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Cohu Reports Third Quarter 2010 Operating Results

^{Published on 2010-10-20 13:15:50 - Market Wire}
 

POWAY, Calif.--([ BUSINESS WIRE ])--Cohu, Inc. (NASDAQ:COHU) today reported fiscal 2010 third quarter net sales of $86.1million and GAAP net income of $7.6millionor $0.32per share. Net sales for the first nine months of 2010 were $225.8million and GAAP net income was $15.2millionor $0.63per share.

"This was a strong quarter for Cohu and the third consecutive quarter of increased operating income and earnings per share, on a non-GAAP basis."

The Company also reported non-GAAP results, with third quarter 2010 net income of $9.8million or $0.41per share and net income of $21.5million or $0.90per share for the first nine months of 2010.

Sales of semiconductor equipment accounted for 87.6% of fiscal 2010 third quarter sales. Microwave communications equipment and video cameras and related equipment contributed 7.3% and 5.1%, respectively, for the same period.

Orders were $90.0million for the third quarter of 2010 and $95.4million for the second quarter of 2010. Orders for semiconductor equipment were $74.0million in the third quarter of 2010 compared to $84.8million in the second quarter of 2010. Total consolidated backlog was $120.8million at September 25, 2010 compared to $116.6million at June 26, 2010. Cohu expects fourth quarter 2010 sales to be approximately $95million.

James A. Donahue, Chairman, President and Chief Executive Officer, stated, "This was a strong quarter for Cohu and the third consecutive quarter of increased operating income and earnings per share, on a non-GAAP basis."

Donahue concluded, "SEMI reported that August orders for test and assembly equipment declined after increasing for seventeen consecutive months and as the third quarter progressed we saw indications of reduced near term demand from some customers. However, there are multiple drivers for our semiconductor equipment business, including the production ramp of Pyramid, our new thermal handler, capacity additions for new test floors, market share gains and the sales synergies of our broad product line. Cohua™s backlog is at a record level and we currently expect sequential increases in revenue and operating income in the fourth quarter."

Cohua™s Board of Directors approved a quarterly cash dividend of $0.06 per share payable on January 3, 2011 to shareholders of record on November 26, 2010. Cohu has paid consecutive quarterly cash dividends since 1977.

Use of Non-GAAP Financial Information:

Included within this press release are non-GAAP financial measures that supplement the Companya™s Condensed Consolidated Statements of Operations prepared under generally accepted accounting principles (GAAP). These non-GAAP financial measures adjust the Companya™s actual results prepared under GAAP to exclude charges and the related income tax effect for share-based compensation, the amortization of acquired intangible assets, inventory step-up adjustments and the deferred tax asset valuation allowance. Reconciliations of GAAP to non-GAAP amounts for the periods presented herein are provided in schedules accompanying this release and should be considered together with the Condensed Consolidated Statements of Operations.

These non-GAAP measures are not meant as a substitute for GAAP, but are included solely for informational and comparative purposes. The Companya™s management believes that this information can assist investors in evaluating the Companya™s operational trends, financial performance, and cash generating capacity. Management believes these non-GAAP measures allow investors to evaluate Cohua™s financial performance using some of the same measures as management. However, the non-GAAP financial measures should not be regarded as a replacement for (or superior to) corresponding, similarly captioned, GAAP measures.

Forward-Looking Statements:

Certain matters discussed in this release, including statements concerning Cohua™s new products and expectations of business conditions, orders, sales, revenues and operating results 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, 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; customer orders may be canceled or delayed; inventory, goodwill and other intangible asset write-downs; the concentration of our revenues from a limited number of customers; intense competition in the semiconductor test handler industry; our reliance on patents and intellectual property; compliance with U.S. export regulations; and the cyclical and unpredictable nature of capital expenditures by semiconductor manufacturers. These and other risks and uncertainties are discussed more fully in Cohua™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.

About Cohu:

Cohu is a supplier of test handling, burn-in and thermal solutions used by the global semiconductor industry, microwave communications and video equipment.

Cohu will be conducting their conference call on Wednesday, October 20, 2010, at 1:30 p.m. Pacific Time/4:30 p.m. Eastern Time. The call will be webcast at [ www.cohu.com ]. Replays of the call can be accessed at [ www.cohu.com ].

For press releases and other information of interest to investors, please visit Cohua™s website at [ www.cohu.com ].

(1) The three- and nine-month periods ended September 25, 2010 and September 26, 2009 were each composed of 13 weeks and 39 weeks, respectively.

(2) During the second quarter of 2009, the Company recorded a charge of $19.6million for an increase in the valuation allowance against deferred tax assets.

(3) For the three- and nine-month periods ended September 26, 2009, potentially dilutive securities were excluded from the per share computations due to their antidilutive effect.

Management believes the presentation of these non-GAAP financial measures, when taken together with the corresponding GAAP financial measures, provides meaningful supplemental information regarding the Companya™s operating performance. Our management uses these non-GAAP financial measures in assessing the Companya™s operating results, as well as when planning, forecasting and analyzing future periods, and these non-GAAP measures allow investors to evaluate the Companya™s financial performance using some of the same measures as management. Management views share-based compensation as an expense that is unrelated to the Companya™s operational performance as it does not require cash payments and can vary in amount from period to period and the elimination of amortization charges provides better comparability of pre and post-acquisition operating results and to results of businesses utilizing internally developed intangible assets. However, the non-GAAP financial measures should not be regarded as a replacement for corresponding, similarly captioned, GAAP measures. The presentation of non-GAAP financial measures above may not be comparable to similarly titled measures reported by other companies and investors should be careful when comparing our non-GAAP financial measures to those of other companies.

(a) 10.2%, 11.9% and (1.8)% of net sales, respectively.

(b) To eliminate compensation expense for employee stock options, restricted stock units and our employee stock purchase plan.

(c) To eliminate the amortization of intangible assets acquired in the fiscal 2008 acquisition of Rasco, the fiscal 2007 acquisition of Tandberg Television AVS GmbH and the fiscal 2006 acquisition of Unigen.

(d) 13.0%, 14.9% and 3.9% of net sales, respectively.

(e) To adjust the provision (benefit) for income taxes related to the adjustments described in notes (b) and (c) above based on applicable tax rates.

(f) Computed using number of GAAP diluted shares outstanding for each period presented.

Management believes the presentation of these non-GAAP financial measures, when taken together with the corresponding GAAP financial measures, provides meaningful supplemental information regarding the Companya™s operating performance. Our management uses these non-GAAP financial measures in assessing the Companya™s operating results, as well as when planning, forecasting and analyzing future periods, and these non-GAAP measures allow investors to evaluate the Companya™s financial performance using some of the same measures as management. Management views share-based compensation as an expense that is unrelated to the Companya™s operational performance as it does not require cash payments and can vary in amount from period to period and the elimination of amortization charges provides better comparability of pre and post-acquisition operating results and to results of businesses utilizing internally developed intangible assets. Management has excluded inventory step-up costs associated with our acquisition of Rasco, primarily because it is not reflective of our ongoing operating results, and is not used by management to assess the core profitability of our business operations. Additionally, management does not consider charges to the deferred tax valuation allowance as related to the Companya™s operational performance and, as such, has excluded them to provide a better understanding of the companya™s underlying operational results and a more meaningful basis for comparison with our historical and future results. However, the non-GAAP financial measures should not be regarded as a replacement for corresponding, similarly captioned, GAAP measures. The presentation of non-GAAP financial measures above may not be comparable to similarly titled measures reported by other companies and investors should be careful when comparing our non-GAAP financial measures to those of other companies.

(a) 8.5% and (12.2)% of net sales, respectively.

(b) To eliminate compensation expense for employee stock options, restricted stock units and our employee stock purchase plan.

(c) To eliminate the amortization of intangible assets acquired in the fiscal 2008 acquisition of Rasco, the fiscal 2007 acquisition of Tandberg Television AVS GmbH, the fiscal 2006 acquisition of Unigen.

(d) To eliminate the inventory step-up associated with certain semiconductor test systems sold.

(e) 11.7% and (6.2)% of net sales, respectively.

(f) To adjust the provision (benefit) for income taxes related to the adjustments described in notes (b), (c) and (d) above based on applicable tax rates.

(g) To exclude the non-cash net impact on the tax provision pertaining to the increase of the deferred tax asset valuation allowance.

(h) Computed using number of GAAP diluted shares outstanding for each period presented.