-----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, WgZfiIw6gQUa+xsOh9/hHb3mLzKK8PDgOC8877+UF2MjBzQb7entw3eKwkqmWuVB PPjhXdIYLaPuTvUkMu2tIg== 0000936392-97-001016.txt : 19970805 0000936392-97-001016.hdr.sgml : 19970805 ACCESSION NUMBER: 0000936392-97-001016 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970804 SROS: NONE 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: 97650765 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 JUNE 30, 1997 OR [X] 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 June 30, 1997, the Registrant had 9,439,287 shares of its $1.00 par value common stock outstanding. 2 COHU, INC. INDEX FORM 10-Q JUNE 30, 1997
PART I FINANCIAL INFORMATION Item 1. Condensed Consolidated Balance Sheets June 30, 1997 (Unaudited) and December 31, 1996............................ 3 Condensed Consolidated Statements of Income (Unaudited) Three and Six Months Ended June 30, 1997 and 1996.......................... 4 Condensed Consolidated Statements of Cash Flows (Unaudited) Six Months Ended June 30, 1997 and 1996.................................... 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 4. Submission of Matters to a Vote of Security Holders........................ 10 Item 6. Exhibits and Reports on Form 8-K........................................... 10 Signatures ............................................................................ 11
2 3 COHU, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands)
JUNE 30, 1997 DECEMBER 31, 1996 ------------- ----------------- (Unaudited) ASSETS Current assets: Cash and cash equivalents $17,509 $24,660 Short-term investments 36,550 28,326 Accounts receivable, less allowance for doubtful accounts 27,240 19,170 Inventories, at lower of average cost or market: Finished goods 3,229 2,395 Work in process 11,803 6,012 Raw materials 10,028 7,175 ------------- ----------------- 25,060 15,582 Deferred income taxes 9,681 9,681 Prepaid expenses 1,107 1,166 ------------- ----------------- Total current assets 117,147 98,585 Property, plant and equipment, at cost: Land and land improvements 2,114 2,114 Buildings and building improvements 12,106 11,932 Machinery and equipment 15,521 14,069 ------------- ----------------- 29,741 28,115 Less accumulated depreciation and amortization 11,999 11,304 ------------- ----------------- Net property, plant and equipment 17,742 16,811 Goodwill, net 2,391 2,469 Other assets 105 61 ------------- ----------------- $137,385 $117,926 ============= ================= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $10,999 $4,464 Income taxes payable 3,584 1,552 Other accrued liabilities 14,172 14,566 ------------- ----------------- Total current liabilities 28,755 20,582 Accrued retiree medical benefits 960 916 Deferred income taxes 156 156 Stockholders' equity: Preferred stock -- -- Common stock 9,439 9,341 Paid in excess of par 6,496 5,863 Retained earnings 91,579 81,068 ------------- ----------------- Total stockholders' equity 107,514 96,272 ------------- ----------------- $137,385 $117,926 ============= =================
See accompanying notes 3 4 COHU, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (in thousands, except per share amounts)
THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30, JUNE 30, 1997 1996 1997 1996 ------- ------- ------- ------- Net sales $44,642 $45,864 $79,404 $96,096 Cost and expenses: Cost of sales 25,100 24,798 45,008 52,146 Research and development 4,264 3,823 7,525 7,351 Selling, general and administrative 5,169 5,430 9,986 12,303 ------- ------- ------- ------- Income from operations 10,109 11,813 16,885 24,296 Interest income 717 369 1,455 780 ------- ------- ------- ------- Income before income taxes 10,826 12,182 18,340 25,076 Provision for income taxes 3,900 4,600 6,700 9,600 ------- ------- ------- ------- Net income $6,926 $7,582 $11,640 $15,476 ======= ======= ======= ======= Net income per share $.70 $.78 $1.18 $1.59 ======= ======= ======= ======= Average common shares and equivalents 9,888 9,703 9,845 9,704 ======= ======= ======= =======
See accompanying notes. 4 5 COHU, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (in thousands)
SIX MONTHS ENDED JUNE 30, 1997 1996 -------- -------- Cash flows from operating activities: Net income $11,640 $15,476 Adjustments to reconcile net income to net cash provided from operating activities: Depreciation and amortization 800 812 Purchase consideration to be paid in stock 262 662 Increase in accrued retiree medical benefits 44 44 Changes in assets and liabilities: Accounts receivable (8,070) 848 Inventories (9,478) (444) Prepaid expenses 59 (85) Accounts payable 6,535 (2,027) Income taxes payable 2,032 (5,424) Other accrued liabilities (656) (1,148) -------- -------- Net cash provided from operating activities 3,168 8,714 Cash flows from investing activities: Purchases of short-term investments (18,834) -- Maturities of short-term investments 10,610 -- Purchases of property, plant, equipment and other assets (1,697) (4,285) -------- -------- Net cash used for investing activities (9,921) (4,285) Cash flows from financing activities: Issuance of stock, net 731 662 Cash dividends (1,129) (925) -------- -------- Net cash used for financing activities (398) (263) -------- -------- Net increase (decrease) in cash and cash equivalents (7,151) 4,166 Cash and cash equivalents at beginning of period 24,660 28,874 -------- -------- Cash and cash equivalents at end of period $17,509 $33,040 ======== ======== Supplemental disclosure of cash flow information: Cash paid during the period for: Income taxes $4,682 $15,004
See accompanying notes. 5 6 COHU, INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 1997 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 six months ended June 30, 1997 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 incorporated by reference in the Company's Annual Report on Form 10-K for the year ended December 31, 1996. 2 - Net income per share as presented on the statements of income represent primary earnings per share. Dual presentation of primary and fully diluted earnings per share has not been made because the differences are insignificant. Effective December 31, 1997, the Company will adopt Statement of Financial Accounting Standards No. 128, "Earnings per Share." At that time, the Company will be required to change the method currently used to calculate earnings per share and to restate all prior periods. The new requirements will include a calculation of basic earnings per share, from which the dilutive effect of stock options will be excluded. The basic earnings per share are expected to reflect an increase of $.04 and $.06 per share for the three and six month periods ended June 30, 1997, respectively, over the primary earnings per share reported for these periods. A calculation of diluted earnings per share will also be required; however, this is not expected to differ materially from the primary earnings per share reported for the three and six-month periods ended June 30, 1997 and 1996. 3 - On May 6, 1997 the stockholders of the Company approved the adoption of (i) the Cohu, Inc. 1997 Employee Stock Purchase Plan providing for the issuance of a maximum of 300,000 shares of the Company's Common Stock to employees and (ii) the Cohu, Inc. 1996 Outside Directors Stock Option Plan providing for the issuance of a maximum of 100,000 shares of the Company's Common Stock to Outside Directors. 6 7 COHU, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS JUNE 30, 1997 RESULTS OF OPERATIONS SECOND QUARTER 1997 COMPARED TO SECOND QUARTER 1996 Net sales decreased 3% to $44.6 million in the second quarter of 1997 compared to net sales of $45.9 million in 1996. Sales of semiconductor test handling equipment by the Company's Delta Design and Daymarc subsidiaries decreased 3% in the second quarter of 1997 as compared to the second quarter of 1996 and accounted for 80% of consolidated net sales versus 81% in the second quarter of 1996. Sales of television cameras and other equipment were virtually unchanged from 1996 and accounted for 20% of consolidated net sales in the second quarter of 1997 versus 19% in 1996. Gross margin as a percentage of net sales in the second quarter of 1997 was 43.8% versus 45.9% in 1996. The decrease in margin was primarily due to the decline in margins within the semiconductor equipment segment largely attributable to reduced business volume, changes in product mix and certain cost increases. Research and development expense as a percentage of net sales was 9.6% in the second quarter of 1997 compared to 8.3% in 1996 and reflected the Company's continued investment in new product development in the semiconductor equipment business. Selling, general and administrative expense as a percentage of net sales was approximately 12% in both the 1997 and 1996 periods. Interest income in the second quarter increased 94% to $.7 million due to the significant increase in cash equivalents and short-term investments. The provision for income taxes expressed as a percentage of pre-tax income was 36% in the second quarter of 1997 versus 37.6% for the year ended December 31, 1996. For the second fiscal quarter, as a result of the factors set forth above, net income decreased 9% to $6.9 million in 1997 from $7.6 million in 1996. SIX MONTHS ENDED JUNE 30, 1997 COMPARED TO SIX MONTHS ENDED JUNE 30, 1996 Net sales decreased 17% to $79.4 million in the first six months of 1997 compared to net sales of $96.1 million in 1996. Sales of semiconductor test handling equipment by the Company's Delta Design and Daymarc subsidiaries decreased 21% in the first six months of 1997 and accounted for 78% of consolidated net sales versus 82% in the first six months of 1996. Sales of television cameras and other equipment decreased 1% from 1996 and accounted for 22% of consolidated net sales in the first six months of 1997 versus 18% in 1996. Gross margin as a percentage of net sales in the first six months of 1997 was 43.3% versus 45.7% in 1996. The decrease in margin was primarily due to the decline in margins within the semiconductor equipment segment largely attributable to reduced business volume, changes in product mix and certain cost increases. Research and development expense as a percentage of net sales was 9.5% in the first six months of 1997 compared to 7.6% in 1996 and reflected the Company's continued investment in new product development in the semiconductor equipment business. Selling, general and administrative expense as a percentage of net sales was approximately 13% in both the 1997 and 1996 periods. Interest income in the 1997 period increased 87% to $1.5 million due to the significant increase in cash equivalents and short-term investments. The provision for income taxes expressed as a percentage of pre-tax income was 36.5% in the first six months of 1997 versus 37.6% for the year ended December 31, 1996. As a result of the factors set forth above, net income decreased 25% to $11.6 million in the first six months of 1997 from $15.5 million in the 1996 period. 7 8 COHU, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS JUNE 30, 1997 LIQUIDITY AND CAPITAL RESOURCES The Company's net cash flows generated from operating activities in the first six months of 1997 totaled $3.2 million. The major components of cash flows from operating activities were net income of $11.6 million and increases in accounts payable of $6.5 million and income taxes payable of $2 million offset by increases in accounts receivable of $8.1 million and inventories of $9.5 million. Net cash used for investing activities was $9.9 million and was used for the purchase of short-term investments, less maturities ($8.2 million) and property, plant and equipment. Net cash used for financing activities was $.4 million. Cash used for financing activities included $1.1 million for the payment of dividends offset by $.7 million received from the issuance of stock upon the exercise of stock options. The Company had $5 million available under its bank line of credit and working capital of $88.4 million at June 30, 1997. It is anticipated that present working capital and available borrowings under the line of credit will be sufficient to meet the Company's 1997 operating requirements and the remaining anticipated capital expenditures for 1997 of approximately $3 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 cycles and downturns such as that experienced in 1996. Reductions in capital equipment investment by semiconductor manufacturers will adversely affect the Company's results of operations. 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. The loss of or a significant reduction in orders by these customers would adversely impact the Company's results of operations. Furthermore, the concentration of the Company's revenues in a limited number of large customers may cause significant fluctuations in the Company's future annual and quarterly operating results. The semiconductor equipment industry is intensely competitive and the Company faces substantial competition from numerous companies throughout the world. Some of these competitors have substantially greater financial, engineering, manufacturing and customer support capabilities than the Company. In addition, there are smaller, emerging semiconductor equipment companies that provide or may provide innovative technology incorporated in products that may compete favorably against those of the Company. The Company expects its competitors to continue to improve the design and performance of their current products and to introduce new products with improved performance capabilities. 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 8 9 COHU, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS JUNE 30, 1997 BUSINESS RISKS AND UNCERTAINTIES (cont.) technology could result in a loss of the Company's competitive position and reduced sales of and margins on existing products. 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 with improved performance capabilities. 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. There can be no assurance that future technologies, processes and product developments will not render the Company's current product offerings obsolete or that the Company will be able to develop and introduce new products or enhancements to its existing products in a timely manner to satisfy customer needs or achieve market acceptance. Due to these and other factors, historical results may not 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 1996 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 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS The Annual Meeting of Stockholders was held on May 6, 1997. At the meeting, the following directors were elected:
Number of Common Shares Voted -------------------------------- DIRECTOR For Withhold Authority - -------- --------- ------------------ Frank W. Davis 8,885,797 41,840 Harry L. Casari 8,887,483 40,154
The directors continuing in office until 1998 or 1999 are James W. Barnes, William S. Ivans, Gene E. Leary and Charles A. Schwan. In addition, the stockholders approved the following proposals:
Number of Common Shares Voted ----------------------------------- PROPOSAL For Against Abstain - -------- --------- --------- ------- To approve the Cohu, Inc. 1997 Employee Stock Purchase Plan 8,273,070 608,108 67,935 To approve the Cohu, Inc. 1996 Outside Directors Stock Option Plan 7,641,876 1,235,095 103,840
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. (a) Exhibits: 10.8(a) - Amendment to Cohu, Inc. 1996 Stock Option Plan 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, 1997. 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: July 30, 1997 /s/ Charles A. Schwan ------------------------ ------------------------------ Charles A. Schwan President & Chief Executive Officer Date: July 30, 1997 /s/ John H. Allen ------------------------ ------------------------------ John H. Allen Vice President, Finance & Chief Financial Officer 11 EX-10.8(A) 2 EXHIBIT 10.8(A) 1 Exhibit 10.8(a) AMENDMENT TO COHU, INC. 1996 STOCK OPTION PLAN Pursuant to the authority granted to the Board of Directors of Cohu, Inc., a Delaware corporation (the "Corporation"), on February 6, 1997 the Board of Directors of the Corporation amended the Cohu, Inc. 1996 Stock Option Plan (the "Plan") by replacing Section 2.1 of the Plan in its entirety with the following: 2.1 "Committee" shall mean the Cohu, Inc. Compensation Committee, appointed by the Board of Directors of the Corporation. If no such Committee is appointed, the entire Board of Directors of the Corporation shall be deemed to constitute the Committee. The Board of Directors of the Corporation may also appoint an Employee Option Committee, consisting of one or more directors, which is authorized to grant options to employees (other than executive officers of the Corporation) subject to such limitations as may be established by the Board of Directors from time to time. If an Employee Option Committee is established, references in the Plan to the term "Committee" shall also include the Employee Option Committee, as the case may be. /s/ Charles A. Schwan ------------------------------ Charles A. Schwan, Director /s/ John H. Allen ------------------------------ John H. Allen, Secretary EX-27 3 FINANCIAL DATA SCHEDULE
5 THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM 1996 AND 1997 FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO FINANCIAL STATEMENTS. 1,000 6-MOS DEC-31-1996 JAN-01-1997 JUN-30-1997 17,509 36,550 27,240 0 25,060 117,147 29,741 11,999 137,385 28,755 0 9,439 0 0 98,075 137,385 79,404 79,404 45,008 45,008 0 0 0 18,340 6,700 11,640 0 0 0 11,640 1.18 0.00
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