-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Vsplgl0iL6//x1lz3+IXKZocCMN/cF/LD5/nrpwxF4Va1M/HBAZXYZF+WMBf9Ect 9Ta4C655BZvwcc4s+Kp/gQ== 0000936392-96-000934.txt : 19961106 0000936392-96-000934.hdr.sgml : 19961106 ACCESSION NUMBER: 0000936392-96-000934 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961104 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: COHU INC CENTRAL INDEX KEY: 0000021535 STANDARD INDUSTRIAL CLASSIFICATION: INSTRUMENTS FOR MEAS & TESTING OF ELECTRICITY & ELEC SIGNALS [3825] IRS NUMBER: 951934119 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-04298 FILM NUMBER: 96653309 BUSINESS ADDRESS: STREET 1: 5755 KEARNY VILLA RD CITY: SAN DIEGO STATE: CA ZIP: 92123 BUSINESS PHONE: 6192776700 MAIL ADDRESS: STREET 1: 5755 KEARNY VILLA ROAD CITY: SAN DIEGO STATE: CA ZIP: 92123 FORMER COMPANY: FORMER CONFORMED NAME: COHU ELECTRONICS INC DATE OF NAME CHANGE: 19720809 10-Q 1 FORM 10-Q 1 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 SEPTEMBER 30, 1996 OR [ ] 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) DELAWARE 95-1934119 (State or other jurisdiction of (I.R.S. Employer Identification No.) Incorporation or Organization) 5755 KEARNY VILLA ROAD, SAN DIEGO, CALIFORNIA 92123 (Address of principal executive office) (Zip Code) Registrant's telephone number, including area code (619) 277-6700 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___ As of September 30, 1996, the Registrant had 9,295,701 shares of its $1.00 par value common stock outstanding. 2 COHU, INC. INDEX FORM 10-Q SEPTEMBER 30, 1996 PART I FINANCIAL INFORMATION Item 1. Condensed Consolidated Balance Sheets (Unaudited) September 30, 1996 and December 31, 1995....................... 3 Condensed Consolidated Statements of Income (Unaudited) Three and Nine Months Ended September 30, 1996 and 1995........ 4 Condensed Consolidated Statements of Cash Flows (Unaudited) Nine Months Ended September 30, 1996 and 1995.................. 5 Notes to Unaudited Condensed Consolidated Financial Statements. 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.................. 7 PART II OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K............................... 10 Signatures............................................................. 11 2 3 COHU, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (in thousands)
ASSETS SEPTEMBER 30, 1996 DECEMBER 31, 1995 ------------------ ----------------- Current assets: Cash and cash equivalents $ 45,360 $ 28,874 Accounts receivable, less allowance for doubtful accounts 22,353 27,572 Inventories, at lower of average cost or market: Finished goods 3,652 3,466 Work in process 4,159 7,759 Raw materials and purchased parts 8,769 10,019 -------- -------- 16,580 21,244 Deferred income taxes 9,413 9,413 Prepaid expenses 955 973 -------- -------- Total current assets 94,661 88,076 Property, plant and equipment, at cost: Land and land improvements 2,114 1,150 Buildings and building improvements 11,723 10,355 Machinery and equipment 14,008 11,697 -------- -------- 27,845 23,202 Less accumulated depreciation and amortization 11,140 10,031 -------- -------- Net property, plant and equipment 16,705 13,171 Goodwill, net 2,508 2,626 Other assets 61 61 -------- -------- $113,935 $103,934 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 3,285 $ 7,453 Income taxes payable 2,917 7,062 Other accrued liabilities 14,463 16,333 -------- -------- Total current liabilities 20,665 30,848 Accrued retiree medical benefits 925 859 Deferred income taxes 198 198 Stockholders' equity: Preferred stock -- -- Common stock 9,296 9,092 Paid in excess of par 4,890 4,252 Retained earnings 77,961 58,685 -------- -------- Total stockholders' equity 92,147 72,029 -------- -------- $113,935 $103,934 ======== ========
See accompanying notes. 3 4 COHU, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (in thousands, except per share amounts)
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, --------------------- ------------------------ 1996 1995 1996 1995 ------- ------- -------- --------- Net sales $34,763 $49,035 $130,859 $ 126,429 Cost and expenses: Cost of sales 19,887 30,130 72,033 77,975 Research and development 3,340 2,635 10,691 7,560 Selling, general and administrative 3,758 5,808 16,061 16,727 ------- ------- -------- --------- Income from operations 7,778 10,462 32,074 24,167 Interest income 513 238 1,293 365 Interest expense -- -- -- (12) ------- ------- -------- --------- Income before income taxes 8,291 10,700 33,367 24,520 Provision for income taxes 3,100 4,200 12,700 9,600 ------- ------- -------- --------- Net income $ 5,191 $ 6,500 $ 20,667 $ 14,920 ======= ======= ======== ========= Net income per share $ .54 $ .67 $ 2.13 $ 1.56 ======= ======= ======== ========= Average common shares and equivalents 9,642 9,670 9,683 9,535 ======= ======= ======== =========
See accompanying notes. 4 5 COHU, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in thousands)
NINE MONTHS ENDED SEPTEMBER 30, 1996 1995 -------- -------- Cash flows from operating activities: Net income $ 20,667 $ 14,920 Adjustments to reconcile net income to net cash provided from operating activities: Depreciation and amortization 1,254 1,457 Purchase consideration to be paid in stock 606 -- Increase in accrued retiree medical benefits 66 43 Changes in assets and liabilities: Accounts receivable 5,219 (7,637) Inventories 4,664 2,997 Prepaid expenses 18 16 Accounts payable (4,168) 6,448 Income taxes payable (4,145) (1,337) Other accrued liabilities (2,476) 2,891 -------- -------- Net cash provided from operating activities 21,705 19,798 Cash flows from investing activities: Purchases of property, plant, equipment and other assets (4,670) (770) -------- -------- Net cash used for investing activities (4,670) (770) Cash flows from financing activities: Reduction in long-term borrowings -- (1,400) Issuance of stock, net 842 699 Cash dividends (1,391) (1,032) -------- -------- Net cash used for financing activities (549) (1,733) -------- -------- Net increase in cash and cash equivalents 16,486 17,295 Cash and cash equivalents at beginning of period 28,874 3,096 -------- -------- Cash and cash equivalents at end of period $ 45,360 $ 20,391 ======== ======== Supplemental disclosure of cash flow information: Cash paid during the period for: Income taxes $ 16,821 $ 10,901 Interest -- 12
See accompanying notes. 5 6 COHU, INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 1996 1 - The accompanying interim financial statements are unaudited but include 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 nine months ended September 30, 1996 are not necessarily indicative of the operating results for the entire year or any future period. These financial statements should be read in conjunction with the consolidated financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 1995. Reclassification has been made to certain prior year and period amounts to conform to the 1996 presentation. 2 - Per share information is based on the weighted average number of shares outstanding during each period and the dilutive effect of the assumed exercise of stock options. 3 - In May 1996, the Company entered into a $5,000,000 unsecured bank line of credit agreement with its primary bank. The agreement expires in May 1998 and requires compliance with certain financial covenants. No borrowings were outstanding at September 30, 1996. 4 - In May 1996, Cohu, Inc. stockholders approved an increase in the Company's authorized shares of common stock from 10,000,000 to 25,000,000 shares and the adoption of the Cohu, Inc. 1996 Stock Option Plan providing for the issuance of up to 450,000 shares of common stock. 6 7 COHU, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS THIRD QUARTER 1996 COMPARED TO THIRD QUARTER 1995 Net sales decreased 29% to $34.8 million in the third quarter of 1996 compared to net sales of $49.0 million in the third quarter of 1995. Sales of semiconductor test handling equipment declined 34% in the third quarter of 1996 compared to the third quarter of 1995 and accounted for 78% of consolidated net sales in the third quarter of 1996. Sales of television cameras and equipment decreased 6% while the combined sales of metal detection and microwave equipment decreased 9% compared to 1995. Gross margin as a percentage of net sales improved to 43% in the third quarter of 1996 versus 39% in 1995, primarily as a result of improved margins in the semiconductor equipment business. Within the semiconductor equipment segment, margins improved due to a significant reduction in provisions for excess and obsolete inventories. Research and development expense as a percentage of net sales was 10% in the third quarter of 1996 up from 5% in 1995 and reflected the Company's continued investment in new product development in the semiconductor equipment business. Selling, general and administrative expense decreased as a percentage of net sales from 12% to 11% in part due to a reduction in certain performance based compensation charges in the 1996 period. Interest income in the quarter increased to $.5 million due to the significant increase in cash and cash equivalents. The provision for income taxes expressed as a percentage of pre-tax income was 37% in the third quarter of 1996 and 39% for the year ended December 31, 1995. For the third quarter, as a result of the factors set forth above, net income decreased 20% to $5.2 million in 1996 from $6.5 million in 1995. NINE MONTHS ENDED SEPTEMBER 30, 1996 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30, 1995 Net sales increased 4% to $130.9 million in the first nine months of 1996 compared to net sales of $126.4 million in the first nine months of 1995. Despite the sales decline in the third quarter, sales of semiconductor test handling equipment increased an aggregate of 4% over sales in the first nine months of 1995 and accounted for 81% of consolidated net sales in the first nine months of 1996. Sales of television cameras and equipment and the combined sales of metal detection and microwave equipment in the first nine months of 1996 increased 3% and 2%, respectively, over 1995. Gross margin as a percentage of net sales improved to 45% in the first nine months of 1996 versus 38% in the first nine months of 1995, primarily as a result of improved margins in the semiconductor equipment business. Within the semiconductor equipment segment, margins improved due to a significant reduction in provisions for excess and obsolete inventories and, to a lesser extent, production efficiencies. Research and development expense as a percentage of net sales increased to 8% in the first nine months of 1996 from 6% in 1995 and reflected the Company's continued investment in new product development in the semiconductor equipment business. Selling, general and administrative expense decreased as a percentage of net sales from 13% to 12% in part due to a reduction in certain performance based compensation charges in the 1996 period. Interest income in the period increased to $1.3 million due to the significant increase in cash and cash equivalents. The provision for income taxes expressed as a percentage of pre-tax income was 38% in the first nine months of 1996 down from 39% for the year ended December 31, 1995. For the nine month period, as a result of the factors set forth above, net income increased 39% to $20.7 million in 1996 from $14.9 million in 1995. 7 8 COHU, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (cont.) LIQUIDITY AND CAPITAL RESOURCES The Company's net cash flows generated from operating activities in the first nine months of 1996 totaled $21.7 million. The major components of cash flows from operating activities were net income of $20.7 million and decreases in accounts receivable of $5.2 million and inventories of $4.7 million offset by decreases in accounts payable, income taxes payable and other accrued liabilities totaling $10.8 million. Net cash used for investing activities was $4.7 million and was used for the purchase of property, plant and equipment. Net cash used for financing activities was $.5 million. Cash used for financing activities included $1.4 million for the payment of dividends offset by $.8 million received from the issuance of stock upon the exercise of stock options. The Company has $5 million available under its bank line of credit and working capital of $74 million at September 30, 1996. It is anticipated that present working capital and cash generated from operations will be sufficient to meet the Company's 1996 operating requirements and the remaining anticipated capital expenditures for 1996 of approximately $1 million. BUSINESS RISKS AND UNCERTAINTIES The Company's operating results are substantially dependent on the semiconductor test handling equipment business conducted through its Delta Design and Daymarc subsidiaries. This capital equipment business is in turn highly dependent on the overall strength of the semiconductor industry. Historically, the semiconductor industry has been highly cyclical with recurring periods of oversupply, which often have had a significant effect on the semiconductor industry's demand for capital equipment, including equipment of the type manufactured and marketed by the Company. The Company believes that the markets for newer generations of semiconductors may also be subject to similar fluctuations. Reductions in capital equipment investment by semiconductor manufacturers adversely affect the Company's results of operations. The Company's order backlog declined to $27.3 million at September 30, 1996 from $45.4 million at December 31, 1995. This reduction in backlog is principally related to the Company's semiconductor equipment business. The decline in the Company's backlog and announcements by certain semiconductor and semiconductor equipment manufacturers indicate there has been a slowdown in demand for semiconductor related equipment including equipment of the type manufactured and marketed by the Company. In addition, continued DRAM price declines in recent months have negatively impacted the profitability of DRAM manufacturers which has impacted capital equipment purchases. These factors negatively affected the Company's operating results in the third quarter of 1996. The recovery in the semiconductor equipment business is not expected for some time and the reduced level of backlog indicates that the Company's downward trend in sales and net income will continue in the 1996 fourth quarter. Earlier in 1996, in response to the changing environment in the semiconductor equipment industry, the Company reduced its work force. The Company will attempt to keep its production capacity, labor force and other aspects of its cost structure in line with expected demand. If the slowdown in the semiconductor equipment industry continues, it is likely that the Company will further reduce its work force. Cost reduction programs may have a temporary negative impact on the Company's operations and operating results. Furthermore, no assurance can be made that such cost reduction programs will be implemented successfully. 8 9 COHU, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (cont.) As is common in the semiconductor equipment industry, the Company relies on a limited number of customers for a substantial percentage of its net sales (two customers accounted for approximately 28% of net sales in the first nine months of 1996 and also 35% of net sales for the year ended December 31, 1995). The loss of or a significant reduction in orders by either of these or other significant customers not compensated for by other customer orders would adversely impact the Company's results of operations. Semiconductor equipment and processes are subject to rapid technological change. The Company believes that its future success will depend in part on its ability to enhance existing products and develop new products that enable semiconductor manufacturers to more efficiently handle and test semiconductors. Failure to introduce new products in a timely manner, the introduction by competitors of products with perceived or actual advantages or disputes over rights of the Company or its competitors to use certain intellectual property or technology could result in a loss of competitive position and reduced sales of existing products. The Company expects to continue to invest heavily in research and development and must manage product transitions successfully as introductions of new products could adversely impact sales of existing products. Due to these and other factors, historical results may not necessarily be indicative of results of operations for any future period. In addition, certain matters discussed above are forward looking statements that are subject to the risks and uncertainties noted herein and the other risks and uncertainties listed from time to time in the Company's filings with the Securities and Exchange Commission, including but not limited to the 1995 Annual Report on Form 10-K, that could cause actual results to differ materially from those projected or forecasted. The Company undertakes no obligation to update the information, including the forward looking statements, in this Form 10-Q. 9 10 PART II OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. (A) Exhibits: 3(i) - Certificate of Amendment of Restated Certificate of Incorporation 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 September 30, 1996. 10 11 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. COHU, INC. -------------------------------------- (Registrant) Date: October 30, 1996 /s/ Charles A. Schwan --------------------------- -------------------------------------- Charles A. Schwan President & Chief Executive Officer (Principal Executive Officer) Date: October 30, 1996 /s/ John H. Allen --------------------------- -------------------------------------- John H. Allen Vice President, Finance & Chief Financial Officer (Principal Financial and Accounting Officer) 11 EX-3.I 2 EXHIBIT 3(I) 1 EXHIBIT 3(i) CERTIFICATE OF AMENDMENT OF RESTATED CERTIFICATE OF INCORPORATION Cohu, Inc., a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware (the "Company"), DOES HEREBY CERTIFY: FIRST: That at a meeting of the Board of Directors of the Company, resolutions were duly adopted setting forth a proposed amendment of the Restated Certificate of Incorporation of the Company, declaring said amendment to be advisable and calling a meeting of the stockholders of the Company for consideration thereof. The resolution setting forth the proposed amendment is as follows: RESOLVED, that the Restated Certificate of Incorporation of the Company be amended by changing the first paragraph of Article Fourth so that, as amended, said paragraph shall be and read as follows: "FOURTH: The total number of shares of all classes of stock which the corporation shall have authority to issue is Twenty- six Million (26,000,000) of which 1,000,000 shares shall constitute Preferred Stock having a par value of $1.00 per share and 25,000,000 shares shall constitute Common Stock having a par value of $1.00 per share." SECOND: That thereafter, pursuant to resolution of its Board of Directors, a special meeting of the stockholders of the Company was duly called and held, upon notice in accordance with Section 222 of the General Corporation law of the State of Delaware, at which meeting the necessary number of shares as required by statute were voted in favor of the amendment. THIRD: That said amendment was duly adopted in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware. IN WITNESS WHEREOF, the Company has caused this certificate to be signed by Charles A. Schwan , its President, and John H. Allen , its Secretary, this 7th day of May , 1996. By: /s/ Charles A. Schwan -------------------------------------- President ATTEST: /s/ John H. Allen ---------------------------------- Secretary EX-27.1 3 EXHIBIT 27.1
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM 1995 AND 1996 FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1000 9-MOS DEC-31-1995 JAN-01-1996 SEP-30-1996 45,360 0 22,353 0 16,580 94,661 27,845 11,140 113,935 20,665 0 0 0 9,296 82,851 113,935 130,859 130,859 72,033 72,033 0 0 0 33,367 12,700 20,667 0 0 0 20,667 2.13 2.13
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