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Lemelson Capital Management Announces Stake In Kulicke And Soffa Industries, Delivers Letter To Management And Board Members Urging Immediate Share Repurchase

Stocks in this article: KLIC

SOUTHBOROUGH, Mass., April 22, 2014 /PRNewswire/ -- Lemelson Capital Management, LLC, a private investment manager, today announced that it has taken a significant equity position in Kulicke & Soffa Industries (NASDAQ: KLIC), a global leader in the design and manufacture of semiconductor and LED assembly equipment.

Lemelson Capital's acquisition reflects the firm's view that shares of the company remain dramatically undervalued. 

Lemelson Capital also announced today that it is urging K&S to initiate a share repurchase plan and has delivered the following letter to the company's management team, board of directors and other stakeholders.

April 22, 2014

Mr. Bruno Guilmart  President and Chief Executive Officer K&S Corporate Headquarters23A Serangoon North Ave 5 #01-01 Singapore 554369

Dear Bruno,

Congratulations on what can only be described as first-rate execution since taking over as CEO of Kulicke and Soffa Industries in 2010. 

The firm's focus on transitioning to copper wire bonding proved timely while your and Jonathan's operational acumen appear to have contributed significantly to K & S's sizeable war chest of approximately $556 million and its near flawless balance sheet.

Additionally, your leadership team deserves much credit for achieving an important shift in corporate culture that has fueled higher employee morale while lowering turnover.

After following your progress over the years, Lemelson Capital on behalf of its clients has picked up some 368,429 shares over the last 14 months, increasing the positional size some 65 percent since YE 2013 alone, which is indicative of a firm conviction that the market continues to radically under-value the company and its future prospects. 

Lemelson Capital intends to continue buying on behalf of its clients.

As you know, cash and cash equivalents now represent approximately 60 percent of the company's market capitalization.  The wedge bonder business remains undervalued on the balance sheet and the flexible operating model that has been adopted has reduced OpEx when needed.  Also, the steady, high margin expendable tools business combined with the absence of the convertible debt that was paid off in 2011 have worked to minimize the correlation in the share price to the overall semi-conductor industry cycles while "juicing" cash flow.   As a result of these changes, short interest in K&S has never been lower.

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