Greetings, and welcome to the Kulicke and Soffa 2018 preliminary second fiscal quarter results call. All participants will continue to be in listen-only mode, and there will not be a question and answer session during this earnings call. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Joseph Elgindy, Director of Investor Relations and Strategic Initiatives for Kulicke and Soffa. Joseph, you may begin.
Thank you, Hector. Welcome everyone to Kulicke and Soffa second quarter 2018 conference call. Joining us on the call today are Fusen Chen, President and Chief Executive Officer, and Lester Wong, General Counsel and Interim Chief Financial Officer. In addition to historical statements, today's remarks will contain statements relating to future events and our future results. These statements are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Our actual results and financial condition may differ materially from what is indicated in those forward-looking statements. For a complete discussion of the risks associated with Kulicke and Soffa that could affect our future results and financial condition, please refer to our recent SEC filings, including the risk factors in the 10-K for the year ended September 30, 2017, as well as the disclaimers to our forward-looking statements contained in our preliminary earnings release.
We want to remind investors that comments during today's discussion represent preliminary financial information, which may be subject to change. I would now like to turn the call over to Fusen Chen for the business overview. Please go ahead, Fusen.
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 finance employee. We immediately initiated an investigation of this transaction with the assistance of outside advisors. In the course of this investigation, it was discovered that certain warranty accrual in prior periods had been accounted for incorrectly and therefore misstated. Although this investigation is ongoing, at the present time, we believe certain amounts that should have been included in our reserve for future warranty expenses was instead not reserved, but expenses as incurred. We currently believe that this error was not intentional. However, considering the timing and scope of this review, more time is required to validate our current understanding.
At this time, we anticipate that we will need to restate fiscal year 2017 due to inconsistencies impacting our warranty accrual, affecting both cost of goods sold and the selling, general, and administrative expenses. We do not currently anticipate the effect of this specific and identified adjustments to be material or adverse to the company. While this is an extremely critical issue, we are working closely with our external advisors and the internal team to aggressively remediate and file as soon as possible. The company is committed to addressing the issue identified and reestablishing timely financial reporting as soon as possible. While 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 prospects.
From a very high level, despite our delayed filing, our favorable end market alignment, near-term technical share gain opportunities, and the long-term potential within 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 during 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 System-in-Package applications. Overlaying this critical benefit with the high growth and demand from price-sensitive applications such as sensor and connected devices, we expect ball bonding to continue to be a dynamic and growing solution for the whole industry's needs.
We have demonstrated a clear path to optimize this business through technical share gains in LED, as well as enhancing recurring revenue opportunities within this sizable market. Within wedge bonding, where we also enjoy a strong equipment position. We have significant exposure to legacy and high-growth automotive applications, in addition to larger power storage and power control applications, supporting sustainable energy and efficient energy distribution. We have developed a growing portfolio of advanced packaging tools, ready to serve the new capability needs of next generation logic and memory, supported by wafer-level packaging, Thermo-Compression Bonding, and high accuracy flip chip processes. With that said, I would now like to come back to our March quarter's performance. During the quarter, we were again able to exceed our guidance range with $241.8 million of revenue, and currently anticipate net income to be approximately $36 million.
Revenue for the quarter increased 11.1% for the same period in the prior years, driven by an increase in both our capital equipment and the aftermarket product and service segment. Sequentially, capital equipment revenue improved by 3.2%, driven primarily by an increase in LED and IC equipment, which more than offset the anticipated reduction from the December quarter, when we recognized revenue from a sizable automotive-related order. Moving forward, we 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 combined shipment during the March quarters. Revenue within our aftermarket product and service 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 Lester Wong, who will cover this quarter's financial overview in greater detail. Lester?
Thank you, Fusen. 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 two 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 chains, 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 was overwhelmingly due to the quarter's more aggressive share repurchase program, and also increases to working capital largely related to our ongoing operational ramp. 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%-7% of variable expenses tied to revenue. Regarding tax, while still evaluating the U.S. tax reforms, 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 Fusen for the June quarter's business outlook.
Thanks, Lester. Looking into our June quarter, we are targeting revenue to be between $255 million-$270 million, are anticipating another very strong revenue year. Overall, strong IC unit growth, combined with our product cost alignment with nearly every fast-growing end market, including LED, automotive, memory, 3D sensing, and advanced packaging, all provide us with additional confidence. We continue to optimize our business and drive meaningful change within the company. This has already borne fruit in the LED market and also has set the foundation for ongoing core growth in our recurring revenue business. We also have new opportunities among our growing advanced packaging portfolio. We have recently initiated several new development efforts to further expand this offering and also our sub-market. We appreciate your ongoing support, 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.
Thank you, Fusen. Before closing, we wanted to inform investors that we will be participating at several upcoming investor events in Santa Monica, Boston, Chicago, New York, and Toronto. Additional details on past and future events are available on our corporate website at investor.kns.com. Thank you all for the time today. As always, please feel free to follow up directly with any questions. Hector, this concludes our call. Good day.
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