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RESTATEMENT OF CONSOLIDATED FINANCIAL STATEMENTS | 3 Months Ended
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Dec. 30, 2017
Accounting Changes and Error Corrections [Abstract] |
RESTATEMENT OF CONSOLIDATED FINANCIAL STATEMENTS | RESTATEMENT OF CONSOLIDATED CONDENSED FINANCIAL STATEMENTS On May 10 and May 28, 2018, the Company’s Audit Committee, in consultation with the Board of Directors, concluded that the Company’s previously issued financial statements for the fiscal year ended September 30, 2017 and the three months ended December 30, 2017, respectively, could no longer be relied upon. This decision was reached after discussions with the Company’s senior management and outside advisers. The above was a result of the Company’s determination that: i) the warranty expense and warranty accrual accounts had been misstated for the quarter ended December 30, 2017 as a result of inaccurate and unsupported journal entries recorded due to management override of controls, and ii) the cost of sales and account payable accounts were misstated for the quarter ended December 30, 2017 as a result of falsified accounting records due to management override of controls. The management overrides of controls were identified during an internal investigation related to an unauthorized disbursement by a senior finance employee that was discovered after the end of the second fiscal quarter of 2018. With respect to the journal entries impacting warranty expense and warranty accrual accounts, we determined that the manual journal entries initiated by this employee were made to correct the Company's failure to properly include labor costs in our warranty accrual, described below, lacked supporting documentation and were accounted for incorrectly. As a result, the Company identified overstatements of specific warranty accruals of $2.8 million and $15.9 million for fiscal 2016 and fiscal 2017, respectively. In addition, the Company also identified adjustments that were required to be made to retained earnings, warranty expense and accrual accounts to correct the inappropriate exclusion of the estimated labor costs related to warranty repairs from its historical warranty accounting. While the latter adjustments are not deemed material, the Company is adjusting retained earnings, warranty expense and warranty accrual accounts as part of the restatement. As a result, the Company identified an understatement of warranty accruals relating to fiscal 2014 and prior years of $10.1 million in the aggregate, as the actual labor costs had instead been expensed in the periods incurred. In addition to the understatement of warranty accruals relating to fiscal 2014 and in prior years, the warranty expense had also been misstated from fiscal 2015 through fiscal 2017, resulting in a cumulative understatement of income from operations of approximately $17.6 million. Of this understatement, approximately $14.8 million, $1.4 million, and $1.4 million was related to the fiscal years ended September 30, 2017, October 1, 2016 and October 3, 2015, respectively. The labor costs relating to warranty expenses were also incorrectly reported in selling, general and administrative expense instead of cost of sales for the fiscal years ended September 30, 2017, October 1, 2016 and October 3, 2015. The Consolidated Balance Sheets were also misstated for the annual periods from 2015 through 2017. The Company has also identified a misstatement in its previously reported consolidated condensed financial statements for the quarterly period ended December 30, 2017, relating to a reduction in the warranty accrual of $5.2 million. This reduction resulted in an understatement of cost of sales and provision for warranty. In addition, the labor costs relating to warranty expenses of $2.4 million were also incorrectly reported in selling, general and administrative expense instead of cost of sales. In connection with the internal investigation, the Company identified an unauthorized payment that had been initiated by a senior finance employee to an unapproved vendor in the second fiscal quarter of fiscal 2018. The payment was made based on falsified accounting records where two manual journal entries totaling $5.8 million in the aggregate had been recorded in accounts payable and cost of sales. Management has determined this to be a misappropriation of the Company's assets. Accordingly, the previously reported consolidated condensed financial statements for the quarterly period ended December 30, 2017 were misstated, because accounts payable and cost of sales were each overstated by $5.8 million. In addition, we have made related tax expense adjustments for the above matters. The restated consolidated condensed financial statements for the three months ended December 30, 2017 have been amended to reflect in the proper periods the misstatements described above. Our Quarterly Reports on Form 10-Q for fiscal 2018 will include the restated fiscal 2017 comparable prior quarter and year to date periods. KULICKE AND SOFFA INDUSTRIES, INC. CONSOLIDATED CONDENSED BALANCE SHEETS (in thousands) Unaudited
|  | As of
|  | December 30, 2017
|  | As Previously Reported |  | Effect of Restatement |  | As Restated
Accounts payable |  | 68,370 |  |  | (5,802 | ) |  | 62,568 |
Accrued expenses and other current liabilities |  | 80,147 |  |  | (2,253 | ) |  | 77,894 |
Income taxes payable |  | 18,137 |  |  | 105 |  |  | 18,242 |
Total current liabilities |  | 166,654 |  |  | (7,950 | ) |  | 158,704 |
Deferred income taxes |  | 26,940 |  |  | 373 |  |  | 27,313 |
Income taxes payable |  | 89,491 |  |  | 674 |  |  | 90,165 |
TOTAL LIABILITIES |  | $ | 308,215 |  |  | $ | (6,903 | ) |  | $ | 301,312 |
Retained earnings |  | 496,655 |  |  | 6,903 |  |  | 503,558 |
TOTAL SHAREHOLDERS' EQUITY |  | $ | 850,371 |  |  | $ | 6,903 |  |  | $ | 857,274 |
KULICKE AND SOFFA INDUSTRIES, INC. CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (in thousands, except per share data) Unaudited
|  | Three Months Ended
|  | December 30, 2017
|  | As Previously Reported |  | Effect of Restatement |  | As Restated
Cost of sales |  | 114,652 |  |  | 1,837 |  |  | 116,489 |
Gross profit |  | 99,039 |  |  | (1,837 | ) |  | 97,202 |
Selling, general and administrative |  | 30,218 |  |  | (2,425 | ) |  | 27,793 |
Operating expenses |  | 60,468 |  |  | (2,425 | ) |  | 58,043 |
Income from operations |  | 38,571 |  |  | 588 |  |  | 39,159 |
Income from operations before income taxes |  | 40,280 |  |  | 588 |  |  | 40,868 |
Income tax expense |  | 109,633 |  |  | 779 |  |  | 110,412 |
Net loss |  | $ | (69,337 | ) |  | $ | (191 | ) |  | $ | (69,528 | )
Net loss per share: |  |  |  |  |  |  |  |
Basic |  | $ | (0.98 | ) |  | $ | (0.01 | ) |  | $ | (0.99 | )
Diluted |  | $ | (0.98 | ) |  | $ | (0.01 | ) |  | $ | (0.99 | )
|  | Three Months Ended
|  | December 31, 2016
|  | As Previously Reported |  | Effect of Restatement |  | As Restated
Cost of sales |  | 81,321 |  |  | (109 | ) |  | 81,212 |
Gross profit |  | 68,318 |  |  | 109 |  |  | 68,427 |
Selling, general and administrative |  | 29,532 |  |  | (1,669 | ) |  | 27,863 |
Operating expenses |  | 51,037 |  |  | (1,669 | ) |  | 49,368 |
Income from operations |  | 17,281 |  |  | 1,778 |  |  | 19,059 |
Income from operations before income taxes |  | 18,191 |  |  | 1,778 |  |  | 19,969 |
Income tax expense |  | 2,608 |  |  | (35 | ) |  | 2,573 |
Net income |  | $ | 15,583 |  |  | $ | 1,813 |  |  | $ | 17,396 |
Net income per share: |  |  |  |  |  |  |  |
Basic |  | $ | 0.22 |  |  | $ | 0.03 |  |  | $ | 0.25 |
Diluted |  | $ | 0.22 |  |  | $ | 0.02 |  |  | $ | 0.24 |
KULICKE AND SOFFA INDUSTRIES, INC. CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (in thousands) Unaudited
|  | Three Months Ended
|  | December 30, 2017
|  | As Previously Reported |  | Effect of Restatement |  | As Restated
Net loss |  | $ | (69,337 | ) |  | $ | (191 | ) |  | $ | (69,528 | )
Comprehensive loss |  | $ | (67,512 | ) |  | $ | (191 | ) |  | $ | (67,703 | )
|  | Three Months Ended
|  | December 31, 2016
|  | As Previously Reported |  | Effect of Restatement |  | As Restated
Net income |  | $ | 15,583 |  |  | $ | 1,813 |  |  | $ | 17,396 |
Comprehensive income |  | $ | 10,066 |  |  | $ | 1,813 |  |  | $ | 11,879 |
KULICKE AND SOFFA INDUSTRIES, INC. CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (in thousands) Unaudited
|  | Three Months Ended
|  | December 30, 2017
|  | As Previously Reported |  | Effect of Restatement |  | As Restated
CASH FLOWS FROM OPERATING ACTIVITIES: |  |  |  |  |  |  |  |
Net loss |  | $ | (69,337 | ) |  | $ | (191 | ) |  | (69,528 | )
Adjustments to reconcile net income to net cash provided by operating activities: |  |  |  |  |  |
Accounts payable, accrued expenses and other current liabilities |  | (36,551 | ) |  | (588 | ) |  | (37,139 | )
Income taxes payable |  | 84,560 |  |  | 779 |  |  | 85,339 |
Net cash provided by operating activities |  | 50,333 |  |  | — |  |  | 50,333 |
|  | Three Months Ended
|  | December 31, 2016
|  | As Previously Reported |  | Effect of Restatement |  | As Restated
CASH FLOWS FROM OPERATING ACTIVITIES: |  |  |  |  |  |  |  |
Net income |  | $ | 15,583 |  |  | $ | 1,813 |  |  | 17,396 |
Adjustments to reconcile net income to net cash provided by operating activities: |  |  |  |  |  |
Deferred taxes |  | 840 |  |  | (35 | ) |  | 805 |
Accounts payable, accrued expenses and other current liabilities |  | (3,223 | ) |  | (1,778 | ) |  | (5,001 | )
Net cash provided by operating activities |  | 30,049 |  |  | — |  |  | 30,049 |

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- Definition The entire disclosure for reporting accounting changes and error corrections. It includes the conveyance of information necessary for a user of the Company's financial information to understand all aspects and required disclosure information concerning all changes and error corrections reported in the Company's financial statements for the period. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 250 -SubTopic 10 -Section S99 -Paragraph 4 -Subparagraph (SAB Topic 6.G.2.b(b)(1)) -URI http://asc.fasb.org/extlink&oid=26874127&loc=d3e31034-122693 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 250 -SubTopic 10 -Section 50 -Paragraph 7 -URI http://asc.fasb.org/extlink&oid=64853466&loc=d3e22644-107794 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 250 -SubTopic 10 -Section 45 -Paragraph 23 -URI http://asc.fasb.org/extlink&oid=6368906&loc=d3e21914-107793 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 250 -SubTopic 10 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=64853466&loc=d3e22595-107794 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 250 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=64853466&loc=d3e22499-107794 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 250 -SubTopic 10 -Section S99 -Paragraph 2 -Subparagraph (SAB TOPIC 1.N.Q3) -URI http://asc.fasb.org/extlink&oid=26874127&loc=d3e30840-122693 + Details
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