Note 9 - Income Taxes

3 Months Ended

Apr. 01, 2023

Notes to Financial Statements

Income Tax Disclosure [Text Block]

9. Income Taxes

We used the estimated annual effective tax rate (“ETR”) expected to be applicable for the full fiscal year in computing our tax provision. The ETR on income for the three months ended April 1, 2023 was 24.1%. Our first quarter 2023 ETR reflects the impact of certain foreign earnings taxed at rates higher than the U.S. statutory rate, offset by the impact of excess tax benefits relating to stock-based compensation and the tax benefit of U.S research & development and foreign tax credits.

We conduct business globally and as a result, Cohu or one or more of its subsidiaries files income tax returns in the US and various state and foreign jurisdictions. In the normal course of business, we are subject to examinations by taxing authorities throughout the world and are currently under examination in Germany, Malaysia, Philippines, Singapore and Thailand. We believe our financial statement accruals for income taxes are appropriate.

In accordance with the disclosure requirements as described in ASC Topic 740, Income Taxes, we have classified unrecognized tax benefits as non-current income tax liabilities, or a reduction in non-current deferred tax assets, unless expected to be paid within one year. Our continuing practice is to recognize interest and/or penalties related to income tax matters in income tax expense. There were no material changes to our unrecognized tax benefits and interest accrued related to unrecognized tax benefits during the three months ended April 1, 2023 and March 26, 2022.