Kulicke and Soffa Industries: & SOFFA INDUSTRIES INC. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL POSITION AND OPERATING RESULTS (Form 10-Q)

Forward-Looking Statements
In addition to historical information, this filing contains statements relating
to future events or our future results. These statements are forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995, Section 27A of the Securities Act of 1933, as amended (the "Securities
Act") and Section 21E of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and are subject to the safe harbor provisions created by
statute. Such forward-looking statements include, but are not limited to,
statements with respect to our future revenue, increasing, continuing or
strengthening, or decreasing or weakening, demand for our products, replacement
demand, our research and development efforts, our ability to identify and
realize new growth opportunities, our ability to control costs and our
operational flexibility as a result of (among other factors):
•our expectations regarding the potential impacts on our business of the
COVID-19 pandemic, including supply chain disruptions, the economic and public
health effects, and governmental and other responses to these impacts;
•projected growth rates in the overall semiconductor industry, the semiconductor
assembly equipment market, and the market for semiconductor packaging materials;
and
•projected demand for ball bonder, wedge bonder, advanced packaging and
electronic assembly equipment and for tools, spare parts and services.
Generally, words such as "may," "will," "should," "could," "anticipate,"
"expect," "intend," "estimate," "plan," "continue," "goal" and "believe," or the
negative of or other variations on these and other similar expressions identify
forward-looking statements. These forward-looking statements are made only as of
the date of this filing. We do not undertake to update or revise the
forward-looking statements, whether as a result of new information, future
events or otherwise.
Forward-looking statements are based on current expectations and involve risks
and uncertainties. Our future results could differ significantly from those
expressed or implied by our forward-looking statements. These risks and
uncertainties include, without limitation, those described below and under the
heading "Risk Factors" in this report and in our Annual Report on Form 10-K for
the fiscal year ended October 3, 2020 (our "Annual Report") and our other
reports filed from time to time with the Securities and Exchange Commission.
This discussion should be read in conjunction with the Consolidated Condensed
Financial Statements and Notes included in this report, as well as our audited
financial statements included in our Annual Report.
We operate in a rapidly changing and competitive environment. New risks emerge
from time to time and it is not possible for us to predict all risks that may
affect us. Given those risks and uncertainties, investors should not place undue
reliance on forward-looking statements as predictions of actual results.
OVERVIEW
Kulicke and Soffa Industries, Inc. ("we," "us," "our," or the "Company") is a
leading provider of semiconductor, light-emitting diode ("LED") and electronic
assembly solutions serving the global automotive, consumer, communications,
computing and industrial markets. Founded in 1951, we pride ourselves on
establishing foundations for technological advancement-creating, pioneering
interconnect solutions that enable performance improvements, power efficiency,
form-factor reductions and assembly excellence of current and next-generation
semiconductor devices. Leveraging decades of development proficiency and
extensive process technology expertise, our expanding portfolio provides
equipment solutions, aftermarket products and services supporting a
comprehensive set of interconnect technologies including wire bonding, advanced
packaging, lithography, and electronics assembly. Dedicated to empowering
technological discovery, always, we collaborate with customers and technology
partners to push the boundaries of possibility, enabling a smarter future.
We design, manufacture and sell capital equipment and tools used to assemble
semiconductor devices, including integrated circuits, high and low powered
discrete devices, LEDs, and power modules. In addition, we have a portfolio of
equipment that is used to assemble components onto electronic circuit boards. We
also service, maintain, repair and upgrade our equipment and sell consumable
aftermarket tools for our and our peer companies' equipment. Our customers
primarily consist of semiconductor device manufacturers, integrated device
manufacturers ("IDMs"), outsourced semiconductor assembly and test providers
("OSATs"), other electronics manufacturers and automotive electronics suppliers.
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Our goal is to be the technology leader and the most competitive supplier in
terms of cost and performance in each of our major product lines. Accordingly,
we invest in research and engineering projects intended to enhance our position
as a leader in semiconductor assembly technology. We also remain focused on our
cost structure through continuous improvement and optimization of operations.
Cost reduction efforts are an important part of our normal ongoing operations
and are intended to generate savings without compromising overall product
quality and service.
We operate two reportable segments, consisting of Capital Equipment and
Aftermarket Products and Services ("APS"). We have aggregated twelve operating
segments as of July 3, 2021, with six operating segments within the Capital
Equipment reportable segment and six operating segments within the APS
reportable segment.
Our Capital Equipment segment engages in the manufacture and sale of ball
bonders, wafer level bonders, wedge bonders, advanced packaging and electronic
assembly solutions to semiconductor device manufacturers, IDMs, OSATs, other
electronics manufacturers and automotive electronics suppliers. Our APS segment
engages in the manufacture and sale of a variety of tools for a broad range of
semiconductor packaging applications, spare parts, equipment repair, maintenance
and servicing, training services, refurbishment and upgrades for our equipment.
Business Environment
The semiconductor business environment is highly volatile and is driven by
internal dynamics, both cyclical and seasonal, in addition to macroeconomic
forces. Over the long term, semiconductor consumption has historically grown,
and is forecast to continue to grow. This growth is driven, in part, by regular
advances in device performance and by price declines that result from
improvements in manufacturing technology. In order to exploit these trends,
semiconductor manufacturers, both IDMs and OSATs, periodically invest
aggressively in latest generation capital equipment. This buying pattern often
leads to periods of excess supply and reduced capital spending-the so-called
semiconductor cycle. Within this broad semiconductor cycle there are also,
generally weaker, seasonal effects that are specifically tied to annual,
end-consumer purchasing patterns. Typically, semiconductor manufacturers prepare
for heightened demand by adding or replacing equipment capacity by the end of
the September quarter. Occasionally, this results in subsequent reductions in
the December quarter. This annual seasonality can be overshadowed by effects of
the broader semiconductor cycle. Macroeconomic factors also affect the industry,
primarily through their effect on business and consumer demand for electronic
devices, as well as other products that have significant electronic content such
as automobiles, white goods, and telecommunication equipment. There can be no
assurances regarding levels of demand for our products and we believe historic
industry-wide volatility will persist.
In the Asia/Pacific region, our customer base has also become more
geographically concentrated as a result of economic and industry conditions.
Approximately 95.8% and 93.9% of our net revenue for the three months ended
July 3, 2021 and June 27, 2020, respectively, was for shipments to customer
locations outside of the U.S., primarily in the Asia/Pacific region.
Approximately 57.2% and 53.3% of our net revenue for the three months ended
July 3, 2021 and June 27, 2020, respectively, was for shipments to customers
located in China, which is subject to risks and uncertainties related to the
respective policies of the governments of China and the U.S.
Similarly, approximately 96.6% and 93.5% of our net revenue for the nine months
ended July 3, 2021 and June 27, 2020, respectively, was for shipments to
customer locations outside of the U.S., primarily in the Asia/Pacific region.
Approximately 53.9% and 54.6% of our net revenue for the nine months ended
July 3, 2021 and June 27, 2020, respectively, was for shipments to customers
located in China.
The U.S. and several other countries have levied tariffs on certain goods and
have introduced other trade restrictions, which, together with the impact of the
COVID-19 pandemic discussed below, has resulted in substantial uncertainties in
the semiconductor, LED, memory and automotive market.
Our Capital Equipment segment is primarily affected by the industry's internal
cyclical and seasonal dynamics in addition to broader macroeconomic factors that
can positively or negatively affect our financial performance. The sales mix of
IDM and OSAT customers in any period also impacts financial performance, as
changes in this mix can affect our products' average selling prices and gross
margins due to differences in volume purchases and machine configurations
required by each customer type.
Our APS segment has historically been less volatile than our Capital Equipment
segment. The APS sales are more directly tied to semiconductor unit consumption
rather than capacity requirements and production capability improvements.
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We continue to position our business to leverage our research and development
leadership and innovation and to focus our efforts on mitigating volatility,
improving profitability and ensuring longer-term growth. We remain focused on
operational excellence, expanding our product offerings and managing our
business efficiently throughout the business cycles. Our visibility into future
demand is generally limited, forecasting is difficult, and we generally
experience typical industry seasonality.
To limit potential adverse cyclical, seasonal and macroeconomic effects on our
financial position, we have continued our efforts to maintain a strong balance
sheet. As of July 3, 2021, our total cash, cash equivalents and short-term
investments were $635.0 million, a $104.9 million increase from the prior fiscal
year end. We believe our strong cash position will allow us to continue to
invest in product development and pursue non-organic opportunities.
Key Events in Fiscal 2021
Business Combinations
On January 19, 2021, we entered into and closed a Stock Purchase Agreement with
Uniqarta, Inc. ("Uniqarta") and the equity holders of Uniqarta to purchase all
of Uniqarta's outstanding equity interests. The purchase price consisted of
$26.5 million in cash paid at closing. Uniqarta is a developer of laser transfer
technology and the acquisition expands our presence in the LED end market. Upon
the closing of the acquisition on January 19, 2021, Uniqarta became our
wholly-owned subsidiary.
COVID-19 Pandemic
The COVID-19 pandemic has significantly impacted the global economy, disrupted
global supply chains, created volatility in equity market valuations, created
significant volatility and disruption in financial markets, and significantly
increased unemployment levels. In addition, the pandemic has resulted in
temporary closures and failures of many businesses and the institution of social
distancing and sheltering-in-place requirements in many jurisdictions. As these
measures were relaxed, in certain jurisdictions there has been a resurgence of
illnesses, which has led to more severe restrictions.
In response to the pandemic, we temporarily closed certain offices in the United
States, Europe and Asia as well as executed our Business Continuity Plan
("BCP"), which measures have disrupted how we operate our business. While we are
currently operating at full capacity in all of our manufacturing locations,
work-from-home practices were instituted across many offices worldwide, which
have impacted our non-manufacturing productivity, including our research &
development. At this point, our BCP has not included significant headcount
reductions or changes in our overall liquidity position. As certain countries
relaxed the measures over the past few months, we have restarted certain
activities in accordance with local guidelines.
We have not experienced significant delays in customer deliveries, but we are
impacted by the global shortage in electronic components and our supply chain is
strained in some cases as the availability of materials, logistics and freight
options are challenging in many jurisdictions. Demand for our products was
consistent with or exceeded our expectations for the third quarter of fiscal
2021. We believe semiconductor industry macroeconomics have not changed and we
anticipate the industry's long-term growth projections will normalize, but the
sector could see short-term volatility and potential disruption.
Various countries have announced measures, including government grants, tax
changes and tax credits, among other types of relief, in response to the
pandemic. For fiscal 2021, we have received a $2.0 million COVID-19-related
grant from the Singapore government as well as other measures including rental
rebates and social insurance exemption, which are not material to our operating
results.
Based on our current evaluation, the pandemic has not had a material impact on
our financial condition and operating results in fiscal 2021 to date. We believe
that our existing cash, cash equivalents, short-term investments, existing
Facility Agreements, and anticipated cash flows from operations will be
sufficient to meet our liquidity and capital requirements, notwithstanding the
COVID-19 pandemic, for at least the next twelve months from the date of filing.
However, as this is a highly dynamic situation, and it is still developing
rapidly, including new strains as it relates to the effectiveness and
utilization rates of vaccines for COVID-19 and its variants, there is
uncertainty surrounding our business, and our near- and long-term liquidity,
financial condition and operating results could deteriorate.
For other information, please see our Annual Report.

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RESULTS OF OPERATIONS
The following tables reflect our income from operations for the three and nine
months ended July 3, 2021 and June 27, 2020:
                                              Three months ended

(amounts in thousands of dollars) July 3, 2021 June 27, 2020

  $ Change       % Change
Net revenue                           $     424,318      $      150,450      $ 273,868        182.0  %
Cost of sales                               228,623              81,027        147,596        182.2  %
Gross profit                                195,695              69,423        126,272        181.9  %
Selling, general and administrative          39,103              27,905         11,198         40.1  %
Research and development                     36,137              30,547          5,590         18.3  %

Operating expenses                           75,240              58,452         16,788         28.7  %
Income from operations                $     120,455      $       10,971      $ 109,484        997.9  %


                                              Nine months ended
(dollar amounts in thousands)          July 3, 2021      June 27, 2020       $ Change       % Change
Net revenue                           $  1,032,338      $      445,488      $ 586,850        131.7  %
Cost of sales                              566,667             236,398        330,269        139.7  %
Gross profit                               465,671             209,090        256,581        122.7  %
Selling, general and administrative        105,511              85,723         19,788         23.1  %
Research and development                   102,549              87,906         14,643         16.7  %

Operating expenses                         208,060             173,629         34,431         19.8  %
Income from operations                $    257,611      $       35,461      $ 222,150        626.5  %



Net Revenue
Our net revenue for the three and nine months ended July 3, 2021 increased as
compared to our net revenue for the three and nine months ended June 27, 2020.
The increase in net revenue is primarily due to higher volume in both Capital
Equipment and APS.
The following tables reflect net revenue by reportable segments for the three
and nine months ended July 3, 2021 and June 27, 2020:
                                                                  Three months ended
(dollar amounts in thousands)                 July 3, 2021                                June 27, 2020                      $ Change             % Change
                                                        % of total net                               % of total net
                                    Net Revenue             revenue             Net Revenue              revenue
Capital Equipment                 $    370,187                  87.2  %       $     111,436                  74.1  %       $ 258,751                  232.2  %

APS                                     54,131                  12.8  %              39,014                  25.9  %          15,117                   38.7  %
Total net revenue                 $    424,318                 100.0  %       $     150,450                 100.0  %       $ 273,868                  182.0  %


                                                                  Nine months ended
(dollar amounts in thousands)                 July 3, 2021                               June 27, 2020                      $ Change             % Change
                                                       % of total net                               % of total net
                                   Net Revenue             revenue             Net Revenue              revenue
Capital Equipment                 $   881,722                  85.4  %       $     326,982                  73.4  %       $ 554,740                  169.7  %

APS                                   150,616                  14.6  %             118,506                  26.6  %          32,110                   27.1  %
Total net revenue                 $ 1,032,338                 100.0  %       $     445,488                 100.0  %       $ 586,850                  131.7  %


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Capital Equipment
For the three months ended July 3, 2021, the higher Capital Equipment net
revenue as compared to the prior year period was primarily driven by growing
demand in the general semiconductor end market for consumer applications and 5G
transition, and automotive end market. This was partially offset by unfavorable
price variance due to less favorable customer mix.
For the nine months ended July 3, 2021, the higher Capital Equipment net revenue
as compared to the prior year period was primarily driven by growing demand in
the general semiconductor end market for consumer applications and 5G
transition, automotive end market and in the LED end market for both the
adoption of the advanced LED display and sequential improvements for general
lighting LED. This was partially offset by unfavorable price variance due to
less favorable customer mix.
APS
For the three and nine months ended July 3, 2021, the higher APS net revenue as
compared to the prior year period was primarily due to higher volume in spares,
services and wire bonding tools.
Gross Profit Margin

The following tables reflect gross profit margin as a percentage of net revenue
by reportable segments for the three and nine months ended July 3, 2021 and
June 27, 2020:
                                            Three months ended               Basis Point
                                     July 3, 2021         June 27, 2020         Change
      Capital Equipment                       44.6  %            41.8  %         280

      APS                                     56.3  %            58.6  %        (230)
      Total gross profit margin               46.1  %            46.1  %           -


                                      Nine months ended               Basis Point
                               July 3, 2021        June 27, 2020         Change
Capital Equipment                      42.9  %            43.4  %         (50)

APS                                    57.9  %            56.6  %         130
Total gross profit margin              45.1  %            46.9  %        (180)


Capital Equipment
For the three months ended July 3, 2021, the higher Capital Equipment gross
profit margin as compared to the prior year period was primarily driven by
favorable product mix.
For the nine months ended July 3, 2021, the Capital Equipment gross profit
margin was generally consistent with the prior year period.
APS
For the three months ended July 3, 2021, the lower APS gross profit margin as
compared to the prior year period was primarily driven by less favorable product
mix in spares and services.
For the nine months ended July 3, 2021, the higher APS gross profit margin as
compared to the prior year period was primarily driven by favorable product mix
in spares and services.
Income from Operations
For the three and nine months ended July 3, 2021, the higher income from
operations as compared to the prior year period was primarily due to higher
contribution from Capital Equipment and APS.
The following tables reflect income from operations by reportable segments for
the three and nine months ended July 3, 2021 and June 27, 2020:
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                                        Three months ended
(dollar amounts in thousands)    July 3, 2021       June 27, 2020       $ Change        % Change
Capital Equipment               $     107,016      $        1,045      $ 105,971       10,140.8  %

APS                                    13,439               9,926          3,513           35.4  %

Total of exploitation products $ 120,455 $ 10,971 $ 109,484 997.9%


                                         Nine months ended
(dollar amounts in thousands)    July 3, 2021       June 27, 2020       $ Change       % Change
Capital Equipment               $     218,010      $        7,815      $ 210,195       2,689.6  %
APS                                    39,601              27,646        

11,955 43.2% Total operating income $ 257,611 $ 35,461 $ 222,150 626.5%


Capital Equipment
For the three and nine months ended July 3, 2021, the higher Capital Equipment
income from operations as compared to the prior year period was primarily due to
higher demand as explained under 'Net Revenue' above. This was partially offset
by higher operating expenses as explained under 'Operating Expenses' below.
APS
For the three and nine months ended July 3, 2021, the higher APS income from
operations as compared to the prior year period was primarily due to higher
demand as explained under 'Net Revenue' above. This was partially offset by
higher operating expenses as explained under 'Operating Expenses' below.
Operating Expenses
The following tables reflect operating expenses for the three and nine months
ended July 3, 2021 and June 27, 2020:
                                              Three months ended

(amounts in thousands of dollars) July 3, 2021 June 27, 2020

$ Variation% Variation

Sales, general and administrative $ 39,103 $ 27,905

 $ 11,198         40.1  %
  Research & development                     36,137              30,547         5,590         18.3  %

  Total                               $      75,240      $       58,452      $ 16,788         28.7  %


                                             Nine months ended
(dollar amounts in thousands)        July 3, 2021       June 27, 2020       $ Change      % Change
Selling, general & administrative   $     105,511      $       85,723      $ 19,788         23.1  %
Research & development                    102,549              87,906        14,643         16.7  %

Total                               $     208,060      $      173,629      $ 34,431         19.8  %


Selling, General and Administrative ("SG&A")
For the three months ended July 3, 2021, the higher SG&A expenses as compared to
the prior year period were primarily due to $7.4 million higher staff costs
related to an increase in incentive compensation and headcount, $0.7 million
higher professional services expenses and a $3.2 million lower COVID-19 related
grant and wage related subsidy received from the Singapore government.
For the nine months ended July 3, 2021, the higher SG&A expenses as compared to
the prior year period were primarily due to $14.6 million higher staff costs
related to an increase in incentive compensation and headcount, and $4.9 million
higher professional services expenses.
Research and Development ("R&D")
For the three months ended July 3, 2021, the higher R&D expenses as compared to
the prior year period were primarily due to higher staff costs related to an
increase in incentive compensation and headcount.
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For the nine months ended July 3, 2021, the higher R&D expenses as compared to
the prior year period were primarily due to higher staff costs related to an
increase in incentive compensation and headcount, and higher spending in
development of prototypes.

Interest Income and Expense
The following tables reflect interest income and interest expense for the three
and nine months ended July 3, 2021 and June 27, 2020:
                                         Three months ended
(dollar amounts in thousands)     July 3, 2021       June 27, 2020       $ Change       % Change
Interest income                 $    564            $        1,374      $    (810)       (59.0) %
Interest expense                $    (41)           $         (446)     $     405        (90.8) %


                                         Nine months ended
(dollar amounts in thousands)    July 3, 2021       June 27, 2020       $ Change      % Change
Interest income                 $       1,801      $        6,888      $ (5,087)       (73.9) %
Interest expense                $        (146)     $       (1,690)     $  1,544        (91.4) %


Interest income
For the three and nine months ended July 3, 2021, the lower interest income as
compared to the prior year period was primarily due to lower weighted average
interest rate on cash, cash equivalents and short-term investments.
Interest expense
For the three and nine months ended July 3, 2021, the lower interest expense as
compared to the prior year period was primarily due to lower average short-term
debt. Please refer to Note 10 of Item 1 for discussion on the Overdraft
Facility.
Provision for Income Taxes
The following table reflects the provision for income taxes and the effective
tax rate for the three and nine months ended July 3, 2021 and June 27, 2020:
                                                 Three months ended                                             Nine months ended

(amounts in thousands of dollars) July 3, 2021 June 27, 2020

  Change           July 3, 2021          June 27, 2020          Change
Provision for income taxes     $      7,212          $        690          $     6,522       $     25,722          $      3,985          $    21,737
Effective tax rate                      6.0  %                5.8  %            0.2  %                9.9  %                9.8  %            0.1  %


Please refer to Note 14 of Item 1 for discussion on the provision for income
taxes and the effective tax rate for the three and nine months ended July 3,
2021 as compared to the prior year period.

CASH AND CAPITAL RESOURCES The following table presents the total of cash, cash equivalents and short-term investments at the July 3, 2021 and October 3, 2020:

                                                                                           As of
(dollar amounts in thousands)                                          July 3, 2021                 October 3, 2020              $ Change
Cash and cash equivalents                                          $             387,999       $                 188,127       $  199,872

Short-term investments                                                           247,000                         342,000          (95,000)
Total cash, cash equivalents, and short-term investments           $             634,999       $                 530,127       $  104,872
Percentage of total assets                                                         45.0%                           50.3%



The following table reflects a summary of the Consolidated Condensed Statements
of Cash Flow information for the nine months ended July 3, 2021 and June 27,
2020:
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                                                                             Nine months ended
(in thousands)                                                     July 3, 2021            June 27, 2020
Net cash provided by operating activities                        $      176,656          $       62,681
Net cash provided by investing activities                                54,221                  25,863
Net cash used in financing activities                                   (31,982)               (130,618)
Effect of exchange rate changes on cash and cash equivalents                977                    (335)
                            Changes in cash and cash equivalents $      199,872          $      (42,409)
                  Cash and cash equivalents, beginning of period        188,127                 364,184
                        Cash and cash equivalents, end of period $      387,999          $      321,775



Nine months ended July 3, 2021
Net cash provided by operating activities was primarily due to net income of
$233.5 million, non-cash adjustments to net income of $14.3 million and a net
unfavorable change in operating assets and liabilities of $71.1 million. The net
change in operating assets and liabilities was primarily driven by an increase
in accounts and other receivable of $170.4 million, an increase in inventory of
$40.8 million, and an increase in prepaid expenses and other current assets of
$2.9 million. This was partially offset by an increase in accounts payable,
accrued expenses and other current liabilities of $144.7 million.
The increase in accounts and other receivable was due to increase in sales in
the first three quarters of fiscal 2021. The increase in inventory was due to
higher manufacturing activities during the third quarter of fiscal 2021 as
compared to the fourth quarter of fiscal 2020 in anticipation of higher demand
in subsequent periods. The higher accounts payable, accrued expenses and other
current liabilities was primarily due to higher purchases, accruals on incentive
compensation and other bonuses, and customer credits in the third quarter of
fiscal 2021.
Net cash provided by investing activities was due to net redemption of
short-term investments of $95.0 million and proceeds from sale of an
equity-method investment of $2.1 million. This was partially offset by the cash
outflow for the Uniqarta acquisition of $26.3 million and capital expenditures
of $16.7 million.
Net cash used in financing activities was primarily due to common stock
repurchases of $7.0 million and dividend payments of $24.8 million.
Nine months ended June 27, 2020
Net cash provided by operating activities was primarily due to net income of
$36.5 million and non-cash adjustments to net income of $31.8 million and
partially offset by a net unfavorable change in operating assets and liabilities
of $5.7 million. The decrease in net change in operating assets and liabilities
was primarily driven by an increase in inventory of $28.0 million, and a
decrease in income tax payable of $5.4 million. This was partially offset by an
increase in accounts payable, accrued expenses and other current liabilities of
$25.9 million, and a decrease in prepaid expenses and other current assets of
$1.7 million.
The increase in inventory was due to higher manufacturing activities during the
third quarter of fiscal 2020 as compared to the fourth quarter of fiscal 2019 in
anticipation of higher demand in subsequent periods. The decrease in income tax
payable was mainly due to payment. The higher accounts payable, accrued expenses
and other current liabilities was primarily due to higher purchases, and higher
accruals on incentive compensation and other bonuses in the third quarter of
fiscal 2020.
Net cash provided by investing activities was due to net redemption of
short-term investments of $35.0 million to repay the short-term debt. This was
partially offset by capital expenditures of $7.8 million and an equity
investment of $1.3 million.
Net cash used by financing activities was primarily due to net repayment of
short-term debt of $60.9 million, common stock repurchases of $46.9 million and
dividend payments of $22.8 million.
Fiscal 2021 Liquidity and Capital Resource Outlook
We expect our aggregate fiscal 2021 capital expenditures to be between
approximately $26.0 million and $30.0 million, of which approximately $15.3
million has been made through the third quarter. Expenditures are anticipated to
be primarily used for R&D projects, enhancements to our manufacturing
operations, improvements to our information technology security, the continuing
implementation of an enterprise resource planning system and leasehold
improvements for our facilities. Our ability to make these expenditures will
depend, in part, on our future cash flows, which are determined by our future
operating
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performance and, therefore, subject to prevailing global macroeconomic
conditions, including the impact from the COVID-19 pandemic, as well as
financial, business and other factors, some of which are beyond our control.
As of July 3, 2021 and October 3, 2020, approximately $614.8 million and $492.0
million of cash, cash equivalents, and short-term investments were held by the
Company's foreign subsidiaries, respectively, with a portion of the cash amounts
expected to be available for use in the U.S. without incurring additional U.S.
income tax.
The Company's international operations and capital requirements are anticipated
to be funded primarily by cash generated by foreign operating activities and
cash held by foreign subsidiaries. Most of the Company's operations and
liquidity needs are outside the U.S. The Company's U.S. operations and capital
requirements are anticipated to be funded primarily by cash generated from U.S.
operating activities, and by our existing Facility Agreements. In the future,
the Company may repatriate additional cash held by foreign subsidiaries that has
already been subject to U.S. income taxes. We believe these sources of cash and
liquidity are sufficient to meet our business needs in the U.S. for the
foreseeable future including funding of U.S. operations, capital expenditures,
repayment of outstanding balances under the Facility Agreements, the dividend
program, and the share repurchase program as approved by the Board of Directors.
We believe that our existing cash, cash equivalents, short-term investments,
existing Facility Agreements, and anticipated cash flows from operations will be
sufficient to meet our liquidity and capital requirements, notwithstanding the
COVID-19 pandemic, for at least the next twelve months from the date of filing.
Our liquidity is affected by many factors, some based on normal operations of
our business and others related to global economic conditions and industry
uncertainties, which we cannot predict. We also cannot predict economic
conditions or industry downturns or the timing, strength or duration of
recoveries. We intend to continue to use our cash for working capital needs and
for general corporate purposes.
In this unprecedented environment, as a result of the COVID-19 pandemic or for
other reasons, we may seek, as we believe appropriate, additional debt or equity
financing that would provide capital for general corporate purposes, working
capital funding, additional liquidity needs or to fund future growth
opportunities, including possible acquisitions. The timing and amount of
potential capital requirements cannot be determined at this time and will depend
on a number of factors, including the actual and projected demand for our
products, semiconductor and semiconductor capital equipment industry conditions,
competitive factors, and the condition of financial markets.
Share Repurchase Program
On August 15, 2017, the Company's Board of Directors authorized a program (the
"Program") to repurchase up to $100 million in total of the Company's common
stock on or before August 1, 2020. In 2018 and 2019, the Board of Directors
increased the share repurchase authorization under the Program to $200 million
and $300 million, respectively. On July 3, 2020, the Board of Directors
increased the share repurchase authorization under the Company's existing share
repurchase program by an additional $100 million to $400 million, and extended
its duration through August 1, 2022. The Company has entered into a written
trading plan under Rule 10b5-1 of the Exchange Act to facilitate repurchases
under the Program. The Program may be suspended or discontinued at any time and
is funded using the Company's available cash, cash equivalents and short-term
investments. Under the Program, shares may be repurchased through open market
and/or privately negotiated transactions at prices deemed appropriate by
management. The timing and amount of repurchase transactions under the Program
depend on market conditions as well as corporate and regulatory considerations.
During the three and nine months ended July 3, 2021, the Company repurchased a
total of approximately 82.0 thousand and 153.0 thousand shares of common stock
under the Program at a cost of approximately $4.1 million and $6.4 million,
respectively. As of July 3, 2021, our remaining stock repurchase authorization
under the Program was approximately $135.7 million.
Dividends
On May 28, 2021, March 5, 2021, and December 10, 2020, the Board of Directors
declared a quarterly dividend of $0.14 per share of common stock. Dividends paid
during the three and nine months ended July 3, 2021 totaled $8.7 million and
$24.8 million, respectively. The declaration of any future cash dividend is at
the discretion of the Board of Directors and will depend on the Company's
financial condition, results of operations, capital requirements, business
conditions and other factors, as well as a determination that such dividends are
in the best interests of the Company's shareholders.
Other Obligations and Contingent Payments
In accordance with GAAP, certain obligations and commitments are not required to
be included in the Consolidated Condensed Balance Sheets and Statements of
Operations. These obligations and commitments, while entered into in the normal
course of business, may have a material impact on our liquidity and are
disclosed in the table below.
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  Table of Contents
As of July 3, 2021, the Company had deferred tax liabilities of $32.9 million
and unrecognized tax benefits within the income taxes payable for uncertain tax
positions of $12.5 million, inclusive of accrued interest on uncertain tax
positions of $1.6 million, substantially all of which would affect our effective
tax rate in the future, if recognized. It is reasonably possible that the amount
of the unrecognized tax benefit with respect to certain unrecognized tax
positions will increase or decrease during the next 12 months due to the
expected lapse of statutes of limitation and / or settlements of tax
examinations. Given the number of years and numerous matters that remain subject
to examination in various tax jurisdictions, we cannot practicably estimate the
timing or financial outcomes of these examinations and, therefore, these amounts
are excluded from the amounts below. When estimating its tax positions, the
Company considers and evaluates numerous complex areas of taxation, which may
require periodic adjustments and which may not reflect the final tax
liabilities.
The following table presents certain payments due by the Company under
contractual and statutory obligations with minimum firm commitments as
of July 3, 2021:

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AKOYA BIOSCIENCES: Discussion and analysis by management of the financial situation and the results of operations (form 10-Q)