1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
- - --- EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1995
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OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
- - --- EXCHANGE ACT OF 1934
Commission file number 1-4298
COHU, INC
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(Exact name of registrant as specified in its charter)
Delaware 95-1934119
- - ------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
5755 Kearny Villa Road, San Diego, California 92123
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(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code 619-277-6700
------------------------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
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4,470,722
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(Number of shares of common stock outstanding as of March 31, 1995)
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2
INDEX
Part I
- - ------
Financial Information:
Consolidated Balance Sheets (Unaudited)
March 31, 1995 and December 31, 1994 ....................... 3
Consolidated Statements of Income (Unaudited)
Three and Nine Months Ended March 31, 1995 and 1994 ........ 4
Consolidated Statements of Cash Flows (Unaudited)
Nine Months Ended March 31, 1995 and 1994 .................. 5
Notes to Consolidated Financial Statements ................. 6
Management's Discussion and Analysis of the
Financial Condition and Results of Operations .............. 7
Part II
- - -------
Other Information .............................................. 8
2
3
CONSOLIDATED BALANCE SHEETS
ASSETS March 31, 1995 December 31, 1994
---------------- ------------------
(Unaudited)
Current assets:
Cash and cash equivalents $ 4,640,000 $ 3,096,000
Accounts receivable, less allowance
for doubtful accounts 23,038,000 20,487,000
Inventories, at lower of average cost or market:
Finished goods 4,621,000 3,920,000
Work in process 10,217,000 8,800,000
Material and parts 15,906,000 15,721,000
----------- -----------
30,744,000 28,441,000
Deferred income taxes 3,250,000 3,250,000
Prepaid expenses 679,000 638,000
----------- -----------
Total current assets 62,351,000 55,912,000
Property, plant and equipment, at cost:
Land and land improvements 150,000 150,000
Buildings and building improvements 7,775,000 7,721,000
Machinery and electronic test equipment 7,320,000 7,314,000
Office furniture and fixtures 3,351,000 3,251,000
----------- -----------
18,596,000 18,436,000
Less accumulated depreciation and amortization 9,612,000 9,357,000
----------- -----------
Net property, plant and equipment 8,984,000 9,079,000
Goodwill, net 3,190,000 3,315,000
Other assets 62,000 62,000
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$74,587,000 $68,368,000
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts and commissions payable $12,684,000 $ 8,599,000
Income taxes payable 3,166,000 1,930,000
Other accrued liabilities 6,100,000 7,303,000
----------- -----------
Total current liabilities 21,950,000 17,832,000
Long-term note payable to bank -- 1,400,000
Accrued retiree medical benefits 815,000 801,000
Deferred income taxes 964,000 964,000
Stockholders' equity:
Preferred stock -- --
Common stock 4,471,000 4,405,000
Paid in excess of par 6,763,000 6,510,000
Retained earnings 39,624,000 36,456,000
----------- -----------
Total stockholders' equity 50,858,000 47,371,000
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$74,587,000 $68,368,000
=========== ===========
See accompanying notes
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4
CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended March 31,
1995 1994
------------ -----------
(Unaudited)
Net sales $ 32,182,000 $17,518,000
Cost and expenses:
Cost of sales 19,359,000 10,452,000
Research and development 2,235,000 1,534,000
Selling, general and administrative 4,932,000 2,970,000
------------ -----------
Income from operations 5,656,000 2,562,000
Interest income 34,000 19,000
Interest expense (10,000) --
------------ -----------
Income before income taxes 5,680,000 2,581,000
Provision for income taxes 2,200,000 950,000
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Net income $ 3,480,000 $ 1,631,000
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Net income per share $ .74 $ .39
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See accompanying notes
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5
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended March 31,
1995 1994
----------- -----------
(Unaudited)
Cash flows from operating activities:
Net income $ 3,480,000 $ 1,631,000
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 394,000 245,000
Increase in accrued retiree medical benefits 14,000 15,000
Changes in assets and liabilities:
Accounts receivable (2,551,000) (4,772,000)
Inventories (2,303,000) (2,303,000)
Prepaid expenses (41,000) (29,000)
Accounts and commissions payable 4,085,000 4,010,000
Income tax payable 1,236,000 150,000
Accrued liabilities (1,203,000) 237,000
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Net cash provided from (used by) operating activities 3,111,000 (816,000)
Cash flows from investing activities:
Purchase of equipment (174,000) (90,000)
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Net cash used for investing activities (174,000) (90,000)
Cash flows from financing activities:
Reduction in long-term borrowings (1,400,000) --
Sale of stock, net 319,000 56,000
Dividends paid (312,000) (245,000)
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Net cash used for financing activities (1,393,000) (189,000)
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Net increase (decrease) in cash and cash equivalents 1,544,000 (1,797,000)
Cash and cash equivalents at beginning of period 3,096,000 3,911,000
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Cash and cash equivalents at end of period $ 4,640,000 $ 2,114,000
=========== ===========
See accompanying notes
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6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1 - The accompanying financial information is unaudited but includes all
adjustments (consisting of normal recurring adjustments) which the Company
considers necessary for a fair statement of the results for the period. The
operating results for the three months ended March 31, 1995 are not
necessarily indicative of the operating results for the entire year.
2 - Per share information is based on the weighted average common shares and
common share equivalents outstanding during each period. The shares that
were used in the calculation of net income per share for the three months
ended March 31, 1995 were 4,698,000 and 4,221,000 shares, respectively.
3 - On June 22, 1994 the Company acquired Daymarc Corporation, a
privately-held manufacturer of gravity feed semiconductor test handling
equipment that complements the pick and place test handling equipment
manufactured by Delta Design. The Company issued 280,000 shares of Cohu
common stock, an option to purchase 70,000 shares of Cohu common stock and
paid $4,000,000 in cash to the securityholders of Daymarc. In addition,
performance-based consideration may be payable in Cohu common stock and cash
which could total approximately $8,000,000 over the next four years. The
acquisition has been accounted for as a purchase and goodwill will be
amortized on a straight-line basis over twenty years. The Company's
consolidated financial statements include the results of Daymarc from June
22, 1994 forward. The $4,000,000 payment made to securityholders of Daymarc
was funded by borrowing $4,000,000 of long term debt payable over four
years.
Assuming that the acquisition of Daymarc had occurred on the first day of the
Company's year ended December 31, 1994, pro forma condensed consolidated results
of operations would be as follows:
Pro Forma Results of Operations
(in thousands, except per share data)
(unaudited)
Three Months Ended
March 31, 1994
------------------
Net sales $25,132
Net income 2,653
Net income per share .59
These results give effect to pro forma adjustments that include the amortization
of goodwill, issuance of 280,000 shares of Cohu common stock and interest
expense on long term debt.
This pro forma information is not necessarily indicative of the actual results
that would have been achieved had Daymarc been acquired the first day of the
Company's year ended December 31, 1994.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
First Quarter 1995 compared to First Quarter 1994
Net sales increased 84% to $32,182,000 in 1995 compared to sales of $17,518,000
in 1994. Sales of semiconductor test handling equipment increased 129% in 1995
with 67% of the increase due to increased sales of pick and place handling
equipment by Delta Design and 62% of the increase attributable to the inclusion
of Daymarc's operating results in 1995. Sales of television cameras and
equipment increased 25% while the combined sales of metal detection and
microwave equipment increased slightly in 1995. Gross Margins as a percentage of
sales remained constant at approximately 40% for 1995 and 1994. Research and
development expense as a percentage of sales decreased to 7% in 1995 from an
abnormally high 9% in 1994. Selling, general and administrative expense
decreased to 15% in 1995 from 17% in 1994 due to cost containment measures and
lower commissions and selling expenses on semiconductor test handling equipment.
The provision for income taxes expressed as a percentage of pre-tax income was
39% in both 1995 and the year ended December 31, 1994. Net income increased 113%
to $3,480,000 in 1995 from $1,631,000 in 1994.
The Company's results are substantially dependent on the results of the
semiconductor test handling equipment business conducted by its wholly-owned
subsidiaries, Delta Design and Daymarc Corporation. This capital equipment
business is in turn highly dependent on the overall strength of the
semiconductor industry. Worldwide demand for semiconductors has historically
been subject to substantial cyclical swings of varying duration and magnitude,
and is currently in a period of relative strength. The Company's favorable
results in recent periods are in part reflective of this current strength in the
semiconductor industry. The Company cannot predict how long the current period
of relative strength will continue. The Company's backlog can be expected to
decline concurrently with or possibly in advance of the next period of relative
weakness in worldwide demand for semiconductors. The Company attempts to keep
its production capacity, labor force and other aspects of its cost structure in
line with expected demand.
Liquidity - The Company's net cash flows generated from operating activities was
$3,111,000. Accounts receivable increased $2,551,000 due to higher first quarter
sales. Inventory increased $2,303,000 in anticipation of increased future sales.
Accounts and commission payables increased $4,085,000 mainly due to purchases
related to the increase in inventory and increased sales. Net cash used for
investing activities was $174,000 which was used for the purchase of equipment.
Net cash used for financing activities was $1,393,000. Cash used by financing
activities included a $1,400,000 final payment on long-term borrowing and
$312,000 cash used for dividends. The Company has $3,000,000 available under its
current short term line of credit and working capital of $40,401,000. It is
anticipated that present working capital, profitable operations and available
borrowings under the credit line will be sufficient to meet the Company's normal
operating requirements and the anticipated capital expenditures for 1995 of
approximately $2,000,000.
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8
Part II
Items not applicable
The information set forth herein reflects all adjustments which are, in the
opinion of management, necessary for a fair statement of the results for the
interim period shown.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1935, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
COHU, INC.
Date: 5/11/95 /s/ J.W. BARNES
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J. W. Barnes, President & CEO
Date: 5/11/95 /s/ CHARLES A. SCHWAN
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Charles A. Schwan, VP-Finance
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5
1
U.S. DOLLARS
3-MOS
DEC-31-1995
JAN-01-1995
MAR-31-1995
1
4,640,000
0
23,038,000
0
30,744,000
62,351,000
18,596,000
9,612,000
74,587,000
21,950,000
0
4,471,000
0
0
46,387,000
74,587,000
32,182,000
0
19,359,000
26,502,000
0
0
10,000
5,680,000
2,200,000
3,480,000
0
0
0
3,480,000
.74
0
