Kulicke & Soffa Industries Inc: Form 10-Q for the period ended Jun 28, 2025

Forward-Looking Statements

In addition to historical information, this Quarterly Report contains statements relating to future events or our future results. These statements are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and are subject to the safe harbor provisions created by statute. Such forward-looking statements include, but are not limited to, statements with respect to our future revenue increasing, continuing or strengthening, or decreasing or weakening; our capital allocation strategies, including any share repurchases; demand for our products, including replacement demand; our research and development efforts; our ability to identify and realize new growth opportunities; our ability to successfully execute our business; our ability to control costs; and our operational flexibility as a result of (among other factors):

• our ability to successfully carry out the intended cessation of our Electronics Assembly ("EA") equipment business, including delays or other problems arising from regulatory or judicial review of the activities concerning the intended cessation;
• our ability to achieve expected organizational efficiencies after the successful cessation of our EA equipment business;
• risks arising from changes or uncertainties in trade policies, including the imposition of new, reciprocal or increases in existing tariffs or other restrictive trade measures, affecting supply chain costs, product pricing and customer demand;
• our expectations regarding the potential impacts on our business of actual or potential inflationary pressures, interest rate and risk premium adjustments, falling consumer sentiment, or economic recession caused, directly or indirectly, by the ongoing tensions in the Middle East, the prolonged Ukraine/Russia conflict, the worsening trade relationship between the U.S. and the world, geopolitical tensions and other macroeconomic factors;
• our expectations regarding supply chain disruptions caused, directly or indirectly, by various macroeconomic events, including increased tariffs, geopolitical tensions, catastrophic events resulting from climate change or other natural disasters and other factors;
• our expectations regarding our effective tax rate and our unrecognized tax benefit;
• our ability to operate our business in accordance with our business plan;
• our ability to adequately protect our trade secrets and intellectual property rights from misappropriation;
• our expectations regarding our success in integrating companies we may acquire with our business, and our ability to continue to acquire or divest companies;
• risks inherent in doing business on an international level, including currency risks, regulatory requirements, systems and cybersecurity risks, political risks, evolving trade and export restrictions and other trade-related barriers;
• disruptions, breaches or failures in our information technology systems and network infrastructures;
• projected growth rates in the overall semiconductor industry, the semiconductor assembly equipment market, and the market for semiconductor packaging materials;
• projected demand for our products and services; and
• unexpected delays and difficulties in executing against our environmental, climate, diversity and inclusion goals or such other environmental, social and governance (“ESG”) targets and commitments.

Generally, words such as “may,” “will,” “should,” “could,” “anticipate,” “expect,” “intend,” “estimate,” “plan,” “continue,” “goal” and “believe,” or the negative of or other variations on these and other similar expressions identify forward-looking statements. These forward-looking statements are made only as of the date of this filing. We do not undertake to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise.

Forward-looking statements are based on current expectations and involve risks and uncertainties. Our future results could differ significantly from those expressed or implied by our forward-looking statements. These risks and uncertainties include, without limitation, those described below and in our Annual Report on Form 10-K for the fiscal year ended September 28, 2024 (our “2024 Annual Report”) and our other reports filed from time to time with the Securities and Exchange Commission. This discussion should be read in conjunction with the Consolidated Condensed Financial Statements and Notes included in this Quarterly Report, as well as our audited financial statements included in our 2024 Annual Report.

We operate in a rapidly changing and competitive environment. New risks emerge from time to time and it is not possible for us to predict all risks that may affect us. Future events and actual results, performance and achievements could differ materially from those set forth in, contemplated by or underlying the forward-looking statements, which speak only as of the date on which they were made. Except as required by law, we assume no obligation to update or revise any forward-looking statement to reflect actual results or changes in, or additions to, the factors affecting such forward-looking statement. Given those risks and uncertainties, investors should not place undue reliance on forward-looking statements as predictions of actual results.

OVERVIEW

Kulicke and Soffa Industries, Inc. (“K&S,” “we,” “us,” “our,” or the “Company”) is a global leader in semiconductor assembly technology, advancing device performance across automotive, compute, industrial, memory and communications markets. Founded on innovation in 1951, K&S is uniquely positioned to overcome increasingly dynamic process challenges – creating and delivering long-term value by aligning technology with opportunity.

We design, develop, manufacture and sell capital equipment and consumables and provide services used to assemble semiconductor and electronic devices, such as integrated circuits, power discretes, light-emitting diode (“LEDs”), advanced displays and sensors. We also service, maintain, repair and upgrade our equipment and sell consumable aftermarket solutions and services for our and our peer companies’ equipment. Our customers primarily consist of integrated device manufacturers (“IDMs”), outsourced semiconductor assembly and test providers (“OSATs”), foundry service providers, and other electronics manufacturers and automotive electronics suppliers.

Our goal is to be the technology leader and the most competitive supplier in terms of performance, cost and quality in each of our major product lines. Accordingly, we invest in research and engineering projects intended to expand our market access and enhance our leadership position in semiconductor, electronics and display assembly. We also remain focused on enhancing our value to customers through higher productivity systems, more autonomous capabilities and continuous improvement and optimization of our operational costs. Delivering new levels of value to our customers is a critically important goal.

Our Ball Bonding Equipment, Wedge Bonding Equipment and Advanced Solutions reportable segments engage in the design, development, manufacture and sale of ball bonding equipment, wafer level bonding equipment, wedge and wedge-related bonding equipment, certain advanced display, die-attach and thermocompression systems and solutions to IDMs, OSATs, foundry service providers, and other electronics manufacturers and automotive electronics suppliers.

Our APS segment engages in the design, development, manufacture and sale of a variety of tools, spares and services for our equipment. For example, we manufacture capillaries, blades, wedge bonder consumables and other spare parts which complements our equipment and to support a broader range of semiconductor packaging applications. We also provide equipment repair, post-sale support, maintenance and servicing, training services, refurbishment and upgrades for our equipment.

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. 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, and die-attach systems and solutions.

Business Environment

The semiconductor business environment is highly volatile and is driven by internal dynamics, both cyclical and seasonal, in addition to macroeconomic forces. Over the long term, semiconductor consumption has historically grown, and is forecasted to continue to grow. This growth is driven, in part, by regular advances in device performance and by price declines that result from improvements in manufacturing technology. In order to exploit these trends, semiconductor manufacturers, both IDMs and OSATs, periodically invest aggressively in the latest generation capital equipment. This buying pattern often leads to periods of excess supply and reduced capital spending — the so-called semiconductor cycle. Within this broad semiconductor cycle there are also, generally weaker, seasonal effects that are specifically tied to annual, end-consumer purchasing patterns. Typically, semiconductor manufacturers prepare for heightened demand by adding or replacing equipment capacity by the end of the September quarter. Occasionally, this results in subsequent reductions in demand during the December quarter. This annual seasonality can be overshadowed by effects of the broader semiconductor cycle. Macroeconomic factors also affect the industry, primarily through their effect on business and consumer demand for electronic devices, as well as other products that have significant electronic content such as automobiles, white goods, and telecommunication equipment. There can be no assurances regarding levels of demand for our products and we believe historic industry-wide volatility will persist.

From time to time, our customers may request that we deliver our products to countries where they own or operate production facilities or to countries where they utilize third-party subcontractors or warehouses as part of their supply chain. For example, customers headquartered in the U.S. may require us to deliver our products to their back-end production facilities in China. Our customer base in the Asia/Pacific region has become more geographically concentrated over time as a result of general economic and industry conditions and trends. Approximately 92.1% and 92.3% of our net revenue for the three months ended June 28, 2025 and June 29, 2024, respectively, were for shipments to customer locations outside of the U.S., primarily in the Asia/Pacific region. Approximately 60.0% and 54.7% of our net revenue for the three months ended June 28, 2025 and June 29, 2024, respectively, were for shipments to customers headquartered in China.

Similarly, approximately 88.4% and 89.5% of our net revenue for the nine months ended June 28, 2025 and June 29, 2024, respectively, were for shipments to customer locations outside of the U.S., primarily in the Asia/Pacific region. Approximately 51.3% and 49.9% of our net revenue for the nine months ended June 28, 2025 and June 29, 2024, respectively, were for shipments to customers headquartered in China.

While our customers have generally been impacted by the current global macroeconomic conditions, those with operations in China, an important manufacturing and supply chain hub, have witnessed a faster decline in demand and, accordingly, a faster decline in product shipments, compared to the rest of the world. The shipments to customers headquartered in China are subject to heightened risks and uncertainties related to the respective trade and export control policies of the governments of China and the U.S, including the imposition of new tariffs or increases in existing tariffs and general inflationary considerations. Furthermore, there remains a potential risk of conflict and instability in the relationship between Taiwan and China that could disrupt the operations of our customers and/or suppliers in both Taiwan and China and our manufacturing operations in Taiwan and China.

The U.S. and several other countries have levied tariffs on certain goods and sectors and have introduced other trade restrictions resulting in substantial uncertainties in the semiconductor, LED, memory and automotive markets.

Our Ball Bonding Equipment, Wedge Bonding Equipment and Advanced Solutions reportable segments, as well as the remaining operating segments in the “All Others” category, are primarily affected by the industry’s internal cyclical and seasonal dynamics in addition to broader macroeconomic factors that can positively or negatively affect our financial performance. The sales mix of IDM and OSAT customers in any period also impacts financial performance, as changes in this mix can affect our products’ average selling prices and gross margins due to differences in volume purchases and machine configurations required by each customer type.

Our APS reportable segment has historically been less volatile than the other reportable segments. APS sales are more directly tied to semiconductor unit consumption rather than capacity requirements and production capability improvements.

We continue to position our business to leverage our research and development leadership and innovation and to focus our efforts on mitigating volatility, improving profitability and ensuring longer-term growth. We remain focused on operational excellence, expanding our product offerings through continuous research and development or acquisitions and managing our business efficiently throughout the business cycles. However, our visibility into future demand is generally limited, forecasting is difficult, and we generally experience typical industry seasonality.

To limit potential adverse cyclical, seasonal and macroeconomic effects on our financial position, we have continued our efforts to maintain a strong balance sheet. As of June 28, 2025, our total cash, cash equivalents and short-term investments were $556.5 million, a $20.7 million decrease from the prior fiscal year end. We believe our ability to maintain a strong cash position will allow us to continue to invest in product development, pursue non-organic growth opportunities and return capital to investors through our share repurchase and dividend programs. Please see “Liquidity and Capital Resources” for more information.

Key Events in Fiscal 2025 to Date

Israel-Iran War

The Israel–Iran war began on June 13, 2025 with Israel's preemptive attacks on Iran’s nuclear facilities, military sites, and other infrastructure. Iran retaliated with missile attacks on Israeli cities, including Haifa and Tel Aviv, and military targets. The conflict also drew in the United States, which defended Israel and later conducted its own precision strikes on Iranian nuclear sites. A ceasefire was reached on June 24, 2025.

The Company has a manufacturing facility and a business office in Haifa, and our capillaries are manufactured at our facilities in Israel and China. As of the date of this report, our business and manufacturing operations in Israel have not been impacted and no material damage or utilities interruptions have been noted at our Israeli facility. Trade routes remain open, and our suppliers and business partners in Israel remain operational. Furthermore, disruption to our workforce has been minimal.

Given that any further escalation or other hostilities cannot be excluded, we continue to monitor the situation and remain ready to activate our Business Continuity Plan (“BCP”) if necessary.

Intended Cessation of EA Equipment Business

On March 25, 2025, the Board of Directors of the Company approved a strategic plan related to the intended cessation of its Electronics Assembly ("EA") equipment business. The plan includes an intention to wind down the EA equipment business in an effort to prioritize core semiconductor assembly business opportunities and enhance overall through-cycle financial performance. The intended cessation of the EA equipment business is subject to a consultation process with the applicable works council and union representatives, which the Company has initiated in the third fiscal quarter of 2025. The wind down activities are ongoing and are expected to be substantially completed by the first half of fiscal 2026, after which there will be some service support activities to serve out the remaining customer obligations. For additional information, see Note 16: Cessation of Business in our Notes to the Consolidated Condensed Financial Statements.

Cancellation of Project W

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"), previously referred to as Project W. As previously disclosed in fiscal 2024, in connection with the Customer's strategic review of its business, the Customer informed the Company that it cancelled the Project.

On November 4, 2024, the Company and the Customer entered into a written agreement pursuant to which the Customer had agreed to reimburse the Company for certain costs and expenses that the Company incurred in connection with the Project. Pursuant to the agreement, the Customer agreed to pay $86.2 million to the Company. In the quarter ended December 28, 2024, $15.1 million was included within "Net Revenue" for delivered products and the remaining $71.1 million was included in "Gain relating to cessation of business" in the Consolidated Condensed Statements of Operations. In the previous quarter ended March 29, 2025, the Company has received the reimbursement amount from the Customer.

Macroeconomic Headwinds

The cost of logistics remains high as a result of macroeconomic conditions, inflation and labor shortages across layers of the supply chain. The Company’s management continues to monitor for signs of any expansion of economic or supply chain disruptions or broader supply chain inflationary and logistical costs resulting either directly or indirectly from the tensions in the Middle East or between Ukraine and Russia, as well as the imposition of new, increased or retaliatory tariffs.

The ongoing tensions in the Middle East, including the Israel-Iran war, and the prolonged Ukraine/Russia conflict have not had a material impact on our financial condition and operating results in fiscal 2025 to date. We believe that our existing cash, cash equivalents, short-term investments, and anticipated cash flows from operations will be sufficient to meet our liquidity and capital requirements, notwithstanding the ongoing tensions in the Middle East and the prolonged Ukraine/Russia conflict and other macroeconomic factors, for at least the next twelve months from the date of this Quarterly Report. However, this is a highly dynamic situation. As the macroeconomic situation remains highly volatile and the geopolitical situation remains uncertain, there is uncertainty surrounding the operations of our manufacturing locations, our business, our expectations regarding future demand or supply conditions, our near- and long-term liquidity and our financial condition. Consequentially, our operating results could deteriorate.

During fiscal years 2021 and 2022, semiconductor suppliers rapidly increased production output in response to increases in end-consumer demand. Concerns surrounding supply availability spurred defensive inventory purchases, which led to a heightened demand for our products.

The current macroeconomic conditions and declining consumer sentiment during fiscal years 2023 and 2024 have persisted, which continues to exacerbate inventory buildup in the semiconductor industry. Many of our customers who accumulated our products in the past three years continue to reduce their order rates as a result of inventory adjustment.

Due to general inflationary pressures, existing and future tariffs, declining consumer sentiment, and an economic downturn caused, directly or indirectly, by various macroeconomic factors, including the ongoing tensions in the Middle East and the prolonged Ukraine/Russia conflict, the sector continues to experience volatility and disruption. However, we believe that the long-term semiconductor industry macroeconomics have not changed and we anticipate that the industry’s growth projections will normalize.

For a description of the risks to our business arising from or relating to the general macroeconomic conditions, please see Part I, Item 1A, “Risk Factors” of our 2024 Annual Report.

RESULTS OF OPERATIONS

The following tables reflect our income from operations for the three and nine months ended June 28, 2025 and June 29, 2024:

(dollar amounts in thousands)

(dollar amounts in thousands)

Net Revenue

Our net revenue for the three and nine months ended June 28, 2025 decreased as compared to our net revenue for the three and nine months ended June 29, 2024. The decrease in net revenue is primarily due to lower volume in Ball Bonding Equipment, APS and All Others and partially offset by the higher volume in Wedge Bonding Equipment and Advanced Solutions, as further outlined in the following tables presented immediately below.

The following tables reflect net revenue for the three and nine months ended June 28, 2025 and June 29, 2024:

(dollar amounts in thousands)

35

(dollar amounts in thousands)

Ball Bonding Equipment

For the three and nine months ended June 28, 2025, the decrease in Ball Bonding Equipment net revenue as compared to the prior year period was primarily due to lower volume of customer purchases in the general semiconductor and memory end markets as a result of relatively stable factory utilization levels in certain regions.

Wedge Bonding Equipment

For the three months ended June 28, 2025, the decrease in Wedge Bonding Equipment net revenue as compared to the prior year period was primarily due to lower volume of customer purchases primarily in the automotive markets and partially offset by higher customer purchase in the general semiconductor.

For the nine months ended June 28, 2025, the increase in Wedge Bonding Equipment net revenue as compared to the prior year period was primarily due to higher volume of customer purchases primarily in the general semiconductor and partially offset by lower customer purchases in the automotive markets.

Advanced Solutions

For the three months ended June 28, 2025, the decrease in Advanced Solutions net revenue as compared to the prior year period was primarily due to a lower volume of customer purchases in the general semiconductor end markets.

For the nine months ended June 28, 2025, the increase in Advanced Solutions net revenue as compared to the prior year period was primarily due to a higher volume of customer purchases in LED which is included in the industrial end market and partially offset by lower customer purchases in general semiconductor end market.

APS

For the three and nine months ended June 28, 2025, the decrease in APS net revenue as compared to the prior year period was due to a lower volume of customer purchases primarily in spares and services, and unfavorable pricing from bonding tools.

All Others

For the three and nine months ended June 28, 2025, the decrease in All Others net revenue as compared to the prior year period was primarily due to a lower volume of customer purchases in the general semiconductor end market.

Gross Profit Margin

The following tables reflect gross profit margin as a percentage of net revenue by reportable segments for the three and nine months ended June 28, 2025 and June 29, 2024:

Ball Bonding Equipment

For the three and nine months ended June 28, 2025, the increase in Ball Bonding Equipment gross profit margin as compared to the prior year period was primarily driven by a favorable product mix, including lower sales of lower margin products and a shift in customer mix, including higher sales to customers where we achieve higher average margins.

Wedge Bonding Equipment

For the three and nine months ended June 28, 2025, the decrease in Wedge Bonding Equipment gross profit margin as compared to the prior year period was primarily driven by a less favorable product mix, including higher sales of lower margin products and a shift in customer mix, including higher sales to customers where we achieve lower average margins.

Advanced Solutions

For the three months ended June 28, 2025, the increase in Advanced Solutions gross profit margin as compared to the prior year period was primarily due to favorable product mix, including higher sales of higher margin products.

For the nine months ended June 28, 2025, the increase in Advanced Solutions gross profit margin as compared to the prior year period was primarily due to the inventory write-down charges in the prior year as a result of the cancellation of Project W and favorable product mix, including higher sales of higher margin products.

APS

For the three and nine months ended June 28, 2025, the decrease in APS gross profit margin as compared to the prior year period was primarily driven by lower volume from spares and services, and unfavorable pricing from bonding tools, and the spares related inventory write-down charges incurred as a result of the intended cessation of the EA equipment business.

All others

For the three and nine months ended June 28, 2025, the decrease in gross profit margin for the “All Others” category as compared to the prior year period was primarily driven by the inventory write-down charges incurred as a result of the intended cessation of the EA equipment business.

Operating Expenses

The following tables reflect operating expenses for the three and nine months ended June 28, 2025 and June 29, 2024:

(dollar amounts in thousands)

(dollar amounts in thousands)

Selling, General and Administrative (“SG&A”)

For the three months ended June 28, 2025, the higher SG&A expenses as compared to the prior year period were primarily due to $1.0 million net unfavourable variance in foreign exchange and $0.5 million higher staff cost. This was partially offset by $0.5 million lower professional services .

For the nine months ended June 28, 2025, the higher SG&A expenses as compared to the prior year period were primarily due to $7.2 million higher severance expenses and $2.3 million higher staff cost. This was partially offset by $2.6 million net favourable variance in foreign exchange.

Research and Development (“R&D”)

For the three months ended June 28, 2025, the lower R&D expenses as compared to the prior year period were primarily due to $1.5 million lower prototype materials and $0.6 million lower staff cost.

For the nine months ended June 28, 2025, the lower R&D expenses as compared to the prior year period were primarily due to $4.0 million lower prototype materials. This was partially offset by $2.8 million higher staff cost.

Gain relating to cessation of business

For the nine months ended June 28, 2025, the gain relating to cessation of business was primarily due to the $71.1 million reimbursement for certain costs and expenses from the cancellation of Project W, a $3.2 million gain on the disposal of a subsidiary and a $1.7 million gain from the supplier settlement.

Impairment Charges

For the nine months ended June 28, 2025, the impairment charges in the current period were due to $39.8 million impairment charges on long-lived assets, intangible assets and goodwill related to the intended cessation of the EA equipment business. The impairment charges in the prior year period were due to $44.5 million impairment charges on long-lived assets related to the cancellation of Project W.

Loss from Operations

The changes in loss from operations for the respective segments are due to the changes in net revenue, gross profit margin and operating expenses as explained in the respective sections above.

The following tables reflect loss from operations by reportable segments for the three and nine months ended June 28, 2025 and June 29, 2024.

(dollar amounts in thousands)

(dollar amounts in thousands)

Interest Income and Expense

The following tables reflect interest income and interest expense for the three and nine months ended June 28, 2025 and June 29, 2024:

(dollar amounts in thousands)

(dollar amounts in thousands)

Interest income

For the three and nine months ended June 28, 2025, interest income decreased as compared to the prior year period primarily due to a lower weighted interest rate on cash, cash equivalents and short-term investments.

Provision for Income Taxes

The following table reflects the provision for income taxes and the effective tax rate for the three and nine months ended June 28, 2025 and June 29, 2024:

(dollar amounts in thousands)

For the three and nine months ended June 28, 2025, as compared to the same period ended June 29, 2024, the change in provision for income taxes and effective tax rate was primarily due to the tax effects of the intended cessation of the Company's EA equipment business and the reimbursement from the cancellation of Project W which were recorded as discrete items during fiscal 2025 as well as the one-time charge for the cancellation of Project W and the increase in valuation allowance recorded against certain deferred tax assets, which were recorded as discrete items during fiscal 2024.

For the three and nine months ended June 28, 2025, the effective tax rate is different than the U.S. federal statutory tax rate primarily due to earnings of foreign subsidiaries subject to tax at different rates than the U.S., tax incentives, tax credits, change in valuation allowances, the impact of global intangible low-taxed income, and the tax impact of the discrete items noted above.

LIQUIDITY AND CAPITAL RESOURCES

The following table reflects total cash, cash equivalents, and short-term investments as of June 28, 2025 and September 28, 2024:

(dollar amounts in thousands)

The following table reflects a summary of the Consolidated Condensed Statements of Cash Flow information for the nine months ended June 28, 2025 and June 29, 2024:

(in thousands)

40

Nine months ended June 28, 2025

The increase in net cash provided by operating activities was primarily due to non-cash adjustments to net loss of $105.8 million and a net favourable change in operating assets and liabilities of $6.5 million, partially offset by a net loss of $6.2 million. The non-cash adjustments were primarily due to impairment charges of $39.8 million and an inventory write-down of $31.6 million as a result of the intended cessation of the EA equipment business. The net change in operating assets and liabilities was primarily driven by a decrease in accounts and other receivable of $20.0 million, a decrease in prepaid expenses and other current assets of $4.7 million, and a net increase in accounts payable, accrued expenses and other liabilities of $10.5 million. This was partially offset by an increase in inventories of $21.4 million after excluding the impact of the inventory write-down as shown above, and a decrease in income tax payable of $7.5 million.

The decrease in accounts and other receivable in the nine months ended June 28, 2025 was mainly due to lower sales for the period. The decrease in prepaid expenses and other current assets was mainly due to the receipt of tax refunds. The net increase in accounts payable, accrued expenses and other liabilities was primarily due to higher accrued employee termination benefits and adverse purchase commitments, partially offset by overall lower purchases. The increase in inventories was due to the buildup of long lead time materials to fulfill certain customer purchase orders. The decrease in income tax payable was primarily due to lower profitability which included the net impact from the intended cessation of EA equipment business and reimbursement from the cancellation of Project W which were treated as discrete items.

Net cash provided by investing activities was due to net maturity of short-term investments of $40.0 million and net cash received from the disposal of a subsidiary of $2.5 million, partially offset by capital expenditures of $14.2 million and investment in a private equity fund of $2.3 million.

Net cash used in financing activities was primarily due to common stock repurchases of $80.1 million and dividend payments of $32.7 million.

Nine months ended June 29, 2024

The increase in net cash used in operating activities was primarily due to a net loss of $81.1 million and a net unfavourable change in operating assets and liabilities of $87.8 million, partially offset by non-cash adjustments to net income of $168.3 million. The non-cash adjustments were primarily due to impairment charges of $44.5 million and inventory write-down of $57.3 million as a result of the cancellation of the Project. The net change in operating assets and liabilities was primarily driven by an increase in accounts and other receivable of $42.4 million, an increase in inventories of $27.0 million after excluding the impact of the inventory write-down as shown above, a decrease in income tax payable of $23.1 million and a decrease in accounts payable and accrued expenses and other current liabilities of $7.8 million. This was partially offset by a decrease in prepaid expenses and other current assets of $18.4 million.

The increase in accounts and other receivable in the nine months ended June 29, 2024 was mainly due to the timing of payments due. The increase in inventories was due to the buildup of long lead time materials to fulfill certain customer purchase orders. The decrease in income tax payable was primarily due to lower profitability. The decrease in accounts payable and accrued expenses and other current liabilities was primarily due to the payment of back loaded purchases and lower accrued employee compensation. The decrease in prepaid expenses was mainly due the transfer of contract assets to net account receivables.

Net cash used in investing activities was due to net purchase of short-term investments of $5.0 million, capital expenditures of $13.7 million and investment in a private equity fund of $1.8 million.

Net cash used in financing activities was primarily due to common stock repurchases of $108.1 million and dividend payments of $33.2 million.

Fiscal 2025 Liquidity and Capital Resource Outlook

We expect our aggregate fiscal 2025 capital expenditures to be between approximately $8.0 million and $12.0 million, of which approximately $7.6 million has been incurred through the third quarter. The actual amounts for 2025 will vary depending on market conditions. Expenditures are anticipated to be primarily for research and development projects, enhancements to our manufacturing operations, improvements to our information technology security, implementation of an enterprise resource planning system and leasehold improvements for our facilities. Our ability to make these expenditures will depend, in part, on our future cash flows, which are determined by our future operating performance and, therefore, subject to prevailing macroeconomic conditions, including actual or potential inflationary pressures, supply chain challenges, geopolitical tensions and other factors, some of which are beyond our control.

As of June 28, 2025 and September 28, 2024, approximately $413.6 million and $302.6 million of cash, cash equivalents, and short-term investments, respectively, were held by the Company’s foreign subsidiaries, with a large portion of the cash amounts expected to be available for use in the U.S. without incurring additional U.S. income tax. The decrease is primarily due to the repatriation of cash held by the Company's foreign subsidiaries to the U.S.

The Company’s operations and capital requirements are anticipated to be funded primarily by cash on hand and cash generated from operating activities. We believe these sources of cash and liquidity are sufficient to meet our additional liquidity needs for the foreseeable future, including payment of dividends, share repurchases and income taxes.

We believe that our existing cash, cash equivalents, short-term investments, and anticipated cash flows from operations will be sufficient to meet our liquidity and capital requirements, notwithstanding the macroeconomic headwinds, for at least the next twelve months and beyond. Our liquidity is affected by many factors, some based on normal operations of our business and others related to macroeconomic conditions including actual or potential inflationary pressures, industry-related uncertainties, and effects arising from the ongoing tensions in the Middle East and the prolonged Ukraine/Russia conflict, which we cannot predict. We also cannot predict economic conditions or industry downturns or the timing, strength or duration of recoveries. We intend to continue to use our cash for working capital needs and for general corporate purposes.

In this unprecedented macroeconomic environment, we may seek, as we believe appropriate, additional debt or equity financing that would provide capital for general corporate purposes, working capital funding, additional liquidity needs or to fund future growth opportunities, including possible acquisitions. The timing and amount of potential capital requirements cannot be determined at this time and will depend on a number of factors, including the actual and projected demand for our products, semiconductor and semiconductor capital equipment industry conditions, competitive factors, the condition of financial markets and the global economic situation.

Share Repurchase Program

On August 15, 2017, the Company’s Board of Directors authorized a program to repurchase up to $100 million of the Company’s common stock on or before August 1, 2020. In 2018, 2019, 2020 and 2022, the Board of Directors increased the share repurchase authorization to $200 million, $300 million, $400 million and $800 million, respectively, and extended its duration through August 1, 2025 (the "Prior Program").

During the three months ended December 28, 2024, the Company repurchased a total of approximately 657.0 thousand shares of common stock under the Prior Program at a cost of approximately $30.3 million. On December 2, 2024, the Company announced that it has completed share repurchases under the Prior Program.

Additionally, as announced on November 13, 2024, the Board of Directors authorized a new share repurchase program to repurchase up to $300 million of the Company's common stock (the "New Program"). On December 2, 2024, the Company entered into a new written trading plan under Rule 10b5-1 of the Exchange Act, to facilitate repurchases under the New Program. The plan permits the purchase of up to approximately $300 million of the Company’s common stock from December 2, 2024 through December 2, 2029. The New 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 New 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 New Program depend on market conditions as well as corporate and regulatory considerations.

During the three and nine months ended June 28, 2025, the Company repurchased a total of approximately 668.0 thousand and 1,322.0 thousand shares of common stock under the New Program at a cost of approximately $21.6 million and $49.5 million, respectively.

The stock repurchases were recorded in the periods the repurchased shares were delivered and accounted for as treasury stock in the Company’s Consolidated Condensed Balance Sheets. The Company records treasury stock purchases under the cost method using the first-in, first-out (FIFO) method. Upon re-issuance of treasury stock, amounts in excess of the acquisition cost are credited to additional paid-in capital.

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 June 28, 2025, our remaining stock repurchase authorization under the New Program was approximately $250.5 million.

Dividends

On June 5, 2025, the Board of Directors declared a quarterly dividend of $0.205 per share of common stock. Dividends paid during the three and nine months ended June 28, 2025 totaled $10.9 million and $32.7 million, respectively. The declaration of any future cash dividend is at the discretion of the Board of Directors and will depend on the Company’s financial condition, results of operations, capital requirements, business conditions and other factors, as well as a determination that such dividends are in the best interests of the Company’s shareholders.

Other Obligations and Contingent Payments

In accordance with U.S. GAAP, certain obligations and commitments are not required to be included in the Consolidated Condensed Balance Sheets and Statements of Operations. These obligations and commitments, while entered into in the normal course of business, may have a material impact on our liquidity and are disclosed in the table below.

As of June 28, 2025, the Company had deferred tax liabilities of $35.8 million and unrecognized tax benefits within the income taxes payable for uncertain tax positions of $20.0 million, inclusive of accrued interest on uncertain tax positions of $4.9 million, substantially all of which would affect our effective tax rate in the future, if recognized.

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 twelve 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 timing or financial outcomes of these examinations and, therefore, these amounts are excluded from the amounts below.

The following table presents certain payments due by the Company under contractual and statutory obligations with minimum firm commitments as of June 28, 2025:

(in thousands)

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

(2) Associated with the U.S. one-time transition tax on certain earnings and profits of our foreign subsidiaries in relation to the U.S. Tax Cuts and Job Act of 2017.

Credit facilities

On February 15, 2019, the Company entered into a Facility Letter and Overdraft Agreement (collectively, the “Facility Agreements”) with MUFG Bank, Ltd., Singapore Branch (the “Bank”). The Facility Agreements provide the Company and one of its subsidiaries with an overdraft facility of up to $150.0 million (the “Overdraft Facility”) for general corporate purposes.

On June 6, 2025, the Company terminated the Facility Agreements with the Bank. As of the date of termination, there were no outstanding amounts under the Overdraft Facility. In addition, the Company did not incur any early termination penalties in connection with the termination of the Facility Agreements.

As of June 28, 2025, other than the bank guarantee disclosed in Note 9: Debt And Other Obligations in our Notes to Consolidated Condensed Financial Statements, we did not have any other off-balance sheet arrangements, such as contingent interests or obligations associated with variable interest entities.

Interest Rate Risk

Our available-for-sale securities, if applicable, may consist of short-term investments in highly rated debt instruments of the U.S. Government and its agencies, financial institutions, and corporations. We continually monitor our exposure to changes in interest rates and credit ratings of issuers with respect to any available-for-sale securities and target an average life to maturity of less than 18 months. Accordingly, we believe that the effects on us of changes in interest rates and credit ratings of issuers are limited and would not have a material impact on our financial condition or results of operations.

Foreign Currency Risk

Our international operations are exposed to changes in foreign currency exchange rates due to transactions denominated in currencies other than the location’s functional currency. Our international operations are 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. Our U.S. operations also have foreign currency exposure due to net monetary assets denominated in currencies other than the U.S. dollar. In addition to net monetary remeasurement, we have exposures related to the translation of subsidiary financial statements from their functional currency, the local currency, into its reporting currency, the U.S. dollar, most notably in the Netherlands, China, Taiwan, Japan and Germany.

Based on our foreign currency exposure as of June 28, 2025, a 10.0% fluctuation could impact our financial position, results of operations or cash flows by $5.0 million to $6.0 million. Our attempts to hedge against these risks may not be successful and may result in a material adverse impact on our financial results and cash flow.

We enter into 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 instruments generally mature within twelve months. We have foreign exchange forward contracts with a notional amount of $47.6 million outstanding as of June 28, 2025.

Evaluation of Disclosure Controls and Procedures

Our Management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of June 28, 2025. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of June 28, 2025, our disclosure controls and procedures were effective in providing reasonable assurance that the information required to be disclosed by us in reports filed under the Exchange Act of 1934 is (i) recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms; and (ii) accumulated and communicated to our management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding disclosure.

Changes in Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) and 15d-15(f) of the Securities Exchange Act of 1934, as amended. Our 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 U.S. GAAP.

In connection with the evaluation by our management, including with the participation of our Chief Executive Officer and Chief Financial Officer, of our internal control over financial reporting, no changes during the three months ended June 28, 2025 were identified to have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Certain Risks Related to Our Business

There have been no material changes from the risk factors discussed in Part I, Item 1A, “Risk Factors”, of our 2024 Annual Report, except for the following:

Substantially all of our sales, distribution channels and manufacturing operations are located outside of the U.S., which subjects us to risks, including risks from changes in trade regulations, currency fluctuations, political instability and conflicts.

From time to time, our customers may request that we deliver our products to countries where they own or operate production facilities or to countries where they utilize third party subcontractors or warehouses as part of their supply chain. Our customer base in the Asia/Pacific region has become more geographically concentrated over time as a result of general economic and industry conditions and trends. Over 85% of our net revenue is derived from shipments to customers located outside of the U.S., primarily in the Asia/Pacific region. Approximately 51.3% and 49.9% of our net revenue for the nine months ended June 28, 2025 and June 29, 2024, respectively, were for shipments to customers headquartered in China.

We expect our future performance to depend on our ability to continue to compete in foreign markets, particularly in the Asia/Pacific region. Some of these economies have been highly volatile, resulting in significant fluctuation in local currencies, and political and economic instability. Some of these economies may also increase trade protectionism, thereby increasing barriers to entry, amplifying supply chain risks and adversely affecting the demand for our products. These conditions may continue or worsen, which may materially and adversely affect our business, financial condition and operating results.

We also rely on non U.S. suppliers for materials and components used in our products, and substantially all of our manufacturing operations are located in countries other than the U.S. We currently manufacture our ball, wedge, APAMATM and APTURATM bonders in Singapore, our Hybrid and Electronic Assembly solutions in the Netherlands and in Singapore, our dicing blades, capillaries and bonding wedges in China, our capillaries in Israel and China, and our advanced dispensing equipment in Taiwan. We also rely on independent foreign distribution channels for certain of our product lines. As a result, a major portion of our business is subject to the risks associated with international commerce, particularly Asia/Pacific region, such as:

• stringent and frequently changing trade compliance regulations;
• less protective foreign intellectual property laws, and the enforcement of patent and other intellectual property rights;
• longer payment cycles in foreign markets and potential default risks;
• foreign exchange restrictions and capital controls, monetary policies and regulatory requirements;
• restrictions or significant taxes on the repatriation of our assets, including cash;
• tariff and currency fluctuations;
• trade wars or trade conflicts;
• difficulties of staffing and managing dispersed international operations, including labor work stoppages and strikes in our factories or the factories of our suppliers;
• changes in our structure or tax incentive arrangements;
• possible disagreements with tax authorities;
• episodic events outside our control such as, for example, outbreaks of coronaviruses, influenza, monkeypox or other illnesses;
• natural disasters such as earthquakes, fires or floods, including as a result of climate change;
• war, risks and rumors of war and civil disturbances, including the prolonged tensions in the Middle East and the Ukraine/Russia conflict, or other events that may limit or disrupt manufacturing, markets and international trade;
• act of terrorism that impact our operations, customers or supply chain or that target U.S. interests or U.S. companies;
• seizure of our foreign assets, including cash;
• the imposition of sanctions of countries in which we do business;
• changing political conditions and rising geopolitical tensions; and
• legal systems which are less developed and may be less predictable than those in the U.S.

In addition, there remains a potential risk of conflict and instability in the relationship between Taiwan and China which could disrupt the operations of our customers and/or suppliers in both Taiwan and China, our manufacturing operations in Taiwan and China, and our future plans in the region.

Our international operations also depend on favorable trade relations between the U.S. and those foreign countries in which our customers, subcontractors and materials suppliers have operations. In 2025, the U.S. has imposed, or threatened to impose, additional tariffs on a number of countries. Impacted countries have imposed, and in the future may impose, retaliatory tariffs, and such actions could give rise to an escalation of other trade measures by the countries subject to such tariffs. While the application of certain previously announced tariffs has been delayed, there is no guarantee that the tariffs will not go into effect and there is the possibility that additional U.S. tariffs may be imposed on certain countries. In addition to tariffs, the U.S. has imposed export controls targeted at specific industries, including the semiconductor industry.

These tariffs and other adverse trade actions, as well as the threat of trade wars against foreign countries/regions, have created even more uncertainties in international trade, which may affect our business. For example, the imposition of tariffs and export controls could increase the cost of our products, which could in turn materially and adversely affect our ability to sell our products in foreign markets.

We are subject to export restrictions that may limit our ability to sell to certain customers, and trade wars, in particular the U.S. China trade war, could adversely affect our business.

The U.S. and several other countries levy tariffs on certain goods and impose other trade restrictions that may impact our customers’ investment in manufacturing equipment, reduce the competitiveness of our products, or inhibit our ability to sell products or purchase necessary equipment and supplies.

In particular, trade tensions between the U.S. and China have been ongoing. There has been a further escalation of trade tensions between the U.S. and China since 2015, with U.S. tariffs on Chinese goods and retaliatory Chinese tariffs on U.S. goods. While a temporary de-escalation has been reached in May 2025, full retaliatory tariffs and other non-tariff countermeasures may be reimposed in the future should there be a suspension or breakdown of trade negotiations.

We cannot predict what further actions may ultimately be taken with respect to tariffs or trade relations between the U.S. and other countries, what products may be subject to such actions, or what actions may be taken by other countries in response. Further changes in trade policy, tariffs, additional taxes, restrictions on exports or other trade barriers, or restrictions on supplies, equipment, and raw materials, may limit our ability to produce products, increase our selling and/or manufacturing costs, reduce the competitiveness of our products, or inhibit our ability to sell products or purchase necessary equipment and supplies, which could have a material adverse effect on our business, results of operations, or financial condition.

Though nearly all of our manufacturing activities take place outside of the U.S., certain of our advanced packaging products are subject to the EAR because they are based on U.S. technology or contain more than a de minimis amount of controlled U.S. content. The EAR require licenses for, and sometimes prohibit, the export of certain products. The CCL sets forth the types of goods and services controlled by the EAR, including civilian science, technology, and engineering dual use items. For products listed on the CCL, a license may be required as a condition to export depending on the end destination, end use or end user and any applicable license exceptions.

In 2020, the U.S. Department of Commerce Bureau of Industry and Security (“BIS”) amended the EAR to expand controls on certain foreign products based on U.S. technology and sold to Huawei and certain other companies. In October 2022, the BIS amended the EAR again to extend those foreign controls to numerous companies on BIS’ so called Entity List. The 2020 and 2022 amendments impact some of our advanced packaging products, which are based on U.S. technology and are within the scope of the expanded EAR controls on Huawei and other Entity List companies. Therefore, these products cannot be sold to Huawei and other Entity List companies, and are subject to certain end use restrictions. To date, these amendments to the EAR have not had a material direct impact on our business, financial condition or results of operations and we do not expect that they will, although they could have indirect impact, including increasing tensions in U.S. and Chinese trade relations, potentially leading to negative sentiments towards U.S. based companies among Chinese consumers. Additionally, some end users may prefer to avoid the U.S. supply chain in its entirety to avoid the application of these regulations.

In November 2023, the BIS issued additional rules to update export controls on advanced computing semiconductors and semiconductor manufacturing equipment , as well as items that support supercomputing applications and end uses, to arms embargoed countries, including China. Further in December 2024, the BIS added new export controls pertaining to high-bandwidth memory, semiconductor manufacturing equipment and related items that enable advanced-node integrated circuit production. While the BIS rescinded its "Framework for AI Diffusion" in May 2025, there is a possibility of a replacement rule or other rules being introduced in the future.

We are taking appropriate measures to comply with all applicable BIS Rules. Where required, we will apply for export licenses from the BIS to avoid disruption to our customers’ operations. Export licenses may be subject to a prolonged review and appeals process, to which there cannot be an assurance as to whether an export license may be granted, granted with conditions or eventually revoked due to subsequent challenge.

Additionally, the rules promulgated by the BIS are typically complex, and the BIS could revise or expand them in response to public comments. Likewise, the BIS may issue guidance clarifying the scope of the rules. Such revisions, expansions or guidance could change the impact of the rules for our business. Future changes in, and responses to, the various export regulations, tariffs, or other trade regulations between the U.S. and other countries may be unpredictable. Such further changes may limit our ability to produce products, increase our selling or manufacturing costs, decrease margins, reduce the competitiveness of our products and cause our sales to decline, and therefore could have a material adverse effect on our business, financial condition or results of operations.