e10vq
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
(Mark One)
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended March 28, 2009
OR
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission file number 1-4298
COHU, INC.
(Exact name of registrant as specified in its charter)
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Delaware
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95-1934119 |
(State or other jurisdiction of
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(I.R.S. Employer Identification No.) |
incorporation or organization) |
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12367 Crosthwaite Circle, Poway, California
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92064-6817 |
(Address of principal executive offices)
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(Zip Code) |
Registrants telephone number, including area code (858) 848-8100
Indicate by check mark whether the registrant (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes þ No o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site,
if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months
(or for such shorter period that the registrant was required to submit and post such files). Yes o No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated
filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large
accelerated filer, accelerated filer Non-accelerated filer, and smaller reporting company in Rule 12b-2 of the
Exchange Act. (Check one):
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Large accelerated filer o
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Accelerated filer þ
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Non-accelerated filer o
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Smaller reporting company o |
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(Do not check if a smaller reporting company) |
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Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Act). Yes o No þ
As of March 28, 2009 the Registrant had 23,344,266 shares of its $1.00 par value common stock
outstanding.
COHU, INC.
INDEX
FORM 10-Q
March 28, 2009
Item 1.
COHU, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except par value)
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March 28, |
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December 27, |
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2009 |
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2008 * |
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(Unaudited) |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
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$ |
37,349 |
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$ |
30,194 |
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Short-term investments |
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45,683 |
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58,191 |
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Accounts receivable, less allowance for bad debts of $1,641 in 2009 and $1,610 in 2008 |
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26,488 |
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31,945 |
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Inventories: |
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Raw materials and purchased parts |
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25,742 |
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27,557 |
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Work in process |
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12,916 |
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14,159 |
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Finished goods |
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11,526 |
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11,598 |
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50,184 |
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53,314 |
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Deferred income taxes |
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16,593 |
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16,270 |
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Other current assets |
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10,781 |
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9,350 |
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Total current assets |
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187,078 |
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199,264 |
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Property, plant and equipment, at cost: |
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Land and land improvements |
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11,664 |
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11,824 |
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Buildings and building improvements |
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28,209 |
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28,341 |
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Machinery and equipment |
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33,712 |
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33,522 |
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73,585 |
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73,687 |
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Less accumulated depreciation and amortization |
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(35,363 |
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(34,258 |
) |
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Net property, plant and equipment |
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38,222 |
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39,429 |
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Deferred income taxes |
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3,029 |
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2,307 |
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Goodwill |
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59,704 |
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60,820 |
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Intangible assets, net of accumulated amortization of $8,633 in 2009 and $7,150 in 2008 (Note 2) |
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38,156 |
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40,993 |
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Other assets |
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1,234 |
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1,356 |
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$ |
327,423 |
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$ |
344,169 |
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LIABILITIES AND STOCKHOLDERS EQUITY |
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Current liabilities: |
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Accounts payable |
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$ |
10,088 |
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$ |
11,720 |
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Accrued compensation and benefits |
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7,645 |
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9,867 |
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Accrued warranty |
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4,319 |
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4,924 |
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Customer advances |
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1,924 |
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2,636 |
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Deferred profit |
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3,420 |
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4,434 |
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Income taxes payable |
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1,523 |
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1,282 |
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Other accrued liabilities |
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8,333 |
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8,812 |
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Total current liabilities |
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37,252 |
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43,675 |
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Other accrued liabilities |
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3,552 |
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3,499 |
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Deferred income taxes |
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10,677 |
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11,456 |
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Commitments and contingencies |
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Stockholders equity: |
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Preferred stock, $1 par value; 1,000 shares authorized, none issued |
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Common stock, $1 par value; 60,000 shares authorized, 23,344
shares issued and outstanding in 2009 and 23,344 shares in 2008 |
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23,344 |
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23,344 |
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Paid-in capital |
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61,781 |
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61,076 |
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Retained earnings |
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186,322 |
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193,985 |
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Accumulated other comprehensive income |
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4,495 |
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7,134 |
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Total stockholders equity |
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275,942 |
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285,539 |
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$ |
327,423 |
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$ |
344,169 |
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* |
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Derived from December 27, 2008 audited financial statements. |
The accompanying notes are an integral part of these statements.
3
COHU, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except per share amounts)
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Three Months Ended |
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March 28, |
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March 29, |
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2009 |
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2008 |
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Net sales |
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$ |
36,582 |
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$ |
58,409 |
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Cost and expenses: |
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Cost of sales |
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29,187 |
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37,602 |
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Research and development |
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7,965 |
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10,001 |
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Selling, general and administrative |
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9,045 |
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8,991 |
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46,197 |
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56,594 |
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Income (loss) from operations |
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(9,615 |
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1,815 |
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Interest and other, net |
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483 |
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1,448 |
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Income (loss) before income taxes |
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(9,132 |
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3,263 |
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Income tax provision (benefit) |
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(2,870 |
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1,311 |
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Net income (loss) |
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$ |
(6,262 |
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$ |
1,952 |
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Income (loss) per share: |
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Basic |
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$ |
(0.27 |
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$ |
0.08 |
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Diluted |
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$ |
(0.27 |
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$ |
0.08 |
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Weighted average shares used in
computing income (loss) per share: |
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Basic |
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23,344 |
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23,053 |
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Diluted |
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23,344 |
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23,235 |
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Cash dividends declared per share |
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$ |
0.06 |
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$ |
0.06 |
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The accompanying notes are an integral part of these statements.
4
COHU, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
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Three Months Ended |
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March 28, |
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March 29, |
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2009 |
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2008 |
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Cash flows from operating activities: |
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Net income (loss) |
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$ |
(6,262 |
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$ |
1,952 |
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Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities: |
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Depreciation and amortization |
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2,640 |
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1,813 |
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Share-based compensation expense |
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708 |
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1,025 |
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Deferred income taxes |
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(1,769 |
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425 |
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Loss on short-term investment |
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350 |
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Increase in other accrued liabilities |
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16 |
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63 |
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Excess tax benefits from stock options exercised |
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(34 |
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Changes in current assets and liabilities, excluding
effects from acquisitions and divestitures: |
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Accounts receivable |
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5,217 |
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3,810 |
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Inventories |
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2,653 |
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(499 |
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Other current assets |
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176 |
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621 |
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Accounts payable |
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(1,526 |
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(4,696 |
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Customer advances |
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(712 |
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(274 |
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Deferred profit |
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(1,014 |
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166 |
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Income taxes payable, including excess stock option exercise benefit |
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(1,378 |
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1,641 |
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Accrued compensation, warranty and other liabilities |
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(2,939 |
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(2,897 |
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Net cash provided from (used in) operating activities |
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(4,190 |
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3,466 |
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Cash flows from investing activities, excluding effects from
acquisitions and divestitures: |
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Purchases of short-term investments |
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(12,292 |
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(25,034 |
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Sales and maturities of short-term investments |
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25,209 |
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37,857 |
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Purchases of property, plant and equipment |
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(152 |
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(416 |
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Cash advances to discontinued operations |
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(9 |
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Other assets |
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118 |
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(4 |
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Net cash provided by investing activities |
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12,883 |
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12,394 |
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Cash flows from financing activities: |
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Issuance of stock, net of repurchases |
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(3 |
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152 |
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Excess tax benefits from stock options exercised |
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34 |
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Cash dividends |
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(1,398 |
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(1,383 |
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Net cash used in financing activities |
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(1,401 |
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(1,197 |
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Effect of exchange rate changes on cash |
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(137 |
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134 |
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Net increase in cash and cash equivalents |
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7,155 |
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14,797 |
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Cash and cash equivalents at beginning of period |
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30,194 |
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77,281 |
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Cash and cash equivalents at end of period |
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$ |
37,349 |
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$ |
92,078 |
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Supplemental disclosure of cash flow information: |
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Cash paid (refunded) during the period for: |
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Income taxes |
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$ |
36 |
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$ |
(1,024 |
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Inventory capitalized as capital assets |
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$ |
201 |
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$ |
132 |
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Dividends declared but not yet paid |
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$ |
1,401 |
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$ |
1,383 |
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The accompanying notes are an integral part of these statements.
5
Cohu, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
March 28, 2009
1. Summary of Significant Accounting Policies
Basis of Presentation
Our fiscal years are based on a 52- or 53-week period ending on the last Saturday in December.
The condensed consolidated balance sheet at December 27, 2008 has been derived from our
audited financial statements at that date. The interim condensed consolidated financial
statements as of March 28, 2009 (also referred to as the first quarter of fiscal 2009) and
March 29, 2008 (also referred to as the first quarter of fiscal 2008) are unaudited.
However, in managements opinion, these financial statements reflect all adjustments
(consisting only of normal, recurring items) necessary to provide a fair presentation of our
financial position, results of operations and cash flows for the periods presented. The first
quarters of fiscal 2009 and 2008 were each comprised of 13 weeks.
Our interim results are not necessarily indicative of the results that should be expected for
the full year. For a better understanding of Cohu, Inc. and our financial statements, we
recommend reading these interim condensed consolidated financial statements in conjunction
with our audited financial statements for the year ended December 27, 2008, which are included
in our 2008 Annual Report on Form 10-K, filed with the U. S. Securities and Exchange
Commission (SEC). In the following notes to our interim condensed consolidated financial
statements, Cohu, Inc. is referred to as Cohu, we, our and us.
Certain prior year balances related to our discontinued metal detection equipment segment have
been reclassified for consistency with the current year presentation. These reclassifications
had no effect on reported results of operations.
Risks and Uncertainties
We are subject to a number of risks and uncertainties that may significantly impact our future
operating results. These risks and uncertainties are discussed under Item 1A. Risk Factors
included in this Form 10-Q. As our interim description of risks and uncertainties only
includes any material changes to our annual description, we also recommend reading the
description of the risk factors associated with our business previously disclosed in Item 1A.
of our 2008 Annual Report on Form 10-K. Understanding these risks and uncertainties is
integral to the review of our interim condensed consolidated financial statements.
Share-Based Compensation
Share-based compensation expense related to stock options is recorded based on the fair value
of the award on its grant date which we estimate using the Black-Scholes valuation model.
Share-based compensation expense related to restricted stock unit awards is calculated based
on the market price of our common stock on the grant date, reduced by the present value of
dividends expected to be paid on our common stock prior to vesting of the restricted stock
unit.
Reported share-based compensation is classified, in the condensed consolidated interim
financial statements, as follows (in thousands):
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Three Months Ended |
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March 28, |
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March 29, |
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2009 |
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2008 |
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Cost of sales |
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$ |
58 |
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$ |
85 |
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Research and development |
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204 |
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300 |
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Selling, general and administrative |
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446 |
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640 |
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Total share-based compensation |
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708 |
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1,025 |
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Income tax benefit |
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(200 |
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(266 |
) |
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Total share-based compensation,
net of tax |
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$ |
508 |
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$ |
759 |
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Income (Loss) Per Share
Income (loss) per share is computed in accordance with FASB Statement No. 128, Earnings per
Share. Basic income (loss) per share is computed using the weighted average number of common
shares outstanding during each period. In loss periods, potentially dilutive securities are
excluded from the per share computations due to their anti-dilutive effect. Diluted income per
share includes the dilutive effect of common shares potentially issuable upon the exercise of
stock options, vesting of outstanding restricted stock units and issuance of stock under our
6
Cohu, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
March 28, 2009
employee stock purchase plan using the treasury stock method. For purposes of computing
diluted income per share, stock options with exercise prices that exceed the average fair
market value of our common stock for the period are excluded. These options could be included
in the calculation in the future if we are profitable and the average market value of our
common shares increases and is greater than the exercise price of these options. For the
three months ended March 28, 2009, had we reported net income instead of a net loss,
approximately 9,000 shares of our common stock would have been included in the calculation of
diluted earnings per share and approximately 2,422,000 shares of our common stock would have
been excluded from the computation. For the three months ended March 29, 2008, options to
purchase approximately 1,610,000 shares of common stock were excluded from the computation. The following table
reconciles the denominators used in computing basic and diluted income per share (in
thousands):
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Three Months Ended |
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March 28, |
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March 29, |
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2009 |
|
2008 |
Weighted average common shares |
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23,344 |
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23,053 |
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Effect of dilutive stock options |
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182 |
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23,344 |
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23,235 |
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Goodwill, Other Intangible Assets and Long-lived assets
Under Statement No. 142, goodwill
and other intangible assets with indefinite useful lives are not amortized, but are reviewed
annually for impairment. Our annual testing date is October 1 and we did not recognize any
goodwill impairment as a result of performing this annual test in 2008. Other events and
changes in circumstances may also require goodwill to be tested for impairment between annual
measurement dates. While a decline in stock price and market capitalization is not
specifically cited in Statement No. 142 as a goodwill impairment indicator, a companys stock
price and market capitalization should be considered in determining whether it is more likely
than not that the fair value of a reporting unit is less than its book value. The financial
and credit market volatility directly impacts our fair value measurement through our stock
price that we use to determine our market capitalization. During times of volatility,
significant judgment must be applied to determine whether stock price changes are a short-term
swing or a longer-term trend. As of March 28, 2009, we do not believe there have been any
events or circumstances that would require us to perform an interim goodwill impairment
review, however, a sustained decline in Cohus market capitalization below book value could
lead us to determine, in a future period, that an interim goodwill impairment review is
required and may result in an impairment charge which would have a negative impact on our
results from operations.
Separable long-lived assets that have finite lives are amortized over their useful lives and
are reviewed for impairment whenever events or changes in circumstances indicate that the
carrying amount of the assets might not be recoverable. Conditions that would necessitate an
impairment assessment include a significant decline in the observable market value of an
asset, a significant change in the extent or manner in which an asset is used, or any other
significant adverse change that would indicate that the carrying amount of an asset or group
of assets may not be recoverable.
Revenue Recognition
Our revenue recognition policy is disclosed in Note 1 of the Notes to Consolidated Financial
Statements included in our Annual Report on Form 10-K for the year ended December 27, 2008. As
more fully described in that policy, revenue from products that have not previously satisfied
customer acceptance requirements is recognized upon customer acceptance. The gross profit on
sales that are not recognized is generally recorded as deferred profit and reflected as a
current liability in our consolidated balance sheet.
At March 28, 2009, we had deferred revenue totaling approximately $5.5 million and deferred
profit of $3.4 million. At December 27, 2008, we had deferred revenue totaling approximately
$6.7 million and deferred profit of $4.4 million.
Retiree Medical Benefits
We provide post-retirement health benefits to certain executives and directors under a
noncontributory plan. The net periodic benefit cost incurred during the first quarter of
fiscal 2009 and 2008 was not significant.
7
Cohu, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
March 28, 2009
Recent Accounting Pronouncements
In December 2007, the FASB issued Statement No. 141(Revised 2007), Business Combinations
(Statement No. 141R), which establishes principles and requirements for the reporting entity
in a business combination, including recognition and measurement in the financial statements
of the identifiable assets acquired, the liabilities assumed, and any non-controlling interest
in the acquiree. This statement also establishes disclosure requirements to enable financial
statement users to evaluate the nature and financial effects of the business combination.
Statement No. 141R applies prospectively to business combinations for which the acquisition
date is on or after the beginning of the first annual reporting period beginning on or after
December 15, 2008, and interim periods within those fiscal years. Statement No. 141R became
effective for our fiscal year beginning in 2009. We expect Statement No. 141R will have an
impact on our consolidated financial statements, but the nature and magnitude of the specific
effects will depend upon the nature, terms and size of the acquisitions we consummate
subsequent to our adoption of the revised standard.
We adopted FASB Statement No. 157, Fair Value Measurements (Statement No. 157) on
December 30, 2007, the first day of fiscal year 2008. Statement No. 157 defines fair value,
establishes a methodology for measuring fair value, and expands the
required disclosure for fair value measurements. In February 2008, the FASB issued FASB Staff
Position No. FAS 157-2, Effective Date of FASB Statement No. 157, which amends Statement
No. 157 by delaying its effective date by one year for non-financial assets and non-financial
liabilities, except for items that are recognized or disclosed at fair value in the financial
statements on a recurring basis. Therefore, beginning on December 30, 2007, this standard
applies prospectively to new fair value measurements of financial instruments and recurring
fair value measurements of non-financial assets and non-financial liabilities. On December 28,
2008, the beginning of our 2009 fiscal year, the standard also applied to all other fair value
measurements. See Note 9, Fair Value Measurements, for additional information.
In March 2008, the FASB issued Statement No. 161, Disclosures about Derivative Instruments
and Hedging Activities-an amendment of FASB Statement No. 133 (Statement No. 161).
Statement No. 161 expands the current disclosure requirements of FASB Statement No. 133,
Accounting for Derivative Instruments and Hedging Activities, and requires that companies
must now provide enhanced disclosures on a quarterly basis regarding how and why the entity
uses derivatives, how derivatives and related hedged items are accounted for under FASB
Statement No. 133 and how derivatives and related hedged items affect the companys financial
position, performance and cash flows. Statement No. 161 is effective prospectively for periods
beginning after November 15, 2008. As we do not currently enter into derivative or hedging
agreements Statement No. 161 did not have an impact on our consolidated financial position or
results of operations.
In April 2008, the FASB issued Staff Position No. FAS 142-3, Determination of the Useful Life
of Intangible Assets (FSP FAS 142-3). FSP FAS 142-3 amends the factors that should be
considered in developing renewal or extension assumptions used to determine the useful life of
a recognized intangible asset under FASB Statement No. 142, Goodwill and Other Intangible
Assets (Statement No. 142). The intent of FSP FAS 142-3 is to improve the consistency
between the useful life of a recognized intangible asset under Statement No. 142 and the
period of expected cash flows used to measure the fair value of the asset under Statement No.
141R, and other U.S. generally accepted accounting principles. FSP FAS 142-3 became effective
for our fiscal year beginning in 2009. FSP FAS 142-3 could have an impact on our consolidated
financial statements, but the nature and magnitude of the specific effects will depend upon
the nature, terms and size of the acquisitions we consummate subsequent to our adoption of
this standard.
2. Strategic Technology Transactions, Goodwill and Other Intangible Assets
Rasco
On December 9, 2008, our wholly owned semiconductor equipment subsidiary, Delta Design, Inc.,
and certain subsidiaries of Delta acquired all of the outstanding share capital of Rasco GmbH,
Rosenheim Automation Systems Corporation, and certain assets of Rasco Automation Asia
(collectively Rasco). The results of Rascos operations have been included in our
consolidated financial statements since that date. Rasco, headquartered near Munich, Germany,
designs, manufactures and sells gravity-feed and strip semiconductor test handlers used in
final test operations by semiconductor manufacturers and test subcontractors.
8
Cohu, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
March 28, 2009
The purchase price of this acquisition was approximately $81.6 million, and was funded
primarily by cash reserves ($80.0 million), other acquisition costs ($1.6 million) and certain
liabilities assumed ($18.6 million, which includes approximately $8.2 million of deferred tax
liabilities and $3.7 million of contractual obligations to purchase inventory). The
acquisition was considered a business in accordance with EITF 98-3, Determining Whether a
Nonmonetary Transaction Involves Receipt of Productive Assets or of a Business and the total
cost of the acquisition was allocated to the assets acquired and liabilities assumed based on
their estimated respective fair values, in accordance with Financial Accounting Standards
Board (FASB) Statement No. 141, Business Combinations, (Statement No. 141). The Rasco
acquisition resulted in the recognition of goodwill of approximately $41.3 million. The
acquisition was nontaxable and certain of the assets acquired, including goodwill and
intangibles, will generally not be deductible for tax purposes. The goodwill has been assigned
to our semiconductor equipment segment.
During the first quarter of fiscal 2009 we finalized the purchase price allocation with no
adjustments to previously disclosed amounts. The allocation of purchase price to the acquired
assets and assumed liabilities was as follows (in thousands):
|
|
|
|
|
Current assets |
|
$ |
14,173 |
|
Fixed assets |
|
|
8,375 |
|
Other assets |
|
|
636 |
|
Intangible assets |
|
|
33,360 |
|
In-process research and development (IPR&D) |
|
|
2,400 |
|
Goodwill |
|
|
41,336 |
|
|
|
|
|
Total assets acquired |
|
|
100,280 |
|
Liabilities assumed |
|
|
(18,643 |
) |
|
|
|
|
Net assets acquired |
|
$ |
81,637 |
|
|
|
|
|
Amounts allocated to intangible assets are being amortized on a straight-line basis over their
useful lives of eight years. Fluctuations in the exchange rate of the Euro, the functional
currency of Rasco, impact the U.S. dollar value of the goodwill and intangible assets in our
consolidated financial statements and, as a result, the future gross carrying value and
amortization of the acquired intangible assets may differ from the amounts presented.
Intangible Assets, subject to amortization
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 28, 2009 |
|
|
December 27, 2008 |
|
|
|
Gross Carrying |
|
|
Accumulated |
|
|
Gross Carrying |
|
|
Accumulated |
|
(in thousands) |
|
Amount |
|
|
Amortization |
|
|
Amount |
|
|
Amortization |
|
|
Unigen technology |
|
$ |
7,020 |
|
|
$ |
4,293 |
|
|
$ |
7,020 |
|
|
$ |
3,935 |
|
AVS technology |
|
|
2,210 |
|
|
|
1,091 |
|
|
|
2,309 |
|
|
|
996 |
|
Rasco Technology |
|
|
33,261 |
|
|
|
1,299 |
|
|
|
34,433 |
|
|
|
269 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
42,491 |
|
|
$ |
6,683 |
|
|
$ |
43,762 |
|
|
$ |
5,200 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization expense related to intangible assets was approximately $1.5 million and
$0.7 million in the first quarter of fiscal 2009 and 2008, respectively. The amounts included
in the table above for the periods ended March 28, 2009 and December 27, 2008 exclude
approximately $2.3 million and $2.4 million, respectively, related to the Rasco trade name
which has an indefinite life and is not being amortized. Changes in the carrying values of AVS
and Rasco intangible assets are a result of the impact of fluctuations in exchange rates.
3. Employee Stock Benefit Plans
Employee Stock Purchase Plan The Cohu, Inc. 1997 Employee Stock Purchase Plan (the Plan)
provides for the issuance of a maximum of 1,400,000 shares of our common stock. Under the
Plan, eligible employees may purchase shares of common stock through payroll deductions. The
price paid for the common stock is equal to 85% of the fair market value of our common stock
on specified dates. At March 28, 2009, there were 506,567 shares available for issuance under
the Plan.
Stock Options Under our equity incentive plans, stock options may be granted to employees,
consultants and directors to purchase a fixed number of shares of our common stock at prices
not less than 100% of the fair market value at the date of grant. Options generally vest and
become exercisable after one year or in four annual increments beginning one year after the
grant date and expire five to ten years from the grant date. At March 28, 2009, 63,215 shares
were available for future equity grants under the Cohu, Inc. 2005 Equity Incentive Plan. We
have historically issued new shares of our common stock upon share option exercise.
9
Cohu, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
March 28, 2009
At March 28, 2009 we had 3,196,767 stock options outstanding. These options had a
weighted-average exercise price of $12.97 per share, an aggregate intrinsic value of
approximately $0.6 million and the weighted average remaining contractual term was
approximately 7.0 years.
At March 28, 2009 we had 1,655,668 stock options outstanding that were exercisable. These
options had a weighted-average exercise price of $16.38 per share, an aggregate intrinsic value
of $0 and the weighted average remaining contractual term was approximately 4.6 years.
Restricted Stock Units We issue restricted stock units to certain employees and directors.
Restricted stock units vest over either a one-year or a four-year period from the date of
grant. Prior to vesting, restricted stock units do not have dividend equivalent rights, do
not have voting rights and the shares underlying the restricted stock units are not considered
issued and outstanding. Shares of our common stock will be issued on the date the restricted
stock units vest.
At March 28, 2009 we had 248,078 restricted stock units outstanding with an aggregate intrinsic
value of approximately $1.9 million and the weighted average remaining vesting period was
approximately 2.1 years.
4. Comprehensive Income (Loss)
Comprehensive income (loss) represents all non-owner changes in stockholders equity and
consists of, on an after-tax basis where applicable, the following (in thousands):
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
March 28, |
|
|
March 29, |
|
|
|
2009 |
|
|
2008 |
|
|
|
|
Net income (loss) |
|
$ |
(6,262 |
) |
|
$ |
1,952 |
|
Foreign currency translation adjustment |
|
|
(2,857 |
) |
|
|
664 |
|
Change in unrealized gain/loss on investments |
|
|
254 |
|
|
|
202 |
|
|
|
|
|
|
|
|
Comprehensive income (loss) |
|
$ |
(8,865 |
) |
|
$ |
2,818 |
|
|
|
|
|
|
|
|
Our accumulated other comprehensive income balance totaled approximately $4.5 million and
$7.1 million at March 28, 2009 and December 27, 2008, respectively, and was attributed to, net
of income taxes where applicable, unrealized losses and gains on investments, adjustments
resulting from the adoption of FASB Statement No. 158, Employers Accounting for Defined
Benefit Pension and Other Postretirement Plans, (an amendment of FASB Statements No. 87, 88,
106, and 132R) and foreign currency adjustments resulting from the translation of certain
accounts into U.S. dollars where the functional currency is the Euro.
5. Income Taxes
The income tax provision (benefit) included in the condensed consolidated statements of
operations for the three months ended March 28, 2009 and March 29, 2008 is based on the
estimated annual effective tax rate for the entire year. These estimated effective tax rates
are subject to adjustment in subsequent quarterly periods as our estimates of pretax income or
loss for the year are increased or decreased. The effective tax rates of (31.4)% and 40.2%,
for the three months ended March 28, 2009 and March 29, 2008, respectively, differ from the
U.S. federal statutory rate primarily due to state taxes, research and development tax
credits, foreign income taxed at lower rates, changes in the valuation allowance on deferred
tax assets and the liability for unrecognized tax benefits, the effects of Statement No. 123R
that does not allow deferred tax benefits to be initially recognized on compensation expense
related to incentive stock options and employee stock purchase plans and interest expense
recorded on unrecognized tax benefits.
Realization of our deferred tax assets is based upon the weight of all available evidence,
including such factors as our recent earnings history and expected future taxable income. We
believe that it is more likely than not that the majority of these assets will be realized;
however, ultimate realization could be negatively impacted by market conditions or other
factors not currently known or anticipated. If the current worldwide economic and financial
crisis continues for an extended period of time and we continue to incur losses, realization
of our deferred tax assets will be jeopardized and this may require us to increase our
valuation allowance with a significant charge to income tax expense in future periods. In
accordance with FASB Statement No. 109, Accounting for Income Taxes, (Statement No. 109),
deferred tax assets are reduced by a valuation allowance if it is more likely than not that
some or all of the deferred tax assets will not be realized. At December 27, 2008 we had
gross deferred tax assets of $27.6 million. A valuation allowance, net of federal benefit, of
approximately $4.3 million was provided on our deferred tax assets at December 27, 2008, for
state tax credit and net operating loss carryforwards that, in the opinion of management, are
more likely than not to expire before we can use them.
10
Cohu, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
March 28, 2009
There was no material change to our unrecognized tax benefits and interest accrued related to
unrecognized tax benefits during the period ended March 28, 2009. We do not expect that the
total amount of unrecognized tax benefits will significantly change over the next 12 months.
In October, 2007 the Internal Revenue Service commenced a routine examination of our U.S.
income tax return for 2005. This examination was substantially completed in 2008 and is
expected to be finalized in 2009 without any material adjustments.
6. Industry Segments
We have three reportable segments as defined by FASB Statement No. 131, Disclosures about
Segments of an Enterprise and Related Information. As discussed in Note 2, in December 2008,
we purchased Rasco, which has been included in our semiconductor equipment segment. Our
reportable segments are business units that offer different products and are managed
separately because each business requires different technology and marketing strategies.
We allocate resources and evaluate the performance of segments based on profit or loss from
operations, excluding interest, corporate expenses and unusual gains or losses. Intersegment
sales were not significant for any period.
Financial information by industry segment is as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
March 28, |
|
|
March 29, |
|
|
|
2009 |
|
|
2008 |
|
Net sales by segment: |
|
|
|
|
|
|
|
|
Semiconductor equipment |
|
$ |
24,581 |
|
|
$ |
44,692 |
|
Television cameras |
|
|
3,919 |
|
|
|
4,434 |
|
Microwave communications |
|
|
8,082 |
|
|
|
9,283 |
|
|
|
|
|
|
|
|
Total consolidated net sales and
net sales for reportable segments |
|
$ |
36,582 |
|
|
$ |
58,409 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment profit (loss): |
|
|
|
|
|
|
|
|
Semiconductor equipment |
|
$ |
(9,372 |
) |
|
$ |
2,272 |
|
Television cameras |
|
|
(174 |
) |
|
|
(465 |
) |
Microwave communications |
|
|
952 |
|
|
|
1,126 |
|
|
|
|
|
|
|
|
Profit (loss) for reportable segments |
|
|
(8,594 |
) |
|
|
2,933 |
|
Other unallocated amounts: |
|
|
|
|
|
|
|
|
Corporate expenses |
|
|
(1,021 |
) |
|
|
(1,118 |
) |
Interest and other, net |
|
|
483 |
|
|
|
1,448 |
|
|
|
|
|
|
|
|
Income (loss) before income taxes |
|
$ |
(9,132 |
) |
|
$ |
3,263 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 28, |
|
|
December 27, |
|
|
|
2009 |
|
|
2008 |
|
Total assets by segment (in thousands): |
|
|
|
|
|
|
|
|
Semiconductor equipment |
|
$ |
195,218 |
|
|
$ |
206,199 |
|
Television cameras |
|
|
10,247 |
|
|
|
10,458 |
|
Microwave communications |
|
|
22,337 |
|
|
|
22,793 |
|
|
|
|
|
|
|
|
Total assets for reportable segments |
|
|
227,802 |
|
|
|
239,450 |
|
Corporate, principally cash and investments
and deferred taxes |
|
|
99,621 |
|
|
|
104,719 |
|
|
|
|
|
|
|
|
Total consolidated assets |
|
$ |
327,423 |
|
|
$ |
344,169 |
|
|
|
|
|
|
|
|
A small number of customers historically have been responsible for a significant portion of
our consolidated net sales. Two customers of the semiconductor equipment segment accounted for
43% of our consolidated net sales for the first quarter of fiscal 2009. Three customers of the
semiconductor equipment segment accounted for 57% of our consolidated net sales for the first
quarter of fiscal 2008.
11
Cohu, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
March 28, 2009
7. Contingencies
We previously disclosed that in May, 2007 our Broadcast Microwave Services subsidiary (BMS)
received a subpoena from a grand jury seated in the Southern District of California,
requesting the production of certain documents related to BMS export of microwave
communications equipment. BMS completed production of documents responsive to the request in
September 2007 and has fully cooperated. On April 30, 2009, BMS received a letter from the U.S. Department of State requesting that BMS provide certain information related to their review of this matter. As of the date of this report, it is premature to assess whether this matter
will have any impact on the BMS business or results of operations.
In addition to the above matter, from time-to-time we are involved in various legal
proceedings, examinations by various tax authorities and claims that have arisen in the
ordinary course of our businesses. Although the outcome of such legal proceedings, claims and
examinations cannot be predicted with certainty, we do not believe any such matters exist at
this time that will have a material adverse effect on our financial position or results of
operations.
8. Guarantees
Our products are generally sold with warranty periods that range from 12 to 36 months
following sale or installation. Parts and labor are covered under the terms of the warranty
agreement. The warranty provision is based on historical and projected experience by product
and configuration.
Changes in accrued warranty during the first quarter of fiscal 2009 and 2008 were as follows
(in thousands):
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
March 28, |
|
|
March 29, |
|
|
|
2009 |
|
|
2008 |
|
Balance at beginning of period |
|
$ |
4,924 |
|
|
$ |
6,760 |
|
Warranty expense accruals |
|
|
1,019 |
|
|
|
2,034 |
|
Warranty payments |
|
|
(1,624 |
) |
|
|
(2,484 |
) |
|
|
|
|
|
|
|
Balance at end of period |
|
$ |
4,319 |
|
|
$ |
6,310 |
|
|
|
|
|
|
|
|
From time-to-time, during the ordinary course of business, we provide standby letters of
credit to certain parties. As of March 28, 2009, the maximum potential amount of future
payments that Cohu could be required to make under these standby letters of credit was
approximately $1.3 million. We have not recorded any liability in connection with these
guarantee arrangements beyond that required to appropriately account for the underlying
transaction being guaranteed. We do not believe, based on historical experience and
information currently available, that it is probable that any amounts will be required to be
paid under these arrangements.
9. Fair Value Measurements
Statement No. 157 establishes a valuation hierarchy for disclosure of the inputs to valuation
used to measure fair value. This hierarchy prioritizes the inputs into three broad levels as
follows. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets
or liabilities. Level 2 inputs are quoted prices for similar assets and liabilities in active
markets or inputs that are observable for the asset or liability, either directly or
indirectly through market corroboration, for substantially the full term of the financial
instrument. Level 3 inputs are unobservable inputs based on our own assumptions used to
measure assets and liabilities at fair value. A financial asset or liabilitys classification
within the hierarchy is determined based on the lowest level input that is significant to the
fair value measurement.
12
Cohu, Inc.
Notes to Unaudited Condensed Consolidated Financial Statements
March 28, 2009
The following table provides the assets carried at fair value measured on a recurring basis as
of March 28, 2009 (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair value measurements using: |
|
|
|
|
|
|
|
Significant other |
|
|
Significant |
|
|
|
|
|
|
Quoted prices in |
|
|
observable |
|
|
unobservable |
|
|
Total estimated |
|
|
|
active markets |
|
|
inputs |
|
|
inputs |
|
|
fair value at |
|
|
|
(Level 1) |
|
|
(Level 2) |
|
|
(Level 3) |
|
|
March 28, 2009 |
|
Cash |
|
$ |
9,830 |
|
|
$ |
|
|
|
$ |
|
|
|
$ |
9,830 |
|
Money market funds |
|
|
27,519 |
|
|
|
|
|
|
|
|
|
|
|
27,519 |
|
Bank certificates of deposit |
|
|
|
|
|
|
2,252 |
|
|
|
|
|
|
|
2,252 |
|
Corporate debt securities |
|
|
|
|
|
|
29,966 |
|
|
|
|
|
|
|
29,966 |
|
U.S. government agencies |
|
|
|
|
|
|
5,278 |
|
|
|
|
|
|
|
5,278 |
|
Asset-backed securities |
|
|
|
|
|
|
8,187 |
|
|
|
|
|
|
|
8,187 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
37,349 |
|
|
$ |
45,683 |
|
|
$ |
|
|
|
$ |
83,032 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
When available, we use quoted market prices to determine the fair value of our investments,
and they are included in Level 1. When quoted market prices are unobservable, we use quotes
from independent pricing vendors based on recent trading activity and other relevant
information. These investments are included in Level 2 and primarily comprise our portfolio of
corporate debt securities, bank certificates of deposit, government-sponsored enterprise, and
asset-backed securities.
13
Cohu, Inc.
Managements Discussion and Analysis of Financial Condition and Results of Operations
March 28, 2009
This Form 10-Q contains certain forward-looking statements including expectations of market
conditions, challenges and plans, within the meaning of Section 21E of the Securities Exchange Act
of 1934, as amended, and is subject to the Safe Harbor provisions created by that statute. Such
forward-looking statements are based on managements current expectations and beliefs, including
estimates and projections about our industries and include, but are not limited to, statements
concerning financial position, business strategy, and plans or objectives for future operations.
Forward-looking statements are not guarantees of future performance, and are subject to certain
risks, uncertainties, and assumptions that are difficult to predict and may cause actual results to
differ materially from managements current expectations. Such risks and uncertainties include
those set forth in this Quarterly Report on Form 10-Q and our 2008 Annual Report on Form 10-K under
the heading Item 1A. Risk Factors. The forward-looking statements in this report speak only as
of the time they are made, and do not necessarily reflect managements outlook at any other point
in time. We undertake no obligation to publicly update any forward-looking statements, whether as
a result of new information, future events, or for any other reason, however, readers should
carefully review the risk factors set forth in other reports or documents we file from time to time
with the SEC after the date of this Quarterly Report.
OVERVIEW
Our primary business activity involves the development, manufacture, marketing, sale and servicing
of test handling and burn-in related equipment and thermal sub-systems for the global semiconductor
industry. This business is significantly dependent on capital expenditures by semiconductor
manufacturers and test subcontractors, which in turn are dependent on the current and anticipated
market demand for semiconductors that are subject to significant cyclical trends in demand. We
expect the semiconductor equipment industry will continue to be cyclical and volatile in part
because consumer electronics, rather than personal computers, are the principal end market for
integrated circuits and demand for consumer electronic products is difficult to accurately predict
and product life cycles have become shorter.
Like other companies in the backend semiconductor
equipment industry, our primary business has been severely impacted by the global economic crisis
and the dramatic decrease in consumer and business confidence, resulting in lower sales of
electronic products and sharply reduced demand for semiconductors and semiconductor equipment.
Changes in the semiconductor, electronics, computer and telecommunications industries, as well as
rapidly shifting global economic conditions, have had and will continue to have a significant
impact on the results of operations of our primary business.
Weak business conditions in the semiconductor equipment industry throughout 2008 were further
impacted by the global economic and financial crisis. Customers for backend semiconductor
equipment have suspended capital spending for new equipment and reduced purchases of spares and
non-essentials as the steep decline in semiconductor demand has created significant idle capacity
for integrated circuit manufacturers and test subcontractors. Recently, equipment utilization on
some test floors is trending up slightly and while this is encouraging, the business environment
remains difficult and equipment utilization is still well below normal levels. Current visibility
in the backend semiconductor industry is limited and we expect business conditions to remain
difficult, at least for the next several quarters. In response to these weak business conditions,
we have taken actions to reduce costs and conserve cash, including headcount reductions, pay cuts,
suspension of the companys matching contribution to our 401(k) plan, reduced work hours and
mandatory time off. Through this downturn, we plan to continue to invest in new product
development and key initiatives to improve gross margin and operating performance that will benefit
the results of operations of our primary business when industry conditions improve.
On December 9, 2008 we completed the acquisition of Rasco. Through this acquisition we combine
Delta, the leading supplier of logic pick and place IC test handlers, with Rasco, a leading supplier
of gravity feed handlers. This expands our semiconductor test handling product line total available
market, extends our market leadership in IC test, expands our customer base, broadens our product
and technology offerings and further strengthens our global sales and service network.
Our operating results in the last three years have been impacted by charges to cost of sales
related to excess, obsolete and lower of cost or market inventory issues. These charges totaled
approximately $20.8 million during the three-year period ended December 27, 2008 (and approximately
$2.9 million in the quarter ended March 28, 2009) and were primarily the result of decreases or
frequent changes in customer forecasts and, to a lesser extent, changes in our sales product mix.
Exposure related to inventories is common in the semiconductor equipment industry due to the narrow
customer base, the custom nature of the products and inventory and the shortened product life
cycles caused by rapid changes in semiconductor manufacturing technology. Increased competition,
particularly in the last several years, has also negatively impacted our gross margins on certain
products and we believe it is likely these conditions will exist for the foreseeable future.
14
Cohu, Inc.
Managements Discussion and Analysis of Financial Condition and Results of Operations
March 28, 2009
Our non-semiconductor equipment businesses comprised approximately 18% of our consolidated revenues
during the last three years (32.8% in the quarter ended March 28, 2009). Customers in our
microwave communications and television camera business are primarily government and military in
nature and the buying cycles are typically longer than the commercial market place. Improved sales,
operating income and orders within our microwave equipment operation during fiscal 2008 have
continued into 2009. The operating results of our television camera business during fiscal 2008
and the first quarter of fiscal 2009 were below our expectations and we are focusing on reducing
costs within this segment. Customer interest remains strong for new products developed for the
high-end security and surveillance markets.
Our management team uses several performance metrics to manage our various businesses. These
metrics, which tend to focus on near-term forecasts due to the limited order backlog in our
businesses, include (i) order bookings and backlog for the most recently completed quarter and the
forecast for the next quarter; (ii) inventory levels and related excess exposures typically based
on the next twelve months forecast; (iii) gross margin and other operating expense trends; (iv)
industry data and trends noted in various publicly available sources; and (v) competitive factors
and information. Due to the short-term nature of our order backlog that historically has
represented about three months of business and the inherent volatility of the semiconductor
equipment business, our past performance is frequently not indicative of future near term operating
results or cash flows.
Application of Critical Accounting Estimates and Policies
Our discussion and analysis of our financial condition and results of operations are based upon our
interim condensed consolidated financial statements, which have been prepared in accordance with
accounting principles generally accepted in the United States of
America. The preparation of these financial statements requires us to make estimates and judgments
that affect the reported amounts of assets, liabilities, revenues and expenses, and related
disclosure of contingent assets and liabilities. We base our estimates on historical experience,
forecasts and on various other assumptions that are believed to be reasonable under the
circumstances, however actual results may differ from those estimates under different assumptions
or conditions. The methods, estimates and judgments we use in applying our accounting policies have
a significant impact on the results we report in our financial statements. Some of our accounting
policies require us to make difficult and subjective judgments, often as a result of the need to
make estimates of matters that are inherently uncertain. Our most critical accounting estimates
that we believe are the most important to an investors understanding of our financial results and
condition and require complex management judgment include:
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revenue recognition, including the deferral of revenue on sales to customers, which
impacts our results of operations; |
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|
estimation of valuation allowances and accrued liabilities, specifically product warranty,
inventory reserves and allowance for doubtful accounts, which impact gross margin or
operating expenses; |
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|
the recognition and measurement of current and deferred income tax assets and liabilities
and the valuation allowance on deferred tax assets, which impact our tax provision; |
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the assessment of recoverability of long-lived assets including goodwill and other
intangible assets, which primarily impacts gross margin or operating expenses if we are
required to record impairments of assets or accelerate their depreciation; and |
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the valuation and recognition of share-based compensation, which impacts gross margin,
research and development expense, and selling, general and administrative expense. |
Below, we discuss these policies further, as well as the estimates and judgments involved. We also
have other policies that we consider key accounting policies; however, these policies typically do
not require us to make estimates or judgments that are difficult or subjective.
15
Cohu, Inc.
Managements Discussion and Analysis of Financial Condition and Results of Operations
March 28, 2009
Revenue Recognition: We generally recognize revenue upon shipment and title passage for established
products (i.e., those that have previously satisfied customer acceptance requirements) that provide
for full payment tied to shipment. Revenue for products that have not previously satisfied
customer acceptance requirements or from sales where customer payment dates are not determinable is
recognized upon customer acceptance. For arrangements containing multiple elements, the revenue
relating to the undelivered elements is deferred at estimated fair value until delivery of the
deferred elements.
Accounts Receivable: We maintain an allowance for doubtful accounts for estimated losses resulting
from the inability of our customers to make required payments. If the financial condition of our
customers deteriorates, resulting in an impairment of their ability to make payments, additional
allowances may be required.
Warranty: We provide for the estimated costs of product warranties in the period sales are
recognized. Our warranty obligation estimates are affected by historical product shipment levels,
product performance and material and labor costs incurred in correcting product performance
problems. Should product performance, material usage or labor repair costs differ from our
estimates, revisions to the estimated warranty liability would be required.
Inventory: The valuation of inventory requires us to estimate obsolete or excess inventory as well
as inventory that is not of saleable quality. The determination of obsolete or excess inventory
requires us to estimate the future demand for our products. The demand forecast is a direct input
in the development of our short-term manufacturing plans. We record valuation reserves on our
inventory for estimated excess and obsolete inventory and lower of cost or market concerns equal to
the difference between the cost of inventory and the estimated market value based upon assumptions
about future product demand, market conditions and product selling prices. If future product
demand, market conditions or product selling prices are less than those projected by management or
if continued modifications to products are required to meet specifications or other customer
requirements, increases to inventory reserves may be required which would have a negative impact on
our gross margin.
Income Taxes: We estimate our liability for income taxes based on the various jurisdictions where
we conduct business. This requires us to estimate our (i) current tax exposure; (ii) temporary
differences that result from differing treatment of certain items for tax and accounting purposes
and (iii) unrecognized tax benefits. Temporary differences result in deferred tax assets and
liabilities that are reflected in the consolidated balance sheet. The deferred tax assets are
reduced by a valuation allowance if, based upon all available evidence, it is more likely than not
that some or all of the deferred tax assets will not be realized. Establishing, reducing or
increasing a valuation allowance in an accounting period results in an increase or decrease in tax
expense in the statement of operations. We must make significant judgments to determine the
provision for income taxes, deferred tax assets and liabilities, unrecognized tax benefits and any
valuation allowance to be recorded against deferred tax assets. Our gross deferred tax asset
balance as of December 27, 2008 was $27.6 million, with a valuation allowance of $4.3 million for
state tax credit and loss carryforwards. The deferred tax assets consist primarily of deductible
temporary differences and tax credit and net operating loss carryforwards.
Contingencies: We are subject to certain contingencies that arise in the ordinary course of our
businesses. In accordance with FASB Statement No. 5, Accounting for Contingencies, (Statement No.
5) we assess the likelihood that future events will confirm the existence of a loss or an
impairment of an asset. If a loss or asset impairment is probable, as defined in Statement No. 5
and the amount of the loss or impairment is reasonably estimable, we accrue a charge to operations
in the period such conditions become known.
Goodwill, Intangible and Long-Lived Assets: We are required to assess goodwill impairment using the
methodology prescribed by Statement No. 142. Under the provisions prescribed in Statement No. 142
we evaluate goodwill for impairment annually. Our annual testing date is October 1 and we did not
recognize any goodwill impairment as a result of performing this annual test in 2008. Other events
and changes in circumstances may also require goodwill to be tested for impairment between annual
measurement dates. While a decline in stock price and market capitalization is not specifically
cited in Statement No. 142 as a goodwill impairment indicator, a companys stock price and market
capitalization should be considered in determining whether it is more likely than not that the fair
value of a reporting unit is less than its book value. The financial and credit market volatility
directly impacts our fair value measurement through our stock price that we use to determine our
market capitalization. During times of volatility, significant judgment must be applied to
determine whether stock price changes are a short-term swing or a longer-term trend. As of March
28, 2009, we do not believe there have been any events or circumstances that would require us to
perform an interim goodwill impairment review, however, a sustained decline in Cohus market
capitalization below book value could lead us to determine, in a future period, that an interim
goodwill impairment review is required and may result in an impairment charge which would have a
negative impact on our results from operations.
16
Cohu, Inc.
Managements Discussion and Analysis of Financial Condition and Results of Operations
March 28, 2009
Share-based Compensation: Share-based compensation expense related to stock options is recorded
based on the fair value of the award on its grant date which we estimate using the Black-Scholes
valuation model.
Share-based compensation expense related to restricted stock unit awards is calculated based on the
market price of our common stock on the grant date, reduced by the present value of dividends
expected to be paid on our common stock prior to vesting of the restricted stock unit.
Recent Accounting Pronouncements: In December 2007, the FASB issued Statement No. 141(Revised
2007), Business Combinations (Statement No. 141R), which establishes principles and
requirements for the reporting entity in a business combination, including recognition and
measurement in the financial statements of the identifiable assets acquired, the liabilities
assumed, and any non-controlling interest in the acquiree. This statement also establishes
disclosure requirements to enable financial statement users to evaluate the nature and financial
effects of the business combination. Statement No. 141R applies prospectively to business
combinations for which the acquisition date is on or after the beginning of the first annual
reporting period beginning on or after December 15, 2008, and interim periods within those fiscal
years. Statement No. 141R became effective for our fiscal year beginning in 2009. We expect
Statement No. 141R will have an impact on our consolidated financial statements, but the nature and
magnitude of the specific effects will depend upon the nature, terms and size of the acquisitions
we consummate subsequent to our adoption of the revised standard.
We adopted FASB Statement No. 157, Fair Value Measurements (Statement No. 157) on December 30,
2007, the first day of our fiscal year 2008. Statement No. 157 defines fair value, establishes a
methodology for measuring fair value, and expands the required disclosure for fair value
measurements. In February 2008, the FASB issued FASB Staff Position No. FAS 157-2, Effective Date
of FASB Statement No. 157, which amends Statement No. 157 by delaying its effective date by one
year for non-financial assets and non-financial liabilities, except for items that are recognized
or disclosed at fair value in the financial statements on a recurring basis. Therefore, beginning
on December 30, 2007, this standard applies prospectively to new fair value measurements of
financial instruments and recurring fair value measurements of non-financial assets and
non-financial liabilities. On December 28, 2008, the beginning of our 2009 fiscal year, the
standard also applied to all other fair value measurements. See Note 9, Fair Value Measurements,
for additional information.
In March 2008, the FASB issued Statement No. 161, Disclosures about Derivative Instruments and
Hedging Activities-an amendment of FASB Statement No. 133 (Statement No. 161). Statement
No. 161 expands the current disclosure requirements of FASB Statement No. 133, Accounting for
Derivative Instruments and Hedging Activities, and requires that companies must now provide
enhanced disclosures on a quarterly basis regarding how and why the entity uses derivatives, how
derivatives and related hedged items are accounted for under FASB Statement No. 133 and how
derivatives and related hedged items affect the companys financial position, performance and cash
flows. Statement No. 161 became effective for our fiscal year beginning in 2009. As we do not
currently enter into derivative or hedging agreements Statement No. 161 did not have an impact on
our financial statements.
In April 2008, the FASB issued Staff Position No. FAS 142-3, Determination of the Useful Life of
Intangible Assets (FSP FAS 142-3). FSP FAS 142-3 amends the factors that should be considered in
developing renewal or extension assumptions used to determine the useful life of a recognized
intangible asset under FASB Statement No. 142, Goodwill and Other Intangible Assets
(Statement No. 142). The intent of the position is to improve the consistency between the useful
life of a recognized intangible asset under Statement No. 142 and the period of expected cash flows
used to measure the fair value of the asset under Statement No. 141R, and other U.S. generally
accepted accounting principles. FSP FAS 142-3 became effective for our fiscal year beginning in
2009. FSP FAS 142-3 could have an impact on our consolidated financial statements, but the nature
and magnitude of the specific effects will depend upon the nature, terms and size of the
acquisitions we consummate subsequent to our adoption of this standard.
17
Cohu, Inc.
Managements Discussion and Analysis of Financial Condition and Results of Operations
March 28, 2009
RESULTS OF OPERATIONS
The following table summarizes certain operating data from continuing operations as a percentage of
net sales.
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|
|
|
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Three Months Ended |
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March 28, |
|
March 29, |
|
|
2009 |
|
2008 |
|
|
|
Net sales |
|
|
100.0 |
% |
|
|
100.0 |
% |
Cost of sales |
|
|
(79.8 |
) |
|
|
(64.4 |
) |
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|
|
|
|
|
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|
Gross margin |
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|
20.2 |
|
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|
35.6 |
|
Research and development |
|
|
(21.8 |
) |
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|
(17.1 |
) |
Selling, general and administrative |
|
|
(24.7 |
) |
|
|
(15.4 |
) |
|
|
|
|
|
|
|
|
|
Income (loss) from operations |
|
|
(26.3 |
)% |
|
|
3.1 |
% |
|
|
|
|
|
|
|
|
|
In December, 2008, we purchased Rasco. The results of Rascos operations have been included in our
consolidated financial statements since that date.
First quarter of fiscal 2009 Compared to First quarter of fiscal 2008
Net Sales
Our net sales decreased 37.4% to $36.6 million in 2009, compared to net sales of $58.4 million in
2008. Sales of semiconductor equipment in the first quarter of fiscal 2009 decreased 45.0% from the
comparable 2008 period and accounted for 67.2% of consolidated net sales in 2009 versus 76.5% in
2008. The decrease in sales of semiconductor equipment resulted from weak business conditions in
the back-end semiconductor equipment industry and the poor business climate due to the global
financial crisis. Consequently customers for backend semiconductor equipment have limited capital
spending for new equipment and reduced purchases of spares and non-essentials.
Sales of microwave communications equipment accounted for 22.1% of consolidated net sales in 2009
and decreased 12.9% when compared to the same period in fiscal 2008. The decrease in sales of our
microwave communications business during the first quarter of fiscal 2009 was attributable to
decreased product shipments to international customers within the public safety sector and the
impact of foreign currency translation rates. While the sales recognized by this segment declined
in the year over year period, orders within our microwave equipment operation increased from
$6.0 million in the first quarter of fiscal 2008 to $10.7 million in the first quarter of fiscal
2009.
Sales of television cameras accounted for 10.7% of consolidated net sales in 2009 and decreased
$0.5 million or 11.6% when compared to the same period of fiscal 2008. Television camera sales in
the first quarter of fiscal 2008 benefitted from the recognition of $0.5 million in deferred
revenue upon the receipt of customer acceptance on a contract with a government subcontractor.
Gross Margin
Gross margin consists of net sales less cost of sales. Cost of sales consists primarily of the cost
of materials, assembly and test labor, and overhead from operations. Our gross margin can fluctuate
due to a number of factors, including, but not limited to, the mix of products sold, product
support costs, inventory reserve adjustments, and utilization of manufacturing capacity. Our gross
margin, as a percentage of net sales, decreased to 20.2% in 2009 from 35.6% in 2008. During the
first quarter of fiscal 2009 our gross margin was impacted by the substantial decrease in the sales
volume of our semiconductor equipment segment due to weak business conditions.
Our gross margin has been impacted by charges to cost of sales related to excess, obsolete and
lower of cost or market inventory issues. We compute the majority of our excess and obsolete
inventory reserve requirements using a one-year inventory usage forecast. During the first quarter
of fiscal 2009 and 2008, we recorded net charges to cost of sales of approximately $2.9 million and
$0.4 million, respectively, for excess and obsolete inventory. While we believe our reserves for
excess and obsolete inventory and lower of cost or market concerns are adequate to cover known
exposures at March 28, 2009, reductions in customer forecasts or continued modifications to
products, as a result of our failure to meet specifications or other customer requirements, may
result in additional charges to operations that could negatively impact our gross margin in future
periods. Conversely, if our actual inventory usage is greater than our forecasted usage, our gross
margin in future periods may be favorably impacted.
18
Cohu, Inc.
Managements Discussion and Analysis of Financial Condition and Results of Operations
March 28, 2009
Research and Development Expense (R&D Expense)
R&D expense consists primarily of salaries and related costs of employees engaged in ongoing
research, product design and development activities, costs of engineering materials and supplies,
and professional consulting expenses. R&D expense as a percentage of net sales was 21.8% in 2009,
compared to 17.1% in 2008, decreasing in absolute dollars from $10.0 million in 2008 to
$8.0 million in 2009. Decreased R&D expense in 2009 was primarily a result of decreased labor and
material costs associated with new product development within our semiconductor equipment business
as development activities on certain new products decreased as they are nearing completion.
Selling, General and Administrative Expense (SG&A Expense)
SG&A expense consists primarily of salaries and benefit costs of employees, commission expense for
independent sales representatives, product promotion and costs of professional services. SG&A
expense as a percentage of net sales increased to 24.7% in 2009, from 15.4% in 2008. SG&A was
approximately $9.0 million in the first fiscal quarter of both 2008 and 2009. While we have reduced
costs, total SG&A expense was unchanged as incremental costs associated with Rasco, acquired in
December 2008, and one-time severance costs associated with headcount reductions at Delta Design
offset these reductions.
Interest and other, net
Interest and other, net was approximately $0.5 million and $1.4 million in the first quarter of
fiscal 2009 and 2008, respectively. Our interest income was lower in 2009 due to a decrease in our
cash and investment balances as a result of the Rasco acquisition which occurred in the fourth
quarter of 2008 and lower short-term interest rates. During the first quarter of fiscal 2008 our
interest income was negatively impacted by a loss of approximately $0.4 million recorded on our
short-term investment portfolio.
Income Taxes
The income tax provision (benefit) included in the condensed consolidated statements of operations
for the three months ended March 28, 2009 and March 29, 2008 is based on the estimated annual
effective tax rate for the entire year. These estimated effective tax rates are subject to
adjustment in subsequent quarterly periods as our estimates of pretax income or loss for the year
are increased or decreased. The effective tax rates of (31.4)% and 40.2%, for the three months
ended March 28, 2009 and March 29, 2008, respectively, differ from the U.S. federal statutory rate
primarily due to state taxes, research and development tax credits, foreign income taxed at lower
rates, changes in the valuation allowance on deferred tax assets and the liability for unrecognized
tax benefits, the effects of Statement No. 123R that does not allow deferred tax benefits to be
initially recognized on compensation expense related to incentive stock options and employee stock
purchase plans and interest expense recorded on unrecognized tax benefits.
Realization of our deferred tax assets is based upon the weight of all available evidence,
including such factors as our recent earnings history and expected future taxable income. We
believe that it is more likely than not that the majority of these assets will be realized;
however, ultimate realization could be negatively impacted by market conditions or other factors
not currently known or anticipated. If the current worldwide economic and financial crisis
continues for an extended period of time and we continue to incur losses, realization of our
deferred tax assets will be jeopardized and this may require us to increase our valuation allowance
with a significant charge to income tax expense in future periods. In accordance with Statement
No. 109, deferred tax assets are reduced by a valuation allowance if it is more likely than not
that some or all of the deferred tax assets will not be realized. At December 27, 2008 we had
gross deferred tax assets of $27.6 million. A valuation allowance, net of federal benefit, of
approximately $4.3 million was provided on our deferred tax assets at December 27, 2008, for state
tax credit and net operating loss carryforwards that, in the opinion of management, are more likely
than not to expire before we can use them.
There was no material change to our unrecognized tax benefits and interest accrued related to
unrecognized tax benefits during the period ended March 28, 2009. We do not expect that the total
amount of unrecognized tax benefits will significantly change over the next 12 months.
In October, 2007 the Internal Revenue Service commenced a routine examination of our U.S. income
tax return for 2005. This examination was substantially completed in 2008 and is expected to be
finalized in 2009 without any material adjustments.
As a result of the factors set forth above, our net loss was $6.3 million in 2009, compared to net
income of $2.0 million in 2008.
19
Cohu, Inc.
Managements Discussion and Analysis of Financial Condition and Results of Operations
March 28, 2009
LIQUIDITY AND CAPITAL RESOURCES
Our business is dependent on capital expenditures by semiconductor manufacturers and test
subcontractors that are, in turn, dependent on the current and anticipated market demand for
semiconductors. Demand for semiconductors is cyclical and volatile. We have implemented cost
reduction programs aimed at aligning our ongoing operating costs with our currently expected
revenues over the near term. These cost management initiatives include reductions to headcount and
reduced spending. The cyclical and volatile nature of our industry makes estimates of future revenues, results of operations and net cash flows
difficult.
Our primary historical source of liquidity and capital resources has been cash flow generated by
operations. While we maintain a credit facility, we have not used this as a source of cash and do
not intend to do so. We use cash to fund growth in our operating assets and to fund new products
and product enhancements primarily through research and development.
Liquidity
Working Capital: The following summarizes our cash, cash equivalents, short-term investments and
working capital:
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 28, |
|
December 27, |
|
|
|
|
|
Percentage |
(in thousands) |
|
2009 |
|
2008 |
|
Decrease |
|
Change |
Cash, cash equivalents and short-term investments |
|
$ |
83,032 |
|
|
$ |
88,385 |
|
|
$ |
(5,353 |
) |
|
|
(6.1) |
% |
Working capital |
|
|
149,826 |
|
|
|
155,589 |
|
|
|
(5,763 |
) |
|
|
(3.7) |
% |
Cash Flows
Operating Activities: Operating cash flows consist of net income, adjusted for non-cash expenses
and changes in operating assets and liabilities. Non-cash items include depreciation and
amortization; non-cash share-based compensation expense and deferred income
taxes. Our net cash used in operating activities in the three months ended March 28, 2009 totaled
$4.2 million. Cash used in operating activities was impacted by changes in current assets and
liabilities and included decreases in accounts receivable, inventory, accounts payable and accrued
compensation and other liabilities of $5.2 million, $2.7 million, $1.5 million and $2.9 million,
respectively. The decrease in accounts receivable was primarily due to lower business volume in
the first three months of fiscal 2009. The decrease in inventory was primarily due to provisions
for excess and obsolete inventory recorded within our semiconductor equipment segment due to weak
business conditions. The decrease in accounts payable and accrued compensation was a result of
the timing of cash payments primarily within our semiconductor equipment business.
Investing Activities: Investing cash flows consist primarily of cash used for capital expenditures
in support of our businesses, proceeds from investment maturities, asset disposals and
divestitures, and cash used for purchases of investments and business acquisitions. Our net cash
provided by investing activities in the first three months of fiscal 2009 totaled $12.9 million and
was primarily the result of $25.2 million in net proceeds from sales and maturities of short-term
investments, offset by $12.3 million in cash used for purchases of short-term investments. We
invest our excess cash, in an attempt to seek the highest available return while preserving
capital, in short-term investments since excess cash is only temporarily available and may be
required for a business-related purpose. Other expenditures in the first three months of fiscal
2009 included purchases of property, plant and equipment of $0.2 million. The purchases of
property, plant and equipment were primarily made to support activities in our semiconductor
equipment and microwave communications equipment businesses and consisted primarily of equipment
used in engineering, manufacturing and related functions.
Financing Activities: Cash flows from financing activities consist primarily of net proceeds from
the issuance of common stock under our stock option and employee stock purchase plans and cash used
to pay dividends to our stockholders. We issue stock options and maintain an employee stock
purchase plan as components of our overall employee compensation. We paid dividends totaling
$1.4 million, or $0.06 per common share during the first quarter of 2009. Future quarterly
dividends are subject to our cash liquidity, capital availability and periodic determinations by
our Board of Directors that cash dividends are in the best interests of our stockholders.
20
Cohu, Inc.
Managements Discussion and Analysis of Financial Condition and Results of Operations
March 28, 2009
Capital Resources
We have a $5.0 million unsecured bank line of credit bearing interest at the banks prime rate. The
line of credit will expire in July, 2009, and requires that we maintain specified minimum levels of
net worth, limits the amount of our capital expenditures and requires us to meet certain other
financial covenants. We are currently in compliance with these covenants. No borrowings were
outstanding at March 28, 2009; however, approximately $1.3 million of the credit facility was
allocated to standby letters of credit at March 28, 2009, leaving the balance of $3.7 million
available for future borrowings.
We expect that we will continue to make capital expenditures to support our business and we
anticipate that present working capital and available borrowings under our line of credit will be
sufficient to meet our operating requirements for at least the next twelve months.
Contractual Obligations and Off-Balance Sheet Arrangements
Contractual Obligations: Our significant contractual obligations consist of operating leases that
have not changed materially from those disclosed in our Annual Report on Form 10-K for the year
ended December 27, 2008.
Purchase Commitments: From time to time, we enter into commitments with our vendors to purchase
inventory at fixed prices or in guaranteed quantities. We are not able to determine the aggregate
amount of such purchase orders that represent contractual obligations, as purchase orders may
represent authorizations to purchase rather than binding agreements. Our purchase orders are based
on our current manufacturing needs and are fulfilled by our vendors within relatively short time
horizons. We typically do not have significant agreements for the purchase of raw materials or
other goods specifying minimum quantities or set prices that exceed our expected requirements for
the next three months.
Off-Balance Sheet Arrangements: During the ordinary course of business, we provide standby letters
of credit instruments to certain parties as required. As of March 28, 2009, the maximum potential
amount of future payments that we could be required to make under these standby letters of credit
was approximately $1.3 million. No liability has been recorded in connection with these
arrangements beyond those required to appropriately account for the underlying transaction being
guaranteed. We do not believe, based on historical experience and information currently available,
that it is probable that any amounts will be required to be paid under these arrangements.
21
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Interest rate risk.
At March 28, 2009 our investment portfolio includes fixed-income securities with a fair value of
approximately $45.7 million. These securities are subject to interest rate risk and will decline
in value if interest rates increase. Due to the relatively short duration of our investment
portfolio, an immediate ten percent change in interest rates (e.g. 3.00% to 3.30%) would not have a
material impact on our financial condition or results of operations.
Foreign currency exchange risk.
We conduct business on a global basis and, as such, we are potentially exposed to adverse as well
as beneficial movements in foreign currency exchange rates. Except for our subsidiaries located in
Germany which conduct business in Euros, we generally conduct business, including sales to foreign
customers, in U.S. dollars and as a result we have limited foreign currency exchange rate risk. The
effect of an immediate ten percent change in foreign exchange rates would not have a material
impact on our financial condition or results of operations.
Item 4. Controls and Procedures.
(a) Evaluation of Disclosure Controls and Procedures. Under the supervision and with the
participation of our management, including our principal executive officer and principal financial
officer, we evaluated the effectiveness of our disclosure controls and procedures, as such term is
defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934, as
amended. Based on this evaluation, our principal executive officer and principal financial officer
concluded that our disclosure controls and procedures were effective as of the end of the period
covered by this quarterly report.
It should be noted that any system of controls, however well designed and operated, can provide
only reasonable, and not absolute, assurance that the objectives of the system are met. In
addition, the design of any control system is based in part upon certain assumptions about the
likelihood of future events. Because of these and other inherent limitations of control systems,
there can be no assurance that any design will succeed in achieving its stated goals under all
potential future conditions, regardless of how remote. Our disclosure controls and procedures are
designed to provide reasonable assurance of achieving their objectives and our principal executive
officer and principal financial officer concluded that our disclosure controls and procedures were
effective at the reasonable assurance level.
(b) Changes in Internal Controls. During the last fiscal quarter, there have been no changes in our
internal control over financial reporting that have materially affected, or are reasonably likely
to materially affect, our internal control over financial reporting.
22
Part II OTHER INFORMATION
Item 1. Legal Proceedings.
The information set forth above under Note 7 contained in the Notes to Unaudited
Condensed Consolidated Financial Statements on Page 12 of this Form 10-Q is incorporated
herein by reference.
Item 1A. Risk Factors.
The most significant risk factors applicable to Cohu are described in Part I, Item 1A
(Risk Factors) of Cohus Annual Report on Form 10-K for the fiscal year ended December
27, 2008 (our 2008 Form 10-K). There have been no material changes to the risk factors
previously disclosed in our 2008 Form 10-K.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Recent Sales of Unregistered Securities
None.
Issuer Purchases of Equity Securities
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
None
Item 5. Other Information.
None.
23
Item 6. Exhibits.
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3(i).1
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Amended and Restated Certificate of Incorporation of Cohu, Inc. incorporated herein by
reference to Exhibit 3.1(a) from the Cohu, Inc. Form 10-Q for the quarterly period ended June
30, 1999 |
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3(i).2
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Certificate of Amendment of Amended and Restated Certificate of Incorporation of Cohu, Inc.
incorporated herein by reference from the Cohu, Inc. Form S-8 filed with the Securities and
Exchange Commission on June 30, 2000, Exhibit 4.1(a) |
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3(ii)
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Amended and Restated Bylaws of Cohu, Inc. incorporated herein by reference to Exhibit 3.2
from the Cohu, Inc. Report on Form 8-K filed with the Securities and Exchange Commission on
December 12, 1996 |
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4.1
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Amended and Restated Rights Agreement dated November 10, 2006, between Cohu, Inc. and Mellon
Investor Services LLC, as Rights Agent, incorporated herein by reference from the Cohu, Inc.
Report on Form 8-K filed with the Securities and Exchange Commission on November 13, 2006,
Exhibit 99.1 |
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31.1
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Certification pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002 |
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31.2
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Certification pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002 |
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32.1
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Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
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32.2
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Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
24
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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COHU, INC.
(Registrant)
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Date: May 4, 2009 |
/s/ James A. Donahue
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James A. Donahue |
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President & Chief Executive Officer |
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Date: May 4, 2009 |
/s/ Jeffrey D. Jones
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Jeffrey D. Jones |
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Vice President, Finance & Chief Financial Officer
(Principal Financial and Accounting Officer) |
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25
EXHIBIT INDEX
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Exhibit No. |
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Description |
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3(i).1
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Amended and Restated Certificate of Incorporation of Cohu, Inc. incorporated herein by
reference to Exhibit 3.1(a) from the Cohu, Inc. Form 10-Q for the quarterly period ended June
30, 1999 |
|
|
|
3(i).2
|
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Certificate of Amendment of Amended and Restated Certificate of Incorporation of Cohu, Inc.
incorporated herein by reference from the Cohu, Inc. Form S-8 filed with the Securities and
Exchange Commission on June 30, 2000, Exhibit 4.1(a) |
|
|
|
3(ii)
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|
Amended and Restated Bylaws of Cohu, Inc. incorporated herein by reference to Exhibit 3.2
from the Cohu, Inc. Report on Form 8-K filed with the Securities and Exchange Commission on
December 12, 1996 |
|
|
|
4.1
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|
Amended and Restated Rights Agreement dated November 10, 2006, between Cohu, Inc. and Mellon
Investor Services LLC, as Rights Agent, incorporated herein by reference from the Cohu, Inc.
Current Report on Form 8-K filed with the Securities and Exchange Commission on November 13,
2006, Exhibit 99.1 |
|
|
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31.1
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Certification pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002 |
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31.2
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Certification pursuant to Section 302(a) of the Sarbanes-Oxley Act of 2002 |
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32.1
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Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
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32.2
|
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Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
exv31w1
Exhibit 31.1
COHU, INC.
SARBANES-OXLEY ACT SECTION 302(a)
CERTIFICATION
I, James A. Donahue, certify that:
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1. |
|
I have reviewed this Form 10-Q of Cohu, Inc.; |
|
|
2. |
|
Based on my knowledge, this report does not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements made, in light of
the circumstances under which such statements were made, not misleading with respect to the
period covered by this report; |
|
|
3. |
|
Based on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects the financial condition,
results of operations and cash flows of the registrant as of, and for, the periods
presented in this report; |
|
|
4. |
|
The registrants other certifying officer(s) and I are responsible for establishing and
maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)
and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act
Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) Designed such disclosure controls and procedures, or caused such disclosure controls
and procedures to be designed under our supervision, to ensure that material information
relating to the registrant, including its consolidated subsidiaries, is made known to us
by others within those entities, particularly during the period in which this report is
being prepared;
(b) Designed such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision, to provide
reasonable assurance regarding the reliability of financial reporting and the preparation
of financial statements for external purposes in accordance with generally accepted
accounting principles;
(c) Evaluated the effectiveness of the registrants disclosure controls and procedures
and presented in this report our conclusions about the effectiveness of the disclosure
controls and procedures, as of the end of the period covered by this report based on such
evaluation; and
(d) Disclosed in this report any change in the registrants internal control over
financial reporting that occurred during the registrants most recent fiscal quarter (the
registrants fourth fiscal quarter in the case of an annual report) that has materially
affected, or is reasonably likely to materially affect, the registrants internal control
over financial reporting; and
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5. |
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The registrants other certifying officer(s) and I have disclosed, based on our most
recent evaluation of internal control over financial reporting, to the registrants
auditors and the audit committee of the registrants board of directors (or persons
performing the equivalent functions): |
(a) All significant deficiencies and material weaknesses in the design or operation of
internal control over financial reporting which are reasonably likely to adversely affect
the registrants ability to record, process, summarize and report financial information;
and
(b) Any fraud, whether or not material, that involves management or other employees who
have a significant role in the registrants internal control over financial reporting.
Date:
May 4, 2009
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/s/ James A. Donahue
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James A. Donahue |
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President and Chief Executive Officer |
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exv31w2
Exhibit 31.2
COHU, INC.
SARBANES-OXLEY ACT SECTION 302(a)
CERTIFICATION
I, Jeffrey D. Jones, certify that:
|
1. |
|
I have reviewed this Form 10-Q of Cohu, Inc.; |
|
|
2. |
|
Based on my knowledge, this report does not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements made, in light of
the circumstances under which such statements were made, not misleading with respect to the
period covered by this report; |
|
|
3. |
|
Based on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects the financial condition,
results of operations and cash flows of the registrant as of, and for, the periods
presented in this report; |
|
|
4. |
|
The registrants other certifying officer(s) and I are responsible for establishing and
maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)
and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act
Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) Designed such disclosure controls and procedures, or caused such disclosure controls
and procedures to be designed under our supervision, to ensure that material information
relating to the registrant, including its consolidated subsidiaries, is made known to us
by others within those entities, particularly during the period in which this report is
being prepared;
(b) Designed such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision, to provide
reasonable assurance regarding the reliability of financial reporting and the preparation
of financial statements for external purposes in accordance with generally accepted
accounting principles;
(c) Evaluated the effectiveness of the registrants disclosure controls and procedures
and presented in this report our conclusions about the effectiveness of the disclosure
controls and procedures, as of the end of the period covered by this report based on such
evaluation; and
(d) Disclosed in this report any change in the registrants internal control over
financial reporting that occurred during the registrants most recent fiscal quarter (the
registrants fourth fiscal quarter in the case of an annual report) that has materially
affected, or is reasonably likely to materially affect, the registrants internal control
over financial reporting; and
|
5. |
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The registrants other certifying officer(s) and I have disclosed, based on our most
recent evaluation of internal control over financial reporting, to the registrants
auditors and the audit committee of the registrants board of directors (or persons
performing the equivalent functions): |
(a) All significant deficiencies and material weaknesses in the design or operation of
internal control over financial reporting which are reasonably likely to adversely affect
the registrants ability to record, process, summarize and report financial information;
and
(b) Any fraud, whether or not material, that involves management or other employees who
have a significant role in the registrants internal control over financial reporting.
Date:
May 4, 2009
|
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/s/ Jeffrey D. Jones
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Jeffrey D. Jones |
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Vice President Finance & Chief Financial Officer |
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exv32w1
Exhibit 32.1
CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
(18 U.S.C. SECTION 1350)
In connection with the accompanying Quarterly Report of Cohu, Inc. (the Company) on Form
10-Q for the fiscal quarter ended March 28, 2009 (the Report), I, James A. Donahue, President and
Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, based on my knowledge:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities
Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the
financial condition and results of operations of the Company.
Date:
May 4, 2009
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/s/ James A. Donahue
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James A. Donahue, |
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President and Chief Executive Officer |
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exv32w2
Exhibit 32.2
CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
(18 U.S.C. SECTION 1350)
In connection with the accompanying Quarterly Report of Cohu, Inc. (the Company) on Form
10-Q for the fiscal quarter ended March 28, 2009 (the Report), I, Jeffrey D. Jones, Vice
President Finance & Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, based on my
knowledge:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities
Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the
financial condition and results of operations of the Company.
Date:
May 4, 2009
|
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/s/ Jeffrey D. Jones
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Jeffrey D. Jones, |
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Vice President Finance & Chief Financial Officer |
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