UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
(Mark one)
[x] Annual report pursuant to section 15 (d) of the Securities Exchange
Act of 1934 for the fiscal year ended December 31, 2001
OR
[ ] Transition report pursuant to section 15 (d) of the Securities
Exchange Act of 1934 for the transition period from ____________ to
_________________.
Commission File Number 0-121
A. Full title of the Plan:
KULICKE & SOFFA INDUSTRIES, INC. INCENTIVE SAVINGS PLAN
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
Kulicke & Soffa Industries, Inc.
2101 Blair Mill Road
Willow Grove, PA 19090
Telephone Number: (215) 784 6000
KULICKE AND SOFFA INDUSTRIES, INC. INCENTIVE SAVINGS PLAN
INDEX TO FINANCIAL STATEMENTS AND ADDITIONAL INFORMATION
December 31, 2000 and 2001
PAGE
Report of Independent Accountants 3
Financial Statements:
Statements of Net Assets Available for Benefits 4
Statements of Changes in Net Assets Available for Benefits 5
Notes to Financial Statements 6 - 10
Additional Information *:
Schedule I - Schedule of Assets (Held at End of Year) 11
Signatures 12
Exhibits 13
* Other schedules required by Section 2520.103-10 of the Department of Labor
Rules and Regulations for Reporting and Disclosure under ERISA have been
omitted because they are not applicable.
2
REPORT OF INDEPENDENT ACCOUNTANTS
To the Participants and Administrator of
Kulicke and Soffa Industries, Inc. Incentive Savings Plan
In our opinion, the accompanying statements of net assets available for benefits
and the related statements of changes in net assets available for benefits
present fairly, in all material respects, the net assets available for benefits
of Kulicke and Soffa Industries, Inc. Incentive Savings Plan (the "Plan") at
December 31, 2001 and 2000, and the changes in net assets available for benefits
for the years then ended in conformity with accounting principles generally
accepted in the United States of America. These financial statements are the
responsibility of the Plan's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with auditing standards generally
accepted in the United States of America, which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedule of Schedule of
Assets (Held at End of Year) is presented for the purpose of additional analysis
and is not a required part of the basic financial statements but is
supplementary information required by the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974. The supplemental schedule is the responsibility of the
Plan's management. The supplemental schedule has been subject to the auditing
procedures applied in the audits of the basic financial statements and, in our
opinion, is fairly stated in all material respects in relation to the basic
financial statements taken as a whole.
PRICEWATERHOUSECOOPERS LLP
Philadelphia, PA
June 21, 2002
3
KULICKE AND SOFFA INDUSTRIES, INC. INCENTIVE SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
December 31, 2000 and 2001
December 31,
2000 2001
----------- -----------
Assets:
Investments, at fair value:
Equity funds $33,076,491 $26,858,780
Fixed income funds 2,549,402 3,054,304
Kulicke and Soffa Industries, Inc. common stock 8,470,193 14,657,298
Money market funds 2,164,703 3,944,113
Participant loans 945,698 934,727
----------- -----------
Total investments 47,206,487 49,449,222
Due from broker for securities sold -- 356
----------- -----------
Total assets 47,206,487 49,449,578
Accounts payable 3,153 --
----------- -----------
Net assets available for benefits $47,203,334 $49,449,578
=========== ===========
The accompanying notes are an integral part of these financial statements.
4
KULICKE AND SOFFA INDUSTRIES, INC. INCENTIVE SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
For the years ended December 31, 2000 and 2001
2000 2001
------------ ------------
Additions:
Investment income:
Interest and dividends $ 433,892 $ 523,812
Net depreciation in fair value of investments (8,287,985) (294,881)
------------ ------------
(7,854,093) 228,931
------------ ------------
Contributions:
Employer 2,173,194 2,019,824
Employee 4,841,637 3,828,966
------------ ------------
7,014,831 5,848,790
------------ ------------
Transfer in from Semitec Plan (Note 8) -- 619,128
Total additions (839,262) 6,696,849
------------ ------------
Deductions:
Benefit payments 3,491,330 4,450,605
------------ ------------
Total deductions 3,491,330 4,450,605
------------ ------------
Net increase (decrease) (4,330,592) 2,246,244
Net assets available for benefits:
Beginning of year 51,533,926 47,203,334
End of year ------------ ------------
$ 47,203,334 $ 49,449,578
============ ============
The accompanying notes are an integral part of these financial statements.
5
KULICKE AND SOFFA INDUSTRIES, INC. INCENTIVE SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 2000 and 2001
1. DESCRIPTION OF THE PLAN
The following description of the Kulicke & Soffa Industries, Inc.
(the "Company") Incentive Savings Plan (the "Plan") provides only
general information. Participants should refer to the Plan agreement
for a more complete description of the Plan's provisions.
GENERAL
The plan is a defined contribution plan established on January 1,
1987 and most recently amended on October 1, 2001. Employees become
eligible to participate upon attaining the age of 18. The Plan is
subject to the provisions of the Employee Retirement Income Security
Act of 1974 ("ERISA").
CONTRIBUTIONS
Participants may contribute an amount up to 14% of their
compensation, on a before-tax or after-tax basis, for the
contribution period subject to IRS limitations. Effective January 1,
2001, the Company began making a matching contribution, on
participant before-tax contributions up to 6% of compensation, in an
amount equal to 50% for employees with less than fifteen years of
service and 100% for employees with fifteen or more years of service.
Prior to January 1, 2001, the Company made matching contributions on
participant before-tax contributions of up to 6% of compensation, in
an amount equal to 30% for employees with less than five years of
service, 50% for employees with at least five years of service but
less than fifteen and 100% for employees with fifteen or more years
of service. Grandfathered matching contributions are additional
matching contributions made to participants who had attained the age
of 40 on or before December 31, 1995. The additional matching
percentage allocated is 25% for participants ages 40-44, 50% for
participants ages 45-54 and 75% for participants ages 55 or older.
Also, upon beginning participation in the Plan, prior to October 2,
2001, the Company made a one time $500 initial ("Jump Start")
contribution for participants. This Jump-Start contribution was
discontinued for employees who first became a participant in the plan
on or after October 2, 2001.
PARTICIPANT ACCOUNTS
Each participant's account is credited with the participant's
contribution and allocation of the Company's contribution and Plan
earnings. Earnings are allocated by fund based on the ratio of a
participant's account invested in a particular fund to all
participants' investments in that fund. The benefit to which a
participant is entitled is the benefit that can be provided from the
participant's account.
6
KULICKE AND SOFFA INDUSTRIES, INC. INCENTIVE SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 2000 and 2001
VESTING
Participants are immediately vested in their voluntary contributions
plus actual earnings thereon. The balance of vesting in the
participants' accounts is based on years of service. A participant
becomes 33 1/3% vested after 2 years of service, 66 2/3% vested after
3 years of service, 100% vested after 4 years of service. However, if
an active participant dies prior to attaining the normal retirement
age, the participant's account becomes 100% vested.
PAYMENT OF BENEFITS
On termination of service, a participant will receive a lump-sum
amount equal to the vested value of his or her account. Distributions
are subject to the applicable provisions of the Plan agreement.
CHANGE OF TRUSTEE AND RECORDKEEPING RESPONSIBILITIES
The Company replaced Morgan Stanley Dean Witter Trust FSB as the Plan
Trustee effective September 30, 2001 with Fidelity Management Trust
Company as the Plan Trustee effective October 1, 2001. The
recordkeeping responsibilities were changed effective October 1, 2001
to Fidelity Investments Institutional Operations Company, Inc.
2. SUMMARY OF ACCOUNTING POLICIES
BASIS OF ACCOUNTING
The accompanying financial statements are prepared on the accrual
basis of accounting.
USE OF ESTIMATES
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and changes therein, and
disclosure of contingent assets and liabilities. Actual results could
differ from those estimates.
BENEFITS
Benefits are recorded as expenses when they have been paid by the
Plan.
VALUATION OF INVESTMENTS
The Plan's investments are stated at fair value, which has been
determined using quoted market prices for these investments on the
last trading day of the Plan year. Participant loans are valued at
cost, which approximates fair value. Purchases and sales are recorded
7
KULICKE AND SOFFA INDUSTRIES, INC. INCENTIVE SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 2000 and 2001
on a trade date basis. Dividends are recorded on the ex-dividend
date. Interest is accrued when earned.
3. INVESTMENTS
Investments that represent 5 % or more of the Plan's net assets are
separately identified at their fair values below.
December 31,
2000 2001
----------- -----------
Kulicke & Soffa Industries, Inc. common stock $ 8,470,193 $14,657,298
Morgan Stanley Dean Witter American Opportunities Fund 16,495,685 --
Morgan Stanley Dean Witter Information Fund 3,282,072 --
Morgan Stanley Dean Witter S&P 500 Index Fund 5,021,932 --
Morgan Stanley Dean Witter Government Securities Trust 2,549,402 --
Van Kampen Emerging Growth Fund A 2,558,013 --
Fidelity Ginnie Mae Fund -- 2,972,490
Fidelity Growth Company Fund -- 13,736,509
Retirement Money Market Portfolio -- 3,944,113
Spartan U.S. Equity Index Fund -- 4,482,223
The change in net depreciation in fair value of investments for the
years ended December 31, 2000 and 2001 by class of investment is
comprised of the following:
December 31,
2000 2001
----------- -----------
Equity funds $(3,835,496) $(5,589,739)
Fixed income funds 91,816 17,874
Kulicke and Soffa Industries, Inc. common stock (4,544,305) 5,276,984
----------- -----------
$(8,287,985) $ (294,881)
=========== ===========
8
KULICKE AND SOFFA INDUSTRIES, INC. INCENTIVE SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 2000 and 2001
4. PARTICIPANT LOANS
Under the terms of the Plan, participants may borrow from their
accounts up to the lesser of $50,000 or 50% of their vested account
balance. Loan transactions are treated as a transfer to/from the
investment fund from/to Participant Loan fund. A loan is
collateralized by the balance in the participant's vested accrued
benefit and bears interest at a rate commensurate with market rates
for similar loans, as defined (9.25% for the year ended December 31,
2000 and ranging from 4.80% to 10.50% for loans issued in the year
ended December 31, 2001). Participants are permitted to have up to
two loans outstanding at any time.
5. PLAN TERMINATION
Although it has not expressed any intent to do so, the Company has
the right under the Plan to discontinue its contributions at any time
and to terminate the Plan subject to the provisions of ERISA. In the
event of Plan termination, participants will become 100 % vested in
their accounts.
6. INCOME TAXES
The Internal Revenue Service (the "IRS") has determined and informed
the Company by a letter dated September 5, 1997, that the Plan and
related trust are designed in accordance with applicable sections of
the Internal Revenue Code ("IRC"). The determination letter does not
include recent amendments. However, the Company believes that the
Plan is designed and is currently being operated in compliance with
the applicable requirements of the IRC. Therefore, no provision for
income taxes has been included in the Plan's financial statements.
The Company has submitted a request for a new determination letter
with the IRS on February 28, 2002; however, a response has not been
received.
7. FORFEITURES
Employer contributions forfeited remain in the Plan and are available
to offset future employer contributions or to pay Plan expenses. The
forfeiture balance was $74,765 and $48,616 at December 31, 2000 and
2001, respectively. During the Plan year ended December 31, 2001,
$178,240 was used from the forfeiture account.
8. PLAN MERGER
Effective January 1, 2001, the plan covering the employees of
Semitec, a wholly owned subsidiary of the Company was merged with and
into the Plan. Approximately 150 participants and their assets,
amounting to approximately $619,000 were transferred into the Plan.
9
KULICKE AND SOFFA INDUSTRIES, INC. INCENTIVE SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
December 31, 2000 and 2001
9. RELATED PARTIES
Certain Plan assets were shares of mutual funds managed by Morgan
Stanley Dean Witter Trust FSB and Fidelity Management Trust Company.
Morgan Stanley was the trustee of the Plan through September 30,
2001. Fidelity was the trustee of the Plan from October 1, 2001
through December 31, 2001. Additionally, the Plan sponsor issues the
shares of Kulicke and Soffa Industries, Inc. Common Stock. Therefore,
transactions in these investments qualified as party-in-interest
transactions, which are exempt from prohibited transaction rules of
ERISA.
10. SUBSEQUENT EVENT
Effective January 1, 2002, the plans covering the employees of
Cerprobe, Probe Tech and Flip Chip, now wholly owned subsidiaries of
the Company were merged with and into the Plan. Approximately 2050
participants and their assets, amounting to approximately $8.3
million were transferred into the Plan.
10
KULICKE AND SOFFA INDUSTRIES, INC. INCENTIVE SAVINGS PLAN
SCHEDULE OF ASSETS (HELD AT END OF YEAR)
December 31, 2001
Identity of Issue, Description of Investment
Borrower, lessor, or including maturity date, rate of interest Current
Similar party collateral, par or maturity value Value
---------------------- ----------------------------------------- ------------
* Kulicke and Soffa Kulicke and Soffa Industries, Inc. Common
Industries, Inc. Stock $ 14,657,298
* Fidelity Investments Fidelity Growth Companies Fund 13,736,509
* Fidelity Investments Spartan US Equity Index Fund 4,482,223
* Fidelity Investments Fidelity Retirement Money Market Fund 3,944,113
* Fidelity Investments Fidelity Ginnie Mae Fund 2,972,490
* Fidelity Investments Fidelity Puritan Fund 2,022,494
* Fidelity Investments Fidelity Select Technology Fund 1,810,812
* Fidelity Investments Fidelity Equity Income Fund 1,705,855
* Fidelity Investments Fidelity Select Healthcare Fund 1,148,287
* Fidelity Investments Fidelity Mid-Cap Stock Fund 847,456
* Fidelity Investments Janus Advisers Worldwide Fund 830,918
* Fidelity Investments Fidelity Low Price Stock Fund 147,773
* Fidelity Investments Pimco Total Return Fund 81,814
* Fidelity Investments Fidelity Small Cap Stock Fund 63,740
* Fidelity Investments Fidelity Dividend Growth Fund 51,082
* Fidelity Investments Fidelity Diversified International Fund 11,631
* Participant Loans 4.80% - 10.50% 934,727
-------------
$ 49,449,222
=============
* Party-in-interest
11
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Plan's
Administrator has duly caused this annual report to be signed on its behalf by
the undersigned, hereunto duly authorized.
Kulicke & Soffa Industries, Inc.
Incentive Savings Plan
Date: June 28, 2002 By: /S/ CLIFFORD G. SPRAGUE
--------------------------------
Clifford G. Sprague
Senior Vice President
Chief Financial Officer
(Principal Financial Officer)
12
INDEX TO EXHIBITS
EXHIBIT PAGE
23.1 Consent of Independent Accountants 14
13