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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
--- ACT OF 1934
For the quarterly period ended June 30, 1995
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
--- EXCHANGE ACT OF 1934
Commission file number 1-4298
COHU, INC
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(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
Delaware 95-1934119
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
</TABLE>
<TABLE>
<S> <C>
5755 Kearny Villa Road, San Diego, California 92123
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(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code (619) 277-6700
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</TABLE>
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 X No
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8,977,330
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(Number of shares of common stock outstanding as of June 30, 1995)
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COHU, INC.
INDEX
Part I
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<TABLE>
<S> <C>
Financial Information:
Consolidated Balance Sheets (Unaudited)
June 30, 1995 and December 31, 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Consolidated Statements of Income (Unaudited)
Three and Six Months Ended June 30, 1995 and 1994 . . . . . . . . . . . . . . . . . . . . . . . 4
Consolidated Statements of Cash Flows (Unaudited)
Six Months Ended June 30, 1995 and 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Notes to Unaudited Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . 6
Management's Discussion and Analysis of
Financial Condition and Results of Operations . . . . . . . . . . . . . . . . . . . . . . . . . 7
Part II
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Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
</TABLE>
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COHU, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands)
<TABLE>
<CAPTION>
ASSETS June 30, 1995 December 31, 1994
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(Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $11,719 $ 3,096
Accounts receivable, less allowance
for doubtful accounts 24,959 20,487
Inventories, at lower of average cost or market:
Finished goods 2,501 3,920
Work in process 11,113 8,800
Material and parts 13,830 15,721
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27,444 28,441
Deferred income taxes 3,250 3,250
Prepaid expenses 614 638
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Total current assets 67,986 55,912
Property, plant and equipment, at cost:
Land and land improvements 150 150
Buildings and building improvements 7,779 7,721
Machinery and electronic test equipment 7,447 7,314
Office furniture and fixtures 3,430 3,251
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18,806 18,436
Less accumulated depreciation and amortization 9,879 9,357
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Net property, plant and equipment 8,927 9,079
Goodwill, net 2,979 3,315
Other assets 61 62
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$79,953 $68,368
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $11,772 $ 6,382
Income taxes payable 988 1,930
Other accrued liabilities 9,793 9,520
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Total current liabilities 22,553 17,832
Long-term note payable to bank - 1,400
Accrued retiree medical benefits 830 801
Deferred income taxes 964 964
Stockholders' equity:
Preferred stock - -
Common stock 8,977 8,810
Paid in excess of par 2,425 2,105
Retained earnings 44,204 36,456
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Total stockholders' equity 55,606 47,371
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$79,953 $68,368
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</TABLE>
See accompanying notes
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COHU, INC.
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
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1995 1994 1995 1994
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(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Net sales $45,212 $22,612 $77,394 $40,130
Cost and expenses:
Cost of sales 27,317 14,010 46,676 24,462
Research and development 2,690 1,715 4,925 3,249
Selling, general and administrative 7,156 3,400 12,088 6,370
------- ------- ------- -------
Income from operations 8,049 3,487 13,705 6,049
Interest income 93 1 127 20
Interest expense (2) (25) (12) (25)
------- ------- ------- -------
Income before income taxes 8,140 3,463 13,820 6,044
Provision for income taxes 3,200 1,290 5,400 2,240
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Net income $ 4,940 $ 2,173 $ 8,420 $ 3,804
======= ======= ======= =======
Net income per share $.52 $.26 $.89 $.45
==== ==== ==== ====
</TABLE>
See accompanying notes
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COHU, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
<TABLE>
<CAPTION>
Six Months Ended June 30,
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1995 1994
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(Unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net income $ 8,420 $ 3,804
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 870 492
Increase in accrued retiree medical benefits 29 29
Changes in assets and liabilities, net of effects from
purchase of Daymarc:
Accounts receivable (4,472) (7,907)
Inventories 997 (5,042)
Prepaid expenses 24 (90)
Accounts payable 5,390 6,241
Income taxes payable (942) (632)
Other accrued liabilities 273 130
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Net cash provided from (used by) operating activities 10,589 (2,975)
Cash flows from investing activities:
Purchase of equipment (382) (417)
Other assets 1 (30)
Purchase of Daymarc, net of cash acquired - (3,506)
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Net cash used for investing activities (381) (3,953)
Cash flows from financing activities:
Proceeds from long-term borrowings - 4,000
Reduction in long-term borrowings (1,400) -
Issuance of stock 487 156
Dividends paid (672) (490)
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Net cash provided by (used for) financing activities (1,585) 3,666
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Net increase (decrease) in cash and cash equivalents 8,623 (3,262)
Cash and cash equivalents at beginning period 3,096 3,911
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Cash and cash equivalents at end of period $11,719 $ 649
======= =======
</TABLE>
See accompanying notes
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COHU, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
1 - The accompanying financial information is unaudited but includes all
adjustments (consisting of normal recurring adjustments) which the
Company considers necessary for a fair statement of the results for the
period. The operating results for the three and six months ended June
30, 1995 are not necessarily indicative of the operating results to be
expected for the entire year.
2 - Per share information is based on the weighted average common and common
equivalent shares outstanding during each period. All share and per
share amounts have been retroactively restated for a two-for-one stock
split effective June 6, 1995. Shares used in the calculation of net
income per share for the three and six month periods ended June 30, 1995
were 9,538,000 and 9,467,000 shares, respectively.
3 - On June 22, 1994 the Company acquired Daymarc Corporation, a
privately-held manufacturer of gravity feed semiconductor test handling
equipment that complements the pick and place test handling equipment
manufactured by Delta Design. The Company's consolidated financial
statements include the results of Daymarc from June 22, 1994 forward.
Assuming that the acquisition of Daymarc had occurred on the first day
of the Company's year ended December 31, 1994, pro forma condensed
consolidated results of operations for 1994 would be as follows:
Pro Forma Results of Operations
(in thousands, except per share data)
(unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30, 1994
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<S> <C>
Net sales $52,392
Net income 5,374
Net income per share .59
</TABLE>
These results give effect to pro forma adjustments that include the
amortization of goodwill, issuance of shares of Cohu common stock and
interest expense on long-term debt.
This pro forma information is not necessarily indicative of the actual
results that would have been achieved had Daymarc been acquired the first day
of the Company's year ended December 31, 1994.
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COHU, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The Company's results are substantially dependent on the operations of the
semiconductor test handling equipment business conducted by its wholly-owned
subsidiaries, Delta Design and Daymarc. This capital equipment business is in
turn highly dependent on the overall strength of the semiconductor industry.
Worldwide demand for semiconductors has historically been subject to
substantial cyclical swings of varying duration and magnitude, and is currently
in a period of relative strength. The Company's favorable results in recent
periods are in part reflective of this current strength in the semiconductor
industry. The Company cannot predict how long the current period of relative
strength will continue. The Company's backlog can be expected to decline
concurrently with or possibly in advance of the next period of relative
weakness in worldwide demand for semiconductors. The Company attempts to keep
its production capacity, labor force and other aspects of its cost structure in
line with expected demand.
SECOND QUARTER 1995 COMPARED TO SECOND QUARTER 1994
Net sales increased 100% to $45,212,000 in 1995 compared to sales of
$22,612,000 in 1994. Sales of semiconductor test handling equipment increased
142% in 1995 due to increased sales of pick and place handling equipment by
Delta Design and the addition of Daymarc's operating results for the entire
1995 period. Sales of this equipment accounted for 82% of consolidated sales.
Sales of television cameras and equipment increased 14% while the combined
sales of metal detection and microwave equipment increased slightly in 1995.
Gross Margin as a percentage of sales increased to 40% for 1995 compared to 38%
for 1994, due to a larger percentage of total sales derived from test handling
equipment that has a higher gross margin than other products. Research and
development expense increased from $1,715,000 to $2,690,000, however, as a
percentage of net sales, decreased to 6% in 1995 from 8% in 1994. Selling,
general and administrative expense increased to 16% in 1995 from 15% in 1994
due to higher commissions and selling expenses on semiconductor test handling
equipment. The provision for income taxes expressed as a percentage of pre-tax
income was 39% in 1995 and for the year ended December 31, 1994. Net income
increased 127% to $4,940,000 in 1995 from $2,173,000 in 1994.
SIX MONTHS 1995 COMPARED TO SIX MONTHS 1994
Net sales increased 93% to $77,394,000 in 1995 compared to sales of $40,130,000
in 1994. The increase in sales was primarily attributable to increased
shipments of semiconductor test handling equipment at Delta Design and the
addition of Daymarc's operating results for the entire 1995 period. Sales of
this equipment accounted for 79% of consolidated sales and increased 137% over
the 1994 period. Sales of television cameras and equipment increased 19%,
while the combined sales of metal detection and microwave equipment increased
slightly in 1995. Gross margin increased to 40% of sales in 1995 from 39% of
sales in 1994 due to a larger percentage of total sales derived from test
handling equipment that has a higher gross margin than other products.
Research and development expense increased from $3,249,000 to $4,925,000,
however, as a percentage of sales decreased to 6% in 1995 from 8% in 1994.
Selling, general and administrative expense as a percentage of sales remained
constant at 16%. The provision for income taxes as a percentage of pre-tax
income was 39% in 1995 and for the year ended December 31, 1994. Net income
increased 121% to $8,420,000 in 1995 from $3,804,000 in 1994.
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LIQUIDITY - The Company's net cash flows generated from operating activities
totalled $10,589,000 for the six months ended June 30, 1995. Accounts
receivable increased $4,472,000 due to higher sales. Inventory decreased
$997,000 as inventory turnover increased over prior periods. Accounts payable
increased $5,390,000 mainly due to purchases related to inventory. Net cash
used for investing activities was $381,000 primarily for the purchase of
equipment. Net cash used for financing activities was $1,585,000. Cash used
by financing activities included a $1,400,000 final payment on long-term
borrowings and $672,000 for dividends. The Company has $3,000,000 available
under its current short-term line of credit and working capital of $45,433,000.
It is anticipated that present working capital, profitable operations and
available borrowings under the credit line will be sufficient to meet the
Company's normal operating requirements and the anticipated capital
expenditures for 1995 of approximately $2,000,000.
PART II OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Annual Meeting of Shareholders was held on May 2, 1995. At the meeting,
the following directors were elected:
<TABLE>
<CAPTION>
Directors Number of Common Shares Voted
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For Against Abstain
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<S> <C> <C> <C>
James W. Barnes 3,997,849 1,564 21,411
William S. Ivans 3,997,849 1,564 21,411
</TABLE>
The directors continuing in office until 1996 or 1997 are Harry L. Casari,
Frank W. Davis, Gene E. Leary and Charles A. Schwan. In addition, the
shareholders approved the following proposal:
<TABLE>
<CAPTION>
Proposal Number of Common Shares Voted
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For Against Abstain
--------- ------- -------
<S> <C> <C> <C>
To adopt the Cohu, Inc. 1994 3,554,479 353,266 123,079
Employee Stock Option Plan
</TABLE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits:
27.1 Financial Data Schedule
(b) Reports on Form 8-K:
The Company did not file any reports on Form 8-K during the quarter
ended June 30, 1995.
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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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<S> <C>
COHU, INC.
---------------------------------------------
(Registrant)
Date: August 10, 1995 /s/ J.W. Barnes
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J. W. Barnes
President & Chief Executive Officer
Date: August 10, 1995 /s/ Charles A. Schwan
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Charles A. Schwan
Vice President, Finance
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9
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S CONSOLIDATED BALANCE SHEET AT JUNE 30, 1995 AND THE CONSOLIDATED
STATEMENT OF INCOME FOR THE SIX MONTHS ENDED JUNE 30, 1995 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> JUN-30-1995
<CASH> 11,719
<SECURITIES> 0
<RECEIVABLES> 24,959
<ALLOWANCES> 0
<INVENTORY> 27,444
<CURRENT-ASSETS> 67,986
<PP&E> 18,806
<DEPRECIATION> 9,879
<TOTAL-ASSETS> 79,953
<CURRENT-LIABILITIES> 22,553
<BONDS> 0
<COMMON> 8,977
0
0
<OTHER-SE> 46,629
<TOTAL-LIABILITY-AND-EQUITY> 79,953
<SALES> 77,394
<TOTAL-REVENUES> 77,394
<CGS> 46,676
<TOTAL-COSTS> 63,689
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 12
<INCOME-PRETAX> 13,820
<INCOME-TAX> 5,400
<INCOME-CONTINUING> 8,420
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,420
<EPS-PRIMARY> .89
<EPS-DILUTED> 0
</TABLE>
