Cohu, Inc. (Form: 8-K)

COHU, INC.
12367 CROSTHWAITE CIRCLE
POWAY, CA 92064
FAX (858) 848-8185
PHONE (858) 858-8100
www.cohu.com

POWAY, Calif., February 1, 2007 — Cohu, Inc. (NASDAQ:COHU) today announced that net sales from continuing operations were $76.6 million for the fourth quarter ended December 30, 2006 compared to $72.4 million for the fourth quarter ended December 31, 2005 and $74.8 million for the third quarter ended September 30, 2006. Net income for the fourth quarter of 2006 was $5.3 million, or $0.23 per share compared to $12.3 million or $0.53 per share for the fourth quarter of 2005 and $4.2 million or $0.18 per share for the third quarter of 2006. Income from continuing operations for the fourth quarter of 2006 was $5.4 million or $0.23 per share compared to $12.5 million or $0.54 per share for the fourth quarter of 2005 and $4.5 million or $0.19 per share for the third quarter of 2006. Stock compensation expense for the three months ended December 30, 2006 was $0.9 million.

Net sales from continuing operations for the year ended December 30, 2006 were $270.1 million with income from continuing operations of $18.6 million or $0.81 per share compared to net sales from continuing operations of $231.4 million with income from continuing operations of $34.3 million or $1.51 per share for the year ended December 31, 2005. Net income for the year ended December 30, 2006 was $17.7 million or $0.77 per share compared to $34.0 million or $1.50 per share for the year ended December 31, 2005. Stock compensation expense for the year ended December 30, 2006 was $3.6 million.

In May, 2006, Cohu sold its metal detection equipment business, Fisher Research Laboratory (FRL). As a result of the disposition, the operating results of FRL have been presented as discontinued operations and all prior period amounts have been reclassified accordingly.

Sales of semiconductor equipment accounted for 88.0% of total fourth quarter 2006 sales from continuing operations. Sales of television cameras and related equipment were 6.1% of sales and microwave communications equipment contributed 5.9% of sales for the same period.

Orders for the fourth quarter of 2006 were $58.4 million compared to $76.5 million for the third quarter of 2006. Orders for semiconductor equipment decreased from $66.2 million in the third quarter of 2006 to $51.6 million in the fourth quarter of 2006. Backlog was $86.3 million at December 30, 2006 compared to $104.5 million at September 30, 2006. Cohu expects first quarter 2007 sales to be approximately $53 million to $58 million.

James A. Donahue, President and Chief Executive Officer stated, “Cohu’s fourth quarter sales were 18% above our previously issued guidance, due to stronger than expected shipments of test handling equipment. During a year characterized by uneven business conditions throughout the semiconductor equipment industry and following sales growth of 36% in 2005, we are very pleased that Cohu’s 2006 sales increased by more than 16%.”

Donahue concluded, “As we anticipated, fourth quarter orders declined from the near-record level achieved in Q3 when, in addition to our ongoing IC test handling business, we received a large initial order for a new product, a thermal sub-system for use in an advanced IC burn-in system. We’ve made excellent progress in completing the development of this system and we plan to begin shipments in the first quarter of 2007. Under current semiconductor industry conditions we expect customers to remain cautious with capacity purchases during the near term.”

Cohu’s Board of Directors approved a quarterly cash dividend of $0.06 per share payable on April 27, 2007 to shareholders of record on March 13, 2007. Cohu has paid consecutive quarterly cash dividends since 1977.

Certain matters discussed in this release, including statements concerning Cohu’s expectations of 2007 industry conditions, new product development and product shipments are forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from those projected or forecasted. Such risks and uncertainties include, but are not limited to, the concentration of our revenues from a limited number of customers; our ability to convert new products under development into production on a timely basis, support product development and meet customer delivery and acceptance requirements for next generation equipment; failure to obtain customer acceptance resulting in the inability to recognize revenue and accounts receivable collection problems; inventory write-offs; intense competition in the semiconductor test handler industry; our reliance on patents and intellectual property; the cyclical and unpredictable nature of capital expenditures by semiconductor manufacturers; difficulties in integrating acquisitions and new technologies and other risks addressed in Cohu’s filings with the Securities and Exchange Commission, including the most recently filed Form 10-K and Form 10-Q. Cohu assumes no obligation to update the information in this release.

Cohu is a leading supplier of test handling solutions used by the global semiconductor industry, as well as a supplier of closed circuit television and microwave communications equipment.

Cohu will be conducting their conference call on Thursday, February 1, 2007 at 2:00 p.m. Pacific Time. The call will be webcast at www.cohu.com. Replays of the call can be accessed at www.cohu.com.


	Three Months Ended (1)						Twelve Months Ended
	December 30,			December 31,			December 30,			December 31,
	2006			2005			2006			2005
Net sales	$	76,607		$	72,417		$	270,106		$	231,382

Cost and expenses:
Cost of sales		52,308			42,752			177,170			138,513
Research and development		10,512			8,210			39,062			29,117
Selling, general and administrative		9,105			9,193			37,089			32,912
Gain on sale of facilities		—			—			(2,963	)		—

		71,925			60,155			250,358			200,542

Income from operations		4,682			12,262			19,748			30,840
Interest income		1,871			1,370			6,678			3,915

Income from continuing operations before income taxes		6,553			13,632			26,426			34,755
Income tax provision (2)		1,202			1,151			7,800			500

Income from continuing operations		5,351			12,481			18,626			34,255

Discontinued operations:
Loss from discontinued operations before income taxes (3)		(111	)		(242	)		(1,545	)		(381	)
Income tax benefit		(101	)		(51	)		(600	)		(100	)

Loss from discontinued operations		(10	)		(191	)		(945	)		(281	)

Net income	$	5,341		$	12,290		$	17,681		$	33,974


Income per share:

Basic:
Income from continuing operations	$	0.24		$	0.56		$	0.82		$	1.56
Loss from discontinued operations		(0.00	)		(0.01	)		(0.04	)		(0.01	)
Net income	$	0.24		$	0.55		$	0.78		$	1.55


Diluted:
Income from continuing operations	$	0.23		$	0.54		$	0.81		$	1.51
Loss from discontinued operations		(0.00	)		0.01			(0.04	)		(0.01	)

Net income	$	0.23		$	0.53		$	0.77		$	1.50


Weighted average shares used in computing income (loss) per share:
Basic		22,661			22,251			22,588			21,902
Diluted		23,059			23,112			22,934			22,585

(1)

The three-month periods ended December 30, 2006 and December 31, 2005 contain 13 weeks and 14 weeks, respectively, while both twelve-month periods are comprised of 52 weeks.

(2)

The income tax provision for the three months ended December 31, 2005 was reduced by, among other items, approximately $1.8 million from a reduction in a deferred tax asset valuation allowance. The income tax provision for the year ended December 31, 2005 was reduced by, among other items, approximately $5.1 million from a reduction in a deferred tax asset valuation allowance and approximately $3.1 million from the reversal of accrued taxes as a result of the completion of a tax examination in March 2005. The income tax provision for the fourth quarter of 2006 was reduced by federal R&D tax credits of approximately $1.1 million.

(3)

Includes a loss on disposition of approximately $0.1 million and $1.4 million in the three and twelve-month periods ended December 30, 2006, respectively.


	December 30,		December 31,
	2006		2005

Assets:

Current assets:
Cash and investments	$	147,916	$	138,745
Accounts receivable		50,088		46,324
Inventories		48,020		42,429
Deferred taxes and other		27,194		25,615
Current assets of discontinued operations		675		3,504

Total current assets		273,893		256,617
Property, plant & equipment, net		29,586		30,887
Goodwill		12,898		9,597
Other assets		9,485		8,983
Noncurrent assets of discontinued operations		477		893

Total assets	$	326,339	$	306,977


Liabilities & Stockholders’ Equity:

Current liabilities:
Deferred profit	$	9,841	$	13,816
Other current liabilities		38,216		35,972
Current liabilities of discontinued operations		316		534

		48,373		50,322
Deferred taxes and other noncurrent liabilities		6,378		6,530
Stockholders’ equity		271,588		250,125

Total liabilities & stockholders’ equity	$	326,339	$	306,977

For press releases and other information of interest to investors, please visit Cohu’s website at www.cohu.com
Contact: John Allen — Investor Relations (858) 848-8106


Delaware	001-04298	95-1934119
_____________________ (State or other jurisdiction	_____________ (Commission	______________ (I.R.S. Employer
of incorporation)	File Number)	Identification No.)

12367 Crosthwaite Circle, Poway, California		92064
_________________________________ (Address of principal executive offices)		___________ (Zip Code)


	Cohu, Inc.

February 1, 2007	By:	John H. Allen

		Name: John H. Allen
		Title: VP Finance and Chief Financial Officer


Exhibit No.		Description

99.1		Fourth Quarter and Full Year 2006 Earnings Release, dated February 1, 2007, of Cohu, Inc.


Date of Report (Date of Earliest Event Reported):		February 1, 2007


Registrant’s telephone number, including area code:		858-848-8100