Note 2 - Discontinued Operations

12 Months Ended

Dec. 26, 2015

Notes to Financial Statements

Disposal Groups, Including Discontinued Operations, Disclosure [Text Block]

2.     Discontinued Operations

In 2015, we sold all of the outstanding stock of BMS for $4.9 million in cash and up to $2.5 million of contingent cash consideration. In 2014, we sold substantially all the assets of our video camera business, Cohu Electronics for $10.3 million comprised of $9.5 million in cash, $0.5 million in contingent consideration and a working capital adjustment. Our decision to sell these two non-core businesses resulted from management’s determination that they were no longer a strategic fit within our organization.

As part of the divestiture of BMS we recorded a long-term contingent consideration receivable that has been classified as Level 3 in the fair value hierarchy. See Note 5, “Financial Instruments Measured at Fair Value” for additional information on the three-tier fair value hierarchy. The contingent consideration represents the estimated fair value of future payments we are due based on BMS achieving annual revenue targets in certain years as specified in the sale agreement. We determine the value of the contingent consideration using a Monte Carlo simulation model with changes to the fair value of the contingent consideration being recognized in discontinued operations. At December 26, 2015, the current fair value of the receivable totaled $0.5 million.

Balance sheet information for BMS presented as discontinued operations is summarized as follows

(in thousands)

:

	December 26, 2015		December 27, 2014
Assets:
Accounts receivable, net	$	-	$	3,156
Inventories		-		6,345
Other current assets		-		817
Total current assets	$	-	$	10,318
Liabilities:
Deferred Profit	$	-	$	504
Other accrued current liabilities		-		2,279
Total current liabilities		-		2,783
Noncurrent liabilities				706
Total liabilities	$	-	$	3,489

COHU, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

Operating results of our discontinued operations are summarized as follows

(in thousands)

:

	December 26,			December 27,			December 28,
	2015			2014			2013
Net sales:
Microwave equipment segment	$	6,965		$	16,694		$	17,063
Video camera segment		-			5,460			15,726
	$	6,965		$	22,154		$	32,789
Operating loss before income taxes:
Microwave equipment segment	$	(1,963	)	$	(10,305	)	$	(6,142	)
Video camera segment		-			(242	)		1,317
		(1,963	)		(10,547	)		(4,825	)
Loss from sale of BMS		(3,573	)		-			-
Gain from sale of Cohu Electronics		-			4,434			-
Loss before taxes		(5,536	)		(6,113	)		(4,825	)
Income tax provision		6			(41	)		45
Loss, net of tax	$	(5,542	)	$	(6,072	)	$	(4,870	)

In the fourth quarter of fiscal 2015 we finalized a working capital adjustment associated with the sale of BMS. We also adjusted the fair value contingent consideration to be earned pursuant to the definitive agreement based on our current estimates. These adjustments have been included in the loss from sale of BMS presented above.