Note 12 - Business Divestitures and Discontinued Operations

6 Months Ended

Jun. 26, 2021

Notes to Financial Statements

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

12. Business Divestitures and Discontinued Operations

PCB Test Equipment Business

On June 24, 2021, we completed the sale of our PCB Test Equipment (“PCB Test”) business, which represented our PCB Test reportable segment. As part of the transaction we also sold certain intellectual property held by our Semiconductor Test & Inspection segment that is utilized by the PCB Test business. Our decision to sell this non-core business resulted from management’s determination that that they were no longer a fit within our organization. We received gross proceeds of $125.4 million, subject to certain closing adjustments. The sale generated a $75.8 million pre-tax gain on sale of business, which was recorded in our condensed consolidated statements of operations for the three months ended June 26, 2021. As a result of the closing of the transaction, we derecognized net assets of $43.4 million, including goodwill of $21.9 million and intangible assets of $10.0 million. The buyer has 60 days from the date the sale closed to submit net working capital adjustment claims that could result in changes to the purchase consideration and resulting gain from disposal in future periods.

We evaluated the guidance in ASC 205-20, Presentation of Financial Statements – Discontinued Operations, and determined that the divestment of our PCB Test business does not represent a strategic shift as the divestiture will not have a major effect on Cohu’s operations and financial results and, as a result, it is not presented as discontinued operations in any periods presented. Subsequent to the sale of our PCB Test business, we have one reportable segment, Semiconductor Test & Inspection.

Fixtures Services Business

On October 1, 2018, we acquired a fixtures services business as part of Xcerra. In the fourth quarter of 2018, our management determined that this business did not align with our core business and was not a fit within our organization. As a result, the fixtures services business was marketed for sale since the date we acquired Xcerra and it qualified for presentation as discontinued operations as it met the held for sale criteria. For financial statement purposes, the results of operations for this business have been segregated from those of continuing operations and are presented in our consolidated financial statements as discontinued operations for all periods presented.

In February 2020, we completed the sale of this business with an immaterial impact to the statement of operations during fiscal year 2020.

Operating results of our discontinued segment are summarized as follows (in thousands):

	Six Months Ended
	June 27,
	2020
Net sales	$	432
Operating income before income taxes		11
Gain on sale of Fixtures business		35
Income before taxes		46
Income tax provision		4
Income, net of tax	$	42