KLIC
#Thanks, Joe.
Before discussing this quarter's business overview, I wanted to share some specifics regarding our delayed filing.
Following the end of the fiscal quarters, we learned of certain unauthorized transactions by a senior financial employee.
We have made the initial investigations of these transactions with the assistance of outside advisers.
In the course of these investigations, it was discovered that certain warranty accrual in prior periods have been accounted for incorrectly and are therefore misstated.
Although this investigation is ongoing, at the present time, we will be getting certain amount that should be ---+ should have been included in our reserve for future warranty expenses, but instead not reserve but expenses as incurred.
We currently believe that this error was not intentional.
However, considering the timing and the scope of this review, more time is required to benefit our current understanding.
And at this time, we anticipate that we will need to restate fiscal year 2017 due to inconsistency impacting our warranty accruals, affecting both cost of goods sold and the selling, general and administrative expenses.
We do not currently anticipate the effect of these specific and identified adjustments to be materially adverse to the company.
While this is an extremely critical issues, we are working closely with our external advisers and our internal team to [operate] review, remediate and file as soon as possible.
The company is committed to addressing the issue identified and then reestablishing timely financial reporting as soon as possible.
One of the information I have just provided is the company's best estimate at this time.
The investigation is not complete, and the impact of the restatement when finalized may be different, perhaps by a material amount.
With that said, I would like now to discuss our ongoing business prospect.
From a very high level, despite our delayed filing, our favorable end market alignment, near-term technical share gain opportunities and the longer-term potential of advanced packaging provide significant confidence in our ability to generate and deliver strong recurring cash flow well into the future.
During the March quarter alone, we repurchased $21.5 million of our stock in open market transactions, 18% more than was purchased in the entire 2017 fiscal year.
Looking ahead, we foresee the ball-bonding process to continue being the most effective way to interconnect the majority of semiconductor devices, from simple, discrete and LED applications to more complex memory and SiP applications, overlaying this critical benefit with a high growth and step from price-sensitive application touch at the center and the connected devices.
We expect ball bonding to continue to be a dynamic and a growing solution for the whole industry's needs.
Furthermore, we have demonstrated a clear path to optimize this business, so typical share gain in LED as well as enhancing the current revenue opportunities within this sizable market.
Next, within wedge bonding, where we also enjoyed strong equipment productions.
We have significant exposure to legacy and high-growth automotive applications in addition to water, power storage and power control applications, supporting sustainable energy and efficient energy distribution.
Lastly, we have developed a growing portfolio of advanced packaging tool ready to serve the new capability needs of next-generation logic and memory, supported by Wafer Level Packaging, thermal compression and the High-Accuracy Flip Chip processes.
With that said, I would now like to conduct our March quarter's performance.
During the quarter, we were again able to exceed our guidance range with $221.8 million of revenue and currently anticipate net income to be approximately $36 million.
Revenue for the quarter increased 11.1% from the same period in the prior year, driven by increase in both our capital equipment and open market product in the service segment.
Sequentially, Capital Equipment revenue improved by 3.2%, driven primarily by an increase in R&D in the RSU equipment, which more than offset the anticipated reduction from the December quarter when we recognize the revenue from a sizable automotive-related order.
During 2018, we'll continue to make ongoing capital investment in LED capacity for general lighting and also memory, driven by NAND.
Memory application accounted for about 14% of our ball bonder shipment during the March quarters.
Revenue within our Aftermarket Products and Services segment outpaced Capital Equipment growth and increased by 6.1% sequentially.
We continue to make progress on further enhancing this recurring revenue business.
I would now like to turn the call over to <UNK> <UNK>, who will cover this quarter's financial overview in greater detail.
<UNK>.
Thank you, <UNK>.
My remarks today will refer to GAAP results.
Based on our preliminary review, gross margins are anticipated to be in line with our previous expectations of slightly below 45%.
Looking ahead to the remaining 2 quarters of fiscal 2018, we anticipate gross margins to improve to around 45%.
Over the past year, we have driven a renewed focus on cost and supply chain, which is increasing our competitiveness and margins in more price-sensitive markets.
We're currently anticipating net income of approximately $36 million or about $0.51 of EPS.
Our cash balance closed at approximately $628.7 million.
This decrease is overwhelmingly due to the quarter's more aggressive share repurchase program and also increases to working capital largely related to our ongoing operation array.
Looking ahead, our operating model target is still intact.
We currently expect to maintain the existing quarterly operating model of $53 million of fixed expenses plus 5% to 7% of variable expenses tied to revenue.
Regarding tax.
While still evaluating the U.S. tax reform, we currently expect to maintain our long-term 15% effective tax target going forward.
This concludes the financial review portion of our call.
I will now turn the discussion back over to <UNK> for the June quarter's business outlook.
Thank you, <UNK>.
Looking into our June quarters.
We are targeting revenue to be between $255 million to $270 million and are anticipating another very strong revenue year.
Overall, strong IC unit growth come out with all products across [a manner] with yearly profit growing in end market including LED, automotive, memory, 3D sensing and advanced packaging all provide us with additional confidence.
Moreover, we continue to optimize all business and drive meaningful change within the company.
This has already borne fruit in the energy market and also has set the foundation for ---+ ongoing for growth in our recurring revenue business.
We also have new opportunities among our growing advanced packaging portfolio.
In addition, we have recently initiated several new development efforts to further expand this offering and also our served market.
We appreciate your ongoing support, and we look forward to sharing our progress as we continue to execute our long-term strategy.
This concludes our prepared remarks.
I would now like to turn the call back over to Joe for closing comments.
