What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2023-08-08 compared with 2018-05-31 · 739 added, 1044 removed, 471 unchanged (79% of the section changed)

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The restated consolidated financial statements of Kulicke and Soffa Industries, Inc.

The consolidated financial statements of Kulicke and Soffa Industries, Inc.

listed in the index appearing under Item 15(a)(1) herein are filed as part of this Report under this Item 8.

Report of Independent Registered Public Accounting Firm

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

In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of operations, comprehensive income, changes in shareholders’ equity, and cash flows present fairly, in all material respects, the financial position of Kulicke & Soffa Industries, Inc.

and its subsidiaries as of September 30, 2017 and October 1, 2016, and the results of their operations and their cash flows for each of the three years in the period ended September 30, 2017 in conformity with accounting principles generally accepted in the United States of America.

In addition, in our opinion, the financial statement schedule listed in the index appearing under Item 15(a)(2) presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements.

Management and we previously concluded that the Company maintained effective internal control over financial reporting as of September 30, 2017.

However, management has subsequently determined that a material weakness in internal control over financial reporting related to the recording and review of manual journal entries of the Company’s warranty accrual existed as of that date.

Accordingly, management’s report has been restated and our present opinion on internal control over financial reporting, as presented herein, is different from that expressed in our previous report.

In our opinion, the Company did not maintain, in all material respects, effective internal control over financial reporting as of September 30, 2017, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO because a material weakness in internal control over financial reporting existed as of that date related to the recording and review of manual journal entries related to the Company’s warranty accrual.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of annual or interim financial statements will not be prevented or detected on a timely basis.

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

Opinions on the Financial Statements and Internal Control Over Financial Reporting

We have audited the accompanying consolidated balance sheets of Kulicke and Soffa Industries, Inc.

and its subsidiaries (the “Company”) as of October 1, 2022 and October 2, 2021, and the related consolidated statements of operations, of comprehensive income, of changes in shareholders’ equity and of cash flows for each of the three years in the period ended October 1, 2022, including the related notes and schedule of valuation and qualifying accounts for each of the three years in the period ended October 1, 2022 appearing under Item 15(a)(2) (collectively referred to as the “consolidated financial statements”).

We also have audited the Company’s internal control over financial reporting as of October 1, 2022, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of October 1, 2022 and October 2, 2021 , and the results of its operations and its cash flows for each of the three years in the period ended October 1, 2022 in conformity with accounting principles generally accepted in the United States of America.

Also in our opinion, the Company did not maintain, in all material respects, effective internal control over financial reporting as of October 1, 2022, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO because a material weakness in internal control over financial reporting existed as of that date related to a design gap in the existing review of the segment reporting process, which failed to (a) identify all of the key metrics used by the CODM to evaluate performance and allocate resources, (b) assess in totality the level of information provided to and utilized by the CODM to evaluate performance and allocate resources and (c) appropriately analyze every factor pertinent to whether operating segments share economic similarities that are required for aggregation under ASC 280.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the annual or interim financial statements will not be prevented or detected on a timely basis.

The material weakness referred to above is described in Management’s Report on Internal Control Over Financial Reporting appearing under Item 9A.

We considered this material weakness in determining the nature, timing and extent of audit tests applied in our audit of the 2017 consolidated financial statements and our opinion regarding the effectiveness of the Company’s internal control over financial reporting does not affect our opinion on the consolidated financial statements.

The Company's management is responsible for these financial statements and financial statement schedule, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in Management's Report on Internal Control over Financial Reporting under Item 9A.

Our responsibility is to express opinions on these financial statements, on the financial statement schedule, and on the Company's internal control over financial reporting based on our integrated audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States).

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation.

We considered this material weakness in determining the nature, timing, and extent of audit tests applied in our audit of the 2022 consolidated financial statements, and our opinion regarding the effectiveness of the Company’s internal control over financial reporting does not affect our opinion on those consolidated financial statements.

Restatement of Management’s Conclusion Regarding Internal Control Over Financial Reporting

Management and we previously concluded that the Company maintained effective internal control over financial reporting as of October 1, 2022.

However, management has subsequently determined that a material weakness in internal control over financial reporting existed as of that date related to a design gap in the existing review of the segment reporting process, which failed to (a) identify all of the key metrics used by the CODM to evaluate performance and allocate resources, (b) assess in totality the level of information provided to and utilized by the CODM to evaluate performance and allocate resources and (c) appropriately analyze every factor pertinent to whether operating segments share economic similarities that are required for aggregation under ASC 280.

Basis for Opinions

The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in management’s report referred to above.

Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company’s internal control over financial reporting based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.

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We believe that our audits provide a reasonable basis for our opinions.

As discussed in Note 2 to the consolidated financial statements, the Company has restated its 2017, 2016 and 2015 consolidated financial statements to correct misstatements.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

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Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

As described in Management’s Report on Internal Control over Financial Reporting included under Item 9A, management has excluded Liteq B.V (“Liteq”) from its assessment of internal control over financial reporting as of September 30, 2017, because it was acquired by the Company in a purchase business combination during the year ended September 30, 2017.

We have also excluded Liteq from our audit of internal control over financial reporting.

Liteq is a wholly-owned subsidiary of the Company whose total assets excluded from management’s assessment and our audit of internal control over financial reporting represent 2.5% of the related consolidated financial statement amounts as of September 30, 2017.

No revenue was contributed by Liteq for the year ended September 30, 2017.

Critical Audit Matters

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Valuation of inventories - Reserves for excess and obsolete raw materials

As described in Notes 1 and 2 to the consolidated financial statements, the Company’s consolidated net inventory balance was $185.0 million.

The Company generally provides reserves for obsolete inventory and for inventory considered to be in excess of demand.

Demand is generally defined as forecasted future consumption for inventories, and is based upon internal projections, historical sales volumes, customer order activity and a review of consumable inventory levels at customers’ facilities.

The principal considerations for our determination that performing procedures relating to the valuation of inventories, specifically the reserves for excess and obsolete raw materials, is a critical audit matter are our assessment that this is an area of significant judgment by management when developing reserves for excess and obsolete raw materials, including developing the assumption related to forecasted future consumption for raw materials.

This has in turn led to significant auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s assumptions over the reasonableness of the significant assumptions related to the forecasted future consumption for raw materials.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of controls relating to management’s reserves for excess and obsolete raw materials, including controls over management’s assumption related to forecasted future consumption for raw materials.

These procedures also included, among others, testing management’s process for developing the reserves for excess or obsolete raw materials;

evaluating the appropriateness of management’s approach;

testing the completeness and accuracy of underlying data used in the approach;

and evaluating the reasonableness of management’s assumption related to forecasted future consumption for raw materials.

Evaluating management’s assumption related to forecasted future consumption for raw materials involved evaluating whether the assumption used by management was reasonable considering (i) current and past sales results, (ii) the consistency of sales with external market and industry data, and (iii) comparing prior year estimates of sales to actual sales results in the current year.

/s/ PricewaterhouseCoopers LLP

November 16, 2017 except for the effects of the restatement described in Note 2 to the consolidated financial statements and the matter discussed in the fourth paragraph of Management’s Report on Internal Control over Financial Reporting, as to which the date is May 31, 2018

November 17, 2022, except for the effects of the revision discussed in Notes 4 and 16 to the consolidated financial statements and with respect to our opinion on internal control over financial reporting insofar as it relates to the effects of the matter discussed in the fourth paragraph of Management’s Report on Internal Control Over Financial Reporting, as to which the date is August 8, 2023.

We have served as the Company’s auditor since 2011.

KULICKE AND SOFFA INDUSTRIES, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands)

September 30, 2017

October 1, 2016

(in thousands, except per share amount)

October 1, 2022 October 2, 2021

Current assets:

Cash and cash equivalents $ 555,537 $ 362,788

Restricted cash

Short-term investments 220,000 377,000

Accounts and notes receivable, net of allowance for doubtful accounts of $ 0 and $ 687 , respectively

309,323 421,193

Inventories, net 184,986 167,323

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Property, plant and equipment, net 80,908 67,982

Operating right-of-use assets 41,767 41,592

Goodwill 68,096 72,949

Intangible assets, net 31,939 42,752

Deferred income taxes

Deferred tax assets 25,572 15,715

Equity investments 5,397 6,388

Other assets 2,874 2,363

TOTAL ASSETS $ 1,588,599 $ 1,601,631

LIABILITIES AND SHAREHOLDERS' EQUITY

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Accounts payable 67,311 154,636

Operating lease liabilities 6,766 4,903

Accrued expenses and other current liabilities 134,541 161,570

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Total current liabilities 248,681 351,875

Financing obligation

Deferred income taxes

Deferred tax liabilities 34,037 32,828

Income taxes payable 64,634 69,422

Operating lease liabilities 34,927 38,084

Other liabilities 11,670 14,185

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Authorized 5,000 shares;

issued - none

issued - no ne

Common stock, no par value:

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outstanding 57,128 and 61,931 shares, respectively

561,684 550,117

Treasury stock, at cost, 28,237 and 23,433 shares, respectively

( 675,800 ) ( 400,412 )

Retained earnings 1,341,666 948,554

Accumulated other comprehensive gain / (loss)

Accumulated other comprehensive loss ( 32,900 ) ( 3,022 )

TOTAL SHAREHOLDERS' EQUITY $ 1,194,650 $ 1,095,237

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(in thousands, except per share data)

2022 2021 2020

Net revenue $ 1,503,620 $ 1,517,664 $ 623,176

Cost of sales 755,300 820,678 325,201

Gross profit 748,320 696,986 297,975

Selling, general and administrative 141,396 147,061 116,007

Research and development 136,852 137,478 123,459

Impairment charges

Operating expenses 278,248 284,539 239,466

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Interest expense ( 208 ) ( 218 ) ( 1,716 )

Income from operations before income taxes

Income tax (benefit) / expense

Income before income taxes 476,988 414,550 64,334

Provision for income taxes 43,443 47,295 11,998

Share of results of equity-method investee, net of tax — 94 36

Net income $ 433,545 $ 367,161 $ 52,300

Net income per share:

Basic $ 7.21 $ 5.92 $ 0.83

Diluted $ 7.09 $ 5.78 $ 0.83

Weighted average shares outstanding:

Basic 60,164 62,009 62,828

Diluted 61,182 63,515 63,359

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

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(in thousands)

2022 2021 2020

Net income $ 433,545 $ 367,161 $ 52,300

Other comprehensive income / (loss):

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Unrecognized actuarial gain / (loss) on pension plan, net of tax 2,276 — ( 1,490 )

( 28,260 ) 672 6,265

Derivatives designated as hedging instruments:

Unrealized gain / (loss) on derivative instruments, net of tax

Reclassification adjustment for loss on derivative instruments recognized, net of tax

Net increase / (decrease) from derivatives designated as hedging instruments, net of tax

Total other comprehensive income / (loss)

Unrealized (loss) / gain on derivative instruments, net of tax ( 2,694 ) 24 358

Reclassification adjustment for loss / (gain) on derivative instruments recognized, net of tax 1,076 ( 1,197 ) 796

Net (decrease) / increase from derivatives designated as hedging instruments, net of tax ( 1,618 ) ( 1,173 ) 1,154

Total other comprehensive (loss) / income ( 29,878 ) ( 501 ) 7,419

Comprehensive income $ 403,667 $ 366,660 $ 59,719

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(in thousands)

Treasury Stock

Retained earnings

(As Restated)

Accumulated Other Comprehensive Income

Shareholders' Equity

(As Restated)

Common Stock Treasury Stock Retained earnings Accumulated Other Comprehensive (loss) / income Shareholders' Equity

Shares Amount

Balances as of September 28, 2019 63,173 $ 533,590 $ ( 349,212 ) $ 594,625 $ ( 9,940 ) $ 769,063

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Repurchase of common stock ( 2,486 ) — ( 55,001 ) — — ( 55,001 )

Exercise of stock options

Issuance of shares for market-based restricted stock and time-based restricted stock

Excess tax benefits from stock based compensation

Equity-based compensation expense

Issuance of shares for equity-based compensation 834 ( 9,037 ) 9,037 — — —

Equity-based compensation — 14,169 — — — 14,169

Cumulative effect of accounting changes — — — ( 769 ) — ( 769 )

Cash dividend declared — — — ( 30,037 ) — ( 30,037 )

Components of comprehensive income:

Translation adjustment

Unamortized pension costs

Net income — — — 52,300 — 52,300

Other comprehensive income — — — — 7,419 7,419

Total comprehensive income — — — 52,300 7,419 59,719

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Repurchase of common stock ( 215 ) — ( 10,182 ) — — ( 10,182 )

Exercise of stock options

Issuance of shares for market-based restricted stock and time-based restricted stock

Excess tax benefits from stock based compensation

Equity-based compensation expense

Issuance of shares for equity-based compensation 565 ( 4,385 ) 4,385 — — —

Equity-based compensation — 14,673 — — — 14,673

Cash dividend declared — — — ( 34,726 ) — ( 34,726 )

Components of comprehensive income:

Translation adjustment

Unrealized loss on derivative instruments

Unamortized pension costs

Total comprehensive income

Net income — — — 367,161 — 367,161

Other comprehensive loss — — — — ( 501 ) ( 501 )

Total comprehensive income/(loss) — — — 367,161 ( 501 ) 366,660

Balances as of October 2, 2021 61,931 $ 550,117 $ ( 400,412 ) $ 948,554 $ ( 3,022 ) $ 1,095,237

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Repurchase of common stock ( 5,576 ) — ( 282,807 ) — — ( 282,807 )

Exercise of stock options

Issuance of shares for market-based restricted stock and time-based restricted stock

Reversal of excess tax benefits from stock based compensation

Equity-based compensation expense

Issuance of shares for equity-based compensation 755 ( 7,244 ) 7,244 — — —

Equity-based compensation — 18,037 — — 18,037

Cash dividend declared — — — ( 40,433 ) — ( 40,433 )

Components of comprehensive income:

Translation adjustment

Unrealized gain on derivative instruments

Unamortized pension costs

Total comprehensive income

Balances as of September 30, 2017

Net income — — — 433,545 — 433,545

Other comprehensive loss — — — — ( 29,878 ) ( 29,878 )

Total comprehensive income / (loss) — — — 433,545 ( 29,878 ) 403,667

Balances as of October 1, 2022 57,128 $ 561,684 $ ( 675,800 ) $ 1,341,666 $ ( 32,900 ) $ 1,194,650

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

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(in thousands)

2022 2021 2020

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income $ 433,545 $ 367,161 $ 52,300

Adjustments to reconcile net income to net cash provided by operating activities:

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Equity-based compensation and employee benefits 18,986 15,491 15,019

Reversal of excess tax benefits (Excess tax benefits from stock based compensation)

Adjustment for doubtful accounts ( 245 ) ( 248 ) 371

Adjustment for inventory valuation ( 2,613 ) ( 2,965 ) 4,170

Change in the estimation of warranty reserve

— — ( 5,417 )

Deferred taxes ( 8,648 ) ( 9,818 ) ( 827 )

Gain on disposal of property, plant and equipment

(Gain) / loss on disposal of property, plant and equipment ( 253 ) 259 953

Gain on disposal of equity-method investments — ( 1,046 ) —

Unrealized foreign currency translation ( 7,278 ) ( 378 ) 874

Share of results of equity-method investee — 94 36

Changes in operating assets and liabilities, net of assets and liabilities assumed in businesses combinations:

Changes in operating assets and liabilities:

Accounts and notes receivable 113,340 ( 221,924 ) ( 1,928 )

Inventory ( 14,924 ) ( 52,719 ) ( 26,194 )

Prepaid expenses and other current assets ( 37,907 ) ( 4,573 ) ( 3,561 )

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Income taxes payable 4,946 7,686 ( 291 )

Other, net ( 2,666 ) 1,242 1,020

Net cash provided by operating activities 390,188 300,032 94,412

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Maturity of short term investments 626,000 472,000 329,000

Changes in restricted cash

Net cash used in investing activities

Disposal of equity-method investments — 2,115 —

Net cash provided by / (used in) investing activities 133,799 ( 81,707 ) ( 125,957 )

CASH FLOWS FROM FINANCING ACTIVITIES:

Payment on debts

Proceeds from short term loans

Proceeds from exercise of common stock options

Payment on short term debt ( 54,500 ) ( 22,750 ) ( 147,143 )

Payment for finance leases ( 509 ) ( 379 ) ( 123 )

Repurchase of common stock ( 281,319 ) ( 10,426 ) ( 54,549 )

(Reversal of excess tax benefits) Excess tax benefits from stock based compensation

Proceeds from short term debt 54,500 22,750 86,239

Common stock cash dividends paid ( 39,363 ) ( 33,453 ) ( 30,233 )

Net cash used in financing activities ( 321,191 ) ( 44,258 ) ( 145,809 )

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CASH PAID FOR:

Interest $ 208 $ 218 $ 1,716

Income taxes $ 50,309 $ 51,856 $ 13,271

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

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In fiscal years consisting of 53 weeks, the fourth quarter will consist of 14 weeks.

The 2017, 2016, and 2015 fiscal years ended on September 30, 2017 , October 1, 2016 and October 3, 2015 , respectively.

The 2022, 2021, and 2020 fiscal years ended on October 1, 2022, October 2, 2021 and October 3, 2020, respectively.

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 Company’s operating results depend upon the capital and operating expenditures of semiconductor device manufacturers, integrated device manufacturers (“IDMs”), 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.

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The preparation of consolidated 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 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, valuation allowances for deferred tax assets and deferred tax liabilities, repatriation of un-remitted foreign subsidiary earnings, equity-based compensation expense, and warranties.

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, income taxes, equity-based compensation expense, and warranties.

Management bases its estimates on historical experience and on various other assumptions believed to be reasonable.

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Actual results may differ from these estimates.

Due to the coronavirus (“COVID-19”) pandemic and macroeconomic headwinds, there has been uncertainty and disruption in the global economy and financial markets.

The Company is not aware of any specific event or circumstance that would require an update to its estimates or judgments or a revision of the carrying value of its assets or liabilities as of October 1, 2022.

While there was no material impact to our consolidated financial statements as of and for the year ended October 1, 2022, these estimates may change, as new events occur and additional information is obtained, as well as other factors related to COVID-19 and macroeconomic headwinds that could materially impact our consolidated financial statements in future reporting periods.

The Company reviews its warranty reserve balances as part of its ongoing policy review.

At the start of fiscal 2020, the Company determined there was a need to obtain granular data given uncertainty in sales demand.

Accordingly , the Company commenced the collection of granular data over the four fiscal quarters in 2020 to establish a more precise estimate of its warranty reserve.

This collection was finalized and the information incorporated in the fourth quarter of fiscal 2020.

This resulted in a decrease to the reserve for warranty and an increase in net income by $ 5.4 million for the fiscal year 2020, as well as an increase to net income per share, basic and diluted, by $ 0.09 and $ 0.09 , respectively.

For further information on warranty reserve, see Notes 14 and 17 below.

KULICKE AND SOFFA INDUSTRIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Vulnerability to Certain Concentrations

Financial instruments which may subject the Company to concentrations of credit risk as of September 30, 2017 and October 1, 2016 consisted primarily of trade receivables.

Financial instruments which may subject the Company to concentrations of credit risk as of October 1, 2022 and October 2, 2021 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.

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These guidelines are periodically reviewed and modified as appropriate.

The Company does not have any exposure to sub-prime financial instruments or auction rate securities.

The 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;

however, the Company monitors its customers' financial strength to reduce the risk of loss.

Write-offs of uncollectible accounts have historically not been material.

The Company actively monitors its customers’ financial strength to reduce the risk of loss, including as a result of COVID-19 and macroeconomic headwinds.

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.

KULICKE AND SOFFA INDUSTRIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Foreign Currency Translation and Remeasurement

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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.

The tax effect of currency translation adjustments related to unremitted foreign earnings no longer deemed to be indefinitely reinvested outside the U.S.

is reflected in the determination of the Company's net income or other comprehensive income (“OCI”).

Gains and losses resulting from foreign currency transactions are included in the determination of net income.

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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.

dollar, differs from their respective local currencies, most notably in Israel, 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 Netherlands, China, Taiwan, Japan and Germany.

dollar, most notably in the Netherlands, China, Taiwan, Japan and Germany.

The Company’s U.S.

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Generally, the Company uses foreign exchange forward contracts in these hedging programs.

The 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.

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.

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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.

KULICKE AND SOFFA INDUSTRIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

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.

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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.

Cash equivalents are measured at fair value based on Level 1 measurement, or quoted market prices, as defined by ASC No.

820, Fair Value Measurements and Disclosures .

As of September 30, 2017 and October 1, 2016 , fair value approximated the cost basis for cash equivalents.

Investments, other than cash equivalents, are classified as “trading,” “available-for-sale” or “held-to-maturity,” in accordance with ASC No.

320, Investments-Debt & Equity Securities , and depending upon the nature of the investment, its ultimate maturity date in the case of debt securities, and management's intentions with respect to holding the securities.

Investments classified as “trading”

KULICKE AND SOFFA INDUSTRIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

are reported at fair market value, with unrealized gains or losses included in earnings.

Investments classified as “available-for-sale” are reported at fair market value, with net unrealized gains or losses reflected as a separate component of shareholders' equity (accumulated other comprehensive income (loss)).

The fair market value of trading and available-for-sale securities is determined using quoted market prices at the balance sheet date.

Investments classified as held-to-maturity are reported at amortized cost.

Realized gains and losses are determined on the basis of specific identification of the securities sold.

Equity Investments

The Company applies the equity method of accounting to investments that provide it with ability to exercise significant influence over the entities in which it lacks controlling financial interest and is not a primary beneficiary.

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.

The Company invests in equity securities in companies to promote business and strategic objectives.

Equity investments are measured and recorded as follows:

• 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.

The Company is also subject to concentrations of customers and sales to a few geographic locations, which could also impact the collectability of certain receivables.

If the financial condition of the Company’s customers were to deteriorate, resulting in an impairment of their ability to make payments, including as a result of COVID-19 and macroeconomic headwinds, 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.

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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.

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Land is not depreciated.

KULICKE AND SOFFA INDUSTRIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

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.

360, Property, Plant & Equipment (“ASC 360”), the Company’s definite lived intangible assets and property, plant and equipment are 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.

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or significant changes in market capitalization.

During the fiscal years ended September 30, 2017 and October 1,

KULICKE AND SOFFA INDUSTRIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

2016 , no "triggering" events occurred.

During the fiscal years ended October 1, 2022 and October 2, 2021, no “triggering” events occurred.

Accounting for Impairment of Goodwill

The Company operates two reportable segments:

Capital Equipment and APS.

Goodwill was recorded for the acquisitions of Orthodyne Electronics Corporation ("Orthodyne"), Assembléon B.V.

("Assembléon") and Liteq B.V.

("Liteq") in fiscal 2009, 2015 and 2017, respectively.

350, Intangibles-Goodwill and Other ("ASC 350") requires goodwill and intangible assets with indefinite lives to be reviewed for impairment annually, or more frequently if circumstances indicate a possible impairment.

350, Intangibles - Goodwill and Other 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.

If the carrying value 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—Goodwill and Other (Topic 350):

Simplifying the Test for Goodwill Impairment.

The new guidance eliminates the requirement to perform a hypothetical purchase price allocation to measure goodwill impairment.

Under the new guidance the goodwill 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.

In fiscal 2017 and 2016, the Company chose to bypass the qualitative assessment and proceed directly to performing the quantitative evaluation of the fair value of the reporting unit, to compare against the carrying value of the reporting unit.

However, if a company concludes otherwise, then it is required to perform the goodwill impairment test.

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.

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.

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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 intangible assets, see Note 6 below.

Indicators of potential impairment, 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 may lead the Company to perform interim goodwill impairment assessments.

For further information on goodwill and other intangible assets, see Note 4 below.

Revenue Recognition

In accordance with ASC No.

605, Revenue Recognition , the Company recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the price is fixed or determinable, the collectability is reasonably assured, and customer acceptance, when applicable, has been received or we otherwise have been released from customer acceptance obligations.

If terms of the sale provide for a customer acceptance period, revenue is recognized upon the expiration of the acceptance period or customer acceptance, whichever occurs first.

Services revenue is generally recognized over the period that the services are provided.

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.

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 the distributors’ resale of the products.

KULICKE AND SOFFA INDUSTRIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

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 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 the customers’ facility.

Customer returns have historically represented a very small percentage of customer sales on an annual basis.

• Warranties :

Our equipment is generally shipped with a one-year warranty against manufacturing 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 manufacturing defects during the warranty period.

• 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 agreed specifications, customer specifications or subject to satisfactory installation 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 fiscal 2022 and 2021, 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 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.

Contract Assets

A contract asset is the Company’s right to consideration in exchange for goods or services that the Company has transferred to a customer.

ASC 606, Revenue from Contracts with Customers , distinguishes between a contract asset and a receivable based on whether receipt of the consideration is conditional on something other than the passage of time.

When the Company transfers control of goods or services to a customer before the customer pays consideration, the Company records either a contract asset or a receivable depending on the nature of the Company’s right to consideration for its performance.

The point at which a contract asset becomes an account receivable may be earlier than the point at which an invoice is issued.

The Company assesses a contract asset for impairment in accordance with ASC 310, Receivables .

Research and Development

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In certain circumstances, pre-production machines that the Company intends to sell are carried as inventory until sold.

KULICKE AND SOFFA INDUSTRIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

In accordance with ASC No.

740, Income Taxes , deferred income taxes are determined using the balance sheet method .

The Company records a valuation allowance to reduce its deferred tax assets to the amount it expects is more likely than not to be realized.

While the Company has considered future taxable income and its ongoing tax planning strategies in assessing the need for the valuation allowance, if it were to determine that it would be able to realize its deferred tax assets in the future in excess of its net recorded amount, an adjustment to the deferred tax asset would increase income in the period 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 would decrease income in the period when such determination is made.

In accordance with ASC No.

740 Topic 10, Income Taxes, General (“ASC 740.10”), the Company accounts for uncertain tax positions taken or expected to be taken in its income tax return.

The Company records a valuation allowance to reduce its deferred tax assets to the amount expected, on a more likely than not basis, to be realized.

While the Company has considered future taxable income and 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 deferred tax 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 deferred tax assets in the future, an adjustment to deferred tax 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”).

Under ASC 740.10, the Company utilizes a two-step approach for evaluating uncertain tax positions.

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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.

The Financial Accounting Standards Board ("FASB") has issued Accounting Standard Update ("ASU") 2015-17, Income Taxes (Topic 740), regarding the presentation of deferred income taxes.

Under the new standard, both deferred tax liabilities and assets are required to be classified as noncurrent in a classified balance sheet.

ASU 2015-17 will become effective for fiscal years, and the interim periods within those years, beginning after December 15, 2016 (our fiscal 2018), with early adoption allowed.

During the first quarter of fiscal 2016, we elected to prospectively adopt ASU 2015-17, thus reclassifying current deferred taxes to noncurrent on the accompanying Consolidated Balance Sheet.

Equity-Based Compensation

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ASC 718 requires the recognition of the fair value of the equity-based compensation in net income.

Compensation expense associated with market-based restricted stock is determined using a Monte-Carlo valuation model, and compensation expense associated with time-based and performance-based restricted stock is determined based on the number of shares granted and the fair value on the date of grant.

The fair value of the Company's stock option awards are estimated using a Black-Scholes option valuation model.

In addition, the calculation of equity-based compensation costs requires that the Company estimate the number of awards that will be forfeited during the vesting period.

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 Growth Performance Share Units is determined based on the number of shares granted and the fair value on the date of grant.

See Note 11 for a summary of the terms of these performance-based awards.

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.

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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 and share unit awards and other convertible instruments outstanding during the period, when such instruments are dilutive.

In accordance with ASC No.

260.10.55, Earnings per Share - Implementation & Guidance , the Company treats all outstanding unvested share-based payment awards that contain rights to nonforfeitable dividends as participating in undistributed earnings with common shareholders.

Awards of this nature are considered participating securities and the two-class method of computing basic and diluted EPS must be applied.

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.

Accelerated Share Repurchase

From time to time, the Company may enter into accelerated share repurchase (“ASR”) agreements with third-party financial institutions to repurchase shares of the Company’s common stock.

Under an ASR agreement, in exchange for an up-front payment, the counterparty makes an initial delivery of shares of the Company’s common stock during the purchase period of the relevant ASR.

This initial delivery of shares represents the minimum number of shares that the Company may receive under an ASR agreement.

Upon settlement of an ASR agreement, the counterparty may deliver additional shares, with the final number of shares delivered determined based on the volume-weighted average price of the Company’s common stock over the term of such ASR agreement, less an agreed-upon discount.

The transactions are accounted for as equity transactions and are included in Treasury Stock when the shares are received, at which time there is an immediate reduction in the weighted-average common shares calculation for basic and diluted earnings per share.

Accounting for Business Acquisitions

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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 and equipment, deferred revenue, intangible assets and related deferred tax liabilities, useful lives of plant and equipment, and amortizable lives of acquired intangible assets.

Any excess of the

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 income taxes, 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 assumed 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.

KULICKE AND SOFFA INDUSTRIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

purchase consideration over the identified fair value of the assets and liabilities acquired is recognized as goodwill.

Restructuring Charges

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Recent Accounting Pronouncements

Restricted Cash

In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230):

Restricted Cash (a consensus of the FASB Emerging Issues Task Force).

This update requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents.

This ASU will be effective for us beginning in our first quarter of 2019.

Early adoption is permitted beginning in our first quarter of fiscal 2018.

We do not expect the adoption of the ASU itself to have a material impact on our financial statements.

We are currently evaluating the timing of the adoption of this ASU.

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 requires the tax effects of intercompany transactions (other than transfers of inventory) to be recognized currently.

The new guidance will be effective for public business entities in fiscal years beginning after December 15, 2017 (our fiscal 2019), including interim periods within those years, with an option to early adopt.

The modified retrospective approach will be required for transition to the new guidance, with a cumulative-effect adjustment recorded in retained earnings as of the beginning of the period of adoption.

We do not expect the adoption of this ASU itself to have a material impact on our financial statements.

However, the ultimate impact of adopting this ASU will depend on the balance of intellectual property transferred between our subsidiaries as of the adoption date.

We are currently evaluating the timing of the adoption of this ASU.

Stock Compensation

In March 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation (Topic 718):

Improvements to Employee Share-Based Payment Accounting.

This ASU identifies areas for simplification involving several aspects of accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, an option to recognize gross stock compensation expense with actual forfeitures recognized as they occur, as well as certain classifications on the statement of cash flows.

This ASU will be effective for us beginning in our first quarter of fiscal 2018.

In the year of adoption, the Company anticipates we will recognize unrealized excess tax benefits of $5.4 million in retained earnings.

In May 2017, the FASB issued ASU No.

2017-09, Compensation - Stock Compensation (Topic 718):

Scope of Modification Accounting.

This ASU specifies the modification accounting applicable to any entity which changes the terms or conditions of a share-based payment award.

This ASU will be effective for us beginning in our first quarter of fiscal 2019.

Early adoption is permitted.

We do not expect the adoption of this ASU itself to have a material impact on our financial statements.

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.

This ASU will be effective for us beginning in our first quarter of fiscal 2020 and early adoption is permitted.

The adoption of this ASU will result in an increase to our consolidated balance sheets for these right of use assets and corresponding liabilities.

However, the ultimate impact of adopting this ASU will depend on the Company's lease portfolio as of the adoption date.

We are currently evaluating the timing and other effects of the adoption of this ASU on our financial statements.

Financial Instruments

In January 2016, the FASB issued ASU No.

2016-01, Financial Instruments – Overall (Subtopic 825-10):

Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU 2016-01”), which updates certain aspects of recognition, measurement, presentation and disclosure of financial instruments.

KULICKE AND SOFFA INDUSTRIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

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 2020.

Early adoption is permitted beginning in our first quarter of 2019.

We are currently evaluating the impact of the adoption of this ASU on our 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 of the new guidance on its consolidated financial statements as well as whether to adopt the new guidance early.

Business Combinations

In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805):

Clarifying the Definition of a Business.

The new guidance provides a new framework for determining whether business development transactions should be accounted for as acquisitions (or disposals) of assets or businesses.

This ASU will be effective for us beginning in our first quarter of 2019.

Earlier application is permitted for acquisition or derecognition events that occurred prior to issuance date or effective date of the guidance only when the transaction has not been reported in financial statements that have been issued or made available for issuance.

We do not expect the adoption of this ASU itself to have a material impact on our financial statements.

We are currently evaluating the timing of the adoption of this ASU.

Intangibles—Goodwill and Other

In January 2017, the FASB issued ASU 2017-04, Intangibles—Goodwill and Other (Topic 350):

Simplifying the Test for Goodwill Impairment.

The new guidance eliminates the requirement to perform a hypothetical purchase price allocation to measure goodwill impairment.

During the third quarter of 2017, we elected to prospectively adopt ASU2017-04.

Statement of Cash Flows

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230):

Classification of Certain Cash Receipts and Cash Payments.

This ASU addresses the classification of certain specific cash flow issues including debt prepayment or extinguishment costs, settlement of certain debt instruments, contingent consideration payments made after a business combination, proceeds from the settlement of certain insurance claims and distributions received from equity method investees.

This ASU will be effective for us beginning in our first quarter of 2019 and early adoption is permitted.

We do not expect the adoption of this ASU itself to have a material impact on our financial statements.

Revenue Recognition

In May 2014, the FASB issued ASU No.

2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”), which amends the existing accounting standards for revenue recognition.

ASU 2014-09 is based on principles that govern the recognition 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:

2016-08, Revenue from Contracts with Customers (Topic 606):

Principal versus Agent Considerations (“ASU 2016-08”);

2016-10, Revenue from Contracts with Customers (Topic 606):

Identifying Performance Obligations and Licensing (“ASU 2016-10”);

2016-12, Revenue from Contracts with Customers (Topic 606):

Narrow-Scope Improvements and Practical Expedients (“ASU 2016-12”);

2016-20, Technical Corrections and Improvements to Topic 606, Revenue from Contracts with Customers (“ASU 2016-20”).

The Company must adopt ASU 2016-08, ASU 2016-10, ASU 2016-12 and ASU 2016-20 with ASU 2014-09 (collectively, the “new revenue standards”).

The new revenue standards may be applied retrospectively to each prior period presented or retrospectively with the cumulative effect recognized as of the date of adoption.

The new standard is effective for annual reporting periods beginning after December 15, 2017.

The new standard permits companies to early adopt the new standard, but not before annual reporting periods beginning after December 15, 2016.

The Company will not early adopt the new standard and therefore the new standard will be effective for the Company in the first quarter of its fiscal 2019.

We have made progress in our review of the impact of this guidance on revenue

KULICKE AND SOFFA INDUSTRIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

related activities, and are monitoring additional changes, modifications, clarifications or interpretations undertaken by the FASB.

We do not expect the adoption of this ASU itself to have a material impact on our financial statements.

However, the ultimate impact of adopting this ASU will depend on the Company's revenue portfolio as of the adoption date.

RESTATEMENT OF CONSOLIDATED FINANCIAL STATEMENTS

On May 10, 2018, the Company’s Audit Committee, in consultation with the Board of Directors, concluded that the Company’s previously issued financial statements for the fiscal year ended September 30, 2017 could no longer be relied upon.

This decision was reached after discussions with the Company’s senior management and outside advisers.

The above was a result of the Company’s determination that the warranty expense and warranty accrual accounts had been misstated for the fiscal years ended September 30, 2017 and October 1, 2016 as a result of inaccurate and unsupported journal entries recorded due to management override of controls.

The management override of controls was identified during an internal investigation, which was concluded in May 2018, related to an unauthorized disbursement by a senior finance employee that was discovered after the end of the second fiscal quarter of 2018.

We determined that the manual journal entries initiated by this employee were made to correct the Company's failure to properly include labor costs in our warranty accrual, described below, lacked supporting documentation and were accounted for incorrectly.

As a result, the Company identified overstatements of specific warranty accruals of $2.8 million and $15.9 million for fiscal 2016 and 2017, respectively.

In addition, the Company also identified adjustments that were required to be made to retained earnings, warranty expense and accrual accounts to correct the inappropriate exclusion of the estimated labor costs related to warranty repairs from its historical warranty accounting.

While the latter adjustments are not deemed material, the Company is adjusting retained earnings, warranty expense and warranty accrual accounts as part of the restatement.

As a result, the Company identified an understatement of warranty accruals relating to fiscal 2014 and prior years of $10.1 million in the aggregate, as the actual labor costs had instead been expensed in the periods incurred.

In addition to the understatement of warranty accruals relating to fiscal 2014 and in prior years, the warranty expense had also been misstated from fiscal 2015 through fiscal 2017, resulting in a cumulative understatement of income from operations of approximately $17.6 million .

Of this understatement, approximately $14.8 million , $1.4 million , and $1.4 million was related to the fiscal years ended September 30, 2017, October 1, 2016 and October 3, 2015, respectively.

The labor costs relating to warranty expenses were also incorrectly reported in selling, general and administrative expense instead of cost of sales for the fiscal years ended September 30, 2017, October 1, 2016 and October 3, 2015.

The Consolidated Balance Sheets were also misstated for the annual periods from 2015 through 2017.

In addition, we have made related tax expense adjustments for the above matters.

The Company has evaluated the cumulative impact of these items on prior periods under the guidance in ASC 250-10, relating to SEC Staff Accounting Bulletin (SAB) No.

99, Materiality.

The Company also has evaluated the impact of correcting these items through an adjustment to its financial statements for the fiscal year ended September 30, 2017 and concluded, based on the guidance within ASC 250-10 relating to SAB No.

108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements, that it is necessary to restate our Consolidated Statements of Operations, Consolidated Statements of Comprehensive Income, Consolidated Statements of Changes in Shareholders' Equity, Consolidated Statements of Cash Flows and the related notes for the fiscal years ended September 30, 2017, October 1, 2016 and October 3, 2015, our Consolidated Balance Sheets and the related notes as of September 30, 2017 and October 1, 2016, and our unaudited quarterly data included in this Form 10-K/A.

We believe that presenting all of the amended and restated information in this Form 10-K/A allows investors to review all pertinent data in a single presentation.

In addition, our Quarterly Reports on Form 10-Q for fiscal 2018 will include the restated fiscal 2017 comparable prior quarter and year to date periods.

KULICKE AND SOFFA INDUSTRIES, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands)

September 30, 2017

As Previously Reported

Effect of Restatement

Accrued expenses and other current liabilities

Total current liabilities

Deferred income taxes

TOTAL LIABILITIES

Retained earnings

TOTAL SHAREHOLDERS' EQUITY

October 1, 2016

As Previously Reported

Effect of Restatement

Accrued expenses and other current liabilities

Total current liabilities

Deferred income taxes

TOTAL LIABILITIES

Retained earnings

TOTAL SHAREHOLDERS' EQUITY

KULICKE AND SOFFA INDUSTRIES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

As Previously Reported

Effect of Restatement

Cost of sales

Selling, general and administrative

Operating expenses

Income from operations

Income from operations before income taxes

Income tax benefit

Net income per share:

As Previously Reported

Effect of Restatement

Cost of sales

Selling, general and administrative

Operating expenses

Income from operations

Income from operations before income taxes

Income tax expense

Net income per share:

As Previously Reported

Effect of Restatement

Cost of sales

Selling, general and administrative

Operating expenses

Income from operations

Income from operations before income taxes

Income tax benefit

Net income per share:

KULICKE AND SOFFA INDUSTRIES, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)

As Previously Reported

Effect of Restatement

Comprehensive income

As Previously Reported

Effect of Restatement

Comprehensive income

As Previously Reported

Effect of Restatement

Comprehensive income

KULICKE AND SOFFA INDUSTRIES, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

(in thousands)

Treasury Stock

Retained earnings

Accumulated Other Comprehensive Income

Shareholders' Equity

(As Previously Reported)

Balances as of October 1, 2016

Issuance of stock for services rendered

Repurchase of common stock

Exercise of stock options

Issuance of shares for market-based restricted stock and time-based restricted stock

Excess tax benefits from stock based compensation

Equity-based compensation expense

Components of comprehensive income:

Translation adjustment

Unrealized loss on derivative instruments

Unamortized pension costs

Total comprehensive income

Balances as of September 30, 2017

(Effect of Restatement)

Balances as of October 1, 2016

Issuance of stock for services rendered

Repurchase of common stock

Exercise of stock options

Issuance of shares for market-based restricted stock and time-based restricted stock

Excess tax benefits from stock based compensation

Equity-based compensation expense

Components of comprehensive income:

Translation adjustment

Unrealized loss on derivative instruments

Unamortized pension costs

Total comprehensive income

Balances as of September 30, 2017

(As Restated)

Balances as of October 1, 2016

Issuance of stock for services rendered

Repurchase of common stock

Exercise of stock options

Issuance of shares for market-based restricted stock and time-based restricted stock

Excess tax benefits from stock based compensation

Equity-based compensation expense

Components of comprehensive income:

Translation adjustment

Unrealized loss on derivative instruments

Unamortized pension costs

Total comprehensive income

Balances as of September 30, 2017

KULICKE AND SOFFA INDUSTRIES, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

(in thousands)

Treasury Stock

Retained earnings

Accumulated Other Comprehensive Income

Shareholders' Equity

(As Previously Reported)

Balances as of October 3, 2015

Issuance of stock for services rendered

Repurchase of common stock

Exercise of stock options

Issuance of shares for market-based restricted stock and time-based restricted stock

Excess tax benefits from stock based compensation

Equity-based compensation expense

Components of comprehensive income:

Translation adjustment

Unrealized loss on derivative instruments

Unamortized pension costs

Total comprehensive income

Balances as of October 1, 2016

(Effect of Restatement)

Balances as of October 3, 2015

Issuance of stock for services rendered

Repurchase of common stock

Exercise of stock options

Issuance of shares for market-based restricted stock and time-based restricted stock

Excess tax benefits from stock based compensation

Equity-based compensation expense

Components of comprehensive income:

Translation adjustment

Unrealized loss on derivative instruments

Unamortized pension costs

Total comprehensive income

Balances as of October 1, 2016

(As Restated)

Balances as of October 3, 2015

Issuance of stock for services rendered

Repurchase of common stock

Exercise of stock options

Issuance of shares for market-based restricted stock and time-based restricted stock

Excess tax benefits from stock based compensation

Equity-based compensation expense

Components of comprehensive income:

Translation adjustment

Unrealized loss on derivative instruments

Unamortized pension costs

Total comprehensive income

Balances as of October 1, 2016

KULICKE AND SOFFA INDUSTRIES, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

(in thousands)

Treasury Stock

Retained earnings

Accumulated Other Comprehensive Income

Shareholders' Equity

(As Previously Reported)

Balances as of September 27, 2014

Issuance of stock for services rendered

Repurchase of common stock

Exercise of stock options

Issuance of shares for market-based restricted stock and time-based restricted stock

Excess tax benefits from stock based compensation

Equity-based compensation expense

Components of comprehensive income:

Translation adjustment

Unamortized pension costs

Total comprehensive income

Balances as of October 3, 2015

(Effect of Restatement)

Balances as of September 27, 2014

Issuance of stock for services rendered

Repurchase of common stock

Exercise of stock options

Issuance of shares for market-based restricted stock and time-based restricted stock

Excess tax benefits from stock based compensation

Equity-based compensation expense

Components of comprehensive income:

Translation adjustment

Unamortized pension costs

Total comprehensive income

Balances as of October 3, 2015

(As Restated)

Balances as of September 27, 2014

Issuance of stock for services rendered

Repurchase of common stock

Exercise of stock options

Issuance of shares for market-based restricted stock and time-based restricted stock

Excess tax benefits from stock based compensation

Equity-based compensation expense

Components of comprehensive income:

Translation adjustment

Unamortized pension costs

Total comprehensive income

Balances as of October 3, 2015

KULICKE AND SOFFA INDUSTRIES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

As Previously Reported

Effect of Restatement

CASH FLOWS FROM OPERATING ACTIVITIES:

Adjustments to reconcile net income to net cash provided by operating activities:

Deferred taxes

Accounts payable, accrued expenses and other current liabilities

Net cash provided by operating activities

As Previously Reported

Effect of Restatement

CASH FLOWS FROM OPERATING ACTIVITIES:

Deferred taxes

Accounts payable, accrued expenses and other current liabilities

Net cash provided by operating activities

As Previously Reported

Effect of Restatement

CASH FLOWS FROM OPERATING ACTIVITIES:

Deferred taxes

Accounts payable, accrued expenses and other current liabilities

Net cash provided by operating activities

KULICKE AND SOFFA INDUSTRIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

RESTRUCTURING

In fiscal 2016, the Company implemented a restructuring program to streamline its international operations and functions as well as to consolidate its organization structure to achieve our cost-reduction, productivity and efficiency initiatives.

In fiscal 2017, the Company implemented a restructuring program to reallocate resources with respect to the EA/APMR business unit.

As part of this plan, $3.8 million of restructuring related costs, consisting of $3.3 million of severance and $0.5 million of other exit costs have been reflected in the Company’s consolidated financial statements as of and for fiscal 2017.

The following table is a summary of activity related to the Company’s restructuring and other charges for fiscal 2017, 2016, and 2015 :

Fiscal Year 2017 Activity

(in thousands)

Beginning of period (1)

End of period (1)

Severance and benefits

Other exit costs

Fiscal Year 2016 Activity

(in thousands)

Beginning of period (1)

End of period (1)

Severance and benefits

Other exit costs

Fiscal Year 2015 Activity

(in thousands)

Beginning of period (1)

End of period (1)

Severance and benefits

Included within accrued expenses and other current liabilities on the Consolidated Balance Sheets.

Provision for severance and benefits and other exit costs are included within selling, general and administrative expenses on the Consolidated Statements of Operations.

In December 2019, the Financial Accounting Standards Board (“FASB”) issued ASU 2019-12, Income Taxes (Topic 740).

The amendments in this ASU, among other changes, simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740, clarify and amend the existing guidance.

We adopted this ASU in the first quarter of fiscal 2022.

The adoption of this ASU did not have a material impact on our consolidated financial statements.

Contracts in Entity’s Own Equity

In August 2020, the FASB issued ASU 2020-06, Derivatives and Hedging - Contracts in Entity’s Own Equity (Topic 815).

The amendments in this ASU, among other changes, remove current guidance that allows an entity to rebut the presumption that potential share settlement be included in the diluted earnings per share calculation when an instrument may be settled in cash or shares if the entity has a history or policy of cash settlement.

These amendments affect any instrument that may be settled in cash or shares and, therefore, affects the diluted earnings per share calculation for both convertible instruments and contracts in an entity's own equity.

We elected to early adopt this ASU in the second quarter of fiscal 2022.

The adoption of this ASU did not have a material impact on our consolidated financial statements.

Codification Improvements

In October 2020, the FASB issued ASU 2020-10, Codification Improvements .

The amendments in this ASU affect a wide variety of topics in the Codification and improve the consistency of the Codification by including all disclosure guidance in the appropriate disclosure sections (Section 50).

We adopted this ASU in the first quarter of fiscal 2022.

The adoption of this ASU did not have a material impact on our consolidated financial statements.

Government Assistance

In November 2021, the FASB issued ASU 2021-10, Government Assistance (Topic 832):

Disclosure by Business Entities about Government Assistance which aims at increasing the transparency of government assistance received by most business entities.

The standard requires business entities to make annual disclosures about the nature of the transactions and the related accounting policy used to account for the transactions, the line items and applicable amounts on the balance sheet and income statement that are affected by the transactions, and significant terms and conditions of the transactions, including commitments and contingencies.

If an entity omits any required disclosures because it is legally prohibited, it must disclose that fact.

This ASU is effective for fiscal years (and interim periods within those fiscal years) beginning after December 15, 2021, which for the Company is the first quarter of fiscal 2023.

The Company is currently evaluating the impact the adoption of this standard will have on its consolidated financial statements.

KULICKE AND SOFFA INDUSTRIES, INC.

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BALANCE SHEET COMPONENTS

The following tables reflect the components of significant balance sheet accounts as of September 30, 2017 and October 1, 2016 :

(in thousands)

September 30, 2017

October 1, 2016

The following tables reflect the components of significant balance sheet accounts as of October 1, 2022 and October 2, 2021:

(in thousands) October 1, 2022 October 2, 2021

Short term investments, available-for-sale (1)

$ 220,000 $ 377,000

Inventories, net:

2 unchanged sentences

Finished goods 45,277 40,006

204,224 190,365

Inventory reserves ( 19,238 ) ( 23,042 )

$ 184,986 $ 167,323

Property, plant and equipment, net:

Land $ 2,182 $ 2,182

Buildings and building improvements 22,783 23,314

2 unchanged sentences

Machinery, equipment, furniture and fixtures 90,151 87,994

Construction in progress 25,004 9,562

210,743 194,051

Accumulated depreciation ( 129,835 ) ( 126,069 )

$ 80,908 $ 67,982

Accrued expenses and other current liabilities:

Accrued customer obligations (2)

$ 58,916 $ 72,478

Wages and benefits 50,279 66,531

Accrued customer obligations (3) (As Restated)

Commissions and professional fees 5,019 6,190

Deferred rent

Dividends payable 9,743 8,673

Severance 19 31

Other (As Restated)

All short-term investments were classified as available-for-sale and were measured at fair value based on level one measurement, or quoted market prices, as defined by ASC 820.

As of September 30, 2017 and October 1, 2016 , fair value approximated the cost basis for short-term investments.

The Company did not recognize any realized gains or losses on the sale of investments during the years ended 2017 and 2016.

Certain balances as at October 1, 2016 relating to Inventories and Property, plant and equipment have been reclassified for comparative purposes.

These reclassifications have no impact to the Consolidated Balance Sheets as at October 1, 2016.

Other 10,565 7,667

$ 134,541 $ 161,570

(1) All short-term investments were classified as available-for-sale and the fair value approximates cost basis.

The Company did not recognize any realized gains or losses on the sale of investments during the fiscal years ended 2022 and 2021.

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

Includes the restructuring plan discussed in Note 3, severance payable in connection with the October 2015 retirement of the Company's CEO of $0.2 million (as of October 1, 2016:

$0.8 million ), and other severance payments which are not part of the Company's plan to streamline its global operations and functions.

KULICKE AND SOFFA INDUSTRIES, INC.

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BUSINESS COMBINATIONS

Acquisition of Liteq

On July 2, 2017, Kulicke and Soffa Holland Holdings B.V.

(“KSHH”), the Company's wholly owned subsidiary, entered into a Share Sale and Purchase Agreement (the “Agreement”) with the shareholders of Liteq to purchase all of the outstanding equity interests of Liteq.

Liteq is a lithography solutions provider for advanced packaging.

The purchase price consists of EUR 25.0 million (approximately $28.6 million ) cash paid at closing and additional potential earn-out payments based on Liteq's cumulative pre-tax earnings and cumulative engineering expenses for fiscal 2018 to 2022.

The acquisition expands the Company's presence in the advanced packaging market.

The acquisition of Liteq was accounted for in accordance with ASC No.

Acquisition of Uniqarta

On January 19, 2021, Kulicke and Soffa Industries, Inc.

entered into a Stock Purchase Agreement with Uniqarta, Inc.

(“Uniqarta”) and its equity holders to purchase all of Uniqarta’s outstanding equity interests.

Upon the closing of the acquisition, Uniqarta became a wholly-owned subsidiary of the Company.

Uniqarta is a developer of laser transfer technology and the acquisition expands the Company’s presence in the LED end market.

The purchase price consisted of $ 26.5 million in cash paid at closing.

The acquisition of Uniqarta was accounted for in accordance with ASC No.

805, Business Combinations , using the acquisition method.

The Company has estimated the preliminary fair value of acquired assets and liabilities as of the date of acquisition based on information available.

Any changes in these estimates may have a material impact on our Consolidated Results of Operations or Consolidated Balance Sheets.

The following table summarizes the allocation of the assets acquired and liabilities assumed based on the fair values as of the acquisition date and related useful lives of the finite-lived intangible assets acquired:

(in thousands)

On January 19, 2022, the Company finalized the valuation of the tangible and identifiable intangible assets and liabilities in connection with the acquisition of Uniqarta and no further adjustment was recorded.

On July 15, 2022, the Company released the escrow amount of $ 3.5 million to the seller in respect of Uniqarta’s completion of its post-closing obligations under the Agreement.

The following table summarizes the allocation of the assets acquired and liabilities assumed based on the fair values as of the acquisition date:

(in thousands) January 19, 2021

Accounts and other receivable $ 7

Prepaid expenses and other current assets 6

Property, plant and equipment

Property, plant and equipment, net 539

Goodwill 16,799

Intangible assets 11,200

Accounts payable ( 77 )

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Tangible net assets (liabilities) were valued at their respective carrying amounts, which the Company believes approximate their current fair values at the acquisition date.

The valuation of identifiable intangible assets acquired, representing developed technology, reflects management’s estimates based on, among other factors, use of established valuation methods.

The developed technology was determined using the relief from royalty method, and is amortized over the period of estimated benefit using the straight-line method and the estimated useful lives of ten years.

The valuation of identifiable intangible assets acquired, representing in-process research and development (“IPR&D”) and others, reflects management’s estimates based on, among other factors, the use of an established valuation method.

The intangible assets are valued using a cost replacement method.

As of October 2, 2021, the IPR&D intangible asset of $ 9.0 million is not amortized, but rather is reviewed for impairment on an annual basis or more frequently if indicators of impairment are present, until the project is completed, abandoned, or transferred to a third party.

As of October 1, 2022, the IPR&D were transferred to developed technology (definite-lived intangible assets) as the research and development process was completed.

The other intangible assets acquired of $ 2.2 million and the IPR&D are amortized over the period of estimated benefit using the straight-line method and the estimated useful life of six years .

The straight-line method of amortization represents the Company’s best estimate of the distribution of the economic value of the identifiable intangible assets.

Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired and includes the value of expected future cash flows of Liteq from expected synergies with our other affiliates and other unidentifiable intangible assets.

None of the goodwill recorded as part of the acquisition will be deductible for income tax purposes.

In connection with the acquisition of Liteq, the Company recorded deferred tax liabilities relating to the acquired intangible assets, which are partially offset by the net amount of acquired net operating losses.

The net amount of acquired net operating losses is comprised of net operating losses less the tax reserves and valuation allowance.

For the year ended September 30, 2017, the acquired business contributed a net loss of $1.4 million .

Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired and includes the value of expected future cash flows of Uniqarta from expected synergies with our other affiliates and other unidentifiable intangible assets.

No ne of the goodwill recorded as part of the acquisition will be deductible for income tax purposes.

In connection with the acquisition of Uniqarta, the Company recorded deferred tax liabilities primarily relating to the acquired intangible assets, which are partially offset by the acquired tax attributes.

The acquired tax attributes are comprised of net operating losses and research and development credits.

For the year ended October 2, 2021, the acquired business contributed a net loss of $ 0.2 million.

During fiscal 2021, the Company incurred $ 1.7 million of expenses related to the acquisition, which is included within selling, general and administrative expense in the Consolidated Statements of Operations.

The following unaudited pro forma information presents the combined results of operations as if the acquisition had been completed on October 3, 2015, the beginning of the comparable prior annual reporting period.

The unaudited pro forma results include:

(i) amortization associated with preliminary estimates for the acquired intangible assets;

(ii) recognition of the post-acquisition share-based compensation and other compensation expense;

and (iii) the associated tax impact on these unaudited pro forma adjustments.

KULICKE AND SOFFA INDUSTRIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The unaudited pro forma results do not reflect any cost saving synergies from operating efficiencies or the effect of the incremental costs incurred in integrating the two companies.

Accordingly, these unaudited pro forma results are presented for informational purposes only and are not necessarily indicative of what the actual results of operations of the combined company would have been if the acquisition had occurred at the beginning of the periods presented, nor are they indicative of future results of operations:

(in thousands, except for per share information)

Basic income per common share

Diluted income per common share

Acquisition of Assembléon

On January 9, 2015, Kulicke & Soffa Holdings B.V.

(“KSH”), the Company's wholly owned subsidiary, acquired all of the outstanding equity interests of Assembléon.

The cash purchase price of approximately $97.4 million (EUR 80 million ) consisted of $72.5 million for 100% of the equity of Assembléon and $24.9 million which was used by Assembléon to settle intercompany loans with its parent company.

The acquisition of Assembléon was accounted for in accordance with ASC No.

805, Business Combinations, using the acquisition method.

On January 9, 2016, the Company finalized the valuation of the tangible and identifiable intangible assets and liabilities in connection with the acquisition of Assembléon and no further adjustment was recorded.

On September 27, 2016, the escrow due date was extended until the conclusion of a legal proceeding which the Company was indemnified under the share purchase agreement.

As of October 1, 2016, $8.7 million (EUR 7.7 million ) was held in escrow .

(in thousands)

January 9, 2015

Accounts receivable

Prepaid expenses and other current assets

Deferred tax asset

Property, plant and equipment

Deferred income taxes

Accounts payable

Borrowings financial institutions

Accrued expenses and other current liabilities

Income taxes payable

Deferred tax liabilities

Total purchase price, net of cash acquired

Tangible net assets (liabilities) were valued at their respective carrying amounts, which the Company believes approximate their current fair values at the acquisition date.

The valuation of identifiable intangible assets acquired reflects management’s estimates based on, among other factors, use of established valuation methods.

The technology/software and product brand name was determined using the relief from royalty method.

Customer relationships were valued by using multi-period excess earnings method.

Identifiable intangible assets with definite lives are amortized over the period of estimated benefit using the straight-line method and the estimated useful lives of

KULICKE AND SOFFA INDUSTRIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

six to fifteen years.

The straight-line method of amortization represents the Company’s best estimate of the distribution of the economic value of the identifiable intangible assets.

Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired.

None of the goodwill recorded as part of the acquisition will be deductible for income tax purposes.

In connection with the acquisition of Assembléon, the Company recorded deferred tax liabilities relating to the acquired intangible assets, which is partially offset by the net amount of acquired net operating losses.

The net amount of acquired net operating losses is comprised of net operating losses less the tax reserves and valuation allowance.

The Company has recorded long-term income tax payable due to uncertain tax positions with respect to certain Assembléon entities.

For the year ended October 3, 2015, the acquired business contributed revenue of $59.3 million and net loss of $2.0 million .

During fiscal 2015, the Company incurred $0.9 million of expenses related to the acquisition, which is included within selling, general and administrative expense in the consolidated statements of income.

The following unaudited pro forma information presents the combined results of operations as if the acquisition had been completed on September 29, 2019, the beginning of the comparable prior annual reporting period.

1 unchanged sentence

(i) amortization associated with preliminary estimates for the acquired intangible assets;

(ii) recognition of the post-acquisition share-based compensation and other compensation expense;

and (iii) the associated tax impact on these unaudited pro forma adjustments.

and (ii) the associated tax impact on the unaudited pro forma adjustments.

The unaudited pro forma results do not reflect any cost saving synergies from operating efficiencies or the effect of the incremental costs incurred in integrating the two companies.

1 unchanged sentence

(in thousands) 2021 2020

Basic income per common share

Diluted income per common share

Net revenue $ 1,517,664 $ 623,176

Net income 368,546 49,766

GOODWILL AND INTANGIBLE ASSETS

Intangible assets classified as goodwill are not amortized.

During fourth quarter of fiscal 2017, the Company recorded goodwill relating to the acquisition of Liteq.

For further information on the acquisition of Liteq, please see Note 5.

The goodwill established in connection with our acquisitions of Assembléon, Orthodyne and Liteq represents the estimated future economic benefits arising from the assets we acquired that did not qualify to be identified and recognized individually.

The goodwill also includes the value of expected future cash flows of Assembléon, Orthodyne and Liteq, expected synergies with our other affiliates and other unidentifiable intangible assets.

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 individually.

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

During the third quarter of the fiscal year ended September 30, 2017 , the Company concluded that a triggering event had occurred in connection with the EA/APMR reporting unit (the former Assembléon) based on the results of an updated long-term financial outlook for the EA/APMR business that was conducted as part of the Company’s strategic review during the third quarter due to the lower demand as compared to forecast.

The projection used in the fiscal 2016 annual impairment test had been developed based on the fiscal 2016 actual results, where the actual revenue had exceeded the forecast.

This updated outlook projected that the near-term projected cash flows are expected to be lower than previously forecasted due to softer near-term demand in the System-in-package market.

Under ASC 350, the Company is required to test its goodwill and intangible assets for impairment annually or when a triggering event has occurred that would indicate it is more likely than not that the fair value of the reporting unit is less than the carrying value including goodwill and intangible assets.

Accordingly, the Company performed the first step of the goodwill impairment test for the EA/APMR reporting unit.

KULICKE AND SOFFA INDUSTRIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The Company used a discounted cash flow model to determine the fair value of the EA/APMR reporting unit.

The cash flow projections used within the discounted cash flow model were prepared using the forecasted financial results of the reporting unit, which was based upon underlying estimates of the total market size using independent third party industry reports, and market share data developed using the combination of independent third party data and our internal data.

Significant assumptions used to determine fair value of the EA/APMR reporting unit include terminal growth rate of 2.5% , cost reduction initiatives including restructuring, working capital, tax rate and a weighted average cost of capital (discount rate) of 10.45% .

Following the Company's early adoption of ASU 2017-04, Intangibles-Goodwill and Other (Topic 350):

Simplifying the Test for Goodwill Impairment in the third quarter of fiscal 2017, the requirement to perform a hypothetical purchase price allocation to measure goodwill 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.

Based on the calculation, the Company determined that the carrying amount of the EA/APMR reporting unit exceeded its fair value by $35.2 million , requiring an impairment charge of this amount in the third quarter of fiscal 2017.

The goodwill impairment charge, which is a non-cash charge, has been reflected in the Company’s Consolidated Statements of Operations for the fiscal year ended September 30, 2017.

In connection with the evaluation of the goodwill impairment in the EA/APMR reporting unit, the Company assessed tangible and intangible assets for impairment prior to performing the first step of the goodwill impairment test.

As a result of this analysis, it was determined that there were no impairment charges to record related to these assets for the nine months ended September 30, 2017 .

No triggering event had occurred for the wedge bonder reporting unit (the former Orthodyne).

During the fourth quarter of fiscal 2017, the Company reorganized its reportable segments into (i) Capital Equipment and (ii) Aftermarket Products and Services ("APS") and realigned our reporting units to reflect the revised reporting structure.

As a result of this re-alignment, the Company has five reporting units as of September 30, 2017, with two reporting units within the Capital Equipment reportable segment and three reporting units in the APS reportable segment.

Please refer to Note 16, "Segment Information" for additional information on the operating and reportable segments realignment.

The Company evaluated goodwill for potential impairment before and after this realignment and determined that the fair value of each component individually and in aggregate exceeded their carrying values.

The following table summarizes the Company's recorded goodwill by reportable segments as of September 30, 2017 and October 1, 2016 :

(in thousands)

Capital Equipment

Balance at October 3, 2015 and October 1, 2016 (1)

Acquired in business combination

Goodwill impairment

Balance at September 30, 2017

Balances have been recasted due to the operating and reportable segments realignment.

The Company performed its annual impairment test in the fourth quarter of fiscal 2022 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 fiscal year ended October 1, 2022, 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.

While we have concluded that a triggering event did not occur during the fiscal year ended October 1, 2022, the prolonged COVID-19 pandemic and macroeconomic headwinds could impact the results of operations due to changes to assumptions utilized in the determination of the estimated fair values of the reporting units that could be significant enough to trigger an impairment.

Net sales and earnings growth rates could be negatively impacted by reductions or changes in demand for our products.

The discount rate utilized in our valuation model could also be impacted by changes in the underlying interest rates and risk premiums included in the determination of the cost of capital.

During the third quarter of fiscal year 2023, the Company reconsidered its reportable segments and has revised the segment-related presentation in the Original Form 10-K.

As a result, its four reportable segments are (1) Ball Bonding Equipment, (2) Wedge Bonding Equipment, (3) Advanced Solutions, and (4) Aftermarket Products and Services (“APS”).

All other operating segments that do not meet the quantitative threshold to be disclosed as a separate reportable segment have been grouped within an “All Others” category.

Please refer to Note 16 for further information on the revision of the reportable and operating segments.

Accordingly, the Company’s goodwill as previously reported under “Capital Equipment” in the Original Form 10-K has been disaggregated and presented separately into the Wedge Bonding Equipment reportable segment and the “All Others” category.

There are no changes to the goodwill reported under the APS reportable segment.

While there were no changes in the methodology and level at which the Company performs its goodwill impairment tests, and no resulting amendments to the total carrying amount of the goodwill, the following table shows the allocation of goodwill based on these revised segments.

KULICKE AND SOFFA INDUSTRIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The following table summarizes the Company’s recorded goodwill, where applicable, by reportable segments and the “All Others” category, as of October 1, 2022 and October 2, 2021:

(in thousands) Wedge Bonding Equipment

APS All Others Total

Balance at October 2, 2021 18,280 26,388 28,281 72,949

Other — ( 481 ) ( 4,372 ) ( 4,853 )

Balance at October 1, 2022 18,280 25,907 23,909 68,096

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 September 30, 2017 and October 1, 2016 :

Average estimated

(dollar amounts in thousands)

September 30, 2017

October 1, 2016

useful lives (in years)

Developed technology

Acquired in business combination

The Company’s intangible assets consist primarily of developed technology, customer relationships, in-process research and development, and trade and brand names.

The following table reflects net intangible assets as of October 1, 2022 and October 2, 2021:

As of Average estimated

(dollar amounts in thousands) October 1, 2022 October 2, 2021 useful lives (in years)

Developed technology $ 89,017 $ 90,427 6.0 to 15.0

Accumulated amortization $ ( 58,636 ) $ ( 58,494 )

Net developed technology $ 30,381 $ 31,933

Customer relationships

Customer relationships $ 33,515 $ 36,114 5.0 to 6.0

Accumulated amortization $ ( 33,515 ) $ ( 36,114 )

Net customer relationships $ — $ —

Trade and brand names

In-process research and development (1)

$ — $ 8,795 N.A.

Accumulated amortization $ — $ —

Net trade and brand names

Other intangible assets

Net in-process research and development $ — $ 8,795

Trade and brand name $ 6,945 $ 7,374 7.0 to 8.0

Accumulated amortization $ ( 6,945 ) $ ( 7,275 )

Net wedge bonder other intangible assets

Net trade and brand name $ — $ 99

Other intangible assets $ 4,700 $ 4,700 1.9 to 6.0

Accumulated amortization $ ( 3,142 ) $ ( 2,775 )

Net other intangible assets $ 1,558 $ 1,925

Net intangible assets $ 31,939 $ 42,752

The following table reflects estimated annual amortization expense related to intangible assets as of September 30, 2017 :

(in thousands)

September 30, 2017

(1) During the year ended October 1, 2022, $ 7.9 million of in-process research and development assets were transferred to developed technology (definite-lived intangible assets) as the research and development process was completed, and are being amortized over the period of estimated benefit using the straight-line method and the estimated useful life of six years .

KULICKE AND SOFFA INDUSTRIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The following table reflects estimated annual amortization expense related to intangible assets as of October 1, 2022:

(in thousands) October 1, 2022

Fiscal 2023 $ 5,348

Fiscal 2024 $ 5,348

Fiscal 2025 $ 5,348

Fiscal 2026 $ 5,348

Fiscal 2027 $ 4,685

Fiscal 2028 and thereafter $ 5,862

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

CASH, CASH EQUIVALENTS, RESTRICTED CASH AND SHORT-TERM INVESTMENTS

CASH, CASH EQUIVALENTS, AND SHORT-TERM INVESTMENTS

Cash equivalents consist of instruments with remaining maturities of three months or less at the date of purchase.

In general, these investments are free of trading restrictions.

We carry these investments at fair value, based on quoted market prices or other readily available market information.

Cash, cash equivalents, restricted cash and short-term investments consisted of the following as of September 30, 2017 :

(dollar amounts in thousands)

September 30, 2017

October 1, 2016

Cash, cash equivalents and short-term investments consisted of the following as of October 1, 2022:

(dollar amounts in thousands) Amortized

Cost Unrealized

Gains Unrealized

Losses Estimated Fair Value

Current assets:

Cash $ 173,402 $ — $ — $ 173,402

Cash equivalents:

Money market funds (1)

157,145 — ( 20 ) 157,125

Time deposits (2)

Commercial paper

225,010 — — 225,010

Total cash and cash equivalents $ 555,557 $ — $ ( 20 ) $ 555,537

Restricted Cash (1)

Total restricted cash

Short-term investments:

Time deposits (2)

$ 220,000 $ — $ — $ 220,000

Total short-term investments $ 220,000 $ — $ — $ 220,000

Total cash, cash equivalents, and short-term investments $ 775,557 $ — $ ( 20 ) $ 775,537

(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.

(2) Fair value approximates cost basis.

Cash, cash equivalents, restricted cash and short-term investments consisted of the following as of October 2, 2021:

(dollar amounts in thousands) Amortized

Cost Unrealized

Gains Unrealized

Losses Estimated Fair Value

Current assets:

Cash $ 269,201 $ — $ — $ 269,201

Cash equivalents:

Money market funds (1)

93,598 — ( 18 ) 93,580

Time deposits (2)

Total cash and cash equivalents $ 362,806 $ — $ ( 18 ) $ 362,788

Short-term investments:

Time deposits (2)

377,000 — — 377,000

Total short-term investments $ 377,000 $ — $ — $ 377,000

Total cash, cash equivalents, restricted cash and short-term investments $ 739,806 $ — $ ( 18 ) $ 739,788

(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.

(2) Fair value approximates cost basis.

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

Certain time deposits as at October 1, 2016 have been corrected from cash equivalents to short-term investments for comparative purposes.

KULICKE AND SOFFA INDUSTRIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

EQUITY INVESTMENTS

Equity investments consisted of the following as of September 30, 2017 and October 1, 2016 :

(in thousands)

September 30, 2017

October 1, 2016

Equity method investment

In March 2017, the Company made an investment in one of our strategic suppliers which provides the Company with the ability to exercise significant influence over the investment vehicle, in which it lacks controlling financial interest and is not a primary beneficiary.

Our share of gains and losses in the equity method investment is recognized on a one-quarter lag, and is reflected as share of results of equity-method investee, net of tax, in the accompanying Consolidated Statements of Operations.

During the fiscal year ended September 30, 2017 , the Company recognized $0.2 million gain on equity investment.

Equity investments consisted of the following as of October 1, 2022 and October 2, 2021:

(in thousands) October 1, 2022 October 2, 2021

Non-marketable equity securities $ 5,397 $ 6,388

During the year ended October 1, 2022, the Company recorded an impairment of $ 1.3 million on a non-marketable equity security without a readily determinable fair value.

The entire amount of the investment in the non-marketable equity security was impaired due to a significant deterioration in the earnings performance of the equity investee.

The impairment amount is recorded within “Selling, general and administrative expense” in the Consolidated Statement of Operations.

FAIR VALUE MEASUREMENTS

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We measure certain financial assets and liabilities at fair value on a recurring basis.

There were no transfers between fair value measurement levels during the year ended September 30, 2017 .

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

There were no transfers between fair value measurement levels during the fiscal year ended October 1, 2022.

Fair Value Measurements on a Nonrecurring Basis

Our non-financial assets such as intangible assets and property, plant equipment are carried at cost unless impairment is deemed to have occurred.

Our non-financial assets such as intangible assets and property, plant and equipment are carried at cost unless impairment is deemed to have occurred.

Fair Value of Financial Instruments

Amounts reported as cash equivalents, short-term investments, accounts receivables, prepaid expenses and other current assets, accounts payable and accrued expenses approximate fair value.

Amounts reported as accounts receivables, prepaid expenses and other current assets, accounts payable and accrued expenses approximate fair value.

DERIVATIVE FINANCIAL INSTRUMENTS

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Most of the Company’s revenue and cost of materials are transacted in U.S.

However, a significant amount of the Company’s operating expenses are denominated in foreign currencies, primarily in Singapore.

The foreign currency exposure of our operating expenses are generally hedged with foreign exchange forward contracts.

The Company’s foreign exchange risk management programs include using foreign exchange forward contracts with cash flow hedge accounting designation to hedge exposures to the variability in the U.S.-dollar equivalent of forecasted non-U.S.

However, a significant amount of the Company’s operating expenses is denominated in foreign currencies, primarily in Singapore.

The foreign currency exposure of our operating expenses is generally hedged with foreign exchange forward contracts.

dollar equivalent of forecasted non-U.S.

dollar-denominated operating expenses.

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For these derivatives, we report the after-tax gain or loss from the effective portion of the hedge as a component of accumulated other comprehensive income (loss), and we reclassify it into earnings in the same period or periods in which the hedged transaction affects earnings and in the same line item on the Consolidated Statements of Operations as the impact of the hedged transaction.

The fair value of derivative instruments on our Consolidated Balance Sheet as of September 30, 2017 and October 1, 2016 is as follows:

(in thousands)

September 30, 2017

October 1, 2016

Notional Amount

Fair Value Asset Derivatives (1)

Notional Amount

Fair Value Liability Derivatives (2)

KULICKE AND SOFFA INDUSTRIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The fair value of derivative instruments on our Consolidated Balance Sheets as of October 1, 2022 and October 2, 2021 is as follows:

(in thousands) October 1, 2022 October 2, 2021

Notional Amount Fair Value Liability Derivatives (1)

Derivatives designated as hedging instruments:

Foreign exchange forward contracts (2)

$ 57,570 $ ( 2,234 ) $ 57,682 $ ( 616 )

Total derivatives $ 57,570 $ ( 2,234 ) $ 57,682 $ ( 616 )

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 Balance Sheet.

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 Balance Sheet.

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

The effect of derivative instruments designated as cash flow hedges in our Consolidated Statements of Operations for the year ended September 30, 2017 and October 1, 2016 was as follows:

(in thousands)

(1) 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 Balance Sheets.

(2) Hedged amounts expected to be recognized into earnings within the next twelve months .

The effect of derivative instruments designated as cash flow hedges in our Consolidated Statements of Operations for the fiscal years ended October 1, 2022 and October 2, 2021 was as follows:

(in thousands) Fiscal

Foreign exchange forward contract in cash flow hedging relationships:

Net gain / (loss) recognized in OCI, net of tax (1)

Net loss reclassified from accumulated OCI into income, net of tax (2)

Net gain recognized in income (3)

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

Net (loss)/gain recognized in OCI, net of tax (1)

$ ( 2,694 ) $ 24

Net (loss)/gain reclassified from accumulated OCI into earnings, net of tax (2)

$ ( 1,076 ) $ 1,197

(1) Net change in the fair value of the effective portion classified in OCI.

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

Ineffective portion and amount excluded from effectiveness testing classified in selling, general and administrative expense.

We have entered into various non-cancellable operating and finance lease agreements for certain of our offices, manufacturing, technology, sales support and service centers, equipment, and vehicles.

We determine if an arrangement is a lease, or contains a lease, at inception and record the leases in our financial statements upon lease commencement, which is the date when the underlying asset is made available for use by the lessor.

Our lease terms may include one or more options to extend the lease terms, for periods from one year to 20 years, when it is reasonably certain that we will exercise that option.

As of October 1, 2022, one option to extend the lease were recognized as right-of-use (“ROU”) assets and lease liabilities.

We have lease agreements with lease and non-lease components, and non-lease components are accounted for separately and not included in our leased assets and corresponding liabilities.

We have elected not to present short-term leases on the Consolidated Balance Sheets as these leases have a lease term of 12 months or less at lease inception.

Operating leases are included in operating ROU assets, current and non-current operating lease liabilities, and finance leases are included in property, plant and equipment, accrued expenses and other current liabilities, and other liabilities on the Consolidated Balance Sheets.

As of October 1, 2022, our finance leases are not material.

The following table shows the components of lease expense:

(in thousands) Fiscal

Operating lease expense (1)

$ 8,625 7,629

(1) Operating lease expense includes short-term lease expense, which is immaterial for the fiscal year ended October 1, 2022.

KULICKE AND SOFFA INDUSTRIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The following table shows the cash flows arising from lease transactions.

Cash payments related to short-term leases are not included in the measurement of operating and finance lease liabilities, and, as such, are excluded from the amounts below:

(in thousands) Fiscal

Cash paid for amounts included in the measurement of lease liabilities:

Operating cash outflows from operating leases $ 7,908 $ 7,211

The following table shows the weighted-average lease terms and discount rates for operating leases:

Operating leases:

Weighted-average remaining lease term (in years):

Weighted-average discount rate:

Future lease payments, excluding short-term leases, as of October 1, 2022, are detailed as follows:

(in thousands) Operating leases

Fiscal 2023 $ 8,748

Fiscal 2024 8,354

Fiscal 2025 7,649

Fiscal 2026 4,954

Fiscal 2027 3,195

Fiscal 2028 and thereafter 20,193

Total minimum lease payments 53,093

Interest 11,400

Present value of lease obligations 41,693

Current portion 6,766

Long-term portion of lease obligations $ 34,927

KULICKE AND SOFFA INDUSTRIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

DEBT AND OTHER OBLIGATIONS

Financing Obligation

On December 1, 2013, Kulicke & Soffa Pte Ltd.

(“Pte”), the Company's wholly owned subsidiary, signed a lease with DBS Trustee Limited as trustee of Mapletree Industrial Trust (the “Landlord”) to lease from the Landlord approximately 198,000 square feet, representing approximately 70% of a building in Singapore as our corporate headquarters, as well as a manufacturing, technology, sales and service center (the “Building”).

The lease has a 10 year non-cancellable term (the "Initial Term") and contains options to renew for 2 further 10 -year terms.

The annual rent and service charge for the initial term range from $4 million to $5 million Singapore dollars.

Pursuant to ASC No.

840, Leases ("ASC 840"), we have classified the Building on our balance sheet as Property, Plant and Equipment, which we are depreciating over its estimated useful life of 25 years.

We concluded that the term of the financing obligation is 10 years.

This is equal to the non-cancellable term of our lease agreement with the Landlord.

At the inception of the lease, the asset and financing obligation recorded on the balance sheet was $20.0 million , which was based on an interest rate of 6.3% over the Initial Term.

As of September 30, 2017 , the financing obligation related to the Building is $16.8 million , which approximates fair value (Level 2).

The financing obligation will be settled through a combination of periodic cash rental payments and the return of the leased property at the expiration of the lease.

We do not report rent expense for the property, which is deemed owned for accounting purposes.

Rather, rental payments required under the lease are considered debt service and applied to the deemed landlord financing obligation and interest expense.

The Building and financing obligation are being amortized in a manner that will not generate a gain or loss upon lease termination.

Credit facilities and Bank Guarantees

Bank Guarantees

On November 22, 2013, the Company obtained a $ 5.0 million credit facility with Citibank in connection with the issuance of bank guarantees for operational purposes.

As of September 30, 2017 , the outstanding amount is $3.2 million .

In addition, the Company has other bank guarantees for operational purposes which are secured with corresponding deposits placed with the issuer banks.

These amounts are shown as restricted cash in the Consolidated Balance Sheets.

On March 21, 2016, the Company entered into an Uncommitted Revolving Credit Agreement with United Overseas Bank Limited, New York Agency ("UOB"), providing for a $25 million revolving credit facility (the "2016 Credit Facility").

The 2016 Credit Facility is an unsecured revolving credit facility of $25 million with an initial term of one year, and has been extended on the same terms by another year until March 20, 2018 .

The proceeds of the 2016 Credit Facility may be used for the Company's general corporate purposes.

As of September 30, 2017 , there was no outstanding amount under the 2016 Credit Facility and we were in compliance with the covenants described in the 2016 Credit Facility.

As of October 1, 2022 and October 2, 2021, the outstanding amount was $ 2.9 million and $ 3.0 million respectively.

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 million (the “Overdraft Facility”) for general corporate purposes.

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.

The Overdraft Facility is an unsecured facility per the terms of the Facility Agreements.

The Facility Agreements contain customary non-financial covenants, including, without limitation, covenants that restrict the Company’s ability to sell or dispose of its assets, cease owning at least 51% of two of its subsidiaries (the “Subsidiaries”), or encumber its assets with material security interests (including any pledge of monies in the Subsidiaries’ cash deposit account with the Bank).

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.

SHAREHOLDERS’ EQUITY AND EMPLOYEE BENEFIT PLANS

Common Stock and 401(k) Retirement Income Plans

The Company has a 401(k) retirement plan (the “Plan”) for eligible U.S.

The Plan allows for employee contributions and matching Company contributions from 4% to 6% based upon terms and conditions of the 401(k) Plan.

The following table reflects the Company’s contributions to the Plans during fiscal 2017 and 2016:

401(k) Retirement Income Plans

The Company has a 401(k) retirement plan (the “401(k) Plan”) for eligible U.S.

The 401(k) Plan allows for employee contributions and matching Company contributions from 4 % to 6 % based upon terms and conditions of the 401(k) Plan.

The following table reflects the Company’s contributions to the 401(k) Plan during fiscal 2022 and 2021:

(in thousands) 2022 2021

Cash $ 1,973 $ 1,780

Share Repurchase Program

On August 15, 2017 , the Company announced that it fully executed its $100 million share repurchase program (the "Program"), originally announced on August 27, 2014.

In addition, the Company announced that its Board of Directors approved a new share repurchase program (the "New Program") that authorizes the repurchase of up to $100 million of the Company’s common shares, from time to time over the three year period ending August 1, 2020.

The 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 New Program.

The New Program is effective immediately, may be suspended or discontinued at any time and will be funded using the Company's available

KULICKE AND SOFFA INDUSTRIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

cash, cash equivalents and short-term investments.

The timing and amount of repurchase transactions under the New Program depend on market conditions as well as corporate and regulatory considerations.

During the year ended September 30, 2017 , the Company repurchased a total of 0.9 million shares of common stock at a cost of $18.2 million .

The share repurchases were recorded in the periods they were delivered, and the payment of $18.2 million was accounted for as treasury stock in the Company’s Consolidated Balance Sheet.

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.

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.

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 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 stock repurchases were recorded in the periods they were delivered and accounted for as treasury stock in the Company’s Consolidated Balance Sheets.

The Company records treasury stock purchases under the cost method using the first-in, first-out (FIFO) method.

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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, 2017 , our remaining share repurchase authorization under the New Program was approximately $88.8 million.

KULICKE AND SOFFA INDUSTRIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

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.

The March 2022 ASR Agreement was entered into pursuant to the Company’s current $ 800 million share repurchase authorization.

Under the March 2022 ASR Agreement, the Company made an up-front payment of $ 150 million to the Dealer and received an initial delivery of 2,449.9 thousand shares of common stock at a cost of approximately $ 120 million on March 10, 2022.

The final number of shares to be repurchased will be based on the volume-weighted average price of the Company’s common stock during the term of the transaction, less a discount and subject to adjustments pursuant to the terms and conditions of the March 2022 ASR Agreement.

For accounting purposes, the March 2022 ASR Agreement is evaluated as an unsettled forward contract indexed to the Company’s own stock, with $ 30 million being classified within common stock.

At settlement, the Dealer may be required to deliver additional shares of common stock to the Company, or, under certain circumstances, the Company may be required to deliver shares of its common stock or may elect to make a cash payment to the Dealer.

The March 2022 ASR Agreement was settled between the Company and the Dealer on April 22, 2022 and the Company received an additional 344.5 thousand shares of common stock from the Dealer.

In total, an aggregate of 2,794.4 thousand shares of common stock were delivered by the Dealer under the March 2022 ASR Agreement at an average price of $ 53.68 per share, which was then reclassified as treasury stock from common stock in shareholder’s equity.

As of October 1, 2022, our remaining stock repurchase authorization under the Program was approximately $ 249.2 million.

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.

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 stockholders.

Accumulated Other Comprehensive Income

The following table reflects accumulated other comprehensive income / (loss) reflected on the Consolidated Balance Sheets as of September 30, 2017 and October 1, 2016 :

(in thousands)

September 30, 2017

October 1, 2016

Gain from foreign currency translation adjustments

The following table reflects accumulated other comprehensive loss reflected on the Consolidated Balance Sheets as of October 1, 2022 and October 2, 2021:

(in thousands) October 1, 2022 October 2, 2021

(Loss) / gain from foreign currency translation adjustments $ ( 29,854 ) $ 682

Unrecognized actuarial loss on pension plan, net of tax ( 812 ) ( 3,088 )

Unrealized gain / (loss) on hedging

Accumulated other comprehensive income/(loss)

Unrealized loss on hedging ( 2,234 ) ( 616 )

Accumulated other comprehensive loss $ ( 32,900 ) $ ( 3,022 )

KULICKE AND SOFFA INDUSTRIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Equity-Based Compensation

The Company has stockholder-approved equity-based employee compensation plans (the “Employee Plans”) and director compensation plans (the “Director Plans”) (collectively, the “Equity Plans”).

Under these Equity Plans, market-based share awards (collectively, “market-based restricted stock”), time-based share awards (collectively, “time-based restricted stock”), performance-based share awards (collectively, “performance-based restricted stock”), stock options, or common stock have been granted at 100% of the market price of the Company's common stock on the date of grant.

As of September 30, 2017 , 5.1 million shares of common stock are available for grant to its employees and directors under the 2017 Equity Plan, including previously registered shares that have been carried forward for issuance under the 2009 Equity Plan.

Market-based restricted stock entitles the employee to receive common shares of the Company on the award vesting date if market performance objectives which measure relative total shareholder return (“TSR”) are attained.

Relative TSR is calculated based upon the 90 -calendar day average price of the Company's stock as compared to specific peer companies that comprise the GICS (45301020) Semiconductor Index.

The Company has a stockholder-approved equity-based compensation plan, the 2021 Omnibus Incentive Plan (the “Plan”) from which employees and directors receive grants.

As of October 1, 2022, 3.3 million shares of common stock are available for grant to the Company’s employees and directors under the Plan.

• Relative TSR Performance Share Units (“Relative TSR PSUs”) entitle the employee to receive common shares of the Company on the award vesting date, typically the third anniversary of the grant date (or as soon as administratively practicable if later), if market performance objectives which measure relative total shareholder return (“TSR”) are attained.

Relative TSR is calculated based upon the 90 -calendar day average price at the end of the performance period of the Company’s stock as compared to specific peer companies that comprise the GICS (45301020) Semiconductor Index.

TSR is measured for the Company and each peer company over a performance period, which is generally three years .

Vesting percentages range from 0 % to 200 % of awards granted.

The provisions of the market-based restricted stock are reflected in the grant date fair value of the award;

The provisions of the Relative TSR PSUs are reflected in the grant date fair value of the award;

therefore, compensation expense is recognized regardless of whether the market condition is ultimately satisfied.

Compensation expense is reversed if the award is forfeited prior to the vesting date.

In general, stock options and time-based restricted stock awarded to employees vest annually over a three-year period provided the employee remains employed by the Company.

• Revenue Growth Performance Share Units (“Growth PSUs”) entitle the employee to receive common shares of the Company on the award vesting date, typically the third anniversary of the grant date (or as soon as administratively practicable if later), based on organic revenue growth objectives and relative growth performance against named competitors as set by the Management Development and Compensation Committee (“MDCC”) of the Company’s Board of Directors.

Organic revenue growth is calculated by averaging revenue growth (net of revenues from acquisitions) over a performance period, which is generally three years .

Revenues from acquisitions will be included in the calculation after four fiscal quarters after acquisition.

Any portion of the grant that does not meet the revenue growth objectives and relative growth performance is forfeited.

Vesting percentages range from 0 % to 200 % of awards granted.

• In general, stock options and Time-based Restricted Share Units (“Time-based RSUs”) awarded to employees vest ratably over a three-year period on the anniversary of the grant date provided the employee remains employed by the Company.

The Company follows the non-substantive vesting method for stock options and recognizes compensation expense immediately for awards granted to retirement eligible employees, or over the period from the grant date to the date retirement eligibility is achieved.

In general, performance-based restricted stock (“PSU”) entitles the employee to receive common shares of the Company on the three-year anniversary of the grant date (if employed by the Company) if return on invested capital and revenue growth targets set by the Management Development and Compensation Committee (“MDCC”) of the Board of Directors on the date of grant are met.

If return on invested capital and revenue growth targets are not met, performance-based restricted stock does not vest.

Certain PSUs vest based on achievement of strategic goals over a certain time period or periods set by the MDCC.

If the strategic goals are not achieved, the PSUs do not vest.

Equity-based compensation expense recognized in the Consolidated Statements of Operations for fiscal 2017, 2016, and 2015 was based upon awards ultimately expected to vest.

In accordance with ASC No.

718, Stock Based Compensation , forfeitures have been estimated at the time of grant and were based upon historical experience.

The Company reviews the forfeiture rates periodically and makes adjustments as necessary.

KULICKE AND SOFFA INDUSTRIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The following table reflects total equity-based compensation expense, which includes restricted stock, stock options and common stock, included in the Consolidated Statements of Operations for fiscal 2017, 2016, and 2015 :

Equity-based compensation expense recognized in the Consolidated Statements of Operations for fiscal 2022, 2021, and 2020 was based upon awards ultimately expected to vest, with forfeiture accounted for when they occur.

The following table reflects total equity-based compensation expense, which includes Relative TSR PSUs, Time-based RSUs, Growth PSUs, and common stock, included in the Consolidated Statements of Operations for fiscal 2022, 2021, and 2020:

(in thousands) 2022 2021 2020

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Total equity-based compensation expense $ 18,986 $ 15,502 $ 15,019

(1) The selling, general and administrative expense for fiscal 2016, includes the reversal of a $2.0 million expense due to the forfeiture of stock awards in connection with the October 2015 retirement of the Company's CEO.

The following table reflects equity-based compensation expense, by type of award, for fiscal 2022, 2021, and 2020:

(in thousands) 2022 2021 2020

Market-based restricted stock

Time-based restricted stock

Performance-based restricted stock

Stock options

Relative TSR PSUs 4,255 3,916 $ 3,266

Time-based RSUs 11,655 10,314 9,519

Growth PSUs 2,127 444 1,384

Common stock 949 828 850

Total equity-based compensation expense $ 18,986 $ 15,502 $ 15,019

(1) The equity-based compensation expense for fiscal 2016, includes the reversal of a $2.0 million expense due to the forfeiture of stock awards in connection with the October 2015 retirement of the Company's CEO.

KULICKE AND SOFFA INDUSTRIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Equity-Based Compensation:

employee market-based restricted stock

The following table reflects employee market-based restricted stock activity for fiscal 2017, 2016, and 2015 :

Number of shares (in thousands)

Unrecognized compensation expense (in thousands)

Average remaining service period (in years)

Weighted average grant date fair value per share

Market-based restricted stock outstanding as of September 27, 2014

Relative TSR PSUs

The following table reflects Relative TSR PSUs activity for fiscal 2022, 2021, and 2020:

Number of shares (in thousands) Unrecognized compensation expense (in thousands) Average remaining service period (in years) Weighted average grant date fair value per share

Relative TSR PSUs outstanding as of September 28, 2019 561 $ 4,136 0.9

Granted 162 $ 28.80

Forfeited or expired ( 52 )

Market-based restricted stock outstanding as of October 3, 2015

Vested ( 268 )

Relative TSR PSUs outstanding as of October 3, 2020 403 $ 4,198 1.1

Granted 155 $ 28.21

Forfeited or expired ( 6 )

Market-based restricted stock outstanding as of October 1, 2016

Vested ( 108 )

Relative TSR PSUs outstanding as of October 2, 2021 444 $ 4,455 1.1

Granted 152 $ 52.18

Forfeited or expired ( 11 )

Market-based restricted stock outstanding as of September 30, 2017

Vested ( 205 )

Relative TSR PSUs outstanding as of October 1, 2022 380 $ 4,619 0.9

KULICKE AND SOFFA INDUSTRIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The following table reflects the assumptions used to calculate compensation expense related to the Company’s market-based restricted stock issued during fiscal 2017, 2016, and 2015 :

The following table reflects the assumptions used to calculate compensation expense related to the Company’s Relative TSR PSUs issued during fiscal 2022, 2021, and 2020:

2022 2021 2020

Grant price $ 49.20 $ 23.88 $ 22.95

Expected dividend yield 1.14 % 2.01 % 2.09 %

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Equity-Based Compensation:

employee time-based restricted stock

The following table reflects employee time-based restricted stock activity for fiscal 2017, 2016, and 2015 :

Number of shares (in thousands)

Unrecognized compensation expense (in thousands)

Average remaining service period (in years)

Weighted average grant date fair value per share

Time-based restricted stock outstanding as of September 27, 2014

Time-based RSUs

The following table reflects Time-based RSUs activity for fiscal 2022, 2021, and 2020:

Number of shares (in thousands) Unrecognized compensation expense (in thousands) Average remaining service period (in years) Weighted average grant date fair value per share

Time-based RSUs outstanding as of September 28, 2019 947 $ 10,555 1.4

Granted 490 $ 22.93

Forfeited or expired ( 80 )

Time-based restricted stock outstanding as of October 3, 2015

Vested ( 569 )

Time-based RSUs outstanding as of October 3, 2020 788 $ 10,480 1.6

Granted 486 $ 24.34

Forfeited or expired ( 24 )

Time-based restricted stock outstanding as of October 1, 2016

Vested ( 333 )

Time-based RSUs outstanding as of October 2, 2021 917 $ 11,420 1.4

Granted 301 $ 49.47

Forfeited or expired ( 29 )

Time-based restricted stock outstanding as of 30 September 2017

Vested ( 453 )

Time-based RSUs outstanding as of October 1, 2022 736 $ 13,752 1.2

KULICKE AND SOFFA INDUSTRIES, INC.

1 unchanged sentence

Equity-Based Compensation:

employee performance-based restricted stock

The following table reflects employee performance-based restricted stock activity for fiscal 2017, 2016, and 2015 :

Number of shares (in thousands)

Unrecognized compensation expense (in thousands)

Average remaining service period (in years)

Performance-based restricted stock outstanding as of September 27, 2014

Performance-based restricted stock outstanding as of October 3, 2015

Forfeited or expired

Performance-based restricted stock outstanding as of October 1, 2016

Forfeited or expired

Performance-based restricted stock outstanding as of September 30, 2017

The following table reflects employee stock option activity for fiscal 2017, 2016, and 2015 :

Number of shares (in thousands)

Weighted average exercise price

Average remaining contractual life (in years)

Aggregate intrinsic value (in thousands)

Options outstanding as of September 27, 2014

The following table reflects Growth PSUs activity for fiscal 2022, 2021, and 2020:

Number of shares (in thousands) Unrecognized compensation expense (in thousands) Average remaining service period (in years) Weighted average grant date fair value per share

Special/Growth PSUs outstanding as of September 28, 2019 97 $ 1,128 1.6

Granted 80 $ 23.65

Forfeited or expired ( 22 )

Options outstanding as of October 3, 2015

Special/Growth PSUs outstanding as of October 3, 2020 151 $ 1,252 1.1

Granted 52 $ 24.01

Forfeited or expired ( 34 )

Options outstanding as of October 1, 2016

Vested ( 17 )

Special/Growth PSUs outstanding as of October 2, 2021 152 $ 1,247 1.0

Granted 79 $ 49.26

Forfeited or expired ( 4 )

Options outstanding as of September 30, 2017

Options vested and expected to vest as of September 30, 2017

Options exercisable as of September 30, 2017

In the money exercisable options as of September 30, 2017

Intrinsic value of stock options exercised is determined by calculating the difference between the market value of the Company's stock price at the time an option is exercised and the exercise price, multiplied by the number of shares.

The intrinsic value of stock options outstanding and stock options exercisable is determined by calculating the difference between the Company's closing stock price on the last trading day of fiscal 2017 and the exercise price of in-the-money stock options, multiplied by the number of underlying shares.

During fiscal 2017, the Company received $0.5 million in cash from the exercise of employee and non-employee director stock options.

As of September 30, 2017 , there were no unvested employee stock options.

KULICKE AND SOFFA INDUSTRIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The following table reflects outstanding and exercisable employee stock options as of September 30, 2017 :

Options Outstanding

Options Exercisable

Range of exercise prices

Options outstanding (in thousands)

Weighted average remaining contractual life (in years)

Weighted average exercise price

Options exercisable (in thousands)

Weighted average exercise price

Vested ( 100 )

Special/Growth PSUs outstanding as of October 1, 2022 127 $ 1,405 0.9

As of October 1, 2022, there were no employee stock options.

Equity-Based Compensation:

2 unchanged sentences

The grant to a non-employee director upon initial election to the board is that number of common shares closest in value to, without exceeding, $ 120,000 .

The quarterly grant to a non-employee director upon the first business day of each calendar year quarter is that number of common shares closest in value to, without exceeding, $32,500 .

The quarterly grant to a non-employee director upon the first business day of each calendar quarter is that number of common shares closest in value to, without exceeding, $ 39,500 .

The following table reflects shares of common stock issued to non-employee directors and the corresponding fair value for fiscal 2022, 2021, and 2020:

2 unchanged sentences

Fair value based upon market price at time of issue $ 949 $ 828 $ 850

The following table reflects non-employee director stock option activity for fiscal 2017, 2016, and 2015 :

Number of shares (in thousands)

Weighted average exercise price

Average remaining contractual life (in years)

Aggregate intrinsic value (in thousands)

Options outstanding as of September 27, 2014

Forfeited or expired

Options outstanding as of October 3, 2015

Forfeited or expired

Options outstanding as of October 1, 2016

Forfeited or expired

Options outstanding as of September 30, 2017

Options vested and expected to vest as of September 30, 2017

Options exercisable as of September 30, 2017

In the money exercisable options as of September 30, 2017

No non-employee director stock options were granted during fiscal 2017, 2016, and 2015 .

KULICKE AND SOFFA INDUSTRIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The following table reflects the Company's defined benefits pension obligations as of September 30, 2017 and October 1, 2016 :

(in thousands)

September 30, 2017

October 1, 2016

The following table reflects the Company’s defined benefits pension obligations, mainly in Switzerland and Taiwan, as of October 1, 2022 and October 2, 2021:

(in thousands) October 1, 2022 October 2, 2021

Switzerland pension obligation $ 1,038 $ 3,534

Taiwan pension obligation 1,189 1,443

Total pension obligation

KULICKE AND SOFFA INDUSTRIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Some of the Company’s other foreign subsidiaries have retirement plans that are integrated with and supplement the benefits provided by laws of the various countries.

These other plans are not required to report nor do they determine the actuarial present value of accumulated benefits or net assets available for plan benefits as they are defined contribution plans.

REVENUE AND CONTRACT BALANCES

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.

Service revenue is generally recognized over time as the services are performed.

For the fiscal years ended October 1, 2022, and October 2, 2021, service revenue is not material.

Please refer to Note 1:

Basis of Presentation- Revenue Recognition , for additional disclosure on the Company’s revenue recognition policy.

The Company reports revenue based on our reportable segments.

The Company believes that reporting revenue on this basis provides information about how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors.

Please refer to Note 16:

Segment Information, for disclosure of revenue by segment.

Contract Balances

Our contract assets relate to our rights to consideration for revenue with collection dependent on events other than the passage of time, such as the achievement of specified payment milestones.

The contract assets will be transferred to net account receivables as our right to consideration for these contract assets become unconditional.

Contracts assets are reported in the accompanying Consolidated Balance Sheets within prepaid expenses and other current assets.

Our contract liabilities are primarily related to payments received in advance of satisfying performance obligations, and are reported in the accompanying Consolidated Balance Sheets within accrued expenses and other current liabilities.

Contract liabilities increase as a result of receiving new advance payments from customers and decrease as revenue is recognized from product sales under advance payment arrangements upon satisfying the performance obligations.

The following table shows the changes in contract asset balances during the fiscal years ended October 1, 2022 and October 2, 2021:

(in thousands) 2022 2021

Contract assets, beginning of period $ — $ —

Additions 51,774 —

Transferred to accounts receivable or collected ( 25,457 ) —

Contract assets, end of period $ 26,317 $ —

The following table shows the changes in contract liability balances during the fiscal years ended October 1, 2022 and October 2, 2021:

(in thousands) 2022 2021

Contract liabilities, beginning of period $ 15,596 $ 2,958

Revenue recognized ( 116,399 ) ( 59,368 )

Additions 103,963 72,006

Contract liabilities, end of period $ 3,160 $ 15,596

KULICKE AND SOFFA INDUSTRIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

EARNINGS PER SHARE

1 unchanged sentence

Stock options and restricted stock are included in the calculation of diluted earnings per share, except when their effect would be anti-dilutive.

The following tables reflect a reconciliation of the shares used in the basic and diluted net income per share computation for fiscal 2017, 2016, and 2015 :

The following table reflects a reconciliation of the shares used in the basic and diluted net income per share computation for fiscal 2022, 2021, and 2020:

(in thousands, except per share) 2022 2021 2020

Basic Diluted Basic Diluted Basic Diluted

Net income $ 433,545 $ 433,545 $ 367,161 $ 367,161 $ 52,300 $ 52,300

Weighted average shares outstanding - Basic 60,164 60,164 62,009 62,009 62,828 62,828

Stock options

Time-based restricted stock

Market-based restricted stock

Dilutive effect of Equity Plans 1,018 1,506 531

Weighted average shares outstanding - Diluted 61,182 63,515 63,359

2 unchanged sentences

Net income per share - Diluted $ 7.09 $ 5.78 $ 0.83

KULICKE AND SOFFA INDUSTRIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The following table reflects income or losses from continuing operations by location, the provision for income taxes and the effective tax rate for fiscal 2017, 2016, and 2015 :

(dollar amounts in thousands)

United States operations

Foreign operations

Income from operations before tax

Income tax (benefit) / expenses

Effective tax rate

The following table reflects the provision for income taxes from continuing operations for fiscal 2017, 2016, and 2015 :

Anti-dilutive shares (1)

(1) Represents the Relative TSR PSUs and Growth PSUs that are excluded from the calculation of diluted earnings per share for fiscal 2022, 2021, and 2020 as the effect would have been anti-dilutive.

OTHER FINANCIAL DATA

The following table reflects other financial data for fiscal 2022, 2021, and 2020:

(in thousands) 2022 2021 2020

Provision for income taxes

The following table reflects the difference between the provision for income taxes and the amount computed by applying the statutory federal income tax rate for fiscal 2017, 2016, and 2015 :

Incentive compensation expense $ 27,011 $ 39,779 $ 18,524

Warranty and retrofit expense 16,349 22,068 8,692

The following table reflects U.S.

and foreign income (loss) before income taxes for fiscal 2022, 2021, and 2020:

(in thousands) 2022 2021 2020

United States $ ( 11,415 ) $ ( 8,853 ) $ ( 14,909 )

Foreign 488,403 423,403 79,243

Income before income taxes $ 476,988 $ 414,550 $ 64,334

KULICKE AND SOFFA INDUSTRIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The following table reflects the current and deferred components of provision for (benefit from) income taxes for fiscal 2022, 2021, and 2020:

(in thousands) 2022 2021 2020

Computed income tax expense based on U.S.

statutory rate

Federal $ 14,975 $ 26,563 $ 5,129

State 246 261 89

Foreign 37,448 30,771 6,508

Federal ( 5,809 ) ( 2,979 ) ( 690 )

Foreign ( 3,417 ) ( 7,321 ) 962

Provision for income taxes $ 43,443 $ 47,295 $ 11,998

The following table reconciles the provision for (benefit from) income taxes with the expected income tax provision computed based on the applicable U.S.

federal statutory tax rate for fiscal 2022, 2021, and 2020:

(dollar amounts in thousands) 2022 2021 2020

Expected income tax provision based on the U.S.

federal statutory tax rate $ 100,212 $ 86,915 $ 13,510

Effect of earnings of foreign subsidiaries subject to different tax rates ( 17,936 ) ( 15,028 ) ( 1,634 )

Benefits from foreign approved enterprise zones

Benefits from research and development tax credits

Benefits from foreign tax credits

Change in permanent reinvestment assertion

Tax impact on restructuring

Tax audit settlement

Effect of permanent items

Non-deductible goodwill impairment

Deferred taxes not benefited

Foreign operations (withholding taxes, deferred taxes on unremitted earnings, US taxation of foreign earnings)

Reserve for uncertain tax positions

State income tax expense (net of federal benefit)

Benefit from tax incentives ( 50,113 ) ( 45,501 ) ( 6,781 )

Benefit from research and development tax credits ( 2,995 ) ( 2,705 ) ( 2,915 )

Benefit from foreign tax credits ( 26,021 ) ( 20,281 ) ( 1,701 )

Valuation allowance ( 5,830 ) ( 11,620 ) 1,224

Foreign operations (Deemed income, taxes on undistributed foreign earnings, and withholding taxes) 45,421 52,414 8,886

Non-deductible items 267 113 1,232

Other, net (1)

438 2,988 177

Provision for income taxes $ 43,443 $ 47,295 $ 11,998

During fiscal 2017, the Company elected to adopt the foreign tax credit for its U.S.

federal tax return filings.

As a result of this election, the Company has amended its U.S.

tax returns from 2006 through 2015, filed its 2016 return on the same basis, and accrued the benefit for 2017.

In fiscal 2015, the Company implemented a restructuring plan to streamline its international operations and functions resulting in a change in its permanent reinvestment assertion outside the United States.

In fiscal 2016, the Company continued to execute on the restructuring plan and approximately $9.7 million of deferred tax liability was reversed and recorded as a tax benefit due to the change in its permanent reinvestment assertion.

As part of the plan, the Company also recorded restructuring related tax expense of approximately $4.2 million for transfers and exchanges of certain foreign subsidiaries in an effort to streamline its international operations and functions.

We consider the earnings of certain foreign subsidiaries to be permanently reinvested outside the United States.

We have not recorded a deferred tax liability for U.S.

federal income taxes of approximately $627.0 million of undistributed earnings.

Determination of the amount of unrecognized deferred tax liability related to these earnings is not practicable, with the exception of certain foreign subsidiaries where we continue to retain a deferred tax liability for foreign withholding taxes of approximately $21.0 million , as those earnings may be distributed to its foreign parent company.

Undistributed earnings of approximately $0.5 million are not considered to be permanently reinvested outside the United States.

As of September 30, 2017 , the Company has provided a deferred tax liability of approximately $0.2 million for withholding taxes associated with future repatriation of earnings for certain subsidiaries to the United States.

The following table reflects the net deferred tax balance, composed of the tax effects of cumulative temporary differences for fiscal 2017 and 2016 :

Effective tax rate 9.1 % 11.4 % 18.6 %

(1) Certain balances in fiscal 2021 and 2020 have been reclassified to conform to the current period presentation.

These reclassifications have no impact to the consolidated financial statements in fiscal 2021 and 2020.

For fiscal 2022 and 2021, the effective tax rate differed from the U.S.

federal statutory tax rate primarily due to tax benefits from tax incentives, foreign earnings subject to a lower statutory tax rate than the U.S.

federal statutory tax rate, tax credits generated during the fiscal year, and the net release of valuation allowances recorded against certain loss and credit carryforwards, partially offset by tax expense related to deemed income and undistributed foreign earnings.

As of October 2, 2022, a large portion of the Company’s undistributed foreign earnings are not considered to be indefinitely reinvested outside the U.S.

and are expected to be available for use in the U.S.

without incurring additional U.S.

Further, we operate in a number of foreign jurisdictions, including Singapore, where we have a tax incentive that allows for a reduced tax rate on certain classes of income, provided the Company meets certain employment and investment conditions through the expiration date in fiscal 2025.

In fiscal 2022, 2021, and 2020, the tax incentive arrangement helped to reduce the Company’s provision for income taxes by $ 50.1 million or $ 0.82 per share, $ 45.5 million or $ 0.72 per share and $ 6.8 million or $ 0.11 per share, respectively.

KULICKE AND SOFFA INDUSTRIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The following table reflects deferred tax balances based on the tax effects of cumulative temporary differences for fiscal 2022 and 2021:

(in thousands) 2022 2021

Inventory reserves

Stock options

Other accruals and reserves

Domestic tax credit carryforwards

Accruals and reserves $ 14,168 $ 11,890

Tax credit carryforwards 3,893 4,230

Fixed and intangible assets 5,963 465

Net operating loss carryforwards 15,329 28,913

Gross deferred tax assets $ 39,353 $ 45,498

Valuation allowance $ ( 21,750 ) $ ( 34,095 )

Total long-term deferred tax asset

Foreign withholding tax on undistributed earnings

Fixed and intangible assets

Total long-term deferred tax liability

Total net deferred tax asset / (liability)

Deferred tax asset

Deferred tax liability

Total net deferred tax asset / (liability)

As of September 30, 2017 , the Company has foreign net operating loss carryforwards of $95.8 million , domestic state net operating loss carryforwards of $165.8 million , federal tax credit carryforwards of $24.3 million , and state tax credit carryforwards of $4.9 million that can reduce future taxable income.

These carryforwards can be utilized in the future, prior to expiration of certain carryforwards in fiscal years 2017 through 2035 with the exception of certain credits and foreign net operating losses that have no expiration date.

Pennsylvania tax law limits the time during which carryforwards may be applied against future taxes and also limits the utilization of domestic state net operating loss carryforwards to $5.0 million annually, but recent developments may change this amount in future years.

The Company has recorded a valuation allowance against domestic state tax attributes and certain foreign tax attributes.

The Company continues to evaluate the realizability of all of its net deferred tax assets at each reporting date and records a benefit for deferred tax assets to the extent it has projected future taxable income or deferred tax liabilities that provide a source of future income to benefit the deferred tax asset.

As a result of this analysis, the Company continues to maintain a valuation allowance against a majority of its state deferred tax assets as the realization of these assets is not more likely than not given uncertainty of future apportioned earnings in these jurisdictions.

The beginning and ending balances of the Company's unrecognized tax benefits are reconciled below for fiscal 2017, 2016, and 2015 :

Deferred tax assets, net of valuation allowance $ 17,603 $ 11,403

Taxes on undistributed foreign earnings $ ( 26,068 ) $ ( 28,516 )

Deferred tax liabilities $ ( 26,068 ) $ ( 28,516 )

Net deferred tax liabilities $ ( 8,465 ) $ ( 17,113 )

Deferred tax assets $ 25,572 $ 15,715

Deferred tax liabilities ( 34,037 ) ( 32,828 )

Net deferred tax liabilities $ ( 8,465 ) $ ( 17,113 )

As of October 1, 2022, the Company has foreign net operating loss carryforwards of $ 37.9 million, state net operating loss carryforwards of $ 54.6 million, and U.S.

federal and state tax credit carryforwards of $ 6.5 million that can be used to offset future income tax obligations.

These net operating loss and tax credit carryforwards can be utilized prior to their expiration dates in fiscal years 2023 through 2041, except for certain credits and foreign net operating losses that can be carried forward indefinitely.

The Company has recorded valuation allowances against certain foreign and state net operating loss carryforwards and state tax credits which are expected to expire unutilized.

The following table reconciles the beginning and ending balances of the Company’s unrecognized tax benefit, excluding related accrued interest and penalties, for fiscal 2022, 2021, and 2020:

(in thousands) 2022 2021 2020

1 unchanged sentence

Additions for tax positions, current year 2,288 4,003 537

Additions for tax positions, prior year

Reductions for tax positions, prior year ( 587 ) ( 2,145 ) ( 398 )

Unrecognized tax benefit, end of year $ 16,623 $ 14,922 $ 13,064

Approximately $11.2 million of the $12.1 million of unrecognized tax benefit as of September 30, 2017 , if recognized, would impact the Company's effective tax rate.

The Company recognizes interest and penalties related to unrecognized tax benefits as a component of income tax expense.

The Company recognizes interest and penalties related to potential income tax liabilities as a component of unrecognized tax benefit and in provision for income taxes.

The amount of interest and penalties related to unrecognized tax benefit recorded in fiscal 2022 provision for income taxes is not material.

As of October 1, 2022, the Company has recognized $ 2.0 million of accrued interest and penalties related to unrecognized tax benefit within the income tax payable for uncertain tax positions and approximately $ 17.1 million of unrecognized tax benefit, including related interest and penalties, that if recognized, would impact the Company’s effective tax rate.

It is reasonably possible that the amount of the unrecognized tax benefit with respect to certain uncertain tax positions will increase or decrease during the next 12 months due to the expected lapse of statutes of limitation and/or settlements of tax examinations.

Given the number of years and numerous matters that remain subject to examination in various tax jurisdictions, we cannot practicably estimate the financial outcomes of these examinations.

KULICKE AND SOFFA INDUSTRIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The Company's future effective tax rate would be affected if earnings were lower than anticipated in countries where it is subjected to lower statutory rates and higher than anticipated in countries where it is subjected to higher statutory rates, by changes in the valuation of its deferred tax assets and liabilities, or by changes in tax laws, regulations, accounting principles, or interpretations thereof.

In addition, changes in assertion for foreign earnings permanently or non-permanently reinvested as a result of changes in facts and circumstances could significantly impact the effective tax rate.

The Company regularly assesses the effects resulting from these factors to determine the adequacy of its provision for income taxes.

It is reasonably possible that the amount of the unrecognized tax benefit with respect to certain unrecognized tax positions will increase or decrease during the next 12 months due to the expected lapse of statutes of limitation and/ or settlements of tax examinations.

We cannot practicably estimate the financial outcomes of these examinations.

The Company files U.S.

The Company files a U.S.

federal income tax return, as well as income tax returns in various state and foreign jurisdictions.

Internal Revenue Service is currently examining the fiscal years 2006 and 2015, and all years prior to fiscal 2006 are closed.

For most state tax returns, tax years following fiscal 2001 remain subject to examination as a result of the generation of net operating loss carry-forwards.

federal income tax returns purposes, tax years from fiscal 2019 remain subject to examination.

For most state tax returns, tax years following fiscal 2003 remain subject to examination as a result of the generation of net operating loss carryforwards.

In the foreign jurisdictions where the Company files income tax returns, the statutes of limitations with respect to these jurisdictions vary from jurisdiction to jurisdiction and range from 4 to 6 years.

The Company is currently under income tax examination by tax authorities in certain foreign jurisdictions.

The Company believes that adequate provisions have been made for any adjustments that may result from tax examinations.

As a result of committing to certain capital investments and employment levels, income from operations in Singapore and Malaysia is subject to reduced tax rates.

In connection with Singapore operations, the Company has been granted a decreased effective tax rate of five percent in that jurisdiction until February 1, 2020 subject to the fulfillment of certain continuing conditions.

In fiscal 2017, 2016, and 2015 , the preferential rate reduced income tax expense by approximately $23.3 million or $0.32 per share, $8.7 million or $0.12 per share and $6.0 million or $0.08 per share, respectively.

OTHER FINANCIAL DATA

The following table reflects other financial data for fiscal 2017, 2016, and 2015 :

(in thousands)

Incentive compensation expense

Warranty and retrofit expense (As Restated)

The Company’s tax returns are currently under examination by tax authorities in multiple state and foreign jurisdictions.

The Company believes that adequate provisions have been made for any adjustments that may result from the examination.

SEGMENT INFORMATION

Reportable segments are defined as components of an enterprise that engage in business activities for which discrete financial information is available and regularly reviewed by the chief operating decision maker in deciding how to allocate resources and to assess performance.

The Company's Chief Executive Officer is the Company's chief operating decision maker.

The chief operating decision-maker does not review discrete asset information.

During the fourth quarter of fiscal 2017, we reorganized our reporting structure into two reportable segments consisting of:

(i) Capital Equipment;

and (ii) APS.

As a result of this re-alignment, the Company has aggregated twelve operating segments as of September 30, 2017, with six operating segments within the Capital Equipment reportable segment and six operating segments in the APS reportable segment.

Subsequently, we have recasted financial results for fiscal years 2017, 2016 and 2015 based on the revised segment structure.

The change in the segments was a result of changes to our organizational structure initiated during the fourth quarter of fiscal 2017 to streamline business operations to improve profitability and competitiveness and reflects a change in the manner in which our chief operating decision maker reviews information to assess our performance and make decisions about resource allocation.

As part of these actions, we transitioned to a new internal management structure whereby the operating management responsible for tools used to assemble semiconductor devices, including integrated circuits (“ICs”), high and low powered discrete devices, light-emitting diodes (“LEDs”) and power modules, services, spares, maintenance, repair and upgrading operating segments was brought under common leadership in the APS segment.

The restructuring actions were completed during the fourth quarter of fiscal year 2017.

Subsequent to the reorganization, the Capital Equipment segment comprises of the manufacturing and selling of ball bonders, wafer level bonders, wedge bonders, advanced packaging and electronic assembly

Reportable segments are defined as components of an enterprise that engage in business activities for which discrete financial information is available and regularly reviewed by the chief operating decision maker (the “CODM”) in deciding how to allocate resources and assess performance.

The Company’s Chief Executive Officer is the CODM.

The CODM does not review discrete asset information.

During the third quarter of fiscal year 2023, the Company reconsidered the guidance under ASC 280, Segment Reporting, and determined that certain prior period conclusions about the Company’s operating and reportable segments were erroneous.

As a result, the Company had incorrectly presented certain segment-related disclosures in the notes to our previously issued consolidated financial statements, included in the Original Form 10-K.

The Company has evaluated the materiality of the incorrect presentation of its segment-related disclosures and has concluded that it did not result in a material misstatement of the Company’s previously issued consolidated financial statements.

However, the Company determined it would revise its notes to the consolidated financial statements to correct the presentation of its segment-related disclosures.

The Company has revised the prior period presentation to reflect its four reportable segments as follows:

(1) Ball Bonding Equipment, (2) Wedge Bonding Equipment, (3) Advanced Solutions, and (4) Aftermarket Products and Services (“APS”).

The four reportable segments are disclosed below:

Ball Bonding Equipment :

Reflects the results of the Company from the design, development, manufacture and sale of ball bonding equipment and wafer level bonding equipment.

Wedge Bonding Equipment :

Reflects the results of the Company from the design, development, manufacture and sale of wedge bonding equipment.

Advanced Solutions :

Reflects the results of the Company from the design, development, manufacture and sale of certain advanced display, die-attach and thermocompression systems and solutions.

Reflects the results of the Company from the design, development, manufacture and sale of a variety of tools, spares and services for our equipment.

Any other operating segments that have not been aggregated within the reportable segments described above which do not meet the quantitative threshold to be disclosed as a separate reportable segment have been grouped within an “All Others” category.

This group is reflective of the results of the Company from the design, development, manufacture and sale of certain advanced display, advanced dispense, electronics assembly, die-attach and lithography systems and solutions.

Results for the “All Others” category and other corporate expenses are included as a reconciling item between the Company’s reportable segments and its consolidated results of operations.

KULICKE AND SOFFA INDUSTRIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

solutions to semiconductor device manufacturers, IDMs, OSATs, other electronics manufacturers and automotive electronics suppliers.

Our prior period reportable segment information has been recasted to reflect the current segment structure and conform to the current period presentation.

The following table reflects operating information by segment for fiscal 2022, 2021, and 2020:

(in thousands) 2022 2021 2020

Capital Equipment

Income from operations:

Capital Equipment (1)

Ball Bonding Equipment $ 909,428 $ 1,016,663 $ 312,611

Wedge Bonding Equipment 194,086 138,836 67,088

Advanced Solutions 94,683 35,123 5,186

APS 197,152 205,088 161,117

All Others 108,271 121,954 77,174

Net revenue 1,503,620 1,517,664 623,176

Income/(loss) from operations:

Ball Bonding Equipment 385,276 $ 401,450 $ 95,695

Wedge Bonding Equipment 66,649 34,563 4,158

Advanced Solutions ( 15,389 ) ( 40,759 ) ( 44,278 )

APS 82,473 75,400 51,255

All Others 25,732 20,565 7,632

Corporate Expenses ( 74,669 ) ( 78,772 ) ( 55,953 )

Income from operations 470,072 412,447 58,509

Includes the restructuring expenses as discussed in Note 3, of $2.4 million , $6.2 million and $1.5 million for the years ended 2017, 2016 and 2015 respectively.

Includes the restructuring expenses as discussed in Note 3, of $0.9 million , $2.4 million and $0.4 million for the years ended 2017, 2016 and 2015 respectively

We have considered:

(1) information that is regularly reviewed by our CODM in evaluating financial performance and how to allocate resources;

and (2) other financial data, including information that we include in our earnings releases but which is not included in our financial statements, to disaggregate revenues by end markets served.

The principal category we use to disaggregate revenues is by the end markets served.

The following table reflects net revenue by end markets served for fiscal 2022, 2021, and 2020

(in thousands) 2022 2021 2020

General Semiconductor $ 843,763 $ 928,259 $ 290,220

Automotive & Industrial 198,138 129,817 60,169

LED 137,077 187,568 76,574

Memory 127,490 66,932 35,096

APS $ 197,152 $ 205,088 $ 161,117

Total revenue $ 1,503,620 $ 1,517,664 $ 623,176

The following tables reflect capital expenditures, depreciation and amortization expense by segment for fiscal 2022, 2021, and 2020.

1 unchanged sentence

Capital expenditures:

Capital Equipment

Ball Bonding Equipment $ 978 $ 1,627 $ 1,586

Wedge Bonding Equipment 1,450 387 607

Advanced Solutions 19,036 6,090 214

APS 4,964 5,286 8,131

All Others 1,364 1,046 1,767

Corporate Expenses 4,441 8,119 2,209

Capital expenditures $ 32,233 $ 22,555 $ 14,514

KULICKE AND SOFFA INDUSTRIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(in thousands) 2022 2021 2020

Depreciation expense:

Capital Equipment

Ball Bonding Equipment $ 1,398 $ 1,153 $ 758

Wedge Bonding Equipment 981 940 933

Advanced Solutions 2,034 845 487

APS 6,632 5,969 4,951

All Others 1,047 1,179 1,252

Corporate Expenses 4,284 3,750 3,987

Depreciation expense $ 16,376 $ 13,836 $ 12,368

1 unchanged sentence

Amortization expense:

Capital Equipment

Ball Bonding Equipment $ — $ — $ —

Wedge Bonding Equipment — — —

Advanced Solutions — — —

APS 994 2,319 3,416

All Others 3,557 3,369 3,955

Corporate Expenses 366 286 —

Amortization expense $ 4,917 $ 5,974 $ 7,371

Geographical information

KULICKE AND SOFFA INDUSTRIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The following tables reflect destination sales to unaffiliated customers by country and long-lived assets by country for fiscal 2022, 2021, and 2020:

(in thousands) 2022 2021 2020

Destination sales to unaffiliated customers:

China $ 855,345 $ 843,470 $ 321,294

Malaysia 126,520 70,253 40,641

Taiwan 123,995 275,251 64,373

Korea 87,647 58,308 30,848

United States 83,906 54,353 36,186

Hong Kong 27,216 82,436 43,288

All other (1)

198,991 133,593 86,546

Total destination sales to unaffiliated customers $ 1,503,620 $ 1,517,664 $ 623,176

(1) Certain balances in fiscal 2021 and 2020 have been reclassified to conform to the current period presentation.

These reclassifications have no impact to the consolidated financial statements in fiscal 2021 and 2020.

KULICKE AND SOFFA INDUSTRIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

(in thousands) 2022 2021

Long-lived assets:

Singapore $ 59,672 $ 40,470

United States 31,469 32,684

China 19,548 25,386

Israel 10,610 8,597

All other 9,647 11,187

Total long-lived assets $ 130,946 $ 118,324

KULICKE AND SOFFA INDUSTRIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

COMMITMENTS, CONTINGENCIES AND CONCENTRATIONS

6 unchanged sentences

Reserve for warranty, beginning of period $ 16,961 $ 9,576 $ 14,185

Addition from business combination

Provision for warranty 12,907 18,889 14,004

Changes in the estimation of warranty reserve — — ( 5,417 )

Utilization of reserve ( 16,425 ) ( 11,504 ) ( 13,196 )

Reserve for warranty, end of period $ 13,443 $ 16,961 $ 9,576

Other Commitments and Contingencies

The following table reflects obligations not reflected on the Consolidated Balance Sheet as of September 30, 2017 :

For the change in estimation of warranty reserve, see Note 1 for details.

O ther Commitments and Contingencies

The following table reflects obligations not reflected on the Consolidated Balance Sheets as of October 1, 2022:

Payments due by fiscal year

(in thousands)

(in thousands) Total 2023 2024 2025 2026 Thereafter

Inventory purchase obligation (1)

Operating lease obligations (2)

$ 316,123 $ 316,123 $ — $ — $ — $ —

(1) The Company orders inventory components in the normal course of its business.

A portion of these orders are non-cancelable and a portion may have varying penalties and charges in the event of cancellation.

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

Pursuant to ASC No.

840, Leases, for lessee's involvement in asset construction, the Company was considered the owner of the Building during the construction phase.

The Building was completed on December 1, 2013 and Pte signed an agreement with the Landlord to lease from the Landlord approximately 198,000 square feet, representing approximately 70% of the Building.

Following the completion of construction, we performed a sale-leaseback analysis pursuant to ASC 840-40 and determined that because of our continuing involvement, ASC 840-40 precluded us from derecognizing the asset and associated financing obligation.

As such, we reclassified the asset from construction in progress to Property, Plant and Equipment and began to depreciate the building over its estimated useful life of 25 years.

We concluded that the term of the financing obligation is 10 years.

This is equal to the non-cancellable term of our lease agreement with the Landlord.

As of September 30, 2017 , we recorded a financing obligation related to the Building of $16.8 million (see Note 11 above).

The financing obligation is not reflected in the table above.

Concentrations

The following tables reflect significant customer concentrations as a percentage of net revenue for fiscal 2017, 2016, and 2015 :

Haoseng Industrial Co., Ltd

* Represents less than 10% of net revenue

From time to time, the Company is party to or the target of lawsuits, claims, investigations and proceedings, including for personal injury, intellectual property, commercial, contract, and employment matters, which are handled and defended in the ordinary course of business.

The Company accrues a contingent loss liability for such matters when it is probable that a liability has been incurred and the amount can be reasonably estimated.

When a single amount cannot be reasonably estimated but the cost can be estimated within a range, the Company accrues the minimum amount.

The Company expenses legal costs, including those expected to be incurred in connection with a loss contingency, as incurred.

Unfunded Capital Commitments

As of October 1, 2022, the Company also has an obligation to fund uncalled capital commitments of approximately $ 9.6 million, as and when required, in relation to its investment in a private equity fund.

KULICKE AND SOFFA INDUSTRIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The following table reflects significant customer concentrations as a percentage of total accounts receivable as of September 30, 2017 and October 1, 2016 :

September 30, 2017

October 1, 2016

Concentrations

The following tables reflect significant customer concentrations as a percentage of net revenue for fiscal 2022, 2021, and 2020:

2022 2021 2020

ASE Technology Holding * 17.4 % *

* Represents less than 10% of total net revenue

The following table reflects significant customer concentrations as a percentage of total accounts receivable as of October 1, 2022 and October 2, 2021:

October 1, 2022 October 2, 2021

Tianshui Huatian Technology Co., Ltd.

16.7 % 18.2 %

Haoseng Industrial Co., Ltd.

KULICKE AND SOFFA INDUSTRIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

SELECTED QUARTERLY FINANCIAL DATA (unaudited)

Presented below is a summary of the unaudited quarterly financial information for fiscal 2017 and 2016 (in thousands, except per share amounts).

See Note 2 — "Restatement of Consolidated Financial Statements" for further discussion of the impact of the restatement on quarterly data as indicated below.

Fiscal 2017 for the Quarter Ended (As Previously Reported)

(in thousands, except per share amounts)

Income from operations

Income tax expense / (benefit)

Net income per share (1) :

Weighted average shares outstanding:

Effect of Restatement

Income from operations

Income tax expense / (benefit)

Net income per share (1) :

Weighted average shares outstanding:

Fiscal 2017 for the Quarter Ended (As Restated)

Income from operations

Income tax expense / (benefit)

Net income per share (1) :

Weighted average shares outstanding:

KULICKE AND SOFFA INDUSTRIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Fiscal 2016 for the Quarter Ended (As Previously Reported)

(in thousands, except per share amounts)

Income from operations

Income tax (benefit) / expense

Net (loss)/income

Net income per share (1) :

Weighted average shares outstanding:

Effect of Restatement

Income from operations

Income tax (benefit) / expense

Net (loss)/income

Net income per share (1) :

Weighted average shares outstanding:

Fiscal 2016 for the Quarter Ended (As Restated)

Income from operations

Income tax (benefit) / expense

Net (loss)/income

Net income per share (1) :

Weighted average shares outstanding:

(1) EPS for the year may not equal the sum of quarterly EPS due to changes in weighted share calculations.

KULICKE AND SOFFA INDUSTRIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

SUBSEQUENT EVENTS

On October 12, 2017 , the Company entered into foreign exchange forward contracts with notional amounts of $12.7 million .

We entered into these foreign exchange forward contracts to hedge a portion of our forecasted foreign currency-denominated expenses in the normal course of business and, accordingly, they are not speculative in nature.

These foreign exchange forward contracts have maturities of up to twelve months .

12.6 % 14.3 %

(1) Distributor of the Company's products

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K/A

Item 8. Financial Statements and Supplementary Data