What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2024-11-14 compared with 2023-11-16 · 280 added, 252 removed, 967 unchanged (35% of the section changed)

2 unchanged sentences

Report of Independent Registered Public Accounting Firm 45

Consolidated Balance Sheets as of September 30, 2023 and October 1, 2022

Consolidated Balance Sheets as of September 28, 2024 and September 30, 2023

Consolidated Statements of Operations for fiscal 2024, 2023 and 2022

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

and its subsidiaries (the “Company”) as of September 30, 2023 and October 1, 2022, 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 September 30, 2023, including the related notes and schedule of valuation and qualifying accounts for each of the three years in the period ended September 30, 2023 appearing under Item 15(a)(2) (collectively referred to as the “consolidated financial statements”).

and its subsidiaries (the “Company”) as of September 28, 2024 and September 30, 2023, 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 September 28, 2024, including the related notes and schedule of valuation and qualifying accounts for each of the three years in the period ended September 28, 2024 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 September 28, 2024, 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 September 30, 2023 and October 1, 2022 , and the results of its operations and its cash flows for each of the three years in the period ended September 30, 2023 in conformity with accounting principles generally accepted in the United States of America.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of September 28, 2024 and September 30, 2023 , and the results of its operations and its cash flows for each of the three years in the period ended September 28, 2024 in conformity with accounting principles generally accepted in the United States of America.

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of September 28, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

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

As described in Management’s Report on Internal Control over Financial Reporting, management has excluded Kulicke and Soffa Hi-Tech Co., Ltd.

(“K&S Hi-Tech”) from its assessment of internal control over financial reporting as of September 30, 2023 because it was acquired by the Company in a purchase business combination during the year ended September 30, 2023.

We have also excluded K&S Hi-Tech from our audit of internal control over financial reporting.

K&S Hi-Tech is a wholly-owned subsidiary whose total assets and total revenues excluded from management’s assessment and our audit of internal control over financial reporting represent less than 1%, respectively, of the related consolidated financial statement amounts as of and for the year ended September 30, 2023.

Definition and Limitations of Internal Control over Financial Reporting

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(ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

and (iii) provide reasonable

assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

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(in thousands, except per share amount)

September 30, 2023 October 1, 2022

September 28, 2024 September 30, 2023

Current assets:

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Operating expenses 361,250 319,218 278,248

Income from operations 39,437 470,072 412,447

(Loss) / Income from operations

( 92,496 ) 39,437 470,072

Interest income 34,230 32,906 7,124

Interest expense ( 89 ) ( 142 ) ( 208 )

Income before income taxes 72,201 476,988 414,550

(Loss)/Income before income taxes

( 58,355 ) 72,201 476,988

Provision for income taxes 10,651 15,053 43,443

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

Net income $ 57,148 $ 433,545 $ 367,161

Net income per share:

Net (loss)/income

$ ( 69,006 ) $ 57,148 $ 433,545

Net (loss)/income per share:

Basic $ ( 1.24 ) $ 1.01 $ 7.21

8 unchanged sentences

2024 2023 2022

Net income $ 57,148 $ 433,545 $ 367,161

Net (loss) / income

$ ( 69,006 ) $ 57,148 $ 433,545

Other comprehensive income / (loss):

Foreign currency translation adjustment 6,917 9,676 ( 30,536 )

Unrecognized actuarial (loss) / gain on pension plan, net of tax ( 49 ) 2,276 —

9,627 ( 28,260 ) 672

Derivatives designated as hedging instruments:

Unrealized gain / (loss) on derivative instruments, net of tax 2,381 ( 2,694 ) 24

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

( 870 ) 1,076 ( 1,197 )

Net increase / (decrease) from derivatives designated as hedging instruments, net of tax 1,511 ( 1,618 ) ( 1,173 )

Unrecognized actuarial (loss) / gain on pension plan ( 821 ) ( 49 ) 2,276

Net increase / (decrease) from derivatives designated as hedging instruments 2,244 1,511 ( 1,618 )

Total other comprehensive income / (loss) 8,340 11,138 ( 29,878 )

Comprehensive income $ 68,286 $ 403,667 $ 366,660

Comprehensive (loss) / income $ ( 60,666 ) $ 68,286 $ 403,667

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

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

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

Cash dividend declared ($ 0.17 per share)

— — — ( 40,433 ) — ( 40,433 )

Components of comprehensive income:

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Equity-based compensation — 21,744 — — — 21,744

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

Cash dividend declared ($ 0.19 per share)

— — — ( 43,004 ) — ( 43,004 )

Components of comprehensive income:

Net income — — — 57,148 — 57,148

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

Other comprehensive income — — — — 11,138 11,138

Total comprehensive income / (loss) — — — 57,148 11,138 68,286

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

Balances as of September 30, 2023 56,310 $ 577,727 $ ( 737,214 ) $ 1,355,810 $ ( 21,762 ) $ 1,174,561

Issuance of stock for services rendered 25 434 242 — — 676

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Issuance of shares for equity-based compensation 740 ( 7,090 ) 7,090 — — —

Excise tax — — ( 1,157 ) — — ( 1,157 )

Equity-based compensation — 25,632 — — — 25,632

Cash dividend declared — — — ( 43,004 ) — ( 43,004 )

Cash dividend declared ($ 0.20 per share)

— — — ( 44,246 ) — ( 44,246 )

Components of comprehensive income:

Net income — — — 57,148 — 57,148

— — — ( 69,006 ) — ( 69,006 )

Other comprehensive income — — — — 8,340 8,340

Total comprehensive income — — — 57,148 11,138 68,286

Total comprehensive income / (loss) — — — ( 69,006 ) 8,340 ( 60,666 )

Balances as of September 28, 2024 53,854 $ 596,703 $ ( 881,830 ) $ 1,242,558 $ ( 13,422 ) $ 944,009

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Impairment charges 44,472 21,535 1,346

Equity-based compensation and employee benefits 22,744 18,986 15,491

Equity-based compensation

26,891 22,744 18,986

Adjustment for doubtful accounts — 49 ( 245 )

1 unchanged sentence

Deferred taxes 11,374 ( 4,478 ) ( 8,648 )

(Gain) / loss on disposal of property, plant and equipment ( 499 ) ( 253 ) 259

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

Loss/(gain) on disposal of property, plant and equipment

72 ( 499 ) ( 253 )

Unrealized fair value changes on equity investment ( 47 ) 323 —

Unrealized foreign currency translation 1,944 85 ( 7,278 )

Share of results of equity-method investee — — 94

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

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Maturity of short term investments 570,000 585,000 626,000

Disposal of equity-method investments — — 2,115

Net cash provided by / (used in) investing activities ( 91,338 ) 133,799 ( 81,707 )

Net cash (used in) / provided by investing activities

( 138,501 ) ( 91,338 ) 133,799

CASH FLOWS FROM FINANCING ACTIVITIES:

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Repurchase of common stock ( 150,791 ) ( 69,210 ) ( 281,319 )

Tax withholding payments related to vested and released restricted stock units ( 583 ) — —

Proceeds from short term debt — — 54,500

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

The 2023, 2022, and 2021 fiscal years ended on September 30, 2023, October 1, 2022 and October 2, 2021, respectively.

The 2024, 2023 and 2022 fiscal years ended on September 28, 2024, September 30, 2023 and October 1, 2022, respectively.

Nature of Business

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The Company believes such volatility will continue to characterize the industry and the Company’s operations in the future.

In connection with the cancellation of a project with one of its customers (previously referred to as Project W), on March 11, 2024, the Company committed to a plan to cease operational activities and commence wind down activities concerning various aspects of Project W.

As of September 28, 2024, the wind down activities have been substantially completed.

For additional information, see Note 17:

Restructuring and Cancellation of Project in our Notes to the Consolidated Financial Statements.

Use of Estimates

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, accrual for customer credit programs, the valuation estimates and assessment of impairment and observable price adjustments, income taxes, 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 and inventory valuation, carrying value and lives of fixed assets, goodwill and intangible assets, accrual for customer credit programs, the valuation estimates and assessment of impairment and observable price adjustments, income taxes, equity-based compensation expense, accrual for employee termination benefits and warranties.

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

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Vulnerability to Certain Concentrations

Financial instruments which may subject the Company to concentrations of credit risk as of September 30, 2023 and October 1, 2022 consisted primarily of trade receivables.

Financial instruments which may subject the Company to concentrations of credit risk as of September 28, 2024 and September 30, 2023 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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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.

Gains and losses resulting from foreign currency transactions are included in the determination of net income and to date has not been material.

The Company’s operations are exposed to changes in foreign currency exchange rates due to transactions denominated in currencies other than the location’s functional currency.

The Company is also exposed to foreign currency fluctuations that impact the remeasurement of net monetary assets of those operations whose functional currency, the U.S.

dollar, differs from their respective local currencies, most notably in Israel, Singapore and Switzerland.

dollar, differs from their respective local currencies, most notably in Israel and Singapore.

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.

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The criteria for designating a derivative as a cash flow hedge include the assessment of the instrument’s effectiveness in risk reduction, matching of the derivative instrument to its underlying transaction, and the assessment of the probability that the underlying transaction will occur.

For derivatives with cash flow hedge accounting designation, we report the after-tax gain / (loss) from the effective portion of the hedge as a component of accumulated other comprehensive income / (loss) and reclassify it into earnings in the same period in which the hedged transaction affects earnings and in the same line item on the consolidated statement of operations as the impact of the hedged transaction.

Derivatives that we designate as cash flow hedges are classified in the consolidated statement of cash flows in the same section as the underlying item, primarily within cash flows from operating activities.

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

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

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.

If it is probable that the forecasted transaction will no longer occur, the cumulative unrealized gain or loss on the related derivative is reclassified from accumulated other comprehensive income / (loss) into earnings.

Subsequent gain / (loss) on the related derivative instrument is recognized into earnings in each period until the instrument matures, is terminated, is re-designated as a qualified cash flow hedge, or is sold.

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This estimate is based on historical sales volumes, internal projections and market developments and trends.

KULICKE AND SOFFA INDUSTRIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Property, Plant and Equipment

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Land is not depreciated.

KULICKE AND SOFFA INDUSTRIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Valuation of Long-Lived Assets

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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.

The carrying amount of an asset or asset group is not recoverable to the extent it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset or asset group.

Estimates of future cash flows used to test the recoverability of a long-lived asset or asset group must incorporate the entity’s own assumptions about its use of the asset or asset group and must factor in all available evidence.

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.

ASC 360 requires that long-lived assets be tested for recoverability whenever events or changes in circumstances indicate that their carrying amount may not be recoverable.

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or significant changes in market capitalization.

During the fiscal years ended September 30, 2023 and October 1, 2022, no “triggering” events occurred.

Accounting for Impairment of Goodwill

During the fiscal years ended September 28, 2024 and September 30, 2023, no “triggering” events occurred.

Accounting for Impairment of Goodwill and Other Intangible Assets

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.

For goodwill, 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 impairment test is unnecessary.

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

KULICKE AND SOFFA INDUSTRIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Government Incentives

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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.

KULICKE AND SOFFA INDUSTRIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

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.

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Any variable consideration such as sales incentives are recognized as a reduction of net revenue at the time of revenue recognition.

The Company’s performance obligations relate to contracts with a duration of less than one year, therefore as allowed under ASC 606, we have opted not to disclose the unsatisfied performance obligations for contracts with original expected durations of less than one year.

The length of time between invoicing and payment is not significant under our payment terms.

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

KULICKE AND SOFFA INDUSTRIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Contract Assets

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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.

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Diluted EPS include the weighted average number of common stock and the dilutive effect of stock options, performance share units and restricted share units outstanding during the period, when such instruments are dilutive.

KULICKE AND SOFFA INDUSTRIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Accelerated Share Repurchase

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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)

Restructuring Charges

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Recent Accounting Pronouncements

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

Business Combinations

In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805):

Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which clarifies that an acquirer of a business should recognize and measure contract assets and contract liabilities in a business combination in accordance with Topic 606:

Revenue from Contracts with Customers .

The amendments should be applied prospectively to business combinations occurring on or after the effective date of the amendments with early adoption permitted.

We elected for an early adoption of this ASU in fiscal year 2023.

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

Disclosure Improvements

In October 2023, the Financial Accounting Standards Board (the "FASB") issued ASU 2023-06, Disclosure Improvements:

Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative.

This ASU aligns the requirements in the FASB Accounting Standards Codification with the SEC’s regulations.

The amendments in the ASU are expected to clarify or improve disclosure and presentation requirements of a variety of Codification Topics.

They will also allow users to more easily compare entities subject to the SEC’s existing disclosures with those entities that were not previously subject to the requirements, and align the requirements in the Codification with the SEC’s regulations.

This ASU will become effective for each amendment on the date on which the SEC removes the related disclosure from its regulations.

However, if by June 30, 2027, the SEC has not removed the related disclosure from its regulations, the amendments will be removed from the Codification and not become effective for any entity.

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

KULICKE AND SOFFA INDUSTRIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Segment Reporting

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosure, which aims to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses.

In addition, the amendments in the ASU enhance interim disclosure requirements, clarify circumstances in which an entity can disclose multiple segment measures of profit or loss, provide new segment disclosure requirements for entities with a single reportable segment, and contain other disclosure requirements.

The purpose of the amendments is to enable investors to better understand an entity's overall performance and assess potential future cash flows.

This ASU will be effective for the Company's fiscal year 2025, and interim periods within the fiscal years beginning in the Company's fiscal year 2026.

Early adoption is permitted.

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

In December 2023, the FASB issued ASU 2023-09 Income Taxes (Topic 740):

Improvement to Income Tax Disclosures.

The amendments in this update are intended to enhance the transparency and decision usefulness of income tax disclosures primarily through changes to the rate reconciliation and income taxes paid information.

This ASU will be effective for the Company's fiscal year 2026.

Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance.

ASU 2023-09 should be applied on a prospective basis, but retrospective application is permitted.

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

KULICKE AND SOFFA INDUSTRIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

BALANCE SHEET COMPONENTS

The following tables reflect the components of significant balance sheet accounts as of September 30, 2023 and October 1, 2022:

(in thousands) September 30, 2023 October 1, 2022

The following tables reflect the components of significant balance sheet accounts as of September 28, 2024 and September 30, 2023:

(in thousands) September 28, 2024 September 30, 2023

Inventories, net:

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Accumulated depreciation ( 159,517 ) ( 142,437 )

Accumulated impairment $ ( 41,691 ) $ —

$ 64,823 $ 110,051

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

BUSINESS COMBINATIONS

BUSINESS COMBINATION

Acquisition of Advanced Jet Automation Co., Ltd.

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As at September 28, 2024, the Company held $ 4.0 million in escrow and will continue to hold such sums for a period of twenty-four ( 24 ) months from the Closing Date, as security pending the completion of Ruo Chuan Inc.’s obligations as the seller under the Definitive Agreement.

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

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

On February 22, 2024, the Company finalized the valuation of the tangible and identifiable intangible assets and liabilities in connection with the acquisition of AJA and no further adjustment was recorded.

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

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Inventory 1,581

Property, plant and equipment, net 1,462

Property, plant and equipment 1,462

Right-of-use assets 989

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Deferred tax liabilities ( 1,785 )

Total purchase price, net of cash acquired $ 38,119

Excluding inventory and property, plant and equipment, all other tangible net assets (liabilities) were valued at their respective carrying amounts, which the Company believes approximate their current fair values at the Closing Date.

Total purchase price $ 38,119

Excluding inventory and property, plant and equipment, all other tangible net assets (liabilities) were valued at their respective carrying amounts, which the Company determined approximate their current fair values at the Closing Date.

In connection with the acquisition of AJA, the Company recorded deferred tax liabilities primarily relating to the acquired intangible assets.

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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 goodwill also includes 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.

KULICKE AND SOFFA INDUSTRIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

During the fiscal year ended September 30, 2023, 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.

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Accordingly, the Company has performed the goodwill impairment test for the Lithography reporting unit with reference to the guidance under ASC 350.

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 Lithography reporting unit.

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Based on the calculation, the Company determined that the carrying value exceeded the fair value of this reporting unit which resulted in a goodwill impairment charge of $ 9.8 million, representing the entire goodwill assigned to this reporting unit.

This 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, 2023.

While we have concluded that a triggering event for the other reporting units did not occur during the fiscal year ended September 30, 2023, the persistent 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.

The following table summarizes the Company’s recorded goodwill based on its reportable segments as of September 30, 2023 and October 1, 2022:

This goodwill impairment charge was reflected in the Company’s Consolidated Statements of Operations in fiscal 2023.

The Company performed its annual impairment test in the fourth quarter of fiscal 2024 and elected to perform the quantitative impairment test as permitted by ASC 350.

Based on the quantitative assessment performed on all its reporting units, the Company concluded that no impairment on the Company's recorded goodwill was required.

The following table summarizes the changes in the Company’s recorded goodwill based on its reportable segments as of September 28, 2024 and September 30, 2023:

(in thousands) Wedge Bonding Equipment APS All Others Total

Balance at October 1, 2022 (1)

Balance at September 30, 2023 (1)

18,280 26,109 44,284 88,673

Acquired in business combination — — 27,975 27,975

Impairment charges — — ( 9,794 ) ( 9,794 )

Other — 159 916 1,075

Balance at September 28, 2024 18,280 26,268 45,200 89,748

(1) Cumulative goodwill impairment as of October 1, 2022 was approximately $ 35.2 million.

(1) Cumulative goodwill impairment as of September 30, 2023 was approximately $ 45.0 million.

KULICKE AND SOFFA INDUSTRIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Intangible Assets

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Subsequently, the Company proceeded to measure the impairment loss by comparing the carrying value against the discounted cash flow model to determine the fair value of the asset group for the Lithography reporting unit, where significant assumptions include revenue forecasts, terminal growth rate of 2.5 %, working capital, tax rate and a weighted average cost of capital (discount rate) of 11.7 %.

As a result of the analysis, the Company determined an impairment charge of $ 6.9 million on the developed technology reported within the “All Others” category for the fiscal year ended September 30, 2023.

The impairment of intangible assets is a non-cash charge which has been reflected in the Company’s Consolidated Statements of Operations for the fiscal year ended September 30, 2023.

KULICKE AND SOFFA INDUSTRIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The following table reflects net intangible assets as of September 30, 2023 and October 1, 2022:

As of Average estimated

(dollar amounts in thousands) September 30, 2023 October 1, 2022 useful lives (in years)

As a result of the analysis, the Company recorded an impairment charge of $ 6.9 million on the developed technology reported within the “All Others” category in fiscal 2023.

The impairment of intangible assets was reflected in the Company’s Consolidated Statements of Operations in fiscal 2023.

No impairment charge was required in the fiscal year ended September 28, 2024 .

The following table reflects net intangible assets as of September 28, 2024 and September 30, 2023:

As of September 28, 2024

As of September 30, 2023

(dollar amounts in thousands) Average estimated

(in years) Gross Carrying Amount Accumulated Amortization Net Amount Gross Carrying Amount Accumulated Amortization Net Amount

Developed technology 6.0 to 15.0

Accumulated amortization $ ( 55,877 ) $ ( 58,636 )

Net developed technology $ 25,082 $ 30,381

$ 83,401 $ ( 61,575 ) $ 21,826 $ 80,959 ( 55,877 ) $ 25,082

Customer relationships 5.0 to 8.0

Accumulated amortization $ ( 34,789 ) $ ( 33,515 )

Net customer relationships $ 1,975 $ —

In-process research and development $ 459 $ — N.A.

Net in-process research and development $ 459 $ —

37,625 ( 35,916 ) 1,709 36,764 ( 34,789 ) 1,975

Trade and brand name 7.0 to 8.0

Accumulated amortization $ ( 7,130 ) $ ( 6,945 )

Net trade and brand name $ — $ —

7,272 ( 7,272 ) — 7,130 ( 7,130 ) —

Other intangible assets 1.0 to 8.0

Accumulated amortization $ ( 3,776 ) $ ( 3,142 )

Net other intangible assets $ 1,841 $ 1,558

Net intangible assets $ 29,357 $ 31,939

5,617 ( 4,372 ) 1,245 5,617 ( 3,776 ) 1,841

In-process research and development N.A 459 — 459 459 — 459

$ 134,374 $ ( 109,135 ) $ 25,239 $ 130,929 $ ( 101,572 ) $ 29,357

The following table reflects estimated annual amortization expense related to intangible assets as of September 28, 2024:

(in thousands) September 28, 2024

Fiscal 2025 $ 5,198

Fiscal 2029 $ 3,420

Fiscal 2030 and thereafter $ 2,021

13 unchanged sentences

Cash equivalents:

Money market funds (1)

Mutual Funds (1)

157,590 89 — 157,679

7 unchanged sentences

Total cash, cash equivalents, and short-term investments $ 577,058 $ 89 $ — $ 577,147

(1) Mutual funds held by the Company include Money Market Funds and Ultra-Short Funds.

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) 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 2023 and 2022.

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

The Company did not recognize any realized gains or losses on the sale of investments during the fiscal year ended 2024.

Cash, cash equivalents, restricted cash and short-term investments consisted of the following as of September 30, 2023:

(dollar amounts in thousands) Amortized

5 unchanged sentences

Cash equivalents:

Money market funds (1)

Mutual Funds (1)

202,113 — ( 10 ) 202,103

7 unchanged sentences

Total cash, cash equivalents, restricted cash and short-term investments $ 759,412 $ — $ ( 10 ) $ 759,402

(1) Mutual funds held by the Company include Money Market Funds.

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) 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 2023 and 2022.

The Company did not recognize any realized gains or losses on the sale of investments during the fiscal year ended 2023.

KULICKE AND SOFFA INDUSTRIES, INC.

1 unchanged sentence

EQUITY INVESTMENTS

Equity investments consisted of the following as of September 30, 2023 and October 1, 2022:

(in thousands) September 30, 2023 October 1, 2022

Equity investments consisted of the following as of September 28, 2024 and September 30, 2023:

(in thousands) September 28, 2024 September 30, 2023

Non-marketable equity securities $ 3,143 $ 716

During the year ended September 30, 2023, the Company recorded an impairment of $ 5.0 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.

Net Asset Value (“NAV”) (Private Equity Fund) :

5 unchanged sentences

The term of the fund will continue until March 18, 2032 unless dissolved earlier or extended by the General Partner.

In accordance with ASC Topic 820-10, this investment is measured at fair value using the NAV per share (or its equivalent) practical expedient has not been classified in the fair value hierarchy.

In accordance with ASC Topic 820-10, this investment is measured at fair value using the NAV per share (or its equivalent) practical expedient and has not been classified in the fair value hierarchy.

As of September 28, 2024, the Company has funded $ 3.4 million into the affiliated investment fund and recognized an unrealized fair value loss of $ 0.3 million on the Consolidated Statements of Operations.

14 unchanged sentences

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

KULICKE AND SOFFA INDUSTRIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

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

4 unchanged sentences

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 Sheets as of September 30, 2023 and October 1, 2022 is as follows:

(in thousands) September 30, 2023 October 1, 2022

Notional Amount Fair Value Liability Derivatives (1)

KULICKE AND SOFFA INDUSTRIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The fair value of derivative instruments on our Consolidated Balance Sheets as of September 28, 2024 and September 30, 2023 is as follows:

(in thousands) September 28, 2024 September 30, 2023

Notional Amount Fair Value Asset

Derivatives (1)

Notional Amount Fair Value Liability Derivatives (2)

3 unchanged sentences

Total derivatives $ 46,234 $ 1,521 $ 54,590 $ ( 723 )

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

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

(3) 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 September 30, 2023 and October 1, 2022 was as follows:

The effect of derivative instruments designated as cash flow hedges in our Consolidated Statements of Operations for the fiscal years ended September 28, 2024 and September 30, 2023 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 gain recognized in OCI, net of tax (1)

$ 1,799 $ 2,381

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

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

$ ( 445 ) $ 870

4 unchanged sentences

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 September 30, 2023, four 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

KULICKE AND SOFFA INDUSTRIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

our leased assets and corresponding liabilities.

As of September 28, 2024, no option to extend the lease was 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 ROU 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.

1 unchanged sentence

As of September 28, 2024, our finance leases are not material.

KULICKE AND SOFFA INDUSTRIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The following table shows the components of lease expense:

(in thousands) Fiscal

2024 2023 2022

Operating lease expense (1)

$ 10,015 10,746 8,625

(1) Operating lease expense includes short-term lease expense, which is immaterial for the fiscal year ended September 30, 2023.

(1) Operating lease expense includes short-term lease and variable lease expenses, which is immaterial for the fiscal year ended September 28, 2024.

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

1 unchanged sentence

(in thousands) Fiscal

2024 2023 2022

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

22 unchanged sentences

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, 2023 and October 1, 2022, the outstanding amount was $ 3.1 million and $ 2.9 million respectively.

As of September 28, 2024 and September 30, 2023, the outstanding amount under the facility was $ 5.0 million and $ 3.1 million respectively.

Credit Facilities

8 unchanged sentences

SHAREHOLDERS’ EQUITY AND EMPLOYEE BENEFIT PLANS

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 2023 and 2022:

(in thousands) 2023 2022

Cash $ 2,001 $ 1,973

Share Repurchase Program

2 unchanged sentences

On March 3, 2022, the Board of Directors increased the share repurchase authorization under the Program by an additional $ 400 million to $ 800 million, and extended its duration through August 1, 2025.

On May 7, 2022, the Company entered into a written trading plan under Rule 10b5-1 of the Exchange Act to facilitate repurchases under the Program.

This trading plan was most recently modified on May 29, 2023.

On November 17, 2023, the Company modified its written trading plan under Rule 10b5-1 of the Exchange Act, dated as of May 7, 2022, to facilitate repurchases under the Program.

The modification provided for the purchase of up to approximately $ 169 million of the Company’s common stock from November 20, 2023 through August 1, 2025.

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.

1 unchanged sentence

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

During the fiscal year ended September 30, 2023, the Company repurchased a total of approximately 1,515.0 thousand shares of common stock at a cost of approximately $ 68.1 million.

During the fiscal year ended September 28, 2024, the Company repurchased a total of approximately 3,221.0 thousand shares of common stock at an aggregate cost of approximately $ 151.0 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.

2 unchanged sentences

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 28, 2024, our remaining stock repurchase authorization under the Program was approximately $ 30.3 million.

KULICKE AND SOFFA INDUSTRIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

As of September 30, 2023, our remaining stock repurchase authorization under the Program was approximately $ 181.0 million.

On August 23, 2023, June 8, 2023, March 2, 2023 and November 16, 2022, the Board of Directors declared a quarterly dividend $ 0.19 per share of common stock.

During the fiscal year ended September 30, 2023, the Company declared dividends of $ 0.76 per share of common stock.

On August 26, 2024, May 16, 2024, March 14, 2024 and November 15, 2023, the Board of Directors declared a quarterly dividend $ 0.20 per share of common stock, resulting in an aggregate dividend of $ 0.80 per share of common stock for the fiscal year ended September 28, 2024.

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 the accumulated other comprehensive loss reflected on the Consolidated Balance Sheets as of September 30, 2023 and October 1, 2022:

(in thousands) September 30, 2023 October 1, 2022

Loss from foreign currency translation adjustments $ ( 20,178 ) $ ( 29,854 )

Unrecognized actuarial loss on pension plan, net of tax ( 861 ) ( 812 )

Unrealized loss on hedging ( 723 ) ( 2,234 )

Accumulated other comprehensive loss $ ( 21,762 ) $ ( 32,900 )

Changes in accumulated other comprehensive income (loss) by component for the year ended September 28, 2024:

(in thousands) Cumulative Foreign Currency Translation Adjustment Pension Plan Adjustments Gain (Losses) on Derivative Instruments Total

As of September 30, 2023

$ ( 20,178 ) $ ( 861 ) $ ( 723 ) $ ( 21,762 )

Other comprehensive income (loss) before reclassifications 7,263 ( 968 ) 1,799 8,094

Amount reclassified out of accumulated other comprehensive income (loss) — — 445 445

Tax effects ( 346 ) 147 — ( 199 )

Accumulated other comprehensive income (loss) 6,917 ( 821 ) 2,244 8,340

As of September 28, 2024

$ ( 13,261 ) $ ( 1,682 ) $ 1,521 $ ( 13,422 )

Equity-Based Compensation

13 unchanged sentences

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

• In general, 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.

Equity-based compensation expense recognized in the Consolidated Statements of Operations for fiscal 2023, 2022, and 2021 was based upon awards ultimately expected to vest, with forfeiture accounted for when they occur.

KULICKE AND SOFFA INDUSTRIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Equity-based compensation expense recognized in the Consolidated Statements of Operations for fiscal 2024, 2023 and 2022 was based upon awards ultimately expected to vest, with forfeiture accounted for when they occur.

The following table reflects the 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 2024, 2023 and 2022:

13 unchanged sentences

Relative TSR PSUs

The following table reflects the Relative TSR PSUs activity for fiscal 2023, 2022, and 2021:

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 October 3, 2020 403 $ 4,198 1.1

Granted 155 $ 28.21

Forfeited or expired ( 6 )

Vested ( 108 )

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

Granted 152 $ 52.18

Forfeited or expired ( 11 )

Vested ( 205 )

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

The following table reflects the Relative TSR PSUs activity for fiscal 2024:

Number of shares

(in thousands) Weighted average grant date fair value per share

Outstanding as of September 30, 2023

Granted 232 $ 36.88

1 unchanged sentence

Vested ( 246 ) $ 28.08

Relative TSR PSUs outstanding as of September 30, 2023 367 $ 5,939 1.0

Outstanding as of September 28, 2024

(in thousands, except fair value per share)

2024 2023 2022

Relative TSR PSUs granted

Weighted-average grant-date fair value per share

$ 36.88 $ 48.35 $ 52.18

KULICKE AND SOFFA INDUSTRIES, INC.

8 unchanged sentences

Time-based RSUs

The following table reflects the Time-based RSUs activity for fiscal 2023, 2022, and 2021:

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 October 3, 2020 788 $ 10,480 1.6

Granted 486 $ 24.34

Forfeited or expired ( 24 )

Vested ( 333 )

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

The following table reflects the Time-based RSUs activity for fiscal 2024:

Number of shares (in thousands) Weighted average grant date fair value per share

Outstanding as of September 30, 2023

Granted 512 $ 47.42

1 unchanged sentence

Vested ( 407 ) $ 35.55

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

Outstanding as of September 28, 2024

(in thousands, except fair value per share)

2024 2023 2022

Time-based RSUs granted

Weighted-average grant-date fair value per share

$ 47.42 $ 37.64 $ 49.47

Equity-Based Compensation:

The following table reflects the Growth PSUs activity for fiscal 2024:

Number of shares (in thousands) Weighted average grant date fair value per share

Outstanding as of September 30, 2023

Granted 49 $ 23.51

1 unchanged sentence

Vested ( 99 ) $ 23.94

Time-based RSUs outstanding as of September 30, 2023 832 $ 17,693 1.5

Outstanding as of September 28, 2024

(in thousands, except fair value per share)

2024 2023 2022

Growth PSUs granted

Weighted-average grant-date fair value per share

$ 23.51 $ 37.55 $ 49.26

The total fair value of RSUs and PSUs, as of their respective vesting dates, during the years ended September 28, 2024, September 30, 2023 and October 1, 2022, was $ 36.4 million, $ 28.9 million and $ 41.3 million, respectively.

KULICKE AND SOFFA INDUSTRIES, INC.

1 unchanged sentence

Equity-Based Compensation:

The following table reflects the Growth PSUs activity for fiscal 2023, 2022, and 2021:

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 October 3, 2020 151 $ 1,252 1.1

Granted 52 $ 24.01

Forfeited or expired ( 34 )

Vested ( 17 )

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

Granted 79 $ 49.26

Forfeited or expired ( 4 )

Vested ( 100 )

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

Granted 91 $ 37.55

Forfeited or expired ( 1 )

Vested ( 95 )

Special/Growth PSUs outstanding as of September 30, 2023 122 $ 1,626 1.0

As of September 30, 2023, there were no employee stock options.

Equity-Based Compensation:

Non-Employee Directors

6 unchanged sentences

Fair value based upon market price at time of issue $ 1,259 $ 1,000 $ 949

The following table reflects the Company’s defined benefits pension obligations, mainly in Switzerland and Taiwan, as of September 30, 2023 and October 1, 2022:

(in thousands) September 30, 2023 October 1, 2022

Switzerland pension obligation $ 1,119 $ 1,038

Taiwan pension obligation 1,257 1,189

KULICKE AND SOFFA INDUSTRIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

We have pension plans available to employees at various foreign sites.

As of September 28, 2024 and September 30, 2023, the defined benefits pension obligations of our plans were $ 5.1 million and $ 4.0 million respectively.

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.

5 unchanged sentences

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

For the fiscal years ended September 30, 2023, and October 1, 2022, service revenue is not material.

For the fiscal years ended September 28, 2024, September 30, 2023 and October 1, 2022, service revenue is not material.

Please refer to Note 1:

4 unchanged sentences

Contract Balances

(in thousands) September 28, 2024 September 30, 2023 October 1,

Contract assets

$ — $ 10,181 $ 26,317

Contract liabilities

$ 18,646 $ 4,797 $ 3,160

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.

1 unchanged sentence

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 September 30, 2023 and October 1, 2022:

(in thousands) 2023 2022

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

Additions 4,230 51,774

Transferred to accounts receivable or collected ( 20,366 ) ( 25,457 )

Contract assets, end of period $ 10,181 $ 26,317

The following table shows the changes in contract liability balances during the fiscal years ended September 30, 2023 and October 1, 2022:

(in thousands) 2023 2022

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

Revenue recognized ( 38,435 ) ( 116,399 )

Additions 40,072 103,963

Contract liabilities, end of period $ 4,797 $ 3,160

The change in contract assets during the fiscal year ended September 28, 2024 was mainly due to $ 10.2 million of contract assets reclassified to accounts receivable, net, as our right to consideration for these contract assets became unconditional.

KULICKE AND SOFFA INDUSTRIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

EARNINGS PER SHARE

Basic income per share is calculated using the weighted average number of shares of common stock outstanding during the period.

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

Revenue recognized during fiscal year 2024 that was included in deferred revenue as of September 30, 2023 was $ 4.5 million.

Revenue recognized during fiscal year 2023 that was included in deferred revenue as of October 1, 2022 was $ 2.9 million.

(LOSS) EARNINGS PER SHARE

Basic (loss)/income per share is calculated using the weighted average number of shares of common stock outstanding during the period.

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

The following table reflects a reconciliation of the shares used in the basic and diluted net income per share computation for fiscal 2023, 2022, and 2021:

For fiscal 2024, restricted stock were excluded due to the net loss the Company incurred during the year.

The following table reflects a reconciliation of the shares used in the basic and diluted net (loss)/income per share computation for fiscal 2024, 2023 and 2022:

(in thousands, except per share) 2024 2023 2022

Basic Diluted Basic Diluted Basic Diluted

Net income $ 57,148 $ 57,148 $ 433,545 $ 433,545 $ 367,161 $ 367,161

Net (loss) / income $ ( 69,006 ) $ ( 69,006 ) $ 57,148 $ 57,148 $ 433,545 $ 433,545

Weighted average shares outstanding - Basic 55,613 55,613 56,682 56,682 60,164 60,164

1 unchanged sentence

Weighted average shares outstanding - Diluted 55,613 57,548 61,182

Net income per share - Basic $ 1.01 $ 1.01 $ 7.21 $ 7.21 $ 5.92 $ 5.92

Net (loss) / income per share - Basic $ ( 1.24 ) $ ( 1.24 ) $ 1.01 $ 1.01 $ 7.21 $ 7.21

Effect of dilutive shares $ — $ ( 0.02 ) $ ( 0.12 )

Net income per share - Diluted $ 0.99 $ 7.09 $ 5.78

Net (loss) / income per share - Diluted $ ( 1.24 ) $ 0.99 $ 7.09

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 2024, 2023 and 2022 as the effect would have been anti-dilutive.

OTHER FINANCIAL DATA

The following table reflects the other financial data for fiscal 2023, 2022, and 2021:

(in thousands) 2023 2022 2021

Incentive compensation expense $ 10,424 $ 27,011 $ 39,779

Warranty and retrofit expense 13,729 16,349 22,068

KULICKE AND SOFFA INDUSTRIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The following table reflects the U.S.

4 unchanged sentences

Income before income taxes $ ( 58,355 ) $ 72,201 $ 476,988

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 2024, 2023 and 2022:

17 unchanged sentences

Foreign operations (Deemed income, taxes on undistributed foreign earnings, and withholding taxes) 7,268 24,450 45,421

Non-deductible items (1)

3,622 1,900 267

Goodwill impairment — 2,517 —

3 unchanged sentences

Effective tax rate ( 18.3 ) % 20.8 % 9.1 %

(1) Certain balances in fiscal 2022 and 2021 have been reclassified to conform to the current period presentation.

These reclassifications have no impact to the consolidated financial statements in fiscal 2022 and 2021.

(1) Certain balances in fiscals 2023 and 2022 have been reclassified to conform to the current period presentation.

These reclassifications have no impact to the consolidated financial statements in the respective fiscal periods.

KULICKE AND SOFFA INDUSTRIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The Company recorded a tax benefit from the U.S.

Tax Court opinion in Varian Medical Systems, Inc.

Commissioner relating to the U.S.

TCJA one-time transition tax of $ 6.5 million in fiscal 2024.

As of September 28, 2024, a large portion of the Company’s undistributed foreign earnings are not considered to be indefinitely reinvested outside the U.S.

4 unchanged sentences

In fiscal 2024, 2023 and 2022, the tax incentive arrangement helped to reduce the Company’s provision for income taxes by $( 1.0 ) million or $( 0.02 ) per share, $ 11.2 million or $ 0.19 per share and $ 50.1 million or $ 0.82 per share, respectively.

KULICKE AND SOFFA INDUSTRIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The following table reflects the deferred tax balances based on the tax effects of cumulative temporary differences for fiscal 2024 and 2023:

2 unchanged sentences

Capitalized Research

12,529 25,105

Tax credit carryforwards 5,537 5,026

11 unchanged sentences

Net deferred tax liabilities $ ( 16,694 ) $ ( 5,713 )

(1) Certain balances in fiscal 2022 have been reclassified to conform to the current period presentation.

These reclassifications have no impact to the consolidated financial statements in fiscal 2022.

As of September 28, 2024, the Company has foreign net operating loss carryforwards of $ 153.9 million, state net operating loss carryforwards of $ 40.2 million, and U.S.

2 unchanged sentences

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.

KULICKE AND SOFFA INDUSTRIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The following table reconciles the beginning and ending balances of the Company’s unrecognized tax benefit, excluding related accrued interest and penalties, for fiscal 2024, 2023 and 2022:

7 unchanged sentences

As of September 28, 2024, the Company has recognized $ 3.7 million of accrued interest and penalties related to unrecognized tax benefit within the income tax payable for uncertain tax positions and approximately $ 19.7 million of unrecognized tax benefit, including related interest and penalties, that if recognized, would impact the Company’s effective tax rate.

KULICKE AND SOFFA INDUSTRIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

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.

17 unchanged sentences

Wedge Bonding Equipment :

Reflects the results of the Company from the design, development, manufacture and sale of wedge bonding equipment.

Reflects the results of the Company from the design, development, manufacture and sale of wedge and wedge-related bonding equipment.

Advanced Solutions :

1 unchanged sentence

Reflects the results of the Company from the design, development, manufacture and sale of a variety of tools, spares and services for our equipment.

KULICKE AND SOFFA INDUSTRIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

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.

1 unchanged sentence

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)

The following table reflects the operating information by reportable segment for fiscal 2024, 2023 and 2022:

13 unchanged sentences

Corporate Expenses ( 85,938 ) ( 83,907 ) ( 74,669 )

Income from Operations 39,437 470,072 412,447

(Loss)/Income from Operations

( 92,496 ) 39,437 470,072

We have considered:

57 unchanged sentences

Total destination sales to unaffiliated customers $ 706,232 $ 742,491 $ 1,503,620

(1) Certain balances in fiscal 2022 and 2021 have been reclassified to conform to the current period presentation.

These reclassifications have no impact to the consolidated financial statements in fiscal 2022 and 2021.

(in thousands) 2024 2023

4 unchanged sentences

Israel 7,822 9,264

12,664 13,774

Total long-lived assets $ 112,322 $ 161,138

12 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

O ther Commitments and Contingencies

Other Commitments and Contingencies

The following table reflects the obligations not reflected on the Consolidated Balance Sheets as of September 28, 2024:

12 unchanged sentences

Concentrations

The following table reflect the significant customer concentrations as a percentage of net revenue for fiscal 2023, 2022, and 2021:

2023 2022 2021

ASE Technology Holding * * 17.4 %

* Represents less than 10% of total net revenue

The following table reflects the significant customer concentrations as a percentage of total accounts receivable as of September 30, 2023 and October 1, 2022:

September 30, 2023 October 1, 2022

There were no customers with sales representing more than 10% of our net revenue in fiscal 2024, 2023 and 2022.

The following table reflects the significant customer concentrations as a percentage of total accounts receivable as of September 28, 2024 and September 30, 2023:

September 28, 2024 September 30, 2023

Tianshui Huatian Technology Co., Ltd.

Haoseng Industrial Co., Ltd.

(1) Distributor of the Company's products

Forehope Semiconductor Group 15.7 % *

* Represents less than 10% of total accounts receivables

RESTRUCTURING AND CANCELLATION OF PROJECT

Cancellation of Project

The Company was engaged by one of its customers (the "Customer") to support the Customer with the development and future mass production of certain technologies relating to advanced display (the "Project"), which project was previously referred to as Project W.

In connection with the Customer's strategic review of its business, the Customer informed the Company that it cancelled the Project.

In connection with the foregoing, on March 11, 2024, the Company committed to a plan to cease operational activities and commence wind down activities concerning various aspects of Project W.

As at September 28, 2024, the wind down activities have been substantially completed.

Wind down charges as a result of these activities incurred during fiscal 2024 were accounted in accordance with ASC 330, Inventory.

The Company also performed the impairment tests of all associated assets with reference to the guidance under ASC 330, Inventory and ASC 360, Property, Plant and Equipment.

The wind down charges and impairments are primarily recorded in the Advanced Solutions reportable segment.

Based on current information available, we do not expect any material future charges with respect to the cancellation of Project W that will be classified as exit and disposal costs under the guidance of ASC 420, Exit or Disposal Cost Obligations.

We plan to fund the cash costs through existing cash balances.

KULICKE AND SOFFA INDUSTRIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

On November 4, 2024, the Company and the Customer entered into a written agreement pursuant to which the Customer has agreed to reimburse the Company for certain costs and expenses that the Company incurred in connection with the Project.

The aggregate amount of the reimbursement that the Customer has agreed to pay to the Company pursuant to the agreement is $ 86.2 million.

The following table presents a summary of the charges related to the cancellation of Project W incurred for the year ended September 28, 2024.

(in thousands) Total Recognized

Statement of Operations Classification September 28, 2024

Inventory write-down Cost of sales $ 57,333

Purchase Order cancellation charges Cost of sales $ 2,931

Impairment charges relating to long-lived assets Impairment charges $ 44,472

Inventory write-down

In determining the value of our inventory, we consider indicators that net realizable value may be lower than cost based upon projections about future consumption, and market conditions.

We recorded a write-down to inventory totaling $ 57.3 million with a corresponding increase to cost of sales in our Consolidated Statements of Operations for fiscal 2024.

Purchase Order cancellation charges

$ 2.9 million of purchase order cancellation charges were included in the cost of sales in our Consolidated Statements of Operations for fiscal 2024.

These costs relate to a net loss on firm purchase commitments for goods for inventory in accordance with ASC 330.

Impairment charges relating to long-lived assets

In determining the fair value of the long-lived assets, the estimated future cash flows were projected as zero.

Accordingly, as of September 28, 2024, we recorded a full impairment of the long-lived assets, resulting in an impairment charge of $ 38.0 million related to property, plant and equipment primarily pertaining to leasehold improvements, $ 3.0 million related to the ROU assets and $ 3.5 million related to Asset Retirement Obligation (ARO).

Restructuring

In March 2024, the Company implemented a restructuring program to reallocate resources within the Company to enhance its performance, boost productivity and drive efficiency initiatives.

As a result, we accounted for the related employee termination costs in accordance with ASC 712, Compensation—Nonretirement Postemployment Benefits.

For fiscal 2024, employee termination costs of $ 2.9 million related to other severance and employee costs incurred as a result of the restructuring program, primarily pertaining to ongoing employee benefit arrangements, were recorded within "Selling, general and administrative" in the Consolidated Statements of Operations.

In September 2024, the Company also implemented a restructuring program as part of our efforts to centralize global manufacturing and supply chain operations.

The accrued costs amounting to $ 2.2 million, which pertain to ongoing employee benefit arrangements arising from the restructuring program as of September 28, 2024 are accounted in accordance with ASC 712 and is expected to be paid by the end of fiscal year 2025.

The costs were recorded within " Selling, general and administrative " in the Consolidated Statement of Operations.

The Company also expects to record costs amounting to $ 1.8 million in fiscal year 2025, pertaining to one-time benefit arrangements in accordance with ASC 420.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

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

Item 8. Financial Statements and Supplementary Data