign currency translation	1,471			(33		)
Share of results of equity-method investee	60			43
Changes in operating assets and liabilities:
Accounts and other receivable	(2,961		)	56,497
Inventory	(6,974		)	5,401
Prepaid expenses and other current assets	(746		)	855
Accounts payable, accrued expenses and other current liabilities	7,987			(32,943		)
Income tax payable	1,016			9,883
Other, net	1,287			943
Net cash provided by operating activities	25,028			56,001

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment	(2,225		)	(3,273		)
Purchase of equity investments	(1,288		)	—
Purchase of short-term investments	(20,000		)	(231,000		)
Maturity of short-term investments	130,000			169,000
Net cash provided by /(used in) investing activities	106,487			(65,273		)

CASH FLOWS FROM FINANCING ACTIVITIES:
Payment on debts	—			(183		)
Payment for finance lease	(10		)	—
Repurchase of common stock	(5,319		)	(25,676		)
Common stock cash dividends paid	(7,582		)	(8,057		)
Proceeds from short term debt	15,063			—
Net cash provided by/(used in) financing activities	2,152			(33,916		)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(477		)	(18		)
Changes in cash, cash equivalents and restricted cash	133,190			(43,206		)
Cash, cash equivalents and restricted cash at beginning of period	364,184			321,148
Cash, cash equivalents and restricted cash at end of period	$	497,374		$	277,942

CASH PAID FOR:
Interest	$	5		$	251
Income taxes, net of refunds	$	206		$	790

Six months ended
March 30, 2019 March 31, 2018
CASH FLOWS FROM OPERATING ACTIVITIES:

Net income/(loss) $ 3,962
$ (33,215 )
Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization 10,006
9,212
Equity-based compensation and employee benefits 7,175
5,331
Excess tax benefits from stock-based compensation —
(50 )
Adjustment for doubtful accounts (385 ) 678
Adjustment for inventory valuation 1,164
2,822
Deferred income taxes (665 ) 22,823
Loss/(gain) on disposal of property, plant and equipment 4
(425 )
Unrealized foreign currency translation 270
6,046
Share of results of equity-method investee 72
23
Changes in operating assets and liabilities:

Accounts and other receivable 104,898
(26,328 )
Inventory 11,421
157
Prepaid expenses and other current assets 1,235
160
Accounts payable, accrued expenses and other current liabilities (54,850 ) (9,793 )
Income taxes payable (1,341 ) 79,908
Other, net 369
(276 )
Net cash provided by operating activities 83,335
57,073

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchases of property, plant and equipment (6,311 ) (11,700 )
Proceeds from sales of property, plant and equipment —
244
Purchase of equity investments (5,000 ) —
Purchase of short-term investments (340,000 ) (325,000 )
Maturity of short-term investments 425,000
253,000
Net cash provided by /(used in) investing activities 73,689
(83,456 )

CASH FLOWS FROM FINANCING ACTIVITIES:

Payment on debts (378 ) (346 )
Proceeds from exercise of common stock options —
55
Repurchase of common stock (52,606 ) (23,950 )
Dividend payment (16,112 ) —
Proceeds from short term debt 10,004
—
Net cash used in financing activities (59,092 ) (24,241 )
Effect of exchange rate changes on cash, cash equivalents and restricted cash 257
(1,630 )
Changes in cash, cash equivalents and restricted cash 98,189
(52,254 )
Cash, cash equivalents and restricted cash at beginning of period 321,148
392,940
Cash, cash equivalents and restricted cash at end of period $ 419,337
$ 340,686

CASH PAID FOR:

Interest $ 505
$ 536
Income taxes, net of refunds $ 16,689
$ 10,728

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

Table of Contents

KULICKE AND SOFFA INDUSTRIES, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

Unaudited

NOTE 1: BASIS OF PRESENTATION

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

The interim consolidated condensed financial statements are unaudited and, in management's opinion, include all adjustments (consisting only of normal and recurring adjustments) necessary for a fair statement of results for these interim periods. The interim consolidated condensed financial statements do not include all of the information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the fiscal year ended September ~~29, 2018,~~28, 2019, filed with the Securities and Exchange Commission, which includes Consolidated Balance Sheets as of September ~~29, 2018~~28, 2019 and September ~~30, 2017,~~29, 2018, and the related Consolidated Statements of Operations, Statements of Other Comprehensive Income, Changes in Shareholders' Equity and Cash Flows for each of the years in the three-year period ended September ~~29, 2018.~~28, 2019. The results of operations for any interim period are not necessarily indicative of the results of operations for any other interim period or for a full year.

Fiscal Year

Each of the Company's first three fiscal quarters end on the Saturday that is 13 weeks after the end of the immediately preceding fiscal quarter. The fourth quarter of each fiscal year ends on the Saturday closest to September 30. Fiscal ~~2019~~2020 quarters end on December ~~29, 2018,~~28, 2019, March ~~30, 2019,~~28, 2020, June ~~29, 2019~~27, 2020 and ~~September 28, 2019.~~October 3, 2020. In fiscal years consisting of 53 weeks, the fourth quarter will consist of 14 weeks. Fiscal ~~2018~~2019 quarters ended on December 29, 2018, March 30, ~~2017, March 31, 2018,~~2019, June ~~30, 2018~~29, 2019 and September ~~29, 2018.~~28, 2019.

Nature of Business

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

Use of Estimates

The preparation of consolidated condensed financial statements requires management to make assumptions, estimates and judgments that affect the reported amounts of assets and liabilities, net revenue and expenses during the reporting periods, and disclosures of contingent assets and liabilities as of the date of the consolidated condensed financial statements. On an ongoing basis, management evaluates estimates, including but not limited to, those related to accounts receivable, reserves for excess and obsolete inventory, carrying value and lives of fixed assets, goodwill and intangible assets,the valuation estimates and assessment of impairment and observable price adjustments, ~~valuation allowances for deferred tax assets and deferred tax liabilities, repatriation of un-remitted foreign subsidiary earnings,~~income taxes, equity-based compensation expense, and warranties. Management bases its estimates on historical experience and on various other assumptions believed to be reasonable. As a result, management makes judgments regarding the carrying values of the Company's assets and liabilities that are not readily apparent from other sources. Authoritative pronouncements, historical experience and assumptions also are used as the basis for making estimates, and on an ongoing basis, management evaluates these estimates. Actual results may differ from these estimates.

Vulnerability to Certain Concentrations

Financial instruments which may subject the Company to concentrations of credit risk as of ~~March 30,~~December 28, 2019 and September ~~29, 2018~~28, 2019 consisted primarily of trade receivables. The Company manages credit risk associated with investments by investing its excess cash in highly rated debt instruments of the U.S. ~~Government~~government and its agencies, financial institutions, and corporations. The Company has established investment guidelines relative to diversification and maturities designed to maintain safety and liquidity.

~~Table of Contents~~

~~KULICKE AND SOFFA INDUSTRIES, INC.~~

~~NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS~~

~~Unaudited (continued)~~

These guidelines are periodically reviewed and modified as appropriate. The Company does not have any exposure to sub-prime financial instruments or auction rate securities.

Table of Contents

KULICKE AND SOFFA INDUSTRIES, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

Unaudited (continued)

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

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

Foreign Currency Translation and Remeasurement

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

The Company's operations are exposed to changes in foreign currency exchange rates due to transactions denominated in currencies other than the location's functional currency. The Company is also exposed to foreign currency fluctuations that impact the remeasurement of net monetary assets of those operations whose functional currency, the U.S. dollar, differs from their respective local currencies, most notably in Israel, ~~Malaysia,~~ Singapore and Switzerland. In addition to net monetary remeasurement, the Company has exposures related to the translation of subsidiary financial statements from their functional currency, the local currency, into its reporting currency, the U.S. dollar, most notably in the Netherlands, China, Taiwan, Japan and Germany. The Company's U.S. operations also have foreign currency exposure due to net monetary assets denominated in currencies other than the U.S. dollar.

Derivative Financial Instruments

The Company’s primary objective for holding derivative financial instruments is to manage the fluctuation in foreign exchange rates and accordingly is not speculative in nature. The Company’s international operations are exposed to changes in foreign exchange rates as described above. The Company has established a program to monitor the forecasted transaction currency risk to protect against foreign exchange rate volatility. Generally, the Company uses foreign exchange forward contracts in these hedging programs. These instruments, which have maturities of up to twelve months, are recorded at fair value and are included in prepaid expenses and other current assets, or accrued expenses and other current liabilities.

Our accounting policy for derivative financial instruments is based on whether they meet the criteria for designation as a cash flow hedge. A designated hedge with exposure to variability in the functional currency equivalent of the future foreign currency cash flows of a forecasted transaction is referred to as a cash flow hedge. The criteria for designating a derivative as a cash flow hedge include the assessment of the instrument’s effectiveness in risk reduction, matching of the derivative instrument to its underlying transaction, and the assessment of the probability that the underlying transaction will occur. For derivatives with cash flow hedge accounting designation, we report the after-tax gain / (loss) from the effective portion of the hedge as a component of accumulated other comprehensive income / (loss) and reclassify it into earnings in the same period in which the hedged transaction affects earnings and in the same line item on the Consolidated Condensed Statement of Operations as the impact of the hedged transaction. Derivatives that we designate as cash flow hedges are classified in the Consolidated Condensed Statement of Cash Flows in the same section as the underlying item, primarily within cash flows from operating activities.

The hedge effectiveness of these derivative instruments is evaluated by comparing the cumulative change in the fair value of the hedge contract with the cumulative change in the fair value of the forecasted cash flows of the hedged item.

If a cash flow hedge is discontinued because it is no longer probable that the original hedged transaction will occur as previously anticipated, the cumulative unrealized gain or loss on the related derivative is reclassified from accumulated other comprehensive income / (loss) into earnings. Subsequent gain / (loss) on the related derivative instrument is recognized into earnings in each period until the instrument matures, is terminated, is re-designated as a qualified cash flow hedge, or is sold. Ineffective portions of cash flow hedges, as well as amounts excluded from the assessment of effectiveness, are recognized in earnings.

Table of Contents

KULICKE AND SOFFA INDUSTRIES, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

Unaudited (continued)

Cash Equivalents

The Company considers all highly liquid investments with original maturities of three months or less when purchased to be cash equivalents. Cash equivalents are measured at fair value based on level one measurement, or quoted market prices, as defined by ASC No. 820, Fair Value Measurements and Disclosures.

Equity Investments

The Company invests in equity securities in companies to promote business and strategic objectives. Equity investments are measured and recorded as follows:

Equity method investments are equity securities in investees that provide the Company with the ability to exercise significant influence in which it lacks a controlling financial interest. Our proportionate share of the income or loss is recognized on a one-quarter lag and is recorded as share of results of equity-method investee, net of tax.

Non-marketable equity securities are equity securities without readily determinable fair value that are measured and recorded using a measurement alternative that measures the securities at cost minus impairment, if any, plus or minus changes resulting from qualifying observable price changes.

Allowance for Doubtful Accounts

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

Inventories

Inventories are stated at the lower of cost (on a first-in first-out basis) or net realizable value. The Company generally provides reserves for obsolete inventory and for inventory considered to be in excess of demand. Demand is generally defined as 18 months forecasted future consumption for equipment, 24 months forecasted future consumption for spare parts, and 12 months forecasted future consumption for tools. Forecasted consumption is based upon internal projections, historical sales volumes, customer order activity and a review of consumable inventory levels at customers' facilities. The Company communicates forecasts of its future consumption to its suppliers and adjusts commitments to those suppliers accordingly. If required, the Company reserves the difference between the carrying value of its inventory and the lower of cost or net realizable value, based upon projections about future consumption, and market conditions. If actual market conditions are less favorable than projections, additional inventory reserves may be required.

Inventory reserve provision for certain subsidiaries is determined based on management's estimate of future consumption for equipment and spare parts. This estimate is based on historical sales volumes, internal projections and market developments and trends.

Property, Plant and Equipment

Property, plant and equipment are carried at cost. The cost of additions and those improvements which increase the capacity or lengthen the useful lives of assets are capitalized, while repair and maintenance costs are expensed as incurred. Depreciation and amortization are provided on a straight-line basis over the estimated useful lives as follows: buildings 25 years; machinery, equipment, furniture and fittings 3 to 10 years; toolings 1 year; and leasehold improvements are based on the shorter of the life of lease or life of asset. Purchased computer software costs related to business and financial systems are amortized over a five-year period on a straight-line basis. Land is not depreciated.

Valuation of Long-Lived Assets

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

Table of Contents

KULICKE AND SOFFA INDUSTRIES, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

Unaudited (continued)

ASC 360 requires that long-lived assets be tested for recoverability whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. Such events include significant under-performance relative to historical internal forecasts or projected future operating results; significant changes in the manner of use of the assets; significant negative industry or economic trends; or significant changes in market capitalization. During the three ~~and six~~ months ended ~~March 30,~~December 28, 2019, no "triggering" events occurred.

Accounting for Impairment of Goodwill

ASC No. 350, Intangibles-Goodwill and Other ("ASC 350") requires goodwill and other intangible assets with indefinite lives to be reviewed for impairment annually, or more frequently if circumstances indicate a possible impairment. We assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. If, after assessing the qualitative factors, a company determines that it is not more likely than not that the fair value of a reporting unit is less than its carrying value, then performing the ~~two-step~~ impairment test is unnecessary. However, if a company concludes otherwise, then it is required to perform the ~~first step of the two-step~~ goodwill impairment test. IfFollowing the ~~carrying value~~Company's early adoption of a reporting unit exceeds its fair value in the first step of the test, then a company is required to perform the second step of the goodwill impairment test to measure the amount of the reporting unit's goodwill impairment loss, if any.

~~In January 2017, the FASB issued~~ ASU 2017-04, ~~Intangibles—~~Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment ~~which eliminates~~ in the third quarter of fiscal 2017, the requirement to perform a hypothetical purchase price allocation to measure goodwill ~~impairment. Under this guidance,~~impairment (i.e. step 2 of the goodwill impairment test) was eliminated. Accordingly, the Company's impairment test is performed by comparing the fair value of a reporting unit with its carrying amount ~~and recognizing an impairment charge for the amount by which the carrying amount~~ of the reporting unit exceeds its fair value, although it cannot exceed the total amount of goodwill allocated to that reporting unit. This ASU will be effective for us beginning in our first quarter of 2021 and early adoption is permitted. During the third quarter of 2017, we elected to prospectively adopt ASU2017-04. This eliminates the requirement to perform step 2 of the goodwill impairment test.value.

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. On an ongoing basis, the Company monitors if a “triggering” event has occurred that may have the effect of reducing the fair value of a reporting unit below its respective carrying value. Adverse changes in expected operating results and/or unfavorable changes in other economic factors used to estimate fair values could result in a non-cash impairment charge in the future.

Impairment assessments inherently involve judgment as to the assumptions made about the expected future cash flows and the impact of market conditions on those assumptions. Future events and changing market conditions may impact the assumptions as to prices, costs, growth rates or other factors that may result in changes in the estimates of future cash flows. Although the Company believes the assumptions that it has used in testing for impairment are reasonable, significant changes in any one of the assumptions could produce a significantly different result. Indicators of potential impairment may lead the Company to perform interim goodwill impairment assessments, including significant and unforeseen customer losses, a significant adverse change in legal factors or in the business climate, a significant adverse action or assessment by a regulator, a significant stock price decline or unanticipated competition.

For further information on goodwill and other intangible assets, see Note 3 below.

Revenue Recognition

In accordance with ASC No. 606, Revenue from Contracts with Customers, the Company recognizes revenue when we satisfy performance obligations as evidenced by the transfer of control of our products or services to customers. In general, the Company generates revenue from product sales, either directly to customers or to distributors. In determining whether a contract exists, we evaluate the terms of the agreement, the relationship with the customer or distributor and their ability to pay.

The Company recognizes revenue from sales of our products, including sales to our distributors, at a point in time, generally upon shipment or delivery to the customer or distributor, depending upon the terms of the sales order. Control is considered transferred when title and risk of loss pass, when the customer becomes obligated to pay and, where applicable, when the customer has accepted the products or upon expiration of the acceptance period. For sales to distributors, payment is due on our standard commercial terms and is not contingent upon resale of the products.

Our business is subject to contingencies related to customer orders, including:

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

~~Table of Contents~~

~~KULICKE AND SOFFA INDUSTRIES, INC.~~

~~NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS~~

~~Unaudited (continued)~~

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. The reserve for estimated warranty expense is based upon historical experience and management's estimate of future expenses, including product parts replacement, freight charges and labor costs expected to be incurred to correct product failures during the warranty period.

Table of Contents

KULICKE AND SOFFA INDUSTRIES, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

Unaudited (continued)

Conditions of Acceptance: Sales of our consumable products generally do not have customer acceptance terms. In certain cases, sales of our equipment have customer acceptance clauses which may require the equipment to perform in accordance with customer specifications or when installed at the customer's facility. In such cases, if the terms of acceptance are satisfied at our facility prior to shipment, the revenue for the equipment will be recognized upon shipment. If the terms of acceptance are satisfied at our customers' facilities, the revenue for the equipment will 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. For the three ~~and six~~ months ended ~~March 30,~~December 28, 2019, and ~~March 31,~~December 29, 2018, the service revenue is not material.

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 ~~any of~~ 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. Shipping and handling costs paid by the Company are included in cost of sales.

Research and Development

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

Income Taxes

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

The Company determines the amount of unrecognized tax benefit with respect to uncertain tax positions taken or expected to be

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

~~Table of Contents~~

~~KULICKE AND SOFFA INDUSTRIES, INC.~~

~~NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS~~

~~Unaudited (continued)~~

Equity-Based Compensation

The Company accounts for equity-based compensation under the provisions of ASC No. 718, Compensation - Stock Compensation (“ASC 718”). ASC 718 requires the recognition of the fair value of the equity-based compensation in net income. Compensation expense associated with Relative TSR Performance Share Units is determined using a Monte-Carlo valuation model, and compensation expense associated with time-based and Special/Growth Performance Share Units is determined based on the number of shares granted and the fair value on the date of grant. See Note 910 for a summary of the terms of these performance-based awards. The fair value of the Company's stock option awards is estimated using a Black-Scholes option valuation model. The fair value of equity-based awards is amortized over the vesting period of the award and the Company elected to use the straight-line method for awards granted after the adoption of ASC 718.

Earnings per Share

Earnings per share (“EPS”) are calculated in accordance with ASC No. 260, Earnings per Share. Basic EPS include only the weighted average number of common shares outstanding during the period. Diluted EPS include the weighted average number of common shares and the dilutive effect of stock options, restricted stock awards, performance share units and restricted share units outstanding during the period, when such instruments are dilutive.

Table of Contents

KULICKE AND SOFFA INDUSTRIES, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

Unaudited (continued)

Accounting for Business Acquisitions

The Company accounts for business acquisitions in accordance with ASC No. 805, Business Combinations. The fair value of the net assets acquired and the results of operations of the acquired businesses are included in the Unaudited Consolidated Condensed Financial Statements from the acquisition date forward. The Company is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and results of operations during the reporting period. Estimates are used in accounting for, among other things, the fair value of acquired net operating assets, property, plant and equipment, deferred revenue, intangible assets and related deferred tax ~~liabilities,~~balances, useful lives of property, plant and equipment, and amortizable lives of acquired intangible assets. Any excess of the purchase consideration over the identified fair value of the assets and liabilities acquired is recognized as goodwill. The valuation of these tangible and identifiable intangible assets and liabilities is subject to further management review and may change materially between the preliminary allocation and end of the purchase price allocation period.

Restructuring charges

Restructuring charges may consist of voluntary or involuntary severance-related charges, asset-related charges and other costs due to exit activities. We recognize voluntary termination benefits when an employee accepts the offered benefit arrangement. We recognize involuntary severance-related charges depending on whether the termination benefits are provided under an ongoing benefit arrangement or under a one-time benefit arrangement. If the former, we recognize the charges once they are probable and the amounts are estimable. If the latter, we recognize the charges once the benefits have been communicated to employees.

Recent Accounting Pronouncements

~~Income Taxes~~

In October 2016, the FASB issued ASU 2016-16, Accounting for Income Taxes: Intra-Entity Asset Transfers of Assets Other than Inventory. The new guidance is effective for the Company beginning fiscal 2019 and requires the tax effects of intercompany transactions (other than transfers of inventory) to be recognized currently. The Company has adopted the modified retrospective approach for the transition based on the new guidance and, as of the beginning of the period of adoption, has recorded the cumulative effect of adjustments related to intra-entity transfers of intangible and fixed assets of $0.5 million prior years as an increase to retained earnings.

Leases

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which requires the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases under current GAAP.

Subsequently in July 2018, the FASB issued ASU 2018-11, ~~-Leases~~Leases (Topic 842): Targeted Improvements, provides additional information concerning the new leases standard in ASU 2016-02, Leases (Topic 842). The targeted improvements provide entities with additional and optional transition methods.

In November 2018, the FASB issued ASU 2018-20, – Leases (Topic 842): Narrow-Scope Improvements for ~~Lessors.~~Lessors. This ASU provides guidance in several areas, including the accounting policy election for sales taxes and other similar taxes collected from lessees, accounting for certain lessor costs and accounting for variable payments for contracts with lease and nonlease components.

~~Table~~We adopted these ASUs utilizing the modified retrospective transition method through a cumulative-effect adjustment at the beginning of ~~Contents~~

~~KULICKE AND SOFFA INDUSTRIES, INC.~~

~~NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS~~

~~Unaudited (continued)~~

~~These ASUs will be effective for us beginning in our~~the first quarter of fiscal 2020. In addition, we elected the package of practical expedients permitted under the transition guidance that allowed us to apply prior conclusions related to lease definition, classification and initial direct costs. Additionally, the lease previously identified as build-to-suit leasing arrangement under legacy lease accounting (ASC 840), was derecognized pursuant to the transition guidance provided for build-to-suit leases in ASC 842 (see Note 9 below). Accordingly, the lease has been reassessed as an operating lease as of the adoption date under ASC 842, and is included on the Consolidated Condensed Balance Sheet. The adoption of these ASUs ~~will result~~has resulted in an increase of approximately $23.8 million in ~~our consolidated balance sheets for these right~~operating lease liabilities and $22.2 million in right-of-use assets, decrease of ~~use assets~~approximately $14.5 million in financing obligation, decrease of approximately $15.3 million in property, plant and ~~corresponding liabilities. However, the ultimate impact~~equipment, and an adjustment of ~~adopting these ASUs will depend on the Company's lease portfolio as of the adoption date. We are currently evaluating the~~$0.8 million to retained earnings after income tax effects ~~of the adoption of these ASUs~~ on our ~~financial statements.~~Consolidated Condensed Balance Sheet.

Financial Instruments

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. This ASU replaces the impairment methodology in current GAAP, which delays recognition of credit losses until it is probable a loss has been incurred, with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. This ASU will be effective for us beginning in our first quarter of fiscal 2021. We are currently evaluating the impact of the adoption of this ASU on our consolidated condensed financial statements.

Derivatives and Hedging

In August 2017, the FASB issued ASU 2017-12, Targeted Improvements to Accounting for Hedging Activities (Topic 815). The new guidance expands and refines hedge accounting for both financial and non-financial risks. The new guidance also modifies disclosure requirements for hedging activities. ~~The new guidance will be effective for us beginning in our first quarter of fiscal 2020, and early adoption is permitted in any interim period. The Company is currently evaluating the impact~~We adopted this ASU as of the ~~new guidance on its consolidated financial statements as well as whether to adopt the new guidance early.~~

~~Revenue Recognition~~

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”), which amends the accounting standards for revenue recognition. ASU 2014-09 is based on principles that govern the recognitionbeginning of ~~revenue at an amount an entity expects to be entitled when products are transferred to customers.~~

Subsequently, the FASB has issued the following standards related to ASU 2014-09: ASU 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (“ASU 2016-08”); ASU 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing (“ASU 2016-10”); ASU 2016-12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients (“ASU 2016-12”); and ASU 2016-20, Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers (“ASU 2016-20” and collectively, the “new revenue standards”).

The Company has performed an evaluation of this ASU and its impact on the financial statements. This included tasks such as identifying contracts, performance obligations and reviewing the applicable revenue streams. We have completed our assessment and implemented policies, processes, and controls to support the standard's measurement and disclosure requirements. The new standard was adopted in the first quarter of ~~fiscal 2019 using a modified retrospective approach.~~

~~Based on our review~~2020. The adoption of all our customer agreements for the affected periods, our revenue from sales of our products, such as equipment and spare parts, will continue to be recognized at a point in time, generally upon shipment or delivery to customers or distributors, depending upon the terms of the sales order, consistent with our current revenue recognition model. Revenue related to the sale of services will generally continue to be recognized over time as the services are performed. In certain instances, where collection of consideration is not probable, recognition of revenue may occur later under the new model after we have completed all of our obligations under the contract. However, when adopting the new standard, we did not identify any balances where collection of consideration is not probable. Thisthis ASU did not have a material impact on ~~the amount and timing~~our consolidated condensed financial statements.

Table of ~~revenue recognized in the Company’s consolidated financial statements.~~Contents

KULICKE AND SOFFA INDUSTRIES, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

Unaudited (continued)

Collaborative Arrangements

In November 2018, the FASB issued ASU 2018-18, – Collaborative Arrangements (Topic 808). This ASU clarifies that certain transactions between collaborative arrangement participants should be accounted for as revenue when the collaborative arrangement participant is a customer in the context of a unit of account and precludes recognizing as revenue consideration received from a collaborative arrangement participant if the participant is not a customer. This ASU will be effective for us in the first quarter of 2021 with early adoption permitted. This ASU requires retrospective adoption to the date we adopted ASC 606 by recognizing a cumulative-effect adjustment to the opening balance of retained earnings of the earliest annual period presented. We are currently evaluating the timing and the effects of the adoption of this ASU on our consolidated condensed financial statements.

Income Taxes

In February 2018, the FASB issued ASU 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects From Accumulated Other Comprehensive Income, which allows for a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the U.S. Tax Cuts and Jobs Act (the “TCJA”) and requires entities to provide certain disclosures regarding these stranded tax effects, if any. We adopted this ASU in the first quarter of 2020. The adoption did not have a material impact on our consolidated condensed financial statements.

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740). The amendments in this ASU simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740 and clarify and amend existing guidance. This ASU will be effective for us in the first quarter of 2022 with early adoption permitted. We are currently evaluating the timing and the effects of the adoption of this ASU on our consolidated condensed financial statements.

1312

Table of Contents

KULICKE AND SOFFA INDUSTRIES, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

Unaudited (continued)

NOTE 2: BALANCE SHEET COMPONENTS

The following tables reflect the components of significant balance sheet accounts as of ~~March 30,~~December 28, 2019 and September ~~29, 2018~~28, 2019:



	As of
(in thousands)	December 28, 2019			September 28, 2019

Short term investments, available-for-sale⁽¹⁾	$	119,000		$	229,000

Inventories, net:
Raw materials and supplies	$	51,651		$	52,853
Work in process	37,481			32,026
Finished goods	36,122			33,742
	125,254			118,621
Inventory reserves	(30,045		)	(29,313		)
	$	95,209		$	89,308
Property, plant and equipment, net:
Land	$	2,182		$	2,182
Buildings and building improvements	22,282			41,961
Leasehold improvements	24,542			24,441
Data processing equipment and software	36,626			36,302
Machinery, equipment, furniture and fixtures	73,018			71,465
Construction in progress	6,769			6,512
	165,419			182,863
Accumulated depreciation	(108,593		)	(110,493		)
	$	56,826		$	72,370
Accrued expenses and other current liabilities:
Accrued customer obligations ⁽²⁾	$	26,484		$	26,292
Wages and benefits	18,473			18,188
Dividend payable	7,651			7,582
Commissions and professional fees	2,432			2,024
Deferred rent	—			1,721
Severance	1,205			1,500
Other	6,277			7,226
	$	62,522		$	64,533

As of
(in thousands) March 30, 2019 September 29, 2018

Short term investments, available-for-sale⁽¹⁾
$ 208,000
$ 293,000

Inventories, net:

Raw materials and supplies $ 58,629
$ 63,894
Work in process 34,405
37,829
Finished goods 36,951
40,357
129,985
142,080
Inventory reserves (27,436 ) (26,889 )
$ 102,549
$ 115,191
Property, plant and equipment, net:

Land $ 2,182
$ 2,182
Buildings and building improvements ⁽²⁾
42,083
41,616
Leasehold improvements ⁽²⁾
23,913
23,561
Data processing equipment and software 36,157
35,469
Machinery, equipment, furniture and fixtures 73,671
68,666
Construction in progress 6,327
6,940
184,333
178,434
Accumulated depreciation (107,990 ) (102,367 )
$ 76,343
$ 76,067
Accrued expenses and other current liabilities:

Accrued customer obligations ⁽³⁾
$ 28,091
$ 34,918
Wages and benefits 15,796
44,505
Dividend payable 8,056
8,057
Commissions and professional fees 2,879
5,549
Deferred rent 1,794
1,847
Severance 647
1,415
Other 7,550
9,687
$ 64,813
$ 105,978


(1)	All short-term investments were classified as available-for-sale and were measured at fair value based on level one measurement, or quoted market prices, as defined by ASC 820. The Company did not recognize any realized gains or losses on the sale of investments during the three ~~and six~~ months ended ~~March 30,~~December 28, 2019 and ~~March 31,~~December 29, 2018.


(2)	Certain balances as at September 29, 2018 relating to Property, plant and equipment have been reclassified. These reclassifications have no impact to the Consolidated Balance Sheet as at September 29, 2018.


~~(3)~~	Represents customer advance payments, customer credit program, accrued warranty expense and accrued retrofit obligations.

NOTE 3: GOODWILL AND INTANGIBLE ASSETS

Goodwill

Intangible assets classified as goodwill are not amortized. The goodwill established in connection with our acquisitions represents the estimated future economic benefits arising from the assets we acquired that did not qualify to be identified and recognized

~~Table of Contents~~

~~KULICKE AND SOFFA INDUSTRIES, INC.~~

~~NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS~~

~~Unaudited (continued)~~

individually. The goodwill also includes the value of expected future cash flows of the acquisitions, expected synergies with our

Table of Contents

KULICKE AND SOFFA INDUSTRIES, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

Unaudited (continued)

other affiliates and other unidentifiable intangible assets. The Company performs an annual impairment test of its goodwill during the fourth quarter of each fiscal year, which coincides with the completion of its annual forecasting and refreshing of business outlook process.

The Company performed its annual impairment test in the fourth quarter of fiscal ~~2018~~2019 and concluded that no impairment charge was required. Any future adverse changes in expected operating results and/or unfavorable changes in other economic factors used to estimate fair values could result in a noncash impairment in the future.

During the three ~~and six~~ months ended ~~March 30,~~December 28, 2019, the Company reviewed qualitative factors to ascertain if a "triggering" event may have taken place that may have the effect of reducing the fair value of the reporting unit below its carrying value and concluded that no triggering event had occurred.

The following table summarizes the Company's recorded goodwill by reporting segments as of ~~March 30,~~December 28, 2019 and September ~~29, 2018:~~28, 2019:



	As of
(in thousands)	December 28, 2019		September 28, 2019
Capital Equipment	$	29,640	$	29,480
APS	26,355		26,211
Total goodwill	$	55,995	$	55,691

As of
(in thousands) March 30, 2019 September 29, 2018
Capital Equipment $ 29,763
$ 30,159
APS 26,287
26,391
Total goodwill $ 56,050
$ 56,550

~~Table of Contents~~

~~KULICKE AND SOFFA INDUSTRIES, INC.~~

~~NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS~~

~~Unaudited (continued)~~

Intangible Assets

Intangible assets with determinable lives are amortized over their estimated useful lives. The Company's intangible assets consist primarily of developed technology, customer relationships and trade and brand names.

The following table reflects net intangible assets as of ~~March 30,~~December 28, 2019 and September ~~29, 2018:~~28, 2019:



	As of						Average estimated
(dollar amounts in thousands)	December 28, 2019			September 28, 2019			useful lives (in years)
Developed technology	$	88,368		$	87,209		7.0 to 15.0
Accumulated amortization	(50,117		)	(48,718		)
Net developed technology	$	38,251		$	38,491

Customer relationships	$	35,521		$	35,180		5.0 to 6.0
Accumulated amortization	(32,808		)	(31,862		)
Net customer relationships	$	2,713		$	3,318

Trade and brand names	$	7,274		$	7,219		7.0 to 8.0
Accumulated amortization	(6,510		)	(6,377		)
Net trade and brand names	$	764		$	842

Other intangible assets	$	2,500		$	2,500		1.9
Accumulated amortization	(2,500		)	(2,500		)
Net other intangible assets	$	—		$	—

Net intangible assets	$	41,728		$	42,651

As of Average estimated
(dollar amounts in thousands) March 30, 2019 September 29, 2018
useful lives (in years)
Developed technology $ 88,578
$ 90,500
7.0 to 15.0
Accumulated amortization (46,969 ) (45,229 )
Net developed technology $ 41,609
$ 45,271

Customer relationships $ 35,583
$ 36,131
5.0 to 6.0
Accumulated amortization (30,825 ) (29,820 )
Net customer relationships $ 4,758
$ 6,311

Trade and brand names $ 7,284
$ 7,377
7.0 to 8.0
Accumulated amortization (6,230 ) (6,088 )
Net trade and brand names $ 1,054
$ 1,289

Other intangible assets $ 2,500
$ 2,500
1.9
Accumulated amortization (2,500 ) (2,500 )
Net other intangible assets $ —
$ —

Net intangible assets $ 47,421
$ 52,871

1614

Table of Contents

KULICKE AND SOFFA INDUSTRIES, INC.

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

Unaudited (continued)

The following table reflects estimated annual amortization expense related to intangible assets as of ~~March 30,~~December 28, 2019:


	As of		As of
(in thousands)	March 30, 2019		December 28, 2019
Remaining fiscal 2019	$	3,689
Fiscal 2020	7,378
Remaining fiscal 2020			$	5,513
Fiscal 2021	5,344		5,324
Fiscal 2022	4,379		4,362
Fiscal 2023 and onwards	26,631
Fiscal 2023			4,267
Fiscal 2024			4,267
Thereafter			17,995
Total amortization expense	$	47,421	$	41,728



~~PENNSYLVANIA~~Pennsylvania	23-1498399
(State or other jurisdiction of incorporation)	(IRS Employer
	Identification No.)



Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, Without Par Value	KLIC	The Nasdaq Global Market



Large accelerated filerx	☒	Accelerated filer¨	☐
Non-accelerated filer¨	☐	Smaller reporting company¨	☐
Emerging growth company¨	☐



~~Title of each class~~	~~Trading Symbol(s)~~	~~Name of each exchange on which registered~~
~~Common Stock, Without Par Value~~	~~KLIC~~	~~The Nasdaq Global Market~~



		Page Number

PART I - FINANCIAL INFORMATION

Item 1.	FINANCIAL STATEMENTS (Unaudited)

	Consolidated Condensed Balance Sheets as of ~~March 30,~~December 28, 2019 and September ~~29, 2018~~28, 2019	1

	Consolidated Condensed Statements of Operations for the three ~~and six~~ months ended ~~March 30,~~December 28, 2019 and ~~March 31,~~December 29, 2018	2

	Consolidated Condensed Statements of Comprehensive Income (Loss) for the three ~~and six~~ months ended ~~March 30,~~December 28, 2019 and ~~March 31,~~December 29, 2018	3

	Consolidated Condensed Statements of Shareholders' Equity for the three ~~and six~~ months ended ~~March 30,~~December 28, 2019 and ~~March 31,~~December 29, 2018	4

	Consolidated Condensed Statements of Cash Flows for the ~~six~~three months ended ~~March 30,~~December 28, 2019 and ~~March 31,~~December 29, 2018	65

	Notes to Consolidated Condensed Financial Statements	76

Item 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	2826

Item 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	3835

Item 4.	CONTROLS AND PROCEDURES	3936

PART II - OTHER INFORMATION

Item 1A.	RISK FACTORS	4037

Item 2.	UNREGISTERED SALES OF EQUITY SECURITIES	4037

Item 6.	EXHIBITS	4138

	SIGNATURES	4239



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



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


	Three months ended						Six months ended						Three months ended
	March 30, 2019			March 31, 2018			March 30, 2019			March 31, 2018			December 28, 2019			December 29, 2018
Net revenue	$	115,908		$	221,772		$	273,116		$	435,463		$	144,297		$	157,208
Cost of sales	60,335			122,325			142,744			238,814			73,933			82,409
Gross profit	55,573			99,447			130,372			196,649			70,364			74,799
Selling, general and administrative	28,461			32,354			58,902			60,147			28,658			30,441
Research and development	29,577			28,657			59,380			58,907			28,292			29,803
Operating expenses	58,038			61,011			118,282			119,054			56,950			60,244
(Loss)/income from operations	(2,465		)	38,436			12,090			77,595
Income from operations													13,414			14,555
Interest income	3,865			2,986			7,691			4,961			2,839			3,826
Interest expense	(254		)	(270		)	(505		)	(536		)	(583		)	(251		)
Income before income taxes	1,146			41,152			19,276			82,020			15,670			18,130
Income tax expense	4,672			4,800			15,242			115,212
Provision for income taxes													2,133			10,570
Share of results of equity-method investee, net of tax	29			39			72			23			60			43
Net (loss)/income	$	(3,555	)	$	36,313		$	3,962		$	(33,215	)
Net income													$	13,477		$	7,517

Net (loss)/income per share:
Net income per share:
Basic	$	(0.05	)	$	0.52		$	0.06		$	(0.47	)	$	0.21		$	0.11
Diluted	$	(0.05	)	$	0.51		$	0.06		$	(0.47	)	$	0.21		$	0.11

Weighted average shares outstanding:
Basic	65,930			70,361			66,530			70,467			63,557			67,176
Diluted	65,930			71,425			67,344			70,467			64,139			67,851



	Common Stock					Treasury Stock			Retained earnings			Accumulated Other Comprehensive loss			Shareholders' Equity
	Shares		Amount			Treasury Stock			Retained earnings			Accumulated Other Comprehensive loss			Shareholders' Equity
Balances as of September 28, 2019	63,173		$	533,590		$	(349,212	)	$	594,625		$	(9,940	)	$	769,063
Issuance of stock for services rendered	9		—			222			—			—			222
Repurchase of common stock	(224	)	—			(5,369		)	—			—			(5,369		)
Issuance of shares for equity-based compensation	800		(7,490		)	7,490			—			—			—
Equity-based compensation	—		3,387			—			—			—			3,387
Cumulative effect of accounting changes	—		—			—			(769		)	—			(769		)
Cash dividend declared	—		—			—			(7,651		)	—			(7,651		)
Components of comprehensive income:
Net income	—		—			—			13,477			—			13,477
Other comprehensive income	—		—			—			—			3,293			3,293
Total comprehensive income	—		—			—			13,477			3,293			16,770
Balances as of December 28, 2019	63,758		$	529,487		$	(346,869	)	$	599,682		$	(6,647	)	$	775,653


(in thousands)	Amortized Cost		Unrealized Gains		Unrealized Losses			Estimated Fair Value		Amortized Cost		Unrealized Gains		Unrealized Losses		Estimated Fair Value
Current assets:
Cash	$	223,814	$	—	$	—		$	223,814	$	246,438	$	—	$	—	$	246,438
Cash equivalents:
Money market funds ⁽¹⁾	125,043		—		(2		)	125,041		141,929		—		—		141,929
Time deposits ⁽²⁾	70,017		—		—			70,017		109,007		—		—		109,007
Total cash and cash equivalents	$	418,874	$	—	$	(2	)	$	418,872	$	497,374	$	—	$	—	$	497,374
Restricted Cash ⁽²⁾	465		—		—			465
Total cash, cash equivalents, and restricted cash	$	419,339	$	—	$	(2	)	$	419,337
Short-term investments ⁽²⁾:
Time deposits	109,000		—		—			109,000		20,000		—		—		20,000
Deposits ⁽³⁾	99,000		—		—			99,000		99,000		—		—		99,000
Total short-term investments	$	208,000	$	—	$	—		$	208,000	$	119,000	$	—	$	—	$	119,000
Total cash, cash equivalents, restricted cash and short-term investments	$	627,339	$	—	$	(2	)	$	627,337
Total cash, cash equivalents, and short-term investments										$	616,374	$	—	$	—	$	616,374


(1)	The fair value was determined using unadjusted prices in active, accessible markets for identical assets, and as such they were classified as Level 1 assets in the fair value hierarchy.


(3)	Represents deposits that require a notice period of three months for withdrawal.


(1)	On January 30, 2019, the Company made a $5.0 million investment in one of our collaborative partners, over which the Company does not have significant influence. During the three ~~and six~~ months ended ~~March 30,~~December 28, 2019, there was no impairment or adjustment to the observable price.


(1)	The fair value of derivative assets is measured using level 2 fair value inputs and is included in prepaid expenses and other current assets on our Consolidated Condensed Balance Sheet.


(2)	The fair value of derivative liabilities is measured using level 2 fair value inputs and is included in accrued expenses and other current liabilities on our Consolidated Condensed Balance Sheet.


(3)	Hedged amounts expected to be recognized to income within the next twelve months.


(1)	Net change in the fair value of the effective portion classified in other comprehensive income (“OCI”).


(2)	Effective portion classified as selling, general and administrative expense.



	As of
	December 28, 2019
Operating leases:
Weighted-average remaining lease term:	5.0		years
Weighted-average discount rate:	4.8	%



(in thousands)	Operating leases
Remainder of 2020	$	5,048
2021	5,265
2022	4,750
2023	4,639
2024	2,278
Thereafter	3,662
Total minimum lease payments	25,642
Less: Interest	3,010
Present value of lease obligations	22,632
Less: Current portion	5,427
Long-term portion of lease obligations	$	17,205



			Payments due by fiscal year
(in thousands)	Total		2020		2021		2022		2023		2024		Thereafter
Operating lease obligations ⁽¹⁾	$	16,273	$	4,089	$	2,576	$	2,182	$	1,967	$	1,822	$	3,637



	Three months ended
(shares in thousands)	December 28, 2019	December 29, 2018
Time-based RSUs	475	507
Relative TSR PSUs	157	157
Special/Growth PSUs	73	52
Common stock	9	8
Equity-based compensation in shares	714	724



	Three months ended
(in thousands, except per share data)	March 30, 2019						March 31, 2018
	Basic			Diluted			Basic		Diluted
NUMERATOR:
Net (loss)/income	$	(3,555	)	$	(3,555	)	$	36,313	$	36,313
DENOMINATOR:
Weighted average shares outstanding - Basic	65,930			65,930			70,361		70,361
Dilutive effect of Equity Plans				—					1,064
Weighted average shares outstanding - Diluted				65,930					71,425
EPS:
Net (loss)/income per share - Basic	$	(0.05	)	$	(0.05	)	$	0.52	$	0.52
Effect of dilutive shares				—					(0.01		)
Net (loss)/income per share - Diluted				$	(0.05	)			$	0.51


(1)	The Company orders inventory components in the normal course of its business. A portion of these orders are non-cancellable, however, some orders impose varying penalties and charges in the event of cancellation.


~~(2)~~	~~The Company has minimum rental commitments under various leases (excluding taxes, insurance, maintenance and~~



	~~Six~~Three months ended
	~~March 30,~~December 28, 2019		~~March 31,~~December 29, 2018
Micron Technology, Inc	~~15.3~~	%*		*18.5	%


	March 30, 2019 vs. March 31, 2018																		December 28, 2019 vs. December 29, 2018
	Three months ended									Six months ended									Three months ended
(in thousands)	Price			Volume			$ Change			Price			Volume			$ Change			Price			Volume			$ Change
Capital Equipment	$	(244	)	$	(96,321	)	$	(96,565	)	$	(1,718	)	$	(150,512	)	$	(152,230	)	$	(5,014	)	$	(8,600	)	$	(13,614	)


	Three months ended				Basis Point	Three months ended				Basis Point
	March 30, 2019		March 31, 2018		Change	December 28, 2019		December 29, 2018		Change
Capital Equipment	44.5	%	42.2	%	230	45.2	%	43.9	%	130
APS	55.8	%	55.4	%	40	57.4	%	57.8	%	(40	)
Total gross margin	47.9	%	44.8	%	310	48.8	%	47.6	%	120


			Payments due in										Payments due in
(in thousands)	Total		Less than 1 year		1 - 3 years		3 - 5 years		More than 5 years		Total		Less than 1 year		1 - 3 years		3 - 5 years		More than 5 years
Inventory purchase obligations ⁽¹⁾	$	100,575	$	100,575	$	—	$	—	$	—	$	115,841	$	115,841	$	—	$	—	$	—
Operating lease obligations ⁽²⁾	17,891		4,103		5,367		3,896		4,525
Long-term tax payable ⁽³⁾ (reflected on our Balance Sheets)	70,941		6,842		13,684		19,671		30,744
Asset retirement obligations ⁽⁴⁾ (reflected on our Balance Sheets)	1,577		41		405		1,012		119
U.S. one-time transition tax payable ⁽²⁾ (reflected on our Consolidated Condensed Balance Sheets)											72,401		5,175		12,213		18,607		36,406
Asset retirement obligations ⁽³⁾ (reflected on our Consolidated Condensed Balance Sheets)											1,663		126		322		1,087		128
Total	$	190,984	$	111,561	$	19,456	$	24,579	$	35,388	$	189,905	$	121,142	$	12,535	$	19,694	$	36,534


(1)	We order inventory components in the normal course of our business. A portion of these orders are non-cancellable and a portion may have varying penalties and charges in the event of cancellation.


(2)	Represents minimum rental commitments under various leases (excluding taxes, insurance, maintenance and repairs, which are also paid by us) primarily for various facility and equipment leases, which expire periodically through 2027 (not including lease extension options, if applicable).


~~(3)~~	Associated with the U.S. one-time transition tax on certain earnings and profits of our foreign subsidiaries in relation to the ~~Act. (Refer to Note 12 of Item 1).~~TCJA.


~~(4)~~(3)	Asset retirement obligations are associated with commitments to return the property to its original condition upon lease termination at various sites.



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⁾
December 30, 2018 to January 26, 2019	407	$	20.92	407	$	163.7
January 27, 2019 to March 2, 2019	462	$	22.37	462	$	153.3
March 3, 2019 to March 30, 2019	355	$	22.70	355	$	145.3
For the three months ended March 30, 2019	1,224			1,224



Exhibit No.		Description

31.1		Certification of Fusen Chen, Chief Executive Officer of Kulicke and Soffa Industries, Inc., pursuant to Rule 13a-14(a) or ~~Rule15d-14(a)~~Rule 15d-14(a).

31.2		Certification of Lester Wong, Chief Financial Officer of Kulicke and Soffa Industries, Inc., pursuant to Rule 13a-14(a) or Rule 15d-14(a).

32.1		Certification of Fusen Chen, Chief Executive Officer of Kulicke and Soffa Industries, Inc., pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2		Certification of Lester Wong, Chief Financial Officer of Kulicke and Soffa Industries, Inc., pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS		~~XBRL~~Inline xBRL Instance Document.

101.SCH		~~XBRL~~Inline xBRL Taxonomy Extension Schema Document.

101.CAL		~~XBRL~~Inline xBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF		~~XBRL~~Inline xBRL Taxonomy Extension Definition Linkbase Document.

101.LAB		~~XBRL~~Inline xBRL Taxonomy Extension Label Linkbase Document.

101.PRE		~~XBRL~~Inline xBRL Taxonomy Extension Presentation Linkbase Document.

104		Cover Page Interactive Data File (formatted as Inline xBRL and contained in Exhibit 101.INS).