KULICKE AND SOFFA INDUSTRIES, INC. (NASDAQ:KLIC) Files An 8-K Non-Reliance on Previously Issued Financial Statements or a Related Audit Report or Completed Interim ReviewItem 4.02
Non-Reliance on Previously Issued Financial Statements or a Related Audit Report or Completed Interim Review.
On May 10, 2018, as previously reported in the Original Form 8-K, the Company’s Audit Committee, in consultation with the Board of Directors, concluded that the Company’s previously issued consolidated financial statements for the fiscal year ended September 30, 2017 should no longer be relied upon. On that same date, the Company also determined that all earnings press releases and similar prior communications issued by the Company as well as other prior statements made by or on behalf of the Company relating to the periods covered by those consolidated financial statements should not be relied upon.
On May 28, 2018, as a result of the review of these matters, the Audit Committee, in consultation with the Board of Directors, determined that in addition to the consolidated financial statements referenced in the preceding paragraph, the unaudited interim consolidated condensed financial statements included in the Prior 10-Q should no longer be relied upon. Accordingly, all earnings press releases and similar prior communications issued by the Company as well as other prior statements made by or on behalf of the Company relating to the periods covered by the Prior 10-Q should not be relied upon.
The above determination was made because in connection with its review, 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. The unauthorized payment of $5.8 million was subsequently recovered in full.
Based on the most recent findings, the Company’s management and the Audit Committee have determined that certain warranty accruals were accounted for incorrectly and therefore misstated in the audited consolidated financial statements for the fiscal year ended September 30, 2017 and certain warranty accruals, accounts payable and cost of sales were accounted for incorrectly and therefore misstated in the unaudited interim consolidated condensed financial statements for the three-month period ended December 30, 2017 (the “Affected Periods”). The Company intends to file restated consolidated financial statements for the year ended September 30, 2017 and consolidated condensed financial statements for the quarter ended December 30, 2017 as soon as practicable following this filing (collectively, the “Amended Filings”). The Company’s Quarterly Reports on Form 10-Q for fiscal 2018 will also include the restated 2017 comparable prior quarter and year to date periods.
Further to the above, the Company’s management also concluded on May 28, 2018 that one or more material weaknesses in the Company’s internal control over financial reporting existed as of the end of each of the Affected Periods. Specifically, (i) effective controls over the recording and review of manual journal entries related to our warranty accrual was not maintained as of September 30, 2017 and journal entries related to our warranty accrual and accounts payable was not maintained as of December 30, 2017 and (ii) effective control over cash disbursements was not maintained as of December 30, 2017. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of an entity’s annual or interim financial statements will not be prevented or detected on a timely basis. The Company will report the details of these material weaknesses and related impacts on its disclosure controls and procedures in the Amended Filings that the Company plans to make as soon as practicable following this filing
The Company’s management and the Audit Committee have discussed the matters disclosed in this Amendment with the Company’s independent registered public accounting firm, PricewaterhouseCoopers LLP.
Forward-Looking Statements
Certain statements in this filing are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements relate to future events or the Company’s future financial performance and involve known and unknown risks, uncertainties and other factors that may cause the actual results, levels of activity, performance or achievements of the Company or its industry to be materially different from those expressed or implied by any forward-looking statements. In some cases, forward-looking statements can be identified by terminology such as “may,” “will,” “could,” “would,” “should,” “expect,” “plan,” “anticipate,” “intend,” “believe,” “estimate,” “predict,” “potential” or the negative of those terms or other
comparable terminology. The Company has based these forward-looking statements on its current expectations, assumptions, estimates and projections. While the Company believes these expectations, assumptions, estimates and projections are reasonable, such forward-looking statements are only predictions and involve known and unknown risks and uncertainties, many of which are beyond the Company’s control. In addition, there can be no assurance as to when the Company will be able to file its 2017 Form 10-K/A containing its restated consolidated financial statements or its Form 10-Q/A containing its restated unaudited interim consolidated condensed financial statements. Furthermore, the investigation may reveal other accounting errors or other material weaknesses in the Company’s internal controls over financial reporting, and the Company may conclude that investors should no longer rely upon other previously issued financial statements. These and other important factors, including those discussed under “Risk Factors” in the Company’s Form 10-K for the fiscal year ended September 30, 2017, as well as the Company’s subsequent filings with the United States Securities and Exchange Commission, may cause actual results, performance or achievements to differ materially from those expressed or implied by these forward-looking statements. The forward-looking statements in this filing are made only as of the date hereof, and unless otherwise required by applicable securities laws, the Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
About KULICKE AND SOFFA INDUSTRIES, INC. (NASDAQ:KLIC)
Kulicke and Soffa Industries, Inc. designs, manufactures and sells capital equipment and expendable tools, as well as services, maintains, repairs and upgrades equipment, all used to assemble semiconductor devices. The Company supplies a range of bonding equipment. The Company operates through two segments: Equipment and Expendable Tools. The Equipment segment manufactures and sells a line of ball bonders, wedge bonders, advanced packaging and surface mount technology solutions. The Expendable Tools segment manufactures and sells expendable tools for a range of semiconductor packaging applications. It offers capital equipment and expendable tools used to assemble semiconductor devices, including integrated circuits, high and low powered discrete devices, light-emitting diodes and power modules. Its customers primarily consist of semiconductor device manufacturers, outsourced semiconductor assembly and test providers, other electronics manufacturers and automotive electronics suppliers.
