S&P: Kulicke & Soffa outlook positive

Standard & Poor's said it affirmed its ratings on Kulicke & Soffa Industries Inc. and revised its outlook on the company to positive from negative, reflecting improved profitability and stabilizing cash balances.

Kulicke & Soffa Industries' corporate credit is rated B and $205 million convertible subordinated notes are rated CCC+.

S&P said the ratings continue to reflect expectations for very volatile sales levels and high leverage, offset somewhat by the company's leading niche market position and its adequate cash balances.

Kulicke & Soffa is a leading supplier of equipment and materials used in semiconductor packaging and testing. Total lease-adjusted debt was about $350 million as of March 2004.

Sales increased 76% in the March 2004 quarter to $222 million from $126 million in the year-earlier quarter. In addition, EBITDA margins reached 20% in the March 2004 quarter. This compares with quarter-over-quarter sales declines of 50% in 2001 and negative EBITDA in 2001 and 2002.

Still, the company's markets are recovering largely because of considerably higher wire bonder sales, which increased over 150% in the March 2004 quarter to $135 million $53 million in the year earlier period. Cash balances have stabilized at about $100 million as of March 2004.

EBITDA in the March 2004 quarter was $45 million, equal to EBITDA generated for the full year in 2003. Total debt to EBITDA was 4.3x in the 12 months ended March 2004.

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