KULICKE & SOFFA INDUSTRIES INCKLIC
KULICKE & SOFFA INDUSTRIES INC Income Taxes Disclosure
INCOME TAXES
The following table reflects the U.S. and foreign (loss) / income before income taxes for fiscal 2025, 2024 and 2023:
| Fiscal | |||||||||||||||||
| (in thousands) | 2025 | 2024 | 2023 | ||||||||||||||
| United States operations | $ | (8,095) | $ | (8,522) | $ | (5,635) | |||||||||||
| Foreign operations | 28,571 | (49,833) | 77,836 | ||||||||||||||
| Income / (loss) from operations before tax | $ | 20,476 | $ | (58,355) | $ | 72,201 | |||||||||||
The following table reflects the current and deferred components of provision for income taxes for fiscal 2025, 2024 and 2023:
| Fiscal | |||||||||||||||||
| (in thousands) | 2025 | 2024 | 2023 | ||||||||||||||
| Federal | $ | 2,873 | $ | (1,881) | $ | 10,412 | |||||||||||
| State | 75 | 232 | (128) | ||||||||||||||
| Foreign | 14,305 | 2,616 | 8,830 | ||||||||||||||
| Deferred: | |||||||||||||||||
| Federal | $ | 4,207 | $ | 101 | $ | 1,304 | |||||||||||
| State | — | — | — | ||||||||||||||
| Foreign | (1,197) | 9,583 | (5,365) | ||||||||||||||
| Provision for income taxes | $ | 20,263 | $ | 10,651 | $ | 15,053 | |||||||||||
The following table reconciles the provision for income taxes with the expected income tax provision computed based on the applicable U.S. federal statutory tax rate for fiscal 2025, 2024 and 2023:
| Fiscal | |||||||||||||||||
| (in thousands) | 2025 | 2024 | 2023 | ||||||||||||||
| Expected income tax provision based on the U.S. federal statutory tax rate | $ | 4,270 | $ | (12,255) | $ | 15,162 | |||||||||||
| Effect of earnings of foreign subsidiaries subject to different tax rates | (8,827) | (3,619) | (8,448) | ||||||||||||||
| Benefit from tax incentives | (10,740) | 980 | (11,198) | ||||||||||||||
| Benefit from research and development tax credits | (4,369) | (4,132) | (4,038) | ||||||||||||||
| Benefit from foreign tax credits | (8,660) | (1,505) | (7,834) | ||||||||||||||
| Valuation allowance | 26,725 | 18,543 | 3,127 | ||||||||||||||
| Foreign operations (Deemed income, taxes on undistributed foreign earnings, and withholding taxes) | 23,487 | 7,268 | 24,450 | ||||||||||||||
Unrecognized tax benefit(1) | (2,572) | 1,011 | 265 | ||||||||||||||
Non-deductible items(1) | 47 | 2,611 | 1,900 | ||||||||||||||
| Goodwill impairment | — | — | 2,517 | ||||||||||||||
Other, net(1) | 902 | 1,749 | (850) | ||||||||||||||
| Provision for income taxes | $ | 20,263 | $ | 10,651 | $ | 15,053 | |||||||||||
| Effective tax rate | 99.0 | % | (18.3) | % | 20.8 | % | |||||||||||
(1) Certain balances in fiscal 2024 and 2023 have been reclassified to conform to the current period presentation. These reclassifications have no impact to the consolidated financial statements in the respective fiscal periods.
As of October 4, 2025, a large portion of the Company’s undistributed foreign earnings are not considered to be indefinitely reinvested outside the U.S. and are expected to be available for use in the U.S. without incurring additional U.S. income tax. Determination of the amount of unrecognized deferred tax liabilities related to the indefinitely reinvested undistributed foreign earnings is not practicable.
Further, we operate in a number of foreign jurisdictions, including Singapore, where we have a tax incentive that allows for a reduced tax rate on certain classes of income, provided the Company meets certain employment and investment conditions through the expiration date in January 2025. In fiscal 2025, 2024 and 2023, the tax incentive arrangement helped to reduce the Company’s provision for income taxes by $10.7 million or $0.20 per share, $(1.0) million or $(0.02) per share and $11.2 million or $0.19 per share, respectively.
The following table reflects the deferred tax balances based on the tax effects of cumulative temporary differences for fiscal 2025 and 2024:
| Fiscal | |||||||||||
| (in thousands) | 2025 | 2024 | |||||||||
| Accruals and reserves | $ | 20,040 | $ | 20,149 | |||||||
| Capitalized research | 6,997 | 7,903 | |||||||||
| Tax credit carryforwards | 6,377 | 5,537 | |||||||||
| Net operating loss carryforwards | 64,760 | 43,195 | |||||||||
| Gross deferred tax assets | $ | 98,174 | $ | 76,784 | |||||||
| Valuation allowance | $ | (68,775) | $ | (45,462) | |||||||
| Deferred tax asset, net of valuation allowance | $ | 29,399 | $ | 31,322 | |||||||
| Fixed and intangible assets | $ | (16,178) | $ | (20,055) | |||||||
| Taxes on undistributed foreign earnings | (32,645) | (27,961) | |||||||||
| Total long-term deferred tax liability | $ | (48,823) | $ | (48,016) | |||||||
| Total net deferred tax liability | $ | (19,424) | $ | (16,694) | |||||||
| Reported as | |||||||||||
| Deferred tax assets | $ | 16,109 | $ | 17,900 | |||||||
| Deferred tax liabilities | $ | (35,533) | $ | (34,594) | |||||||
| Net deferred tax liabilities | $ | (19,424) | $ | (16,694) | |||||||
As of October 4, 2025, the Company has foreign net operating loss carryforwards of $233.7 million, state net operating loss carryforwards of $35.7 million, and U.S. federal and state tax credit carryforwards of $9.8 million that can be used to offset future income tax obligations. These net operating loss and tax credit carryforwards can be utilized prior to their expiration dates in fiscal years 2026 through 2045, except for certain credits and foreign net operating losses that can be carried forward indefinitely. The Company has recorded valuation allowances against certain foreign and state net operating loss carryforwards and state tax credits which are expected to expire unutilized.
The following table reconciles the beginning and ending balances of the Company’s unrecognized tax benefit, excluding related accrued interest and penalties, for fiscal 2025, 2024 and 2023:
| Fiscal | |||||||||||||||||
| (in thousands) | 2025 | 2024 | 2023 | ||||||||||||||
| Unrecognized tax benefit, beginning of year | $ | 17,703 | $ | 16,619 | $ | 16,623 | |||||||||||
| Additions for tax positions, current year | 1,365 | 1,931 | 1,493 | ||||||||||||||
| Reductions for tax positions, prior year | (3,779) | (847) | (1,497) | ||||||||||||||
| Unrecognized tax benefit, end of year | $ | 15,289 | $ | 17,703 | $ | 16,619 | |||||||||||
The Company recognizes interest and penalties related to potential income tax liabilities as a component of unrecognized tax benefit and in provision for income taxes. The amount of interest and penalties related to unrecognized tax benefit recorded in fiscal 2025 provision for income taxes is not material. As of October 4, 2025, the Company has recognized $3.1 million of accrued interest and penalties related to unrecognized tax benefit within the income tax payable for uncertain tax positions and approximately $16.6 million of unrecognized tax benefit, including related interest and penalties, that if recognized, would impact the Company’s effective tax rate.
It is reasonably possible that the amount of the unrecognized tax benefit with respect to certain uncertain 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 financial outcomes of these examinations.
The Company files a U.S. federal income tax return, as well as income tax returns in various state and foreign jurisdictions. For U.S. federal income tax returns purposes, tax years from fiscal 2022 remain subject to examination. For most state tax returns, tax years following fiscal 2006 remain subject to examination as a result of the generation of net operating loss carryforwards. In the foreign jurisdictions where the Company files income tax returns, the statutes of limitations with respect to these jurisdictions vary from jurisdiction to jurisdiction and range from 4 to 6 years. The Company’s tax returns are currently under examination by tax authorities in multiple state and foreign jurisdictions. The Company believes that adequate provisions have been made for any adjustments that may result from the examination.Free Sentinel
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Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Nov 20, 2025 | Showing above |
| 2024 | Nov 14, 2024 | |
| 2023 | Nov 16, 2023 | |
| 2022 | Nov 17, 2022 | |
| 2021 | Nov 18, 2021 | |
| 2020 | Nov 20, 2020 | |
| 2019 | Nov 15, 2019 | |
| 2018 | Nov 20, 2018 | |
| 2017 | Nov 16, 2017 | |
| 2016 | Nov 17, 2016 | |
| 2015 | Nov 18, 2015 | |
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.