10q10k10q10k.net

What changed in COHU INC's 10-K — 2022 vs 2023

vs

Paragraph-level year-over-year comparison of COHU INC's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+424 added−382 removedSource: 10-K (2024-02-16) vs 10-K (2023-02-17)

Top changes in COHU INC's 2023 10-K

424 paragraphs added · 382 removed · 271 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

153 edited+130 added−74 removed113 unchanged
Biggest changeAny failure to effectively manage multiple manufacturing sites and to secure raw materials meeting our quality, cost and other requirements, or failures by our suppliers to perform, could harm our sales, service levels and reputation. ● A failure to perform or unexpected downtime experienced by our sole source contract manufacturer for certain semiconductor automated test equipment could adversely impact our operations. ● Ongoing inflationary pressures on costs, including those for raw and packaging materials, components and subassemblies, labor and distribution costs, along with rising interest rates, increase the threat of recession and may impact our financial condition or results of operations. ● The semiconductor industry we serve is seasonal, volatile and unpredictable, and increased cyclicality could have an adverse impact on our sales and gross margin. ● The semiconductor equipment industry is intensely competitive. ● Semiconductor equipment is subject to rapid technological change, product introductions and transitions which may result in inventory write-offs, and our new product development involves numerous risks and uncertainties. ● A limited number of customers account for a substantial percentage of our net sales. ● A majority of our revenues are generated from exports to foreign countries, primarily in Asia, that are subject to economic and political instability and we compete against a number of Asia-based test contactor, test handler and automated test equipment suppliers. 8 Table of Contents Risks Associated with Operating a Global Business ● Geopolitical instability in locations critical to Cohu and its customers’ business, manufacturing, and engineering operations may adversely impact our operations and sales. ● Increasingly restrictive trade and export regulations may materially harm and limit Cohu’s business and restrict our ability to sell its products, specifically within China.
Biggest changeThis summary should be read in conjunction with the full “Risk Factors” described below and should not be relied upon as a complete summary of the material risks facing our business. 7 Table of Contents Risks Relating to Our Business Operations, Growth Strategy and Industry ● Semiconductor equipment is subject to rapid technological change, product introductions and transitions which may result in inventory write-offs, and our new product development involves numerous risks and uncertainties. ● The semiconductor industry we serve is cyclical, seasonal, volatile and unpredictable, and increased cyclicality could have an adverse impact on our sales and gross margin. ● The erosion in mobility, and automotive & industrial market sales are collectively causing an adverse impact on our sales. ● Any failure to effectively manage multiple overseas manufacturing operations could harm our sales, service levels and reputation. ● We outsource select manufacturing activities to third-party service providers, which decreases our control over the performance of these functions. ● If we deliver systems with defects, our reputation and demand of our systems may decrease, and the cost of quality events could be harmful to our operating results. ● Failure of critical suppliers to deliver sufficient quantities of parts in a timely and cost-effective manner could adversely impact our operations. ● Inflationary pressures, along with any further increase in interest rates, increase the threat of recession and may impact our financial condition or results of operations. ● The semiconductor equipment industry is intensely competitive and we may not be able to win business over that of our competition. ● Consolidation could adversely affect the market for our products and negatively impact our ability to compete. ● The cyclical nature of the semiconductor equipment industry places enormous demands on our employees, operations and infrastructure. ● A limited number of customers account for a substantial percentage of our net sales. ● If we cannot continue to develop, manufacture, market and support products and services that meet customer requirements for innovation and quality, our revenue and gross margin may suffer. ● If our relationships with our large customers deteriorate, our product development activities could be adversely affected. ● We must attract and retain experienced personnel to help support our future growth, and competition for such personnel in our industry is high. ● The use of, or failure to properly implement the use of, Artificial Intelligence within Cohu’s product development involves risks and uncertainties that may impact our operational performance and be subject to legal and/or regulatory action.
Patents and Trademarks Our technology is protected by various intellectual property laws including patent, license, trademark, copyright and trade secret laws.
Patents, Trademarks and Intellectual Property Our technology is protected by various intellectual property laws including patent, license, trademark, copyright and trade secret laws.
In addition, there are emerging companies that provide or may provide innovative technology incorporated in products that may compete successfully against our products. We expect our competitors to continue to improve the design and performance of their current products and introduce new products with improved performance capabilities.
In addition, there are emerging companies that provide or may provide innovative technology incorporated in products that may compete successfully against our products. We expect our competitors to continue to improve the design and performance of their current products and to introduce new products with improved performance capabilities.
For example, while our corporate headquarters are located in California, additional key engineering, sales, and administrative personnel are located in China, Germany, Japan, Malaysia, Philippines, Singapore, Switzerland, Taiwan and elsewhere in the U.S., and our manufacturing operations are primarily located in Germany, Japan, Malaysia, Philippines and the U.S.
For example, while our corporate headquarters are located in California, additional key engineering, sales and administrative personnel are located in China, Germany, Japan, Malaysia, Philippines, Singapore, Switzerland, Taiwan and elsewhere in the U.S., and our manufacturing operations are primarily located in Japan, Malaysia, Philippines and the U.S.
We have increased investments in our test contactor business and targeted significant growth opportunities. However, the test contactor market is fragmented, with many entrenched regional players, and subject to intense price competition and high localized customer support requirements. We believe that customer support and responsiveness and an ability to consistently meet tight deadlines is critical to our success.
We have increased investments in our test contactor business and targeted growth opportunities. However, the test contactor market is fragmented, with many entrenched regional players, and subject to intense price competition and high localized customer support requirements. We believe that customer support and responsiveness and an ability to consistently meet tight deadlines is critical to our success.
These collective export restrictions and the ongoing unpredictability of U.S.-China trade relations have encouraged China-based companies to actively seek to obtain a greater supply of similar or substitute products from our foreign competitors that are not subject to these restrictions, thereby decreasing our long-term competitiveness as a supplier to China-based companies.
Additionally, these collective export restrictions and the ongoing unpredictability of U.S.-China trade relations have encouraged China-based companies to actively seek to obtain a greater supply of similar or substitute products from our foreign competitors that are not subject to these restrictions, thereby decreasing our long-term competitiveness as a supplier to China-based companies.
As a result, many key parts may be available only from a single supplier (“sole source”) or a limited number of suppliers. In addition, suppliers may significantly raise prices or cease manufacturing certain components (with or without advance notice to us) that are difficult to replace without significant reengineering of our products.
As a result, many key parts may be available only from a single supplier (“sole source”) or a limited number of suppliers. In addition, suppliers may significantly raise prices or cease manufacturing certain components (with or without advance notice) that are difficult to replace without significant reengineering of our products.
As a result of these changes and other factors, assessing the market potential and commercial viability of test handling, ATE, MEMS, system-level and burn-in test equipment and test contactors is extremely difficult and subject to a great deal of risk. In addition, not all integrated circuit manufacturers employ the same manufacturing processes.
As a result of these changes and other factors, assessing the market potential and commercial viability of test handling, ATE, system-level and burn-in test equipment and test contactors is extremely difficult and subject to a great deal of risk. In addition, not all integrated circuit manufacturers employ the same manufacturing processes.
Risks Relating to Cybersecurity, Intellectual Property and Litigation Our business and operations could suffer in the event of cybersecurity breaches within our operational systems or products. Attempts by others to gain unauthorized access to information technology systems are becoming more sophisticated and are sometimes successful.
Risks Relating to Cybersecurity, Intellectual Property, Privacy and Litigation Our business and operations could suffer in the event of cybersecurity breaches within our operational systems or products. Attempts by others to gain unauthorized access to information technology systems are becoming more sophisticated and are sometimes successful.
In addition, we believe that, due to the rapid pace of technological change in the semiconductor and electronic equipment industries, the successful manufacture and sale of our products also depends upon our experience, technological know-how, manufacturing and marketing skills and speed of response to sales opportunities.
In addition, we believe that, due to the rapid pace of technological change in the semiconductor and electronic equipment industries, the successful manufacture and sale of our products also depends heavily upon our experience, technological know-how, manufacturing and marketing skills and speed of response to sales opportunities.
To address quality issues, we work extensively with our customers and suppliers and engage in product testing to determine the cause of quality problems and appropriate solutions. Finding solutions to quality issues can be expensive and may result in additional warranty, replacement and other costs.
To proactively address quality issues, we work extensively with our customers and suppliers and engage in product testing to determine the cause of quality problems and appropriate solutions. Finding solutions to quality issues can be expensive and may result in additional warranty, replacement and other costs.
In addition, our effective tax rate in the future could be adversely affected by changes in the mix of earnings in countries with differing statutory tax rates, changes in the valuation of our deferred tax assets and liabilities, changes in tax laws and the discovery of new information during our tax return preparation process.
Our effective tax rate in the future could be adversely affected by changes in the mix of earnings in countries with differing statutory tax rates, changes in the valuation of our deferred tax assets and liabilities, changes in tax laws and the discovery of new information during our tax return preparation process.
Furthermore, energy shortages, particularly with respect to natural gas, should they occur in Europe, would disrupt our test handler operations and research and development activities at our Kolbermoor, Germany and La Chaux-de-Fonds facilities.
Furthermore, energy shortages, particularly with respect to natural gas, should they occur in Europe, would disrupt our test handler operations and research and development activities at our Kolbermoor, Germany and La Chaux-de-Fonds, Switzerland facilities.
The loss of, or a significant reduction in, orders by these or other significant customers as a result of competitive products, market conditions including end market demand for our customers’ products, outsourcing final semiconductor test to test subcontractors that are not our customers or other factors, would have a material adverse impact on our business, financial condition and results of operations.
The loss of, or a significant reduction in, orders by these or other significant customers as a result of competitive products, market conditions including end market demand for our customers’ products, outsourcing final semiconductor test to test subcontractors that are not our customers or other factors, could have a material adverse impact on our business, financial condition and results of operations.
Further, defending against claims of violations of these laws and regulations, even if we are successful, could be time-consuming, result in costly litigation, divert management’s attention and resources and cause us to incur significant expenses. 23 Table of Contents In addition to government regulations regarding sale and export, we are subject to other regulations regarding our products.
Further, defending against claims of violations of these laws and regulations, even if we are successful, could be time-consuming, result in costly litigation, divert management’s attention and resources and cause us to incur significant expenses. 25 Table of Contents In addition to government regulations regarding sale and export, we are subject to other regulations regarding our products.
Kampfer served from 2012 to 2015 as President of CohuHD, formerly a division of Cohu, which was divested in 2014. Previously, Mr. Kampfer spent eight years with Iomega Corporation, holding several executive positions, including President and Chief Operating Officer and Vice President, General Counsel and Secretary. Earlier, Mr.
Prior to that, Mr. Kampfer served from 2012 to 2015 as President of CohuHD, formerly a division of Cohu, which was divested in 2014. Previously, Mr. Kampfer spent eight years with Iomega Corporation, holding several executive positions, including President and Chief Operating Officer and Vice President, General Counsel and Secretary. Earlier, Mr.
Further, as stock may be repurchased, given the volatility of our stock price, we may repurchase stock at prices which, in hindsight, are materially higher than the subsequent price of our stock. 22 Table of Contents Risks Relating to Regulatory Matters There may be changes in, and uncertainty with respect to, legislation, regulation and governmental policy in the United States.
Further, as stock may be repurchased, given the volatility of our stock price, we may repurchase stock at prices which, in hindsight, are materially higher than the subsequent price of our stock. Risks Relating to Regulatory Matters There may be changes in, and uncertainty with respect to, legislation, regulation and governmental policy in the United States.
If the requirement to capitalize Section 174 expenditures is not modified, it may also impact our effective tax rate and our cash tax liability in future years.
If the requirement to capitalize Section 174 expenditures is not modified, it may also continue to adversely impact our effective tax rate and our cash tax liability in future years.
Our Code of Business Conduct and Ethics and other documents related to our corporate governance are also posted on our web site at https://cohu.gcs-web.com/corporate-governance/documents-charters .
Our Code of Business Conduct and Ethics and other documents related to our corporate governance are also posted on our website at https://cohu.gcs-web.com/corporate-governance/documents-charters .
Financial information on our reportable segments for each of the last three years is included in Note 10, “Segment and Geographic Information” in Part IV, Item 15(a) of this Form 10-K. 1 Table of Contents Sales by reportable segment, expressed as a percentage of total consolidated net sales, for the last three years were as follows: 2022 (1) 2021 (1) 2020 Semiconductor Test & Inspection 100 % 97 % 92 % PCB Test - % 3 % 8 % 100 % 100 % 100 % (1) Our PCB Test segment was sold on June 24, 2021.
Financial information on our reportable segments for each of the last three years is included in Note 11, “Segment and Geographic Information” in Part IV, Item 15(a) of this Form 10-K. 1 Table of Contents Sales by reportable segment, expressed as a percentage of total consolidated net sales, for the last three years were as follows: 2023 (1) 2022 (1) 2021 Semiconductor Test & Inspection 100 % 100 % 97 % PCB Test - % - % 3 % 100 % 100 % 100 % (1) Our PCB Test segment was sold on June 24, 2021.
However, certain employees at our operation in Germany are represented by a works council and employees in La Chaux-de-Fonds, Switzerland are members of the microtechnology and Swiss watch trade union. The Collective Bargaining Agreement of “Metallurgie (ingenieurs et cadres)” is applicable to all employees of our French subsidiary and certain employees in our China operation belong to local trade unions.
However, certain employees at our operation in Germany are represented by a works council and employees in Switzerland are members of the microtechnology and Swiss watch trade union. The Collective Bargaining Agreement of “Metallurgie (ingenieurs et cadres)” is applicable to all employees of our French subsidiary and certain employees in our China operation belong to local trade unions.
If our overseas manufacturing locations are unable to meet our manufacturing requirements in a timely manner, our ability to ship products and to realize the related revenues when anticipated could be materially affected. Our suppliers are subject to the fluctuations in general economic cycles, and global economic conditions may impact their ability to operate their businesses.
If our overseas manufacturing locations are unable to meet our manufacturing requirements in a timely manner, our ability to ship products and to realize the related revenues when anticipated could be materially affected. 11 Table of Contents Our suppliers are subject to fluctuations in general economic cycles, and global economic conditions may impact their ability to operate their businesses.
Beginning in 2022, the Tax Cuts and Jobs Act, or the Tax Act, eliminated the option to deduct research and development expenditures currently and requires taxpayers to capitalize and amortize them over five or fifteen years pursuant to Internal Revenue Code Section 174. This has increased our effective tax rate and our cash tax payable in 2022.
For example, beginning in 2022, the Tax Cuts and Jobs Act, or the Tax Act, eliminated the option to deduct research and development expenditures currently and requires taxpayers to capitalize and amortize them over five or fifteen years pursuant to Internal Revenue Code Section 174. This increased our effective tax rate and our cash tax payable in 2022 and 2023.
Although we believe that Cohu qualifies as an “essential business” in the jurisdictions in which we operate, our business has been, and may in the future be, adversely impacted by evolving and extended public health requirements around the world; government-mandated facility shutdowns; import/export, shipping and logistics disruptions and delays; other supply chain and distribution constraints or delays; rapid changes to business, political or regulatory conditions affecting the semiconductor equipment industry and the overall global economy; availability of employees, increased sick time and lost employee productivity; risks associated with, at times, temporarily housing employees in our Malaysia and Philippines factories; remote working IT and increased cybersecurity risks; increased internal control risks over financial reporting as key finance staff work remotely; delayed product development programs; customers’ canceling, pushing out orders or refusal to accept product deliveries; delayed collection of receivables; other actions of our customers, suppliers and competitors which may be sudden and inconsistent with our expectations; higher shipping, trucking and logistics costs; higher component costs; manufacturing capacity limitations; additional credit rating agency downgrades could occur which would increase our cost of raising capital; and potential additional impairment of goodwill or other intangible assets or inventory write-downs due to lower product demand may become necessary.
Our business has previously, and may in the future be, adversely impacted by evolving and extended public health requirements around the world; government-mandated facility shutdowns; import/export, shipping and logistics disruptions and delays; other supply chain and distribution constraints or delays; rapid changes to business, political or regulatory conditions affecting the semiconductor equipment industry and the overall global economy; availability of employees, increased sick time and lost employee productivity; risks associated with, at times, temporarily housing employees in our Malaysia and Philippines factories; remote working and increased cybersecurity risks; increased internal control risks over financial reporting as key finance staff work remotely; delayed product development programs; customers’ canceling, pushing out orders or refusal to accept product deliveries; delayed collection of receivables; other actions of our customers, suppliers and competitors which may be sudden and inconsistent with our expectations; higher shipping, trucking and logistics costs; higher component costs; manufacturing capacity limitations; additional credit rating agency downgrades could occur which would increase our cost of raising capital; and potential additional impairment of goodwill or other intangible assets or inventory write-downs due to lower product demand may become necessary.
Cohu is incurring increased interest expenses on our remaining indebtedness.
Cohu is incurring interest expenses on our remaining indebtedness.
This exposure resulted in charges to operations during each of the years in the three-year period ended December 31, 2022. Future inventory write-offs and increased inventory reserve requirements could have a material adverse impact on our results of operations and financial condition.
This exposure resulted in charges to operations during each of the years in the three-year period ended December 30, 2023. Future inventory write-offs and increased inventory reserve requirements could have a material adverse impact on our results of operations and financial condition.
We have in the past issued common stock as acquisition consideration and for general corporate purposes. For example, in March 2021, we issued 5,692,500 additional shares of our common stock in an underwritten follow-on public offering, an increase of 13.4% of outstanding shares of common stock.
We have in the past issued common stock as acquisition consideration and for general corporate purposes. For example, in March 2021, we issued 5,692,500 additional shares of our common stock in an underwritten follow-on public offering, which represented an increase of 13.4% of outstanding shares of common stock at the time.
If one or more of these risks occurs, it could require us to dedicate significant resources to remedy, and if we are unsuccessful in finding a solution, our financial results will suffer. Geopolitical instability in locations critical to Cohu and its customers ’ business, manufacturing, and engineering operations may adversely impact our operations and sales.
If one or more of these risks occurs, it could require us to dedicate significant resources to remedy, and if we are unsuccessful in finding a solution, our financial results will suffer. Geopolitical instability in locations critical to Cohu and its customers may adversely impact our operations, sales and profitability.
We are required by the Securities and Exchange Commission to establish and maintain adequate internal control over financial reporting that provides reasonable assurance regarding the reliability of our financial reporting and the preparation of financial statements in accordance with generally accepted accounting principles.
We are required by the SEC to establish and maintain adequate internal control over financial reporting that provides reasonable assurance regarding the reliability of our financial reporting and the preparation of financial statements in accordance with generally accepted accounting principles.
Spares and Kits are consumable, non-consumable and spare items that are used to maintain, sustain or otherwise enable customers’ equipment to meet its performance, availability and production requirements. We also design and manufacture a wide range of device dedication kits that enable handlers to process different semiconductor packages. Spares and Kits are included in our recurring revenues.
Spares and Kits are consumable, non-consumable and spare items that are used to maintain, sustain or otherwise enable customers’ equipment to meet its performance, availability and production requirements. We also design and manufacture a wide range of device dedication kits that enable handlers to process different semiconductor packages.
However, stock repurchases may adversely affect the company if the economy turns downward, as it could leave the company limited in its ability to obtain cash necessary for ongoing operations or potential acquisition targets. In addition, any repurchase of stock may have no positive impact on our stock price.
However, stock repurchases may adversely affect the Company if the economy turns downward, as it could leave the Company limited in its ability to obtain cash necessary for ongoing operations or strategic initiatives. In addition, any repurchase of stock may have no positive impact on our stock price.
Any of these occurrences could have a material adverse effect on our business, results of operations or financial condition. In addition, quality issues can impair our relationships with new or existing customers and adversely affect our reputation, which could lead to a material adverse effect on our operating results. The loss of key personnel could adversely impact our business.
Any of these occurrences could have a material adverse effect on our business, results of operations or financial condition. In addition, quality issues can impair our relationships with new or existing customers and adversely affect our reputation, which could lead to a material adverse effect on our operating results.
We believe that a diverse workforce is critical to our success, and we continue to focus on the hiring, retention and advancement of women and underrepresented populations. We are committed to respecting and protecting the human rights of all our employees.
We believe that a diverse workforce is critical to our success, and we continue to endeavor to increase the hiring, retention and advancement of women and underrepresented populations. We are committed to respecting and protecting the human rights of all our employees.
For example, the U.S. Securities and Exchange Commission has adopted disclosure rules for companies that use conflict minerals in their products, with substantial supply chain verification requirements if the materials come from, or could have come from, the Democratic Republic of the Congo or adjoining countries.
For example, the U.S. SEC has adopted disclosure rules for companies that use conflict minerals in their products, with substantial supply chain verification requirements if the materials come from, or could have come from, the Democratic Republic of the Congo or adjoining countries.
We make available free of charge, on or through our web site, our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments to those reports, as soon as reasonably practicable after such material is electronically filed with the Securities and Exchange Commission (the “SEC”).
Available Information Our website address is www.cohu.com. We make available free of charge, on or through our web site, our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and all amendments to those reports, as soon as reasonably practicable after such material is electronically filed with the Securities and Exchange Commission (the “SEC”).
Research and Development Research and development activities are carried on in our various subsidiaries and are directed toward development of new products and equipment, as well as enhancements to existing products and equipment. Our total research and development expense was $92.6 million in 2022, $92.0 million in 2021 and $86.2 million in 2020.
Research and Development Research and development activities are carried on in our various subsidiaries and are directed toward development of new products and equipment, as well as enhancements to existing products and equipment. Our total research and development expense was $88.6 million in 2023, $92.6 million in 2022 and $92.0 million in 2021.
Executive Officers serve at the discretion of the Board of Directors, until their successors are appointed. Name Age Position Luis A. Müller 53 President and Chief Executive Officer Jeffrey D. Jones 61 Senior Vice President, Finance and Chief Financial Officer Christopher G. Bohrson 63 Senior Vice President, and Chief Customer Officer Thomas D.
Executive officers serve at the discretion of the Board of Directors, until their successors are appointed. Name Age Position Luis A. Müller 54 President and Chief Executive Officer Jeffrey D. Jones 62 Senior Vice President, Finance and Chief Financial Officer Christopher G. Bohrson 64 Senior Vice President and Chief Customer Officer Thomas D.
As a global manufacturer, we rely on raw materials, packaging materials, direct labor, energy, a large network of suppliers, distribution resources and transportation providers. In 2022, these costs, including those for transportation and other inputs necessary for the production and distribution of our products, increased.
As a global manufacturer, we rely on raw materials, packaging materials, direct labor, energy, a large network of suppliers, distribution resources and transportation providers. In 2022 and 2023, these costs, including those for transportation and other inputs necessary for the production and distribution of our products, increased in large part due to global inflationary pressures.
This could cause the market price of our stock to decline, perhaps significantly. In addition, as a result of the Term Loan Credit Facility, we maintain credit ratings with Moody’s Investors Service, Inc. (“Moody’s”) and S&P Global Ratings (“S&P”).
This could cause the market price of our stock to decline, perhaps significantly. In addition, as a result of the Term Loan Credit Facility, which was recently paid in February 2024, we maintain credit ratings with Moody’s Investors Service, Inc. (“Moody’s”) and S&P Global Ratings (“S&P”).
We are currently significantly investing in new product development programs relating to test contactors, test handlers and automated test equipment. In fiscal 2022, we incurred $92.6 million in research and development expenses.
We are currently significantly investing in new product development programs relating to test handlers, test contactors and automated test equipment. In fiscal 2023, we incurred $88.6 million in research and development expenses.
Any of the foregoing COVID-19 driven impacts, if they reoccur, may have a material adverse effect on our financial condition and results of operations, and may also have the effect of increasing the likelihood and/or magnitude of other risks described in these risk factors. With any successive COVID-19 surge, we believe the risks of material adverse business disruption increase.
Any of the foregoing, if they reoccur, may have a material adverse effect on our financial condition and results of operations, and may also have the effect of increasing the likelihood and/or magnitude of other risks described in these risk factors. With any reemerging COVID-19 surge or new health epidemic, we believe the risks of material adverse business disruption increase.
Also, perceived company underperformance could attract shareholder activism and such activities could interfere with our ability to execute our business plans, be costly and time-consuming, disrupt our operations, divert the attention of management or result in other short-term focused corporate actions, any of which could have an adverse effect on our business or stock price.
Such activities could interfere with our ability to execute our business plans, be costly and time-consuming, disrupt our operations, divert the attention of management or result in other short-term focused corporate actions, any of which could have an adverse effect on our business or stock price.
The level of capital expenditures by these companies depends on the current and anticipated market demand for semiconductor devices and the products that incorporate them. Our recurring revenues are driven by an increase in the number of semiconductor devices that are tested and by the continuous introduction of new products and technologies by our customers.
The level of capital expenditures by these companies depends on the current and anticipated market demand for semiconductor devices and the products that incorporate them. Our recurring revenues are driven by increases in our product installed base and in the number of semiconductor devices that are tested, and by the continuous introduction of new products and technologies by our customers.
Test contactors serve as the interface between the test handler and the semiconductor device under test such as digital semiconductor devices utilizing spring probe technology, power management and LED semiconductor devices utilizing cantilever technology, and RF semiconductor devices based on contacts designed to operate at high frequencies.
Interface Products are comprised of test contactors, probe heads and probe pins. Test contactors serve as the interface between the test handler and the semiconductor device under test (such as digital semiconductor devices utilizing spring probe technology, power management and LED semiconductor devices utilizing cantilever technology) and RF semiconductor devices based on contacts designed to operate at high frequencies.
Future technologies, processes and product developments may render our current or future product offerings obsolete and we might not be able to develop, introduce and successfully manufacture new products or make enhancements to our existing products in a timely manner to satisfy customer requirements or achieve market acceptance.
Future technologies, processes and product developments may render our current or future product offerings obsolete and we might not be able to develop, introduce and successfully manufacture new products or make enhancements to our existing products in a timely manner to satisfy customer requirements or achieve market acceptance. Furthermore, we might not realize acceptable profit margins on such products.
The issuance of shares of our common stock in connection with any future offerings of securities by us, will dilute our shareholders ’ ownership interest in the company. We may seek additional financing in the future to meet our capital needs, to repay outstanding indebtedness under our existing Credit Agreement or to meet our strategic initiatives or operating activities.
The issuance of shares of our common stock in connection with any future offerings of securities by us, will dilute our shareholders ’ ownership interest in the company. We may seek additional financing in the future to meet our capital needs or to meet our strategic initiatives or operating activities.
The stock market in general, and the market for shares of high-technology companies in particular, including ours, have experienced extreme price fluctuations, which have often been unrelated to the operating performance of affected companies. During the three-year period ended December 31, 2022, the price of our common stock has ranged from $51.86 to $8.89.
The stock market in general, and the market for shares of high-technology companies in particular, including ours, have experienced extreme price fluctuations, which have often been unrelated to the operating performance of affected companies. During the three-year period ended December 30, 2023, the price of our common stock has ranged from $51.86 to $24.06.
On June 24, 2021, we completed the divestment of our PCB Test business. No customer of our PCB Test segment exceeded 10% of consolidated net sales for the years ended December 25, 2021 or December 26, 2020.
On June 24, 2021, we completed the divestment of our PCB Test business. No customer of our PCB Test segment exceeded 10% of consolidated net sales for the year ended December 25, 2021.
To ensure we maintain our position as a global leader in the semiconductor test and inspection space, we are committed to providing a safe and positive work environment for our employees that emphasizes learning and professional development, respect for individuals and ethical conduct, and that is facilitated by a direct management-employee engagement model.
To ensure we maintain our position as a global leader in the semiconductor equipment space, we endeavor to provide a safe and positive work environment for our employees that emphasizes learning and professional development, respect for individuals and ethical conduct, and that is facilitated by a direct management-employee engagement model.
Acquisitions and investments involve numerous risks, including, but not limited to: ● acquisitions may underperform and we may not achieve any forecasted growth, benefits or synergies; ● difficulties entering potentially new markets or manufacturing in new geographies where Cohu has no or limited direct prior experience; ● difficulties and increased costs in connection with integration of the personnel, operations, technologies and products of acquired businesses; ● increasing the scope, geographic diversity and complexity of our business; ● the cost and risk of having to potentially develop new and unfamiliar sales channels for acquired businesses; ● diversion of management’s attention from other operational matters; ● product manufacturing disruptions and delays as we potentially consolidate certain manufacturing sites; ● difficulties and significant costs in integrating the systems and processes of two companies with complex operations including multiple manufacturing sites; ● the potential loss of key employees, customers or suppliers of Cohu or acquired businesses; ● lack of synergy, or the inability to realize expected synergies, resulting from the acquisition; ● potential unknown liabilities associated with the acquired businesses; ● failure to commercialize purchased technology; ● the impairment of acquired intangible assets and goodwill that could result in significant charges to operating results in future periods; and ● challenges caused by distance, language and cultural differences.
Acquisitions and investments involve numerous risks, including, but not limited to: ● acquisitions may underperform and we may not achieve any forecasted growth, benefits or synergies; ● difficulties entering potentially new markets or manufacturing in new geographies where Cohu has no or limited direct prior experience; 19 Table of Contents ● difficulties and increased costs in connection with integration of the personnel, operations, technologies and products of acquired businesses; ● unexpected reduction of sales of existing products as a result of the introduction of new products; ● increasing the scope, geographic diversity and complexity of our business; ● the cost and risk of having to potentially develop new and unfamiliar sales channels for acquired businesses; ● diversion of management’s attention from other operational matters and current products and customers; ● product manufacturing disruptions and delays as we potentially consolidate certain manufacturing sites; ● difficulties and significant costs in integrating the systems and processes of two companies with complex operations including multiple manufacturing sites; ● integration of acquired businesses and their operations, including enterprise resource planning systems, may be costly and time-consuming and divert resources away from other projects; ● the potential loss of key employees, customers or suppliers of Cohu or acquired businesses; ● lack of synergy, or the inability to realize expected synergies, resulting from the acquisition; ● potential unknown liabilities associated with the acquired businesses; ● failure to commercialize or meet the expected performance of the purchased technology or business; ● failure to retain key employees and customer or supplier relationships; ● the impairment of acquired intangible assets and goodwill that could result in significant charges to operating results in future periods; and ● challenges caused by distance, language and cultural differences.
We work closely with our customers to make improvements to our existing products and in the development of new products. We expect to continue to make significant investments in research and development and must manage product transitions successfully as introductions of new products could adversely impact sales.
We work closely with our customers to make improvements to our existing products and in the development of new products. We expect to continue to make significant investments in research and development and must manage product transitions successfully.
Risks Relating to Owning Our Stock ● Our financial and operating results may vary and fall below analysts’ estimates, or credit rating agencies may change their ratings on Cohu, any of which may cause the price of our common stock to decline or make it difficult to obtain other financing. ● We have experienced significant volatility in our stock price.
Risks Relating to Owning Our Stock Our financial and operating results may vary and fall below analysts ’ estimates, or credit rating agencies may change their ratings on Cohu, any of which may cause the price of our common stock to decline or make it difficult to obtain other financing.
Our reliance on overseas manufacturers exposes us to significant risks including complex management, foreign currency, legal, tax and economic risks, which we may not be able to address quickly and adequately. In addition, it is time consuming and costly to qualify overseas supplier relationships.
A substantial majority of our products are manufactured in Asia. Our reliance on overseas manufacturers exposes us to significant risks including complex management, foreign currency, legal, tax and economic risks, which we may not be able to address quickly and adequately. In addition, it is time consuming and costly to qualify and manage overseas supplier relationships.
We also provide training on the maintenance and operation of our systems as well as application, data management software and consulting services on our products.
We also provide training on the maintenance and operation of our systems as well as application, data management software and consulting services on our products. Services are included in our recurring revenues.
These regions are known for being vulnerable to natural disasters and other risks, such as earthquakes, tsunamis, fires and floods, volcanic eruptions, and geopolitical risks, which at times have disrupted the local economies. For example, a significant earthquake or tsunami could materially affect operating results.
In addition, we have Asia-based manufacturing plants in Malaysia, Philippines and Japan. These regions are known for being vulnerable to natural disasters and other risks, such as earthquakes, tsunamis, fires and floods, volcanic eruptions, and geopolitical risks, which at times have disrupted the local economies. For example, a significant earthquake or tsunami could materially affect operating results.
The loss of, or a significant reduction in, orders by these or other significant customers, including reductions due to market, economic or competitive conditions or the outsourcing of final integrated circuit test to subcontractors that are not our customers, would adversely affect our financial condition and results of operations.
The loss of, or a significant reduction in, orders by these or other significant customers, including reductions due to market, economic or competitive conditions or the outsourcing of final integrated circuit test to subcontractors that are not our customers, would adversely affect our financial condition and results of operations. For further information, see Item 1A entitled “Risk Factors” below.
Kampfer joined Cohu in May 2017 as Vice President Corporate Development, General Counsel and Secretary. Prior to Cohu, Mr. Kampfer served from June 2015 to May 2017 as Executive Vice President and Chief Financial Officer of Multi-Fineline Electronix, Inc. Prior to that, Mr.
Kampfer was promoted to Senior Vice President Corporate Development, General Counsel and Secretary on February 6, 2024. Mr. Kampfer joined Cohu in May 2017 as Vice President, Corporate Development, General Counsel and Secretary. Prior to Cohu, Mr. Kampfer served from June 2015 to May 2017 as Executive Vice President and Chief Financial Officer of Multi-Fineline Electronix, Inc.
We believe that our existing sources of liquidity, including cash resources and cash provided by operating activities will provide sufficient resources to meet our working capital and cash requirements for at least the next twelve months; however, a material adverse impact on our business from unforeseen events or a desire to reduce our outstanding indebtedness could result in a need to raise additional capital.
If cash from available sources is insufficient or cash is used for unanticipated needs, we may require additional capital sooner than anticipated. 20 Table of Contents We believe that our existing sources of liquidity, including cash resources and cash provided by operating activities will provide sufficient resources to meet our working capital and cash requirements for at least the next twelve months; however, a material adverse impact on our business from unforeseen events or a desire to reduce our outstanding indebtedness could result in a need to raise additional capital.
Data Analytics (“DI-Core”) is a comprehensive software suite used to optimize Cohu equipment performance. DI-Core provides real-time online performance monitoring and process control to improve utilization, manage predictive maintenance, and link semiconductor tester, handler and test contactor data. DI-Core is included in our recurring revenue.
DI-Core data analytics provides real-time online performance monitoring and process control to improve utilization, manage predictive maintenance, and link semiconductor tester, handler and test contactor data. DI-Core data analytics is a software subscription service included in our recurring revenue.
Further, recent geopolitical tensions between Ukraine and Russia could adversely impact the supply chain in this region, particularly with respect to critical materials and metals, such as palladium which is used in our interface products as well as in semiconductors.
In addition, the conflict could adversely impact the supply chain in this region, particularly with respect to critical materials and metals, such as palladium which is used in our interface products as well as in semiconductors.
(“Jabil”) to manufacture most of our semiconductor test systems from its facility located in Malaysia. In the event that Jabil is unable to meet Cohu’s current delivery schedule for semiconductor test systems, or if Jabil experienced unexpected downtime, we may not be able to sell, or have significant delays, in fulfilling our customer orders.
In the event that Jabil is unable to meet Cohu’s current delivery schedule for semiconductor test systems, or if Jabil experienced unexpected downtime, we may not be able to sell to our customers, or have significant delays in fulfilling their orders.
Item 1. Business. Cohu is a global technology leader supplying test, automation, inspection and metrology products and services to the semiconductor industry. Cohu’s differentiated and broad product portfolio is designed to optimize semiconductor manufacturing yield and productivity, accelerating customers’ time-to-market.
Item 1. Business. Cohu, Inc. (“Cohu”, “we”, “our”, “us” and the “Company”) is a global technology leader supplying test, interface, automation, inspection and metrology products, software and services to the semiconductor industry. Cohu’s differentiated and broad product portfolio enables optimized yield and productivity, accelerating customers’ manufacturing time-to-market.
Goodwill and other intangibles comprise 29% of Cohu’s total assets, of which approximately $213.5 million of our total assets are allocated to goodwill.
Goodwill and other intangibles comprise 34% of Cohu’s total assets, of which approximately $241.7 million of our total assets are allocated to goodwill.
Repeat sales to existing customers represent a significant portion of our sales. During the last three years, customers of our Semiconductor Test & Inspection segment that comprised 10% or greater of our consolidated net sales were as follows: 2022 2021 2020 Analog Devices * 14.1 % * * Less than 10% of consolidated net sales.
During the last three years, customers of our Semiconductor Test & Inspection segment that comprised 10% or greater of our consolidated net sales were as follows: 2023 2022 2021 STMicroelectronics 12.0 % * * Analog Devices * * 14.1 % * Less than 10% of consolidated net sales.
Kampfer 59 Vice President, Corporate Development, General Counsel and Secretary Ian P. Lawee 56 Senior Vice President and General Manager, Semiconductor Test Group Dr. Müller has been the President and Chief Executive Officer of Cohu since December 28, 2014.
Kampfer 60 Senior Vice President, Corporate Development, General Counsel and Secretary Dr. Müller has been the President and Chief Executive Officer of Cohu since December 28, 2014.
Cohu, Inc. (“Cohu”, “we”, “our”, “us” and the “Company”) was incorporated under the laws of California in 1947, as Kalbfell Lab, Inc. and commenced active operations in the same year. Our name was changed to Kay Lab in 1954.
Cohu was incorporated under the laws of California in 1947, as Kalbfell Lab, Inc. and commenced active operations in the same year. Our name was changed to Kay Lab in 1954. In 1957, Cohu was reincorporated under the laws of the State of Delaware as Cohu Electronics, Inc. and, in 1972, our name was changed to Cohu, Inc.
If we are unable to continue to reduce the cost of our test contactor products, while also meeting customer support requirements and deadlines, then we expect that these competitive conditions would negatively impact our test contactor operating results and impede us from achieving our test contactor sales goals.
If we are unable to continue to reduce the cost of our test contactor products, while also meeting customer support requirements and deadlines, then we expect that these competitive conditions would negatively impact our test contactor operating results and impede us from achieving our test contactor sales goals. 13 Table of Contents With respect to Cohu’s ATE business, our ability to increase ATE sales depends, in part, on our ability to win new customers.
Such employee information may be subject to the EU General Data Protection Regulation and the recently effective California Consumer Protection Act. We believe that we have implemented reasonable procedures and internal controls in compliance with these laws, but should such actions be insufficient, we may be subject to regulatory investigations, fines and legal costs.
We believe that we have implemented reasonable procedures and internal controls in compliance with these laws, but should such actions be insufficient, we may be subject to regulatory investigations, fines and legal costs.
Although there is no assurance that existing or future government laws applicable to our operations, services or products will not have a material adverse effect on our capital expenditures, results of operations or our competitive position, we do not currently anticipate material expenditures for government regulations.
Although there is no assurance that existing or future government laws applicable to our operations, services or products will not have a material adverse effect on our capital expenditures, results of operations or our competitive position, we do not currently anticipate material expenditures for government regulations. 5 Table of Contents Sustainability We believe that sound corporate governance is critical to helping us achieve our goals, including with respect to Sustainability considerations.
Failure to introduce new products in a timely manner or the introduction by competitors of products with actual or perceived advantages could result in a loss of competitive position and reduced sales of existing products.
Failure to introduce new products in a timely manner or the introduction by competitors of products with actual or perceived advantages could result in a loss of competitive position and reduced sales of existing products. No assurance can be given that we will continue to compete successfully throughout the world.
The theft, unauthorized use or publication of our intellectual property and/or confidential business information could harm our competitive position, reduce the value of our investment in research and development and other strategic initiatives or otherwise adversely affect our business.
The theft, unauthorized use or publication of our intellectual property and/or confidential business information could harm our competitive position, reduce the value of our investment in research and development and other strategic initiatives or otherwise adversely affect our business. See Item 1C entitled “ Cybersecurity ” for additional information about our cybersecurity processes, oversight, risk mitigation and governance.
Test contactors and probe heads are specific to individual semiconductor device designs, need to be replaced frequently and increase in size with the number of devices tested in parallel. Interface Products are included in our recurring revenues. Inspection and Metrology are products that provide advanced vision capabilities.
With the recent acquisition of EQT, we expanded our interface products in mid- to high-power contactors. Test contactors and probe heads are specific to individual semiconductor device designs, need to be replaced frequently, and increase in size with the number of devices tested in parallel. Interface Products are included in our recurring revenues.
MCT Worldwide, LLC (“MCT”), acquired by Cohu on January 30, 2023, is a United States (“U.S.”) based company with a principal manufacturing site in Penang, Malaysia. MCT provides automated solutions for the semiconductor industry and designs, manufactures, markets, services and distributes strip test handlers, film frame handlers and laser mark handlers.
On January 30, 2023, we completed the acquisition of MCT Worldwide, LLC (“MCT”), a U.S. based company with its principal manufacturing site in Penang, Malaysia. MCT provides automated solutions for the semiconductor industry and designs, manufactures, markets, services and distributes strip test handlers, film frame handlers and laser mark handlers. On October 2, 2023, we acquired Equiptest Engineering Pte. Ltd.
To foster a stronger sense of ownership and align the interests of our employees with shareholders, grants of restricted stock units are provided to many of our employees on an annual basis and all eligible employees are able to purchase shares of our common stock, at a 15% discount, through our Employee Stock Purchase Plan.
Cohu also complies with applicable wage, work hours, overtime and benefits laws. 6 Table of Contents To foster a stronger sense of ownership and align the interests of our employees with shareholders, grants of restricted stock units are provided to many of our employees on an annual basis and certain eligible employees may elect to purchase shares of our common stock, at a 15% discount, through our Employee Stock Purchase Plan.
Global Trade As a global company, the import and export of our products and services are subject to laws and regulations including international treaties, U.S. export controls and sanctions laws, customs regulations, and local trade rules around the world.
Notably, the import and export of our products and services are subject to laws and regulations including international treaties, U.S. export controls and sanctions laws, customs regulations, and local trade rules around the world. We believe we are in compliance and are committed to maintaining compliance with all global trade laws applicable to our operations, products and services.
Our contract manufacturer is responsible for funding the capital expenses incurred in connection with the manufacture of our products, except with regard to end-of-line testing equipment and other specific manufacturing equipment utilized in assembling our products or sub-components which are financed and owned by Cohu.
While our contract manufacturer is responsible for funding a substantial portion of the capital expenses incurred in connection with the manufacture of our products, we finance and own end-of-line testing equipment and other specific manufacturing equipment utilized in assembling our products or sub-components.
Our semiconductor ATE solutions consist primarily of two platforms for the system on a chip (“SoC”) device market. The Diamondx tester offers high-density instrumentation for testing microcontrollers, application specific standard products (“ASSP”), power management, display drivers, sensors and other mixed signal devices. The PAx tester is focused primarily on the RF Front End IC and Module applications.
The Diamondx tester offers high-density instrumentation for testing various semiconductors: microcontrollers, application specific standard products (“ASSP”), power management, radio frequency (RF), display drivers, sensors and other mixed signal devices. The PAx tester is a focused tester for RF Front End IC and Module applications.
Seasonality Historically, the semiconductor industry has been seasonal with recurring periods of oversupply and excess capacity, which often have had a significant effect on the semiconductor industry’s demand for capital equipment, including equipment of the type we manufacture and market. We anticipate that the markets for newer generations of semiconductors and semiconductor equipment will be subject to similar cycles.
Seasonality and Cyclicality Historically, the semiconductor industry has been cyclical as well as seasonal with recurring periods of oversupply and excess capacity, which often have had a significant effect on the semiconductor industry’s demand for capital equipment, such as the type we manufacture and market.
Our customers’ selection processes typically are lengthy and can require us to incur significant sales, service and engineering expenses, and to provide the customer evaluation systems for several months at no charge, in pursuit of a single customer opportunity. We may not win the competitive selection process and may never generate any revenue despite incurring such expenditures.
Our customers’ selection processes typically are lengthy and can require us to incur significant sales, service and engineering expenses, and to provide the customer evaluation systems for a period of time at no charge, in pursuit of a single customer opportunity.
We have in the past and may in the future, experience difficulties in manufacturing and volume production of our new equipment. In addition, as is common with semiconductor equipment, after sale support and warranty costs have typically been significantly higher with new products than with our established products.
In addition, as is common with semiconductor equipment, after-sales support and warranty costs have typically been significantly higher with new products than with our established products.

… 277 more changes not shown on this page.

Item 2. Properties

Properties — owned and leased real estate

3 edited+0 added−0 removed2 unchanged
Biggest changePaul, Minnesota 2, 3, 4, 5 17,000 Leased Penang, Malaysia (1) 2, 3, 4, 5 10,000 Leased (1) Location was acquired on January 30, 2023, in conjunction with the purchase of MCT, see Note 17, “Subsequent Event”, included in Part IV, Item 15(a) of this Form 10-K. Major activities have been separated into the following categories: 1.
Biggest changePaul, Minnesota 2, 3, 4, 5 17,000 Leased (1) On January 10, 2024 we entered into a purchase agreement to acquire our facility in Melaka, Malaysia. (2) Increase in square footage from the prior year is a result of our acquisition of EQT on October 2, 2023. Major activities have been separated into the following categories: 1.
Ownership Poway, California 1, 2, 3, 4, 5 147,000 Leased Malacca, Malaysia 2, 3, 4, 5 96,000 Leased Kolbermoor, Germany 2, 3, 4, 5 83,000 Owned Osaka, Japan 2, 3, 4, 5 67,000 Owned Norwood, Massachusetts 2, 4, 5 56,000 Leased Calamba City, Laguna, Philippines 2, 3, 4, 5 52,000 Leased La Chaux-de-Fonds, Switzerland 2, 4, 5 33,000 Leased Milpitas, California 2, 4, 5 31,000 Leased Lincoln, Rhode Island 2, 3, 4, 5 22,000 Leased Singapore 2, 4, 5 20,000 Leased St.
Ownership Poway, California 1, 2, 3, 4, 5 147,000 Leased Melaka, Malaysia (1) 2, 3, 4, 5 96,000 Leased Kolbermoor, Germany 2, 3, 4, 5 83,000 Owned Osaka, Japan 2, 3, 4, 5 67,000 Owned Calamba City, Laguna, Philippines 2, 3, 4, 5 64,000 Owned Norwood, Massachusetts 2, 4, 5 56,000 Leased Calamba City, Laguna, Philippines 3, 4 37,000 Leased La Chaux-de-Fonds, Switzerland 2, 4, 5 33,000 Leased Singapore (2) 2, 3, 4, 5 32,000 Leased Milpitas, California 2, 4, 5 31,000 Leased Lincoln, Rhode Island 2, 3, 4, 5 22,000 Leased St.
Item 2. Properties. Certain information concerning our principal properties at December 31, 2022, is set forth below: Major Approx. Location Activities Sq. Ft.
Item 2. Properties. Certain information concerning our principal properties at December 30, 2023, is set forth below: Major Approx. Location Activities Sq. Ft.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

1 edited+0 added−0 removed0 unchanged
Biggest changeItem 4. Mine Safety Disclosures 25 PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 26 Item 6. Reserved 28 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 28 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 40
Biggest changeItem 4. Mine Safety Disclosures 30 PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 31 Item 6. Reserved 33 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 33 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 44 Item 8.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

9 edited+1 added−2 removed9 unchanged
Biggest changeIn selecting our 2022 peer group the Compensation Committee of our Board of Directors considered competitive market data and an analysis prepared by Compensia and identified companies headquartered in the U.S. in the semiconductor capital equipment and electronic capital equipment and instrumentation sectors that were comparable to us on the basis of revenue, our market capitalization, and that had similar scope of operations.
Biggest changeIn selecting our peer group, the Compensation Committee of our Board of Directors considered competitive market data and an analysis prepared by Compensia and identified companies headquartered in the U.S. in the semiconductor capital equipment and electronic capital equipment and instrumentation sectors that were comparable to us based on revenue, our market capitalization, and that had similar scope of operations. 32 Table of Contents 2018 2019 2020 2021 2022 2023 Cohu, Inc. $ 100 $ 143 $ 249 $ 245 $ 206 $ 228 NASDAQ Index $ 100 $ 137 $ 198 $ 242 $ 163 $ 236 Russell 2000 $ 100 $ 126 $ 151 $ 173 $ 138 $ 161 Peer Group $ 100 $ 165 $ 211 $ 303 $ 228 $ 316
Repurchases under this program will be made using our existing cash resources and may be commenced or suspended from time-to-time at our discretion without prior notice. Repurchases may be made in the open market, through 10b5-1 programs, or in privately negotiated transactions at prevailing market rates in accordance with federal securities laws.
Repurchases under this program will be made using our existing cash resources and may be commenced or suspended from time-to-time at our discretion without prior notice. Repurchases may be made in the open market, through 10b5-1 programs, or in privately negotiated transactions at prevailing market rates in accordance with federal securities laws.
Recent Sales of Unregistered Securities During 2022, we did not issue any securities that were not registered under the Securities Act of 1933, as amended. Issuer Purchases of Equity Securities On October 28, 2021, we announced that our Board of Directors authorized a $70 million share repurchase program.
Recent Sales of Unregistered Securities During fiscal 2023, we did not issue any securities that were not registered under the Securities Act of 1933, as amended. Issuer Purchases of Equity Securities On October 28, 2021, we announced that our Board of Directors authorized a $70 million share repurchase program.
The graph below compares the cumulative total stockholder return on the common stock of Cohu for the last five fiscal years with the cumulative total return on custom Peer Group Indexes and a Nasdaq Global Select Market Index over the same period (assuming the investment of $100 in Cohu’s common stock, Peer Group Index and Nasdaq Global Select Market Index on December 30, 2017, and reinvestment of all dividends).
The graph below compares the cumulative total stockholder return on the common stock of Cohu for the last five fiscal years with the cumulative total return on custom Peer Group Indexes and a Nasdaq Global Select Market Index over the same period (assuming the investment of $100 in Cohu’s common stock, Peer Group Index and Nasdaq Global Select Market Index on December 29, 2018, and reinvestment of all dividends).
In 2022, the custom peer group was comprised of Advanced Energy Industries, Inc., Alpha & Omega Semiconductor Limited, Axcelis Technologies, Inc., Badger Meter, Inc., Cirrus Logic, Inc., FormFactor, Inc., Harmonic Inc., Ichor Holdings Ltd., Kulicke and Soffa Industries, Inc., MACOM Technology Solutions Holdings, Inc., MaxLinear, Inc., National Instruments Corporation, Novanta, Inc., Onto Innovation, OSI Systems, Inc., Photronics, Inc., Smart Global Holdings, Inc., Ultra Clean Holdings, Inc. and Veeco Instruments, Inc.
The custom peer group in fiscal 2023 was comprised of Advanced Energy Industries, Inc., Alpha & Omega Semiconductor Limited, Axcelis Technologies, Inc., Badger Meter, Inc., Cirrus Logic, Inc., FormFactor, Inc., Harmonic Inc., Ichor Holdings Ltd., Kulicke and Soffa Industries, Inc., MACOM Technology Solutions Holdings, Inc., MaxLinear, Inc., Novanta, Inc., Onto Innovation, OSI Systems, Inc., Photronics, Inc., Smart Global Holdings, Inc., Ultra Clean Holdings, Inc. and Veeco Instruments, Inc.
Item 5. Market for Registrant ’ s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. (a) Market Information Cohu, Inc. stock is traded on the Nasdaq Global Select Market under the symbol “COHU”. Holders At February 8, 2023, Cohu had 577 stockholders of record.
Item 5. Market for Registrant ’ s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. (a) Market Information Cohu, Inc. stock is traded on the Nasdaq Global Select Market under the symbol “COHU”. Holders At February 7, 2024, Cohu had 499 stockholders of record.
Equity Compensation Plan Information The information required by this Item regarding equity compensation plans is incorporated by reference to the information set forth in Part III, Item 12 of this Annual Report on Form 10-K. 27 Table of Contents Comparative Stock Performance Graph The information contained in this Stock Performance Graph section shall not be deemed to be “ soliciting material ” or “ filed ” with the SEC or subject to the liabilities of Section 18 of the Exchange Act except to the extent that Cohu specifically incorporates it by reference into a document filed under the Securities Act or the Exchange Act.
Comparative Stock Performance Graph The information contained in this Stock Performance Graph section shall not be deemed to be “ soliciting material ” or “ filed ” with the SEC or subject to the liabilities of Section 18 of the Exchange Act except to the extent that Cohu specifically incorporates it by reference into a document filed under the Securities Act or the Exchange Act.
The total number of shares of common stock we purchased during the fiscal year ended December 31, 2022 was 1,767,070 shares. 26 Table of Contents Share repurchase activity during the fourth quarter of 2022 was as follows: Total Number of Maximum $ Total Weighted Shares Purchased Value of Shares Number of Average Total as Part of Publicly That May Yet Be Shares Price Paid Purchase Announced Purchased Under Purchased Per Share (1) Cost (2) Programs (3) The Programs (3) (in thousands except price per share) Sep 25, 2022 - Oct 22, 2022 200 $ 27.54 $ 5,513 200 $ 89,085 Oct 23, 2022 - Nov 19, 2022 61 $ 33.20 $ 2,041 61 $ 87,044 Nov 20, 2022 - Dec 31, 2022 150 $ 33.87 $ 5,088 150 $ 81,957 411 $ 30.70 $ 12,642 411 (1) The weighted average price paid per share of common stock does not include the cost of commissions.
The total number of shares of common stock we purchased during the fiscal year ended December 30, 2023 was 700,270 shares. 31 Table of Contents Share repurchase activity during the fourth quarter of 2023 was as follows: Total Number of Maximum $ Total Weighted Shares Purchased Value of Shares Number of Average Total as Part of Publicly That May Yet Be Shares Price Paid Purchase Announced Purchased Under Purchased Per Share (1) Cost (2) Programs (3) The Programs (3) (in thousands except price per share) Oct 1, 2023 - Oct 28, 2023 110 $ 33.75 $ 3,715 110 $ 67,387 Oct 29, 2023 - Nov 25, 2023 165 $ 31.54 $ 5,195 165 $ 62,192 Nov 26, 2023 - Dec 30, 2023 116 $ 33.48 $ 3,876 116 $ 58,316 391 $ 32.74 $ 12,786 391 (1) The weighted average price paid per share of common stock does not include the cost of commissions.
All such repurchased shares and related costs are held as treasury stock and accounted for at trade date using the cost method.
All such repurchased shares and related costs are held as treasury stock and accounted for at trade date using the cost method. Equity Compensation Plan Information The information required by this Item regarding equity compensation plans is incorporated by reference to the information set forth in Part III, Item 12 of this Annual Report on Form 10-K.
Removed
In 2021, the custom Peer Group Index was comprised of Advanced Energy Industries, Inc., Axcelis Technologies, Inc., Azenta, Inc.
Added
The only change from the custom peer group used in fiscal 2022 was the removal of National Instruments Corporation, due to it being acquired by Emerson Electric Co.
Removed
(formerly Brooks Automation, Inc.), Cirrus Logic, Inc., Entegris, Inc., FormFactor, Inc., Kulicke and Soffa Industries, Inc., Novanta, Inc., OSI Systems, Inc., Onto Innovation, Inc., Photronics, Inc., Synaptics, Inc., Ultra Clean Holdings, Inc. and Veeco Instruments, Inc. 2017 2018 2019 2020 2021 2022 Cohu, Inc. $ 100 $ 116 $ 167 $ 291 $ 173 $ 146 NASDAQ Index $ 100 $ 97 $ 133 $ 192 $ 235 $ 159 Russell 2000 $ 100 $ 89 $ 112 $ 134 $ 154 $ 122 2021 Peer Group $ 100 $ 85 $ 149 $ 210 $ 314 $ 194 2022 Peer Group $ 100 $ 83 $ 124 $ 154 $ 212 $ 162

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

1 edited+0 added−0 removed1 unchanged
Biggest changeThere were no retrospective changes to the Consolidated Statements of Operations for any quarters in the two most recent fiscal years that would require disclosure under Item 302, as amended.
Biggest changeThere were no retrospective changes to the Consolidated Statements of Income for any quarters in the two most recent fiscal years that would require disclosure under Item 302, as amended.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

97 edited+20 added−27 removed53 unchanged
Biggest changeManagement’s Discussion and Analysis of Financial Condition and Results of Operations,” under the heading “Liquidity and Capital Resources” in our Annual Report on Form 10-K for the year ended December 25, 2021, filed with the SEC on February 18, 2022, which discussion is incorporated herein by reference and which is available free of charge on the SEC’s website at www.sec.gov.
Biggest changeManagement’s Discussion and Analysis of Financial Condition and Results of Operations,” under the heading “Liquidity and Capital Resources” in our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on February 17, 2023, which discussion is incorporated herein by reference and which is available free of charge on the SEC’s website at www.sec.gov. 40 Table of Contents Liquidity Working Capital: The following summarizes our cash, cash equivalents, short-term investments and working capital at December 30, 2023 and December 31, 2022: (in thousands) 2023 2022 Decrease Percentage Change Cash, cash equivalents and short-term investments $ 335,698 $ 385,576 $ (49,878 ) (12.9 )% Working capital $ 535,397 $ 603,979 $ (68,582 ) (11.4 )% Cash Flows Operating Activities: Cash provided by operating activities consists of our net income adjusted for non-cash expenses and changes in operating assets and liabilities.
Our critical accounting estimates that we believe are the most important to investors’ understanding of our financial results and condition and require complex management judgment include: ● revenue recognition, including the deferral of revenue on sales to customers, which impacts our results of operations; ● estimation of valuation allowances and accrued liabilities, specifically inventory reserves, which impact gross margin or operating expenses; ● the recognition and measurement of current and deferred income tax assets and liabilities, unrecognized tax benefits, the valuation allowance on deferred tax assets and accounting for the impact of the change to U.S. tax law as described herein, which impact our tax provision; and ● the assessment of recoverability of long-lived and indefinite-lived assets including goodwill and other intangible assets, which primarily impacts gross margin or operating expenses if we are required to record impairments of assets or accelerate their depreciation.
Our critical accounting estimates that we believe are the most important to investors’ understanding of our financial results and condition and require complex management judgment include: ● revenue recognition, including the deferral of revenue on sales to customers, which impacts our results of operations; ● estimation of valuation allowances and accrued liabilities, specifically inventory reserves, which impact gross margin or operating expenses; ● the recognition and measurement of current and deferred income tax assets and liabilities, unrecognized tax benefits, the valuation allowance on deferred tax assets and accounting for the impact of the change to U.S. tax law as described herein, which impact our tax provision; and ● the assessment of recoverability of long-lived assets and goodwill and other intangible assets, which primarily impacts gross margin or operating expenses if we are required to record impairments of assets or accelerate their depreciation.
Under the income approach, we use a discounted cash flow methodology to derive an indication of value, which requires management to make significant estimates and assumptions related to forecasted revenues, gross profit margins, operating income margins, working capital cash flow, perpetual growth rates, and long-term discount rates, among others. For the market approach, we use the guideline public company method.
Under the income approach, we use a discounted cash flow methodology to derive an indication of value, which requires management to make estimates and assumptions related to forecasted revenues, gross profit margins, operating income margins, working capital cash flow, perpetual growth rates, and long-term discount rates, among others. For the market approach, we use the guideline public company method.
Establishing, reducing or increasing a valuation allowance in an accounting period generally results in an increase or decrease in tax expense in the statement of operations. We must make significant judgments to determine the provision for income taxes, deferred tax assets and liabilities, unrecognized tax benefits and any valuation allowance to be recorded against deferred tax assets.
Establishing, reducing or increasing a valuation allowance in an accounting period generally results in an increase or decrease in tax expense in the statement of income. We must make significant judgments to determine the provision for income taxes, deferred tax assets and liabilities, unrecognized tax benefits and any valuation allowance to be recorded against deferred tax assets.
For a full reconciliation of our effective tax rate to the U.S. federal statutory rate and further explanation of our provision for income taxes, see Note 9, “Income Taxes”, included in Part IV, Item 15(a) of this Form 10-K, which is incorporated herein by reference.
For a full reconciliation of our effective tax rate to the U.S. federal statutory rate and further explanation of our provision for income taxes, see Note 10, “Income Taxes”, included in Part IV, Item 15(a) of this Form 10-K, which is incorporated herein by reference.
The seasonal and volatile nature of demand for semiconductor equipment, our primary industry, makes estimates of future revenues, results of operations and net cash flows difficult. Our primary historical source of liquidity and capital resources has been cash flow generated by operations and we manage our business to maximize operating cash flows as our primary source of liquidity.
The cyclical, seasonal and volatile nature of demand for semiconductor equipment, our primary industry, makes estimates of future revenues, results of operations and net cash flows difficult. Our primary historical source of liquidity and capital resources has been cash flow generated by operations and we manage our business to maximize operating cash flows as our primary source of liquidity.
South Korea became the first country to enact such global minimum tax rules, which will be effective for fiscal years beginning on or after January 1, 2024. These specific actions did not impact our consolidated financial statements in 2022, however, many more countries are expected to issue laws and regulations to conform with this guidance soon.
South Korea became the first country to enact such global minimum tax rules, which will be effective for fiscal years beginning on or after January 1, 2024. These specific actions did not impact our consolidated financial statements in 2023, however, many more countries are expected to issue laws and regulations to conform with this guidance soon.
We also have other policies that we consider key accounting policies; however, these policies typically do not require us to make estimates or judgments that are difficult or subjective. 29 Table of Contents Revenue Recognition: Our net sales are derived from the sale of products and services and are adjusted for estimated returns and allowances, which historically have been insignificant.
We also have other policies that we consider key accounting policies; however, these policies typically do not require us to make estimates or judgments that are difficult or subjective. 34 Table of Contents Revenue Recognition: Our net sales are derived from the sale of products and services and are adjusted for estimated returns and allowances, which historically have been insignificant.
Fair value determinations require considerable judgment and are sensitive to changes in underlying assumptions and factors. We conduct our annual impairment test as of October 1st of each year, and have determined there was no impairment as of October 1, 2022, as we determined that the estimated fair values of our reporting units exceeded their carrying values on that date.
Fair value determinations require considerable judgment and are sensitive to changes in underlying assumptions and factors. We conduct our annual impairment test as of October 1st of each year, and have determined there was no impairment as of October 1, 2023, as we determined that the estimated fair values of our reporting units exceeded their carrying values on that date.
Share-based compensation on performance stock units with market-based goals is calculated using a Monte Carlo simulation model on the date of the grant. Share-based compensation expense related to stock options is recorded based on the fair value of the award on its grant date, which we estimate using the Black-Scholes valuation model.
Share-based compensation on performance stock units with market-based goals is calculated using a Monte Carlo simulation model on the date of the grant. When granted, share-based compensation expense related to stock options is recorded based on the fair value of the award on its grant date, which we estimate using the Black-Scholes valuation model.
Our purchase orders are based on our current manufacturing needs and are fulfilled by our vendors within relatively short time horizons. We typically do not have significant agreements for the purchase of raw materials or other goods specifying minimum quantities or set prices that exceed our expected requirements for the next three months. 39 Table of Contents Off-Balance Sheet Arrangements.
Our purchase orders are based on our current manufacturing needs and are fulfilled by our vendors within relatively short time horizons. We typically do not have significant agreements for the purchase of raw materials or other goods specifying minimum quantities or set prices that exceed our expected requirements for the next three months. Off-Balance Sheet Arrangements.
Commitments to contract manufacturers and suppliers. From time-to-time, we enter into commitments with our vendors and outsourcing partners to purchase inventory at fixed prices or in guaranteed quantities. We are not able to determine the aggregate amount of such purchase orders that represent contractual obligations, as purchase orders may represent authorizations to purchase rather than binding agreements.
From time-to-time, we enter into commitments with our vendors and outsourcing partners to purchase inventory at fixed prices or in guaranteed quantities. We are not able to determine the aggregate amount of such purchase orders that represent contractual obligations, as purchase orders may represent authorizations to purchase rather than binding agreements.
Due to a change in forecasted results an impairment charge of $0.1 million was recorded. Long-lived assets, other than goodwill, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets might not be recoverable.
Due to a change in forecasted results an impairment charge of $0.1 million was recorded. Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets might not be recoverable.
Our gross margin can fluctuate due to a number of factors, including, but not limited to, the mix of products sold, product support costs, increases to inventory reserves, the sale of previously reserved inventory and business volume which impacts the utilization of our manufacturing capacity.
Our gross margin can fluctuate due to a number of factors, including, but not limited to, the mix of products sold, product support costs, changes in inventory reserves, the sale of previously reserved inventory and business volume which impacts the utilization of our manufacturing capacity.
Under the terms of the Credit Agreement, the lender may accelerate the payment terms upon the occurrence of certain events of default set forth therein, which include: the failure of Cohu to make timely payments of amounts due under the Credit Agreement, the failure of Cohu to adhere to the representations and covenants set forth in the Credit Agreement, the failure to provide notice of any event that causes a material adverse effect or to provide other required notices, upon the event that related collateral agreements become ineffective, upon the event that certain legal judgments are entered against Cohu, the insolvency of Cohu, or upon the change of control of Cohu.
Under the terms of the Credit Agreement, the lender had the option to accelerate the payment terms upon the occurrence of certain events of default set forth therein, which included: the failure of Cohu to make timely payments of amounts due under the Credit Agreement, the failure of Cohu to adhere to the representations and covenants set forth in the Credit Agreement, the failure to provide notice of any event that causes a material adverse effect or to provide other required notices, upon the event that related collateral agreements become ineffective, upon the event that certain legal judgments are entered against Cohu, the insolvency of Cohu, or upon the change of control of Cohu.
We offer a wide range of products and services and our revenue from capital equipment products is driven by the capital expenditure budgets and spending patterns of our customers, who often abruptly delay or accelerate purchases in reaction to variations in their business.
We offer a wide range of products and services and our revenue from capital equipment products is driven by the capital expenditure and operating budgets of our customers, who often abruptly delay or accelerate purchases in reaction to variations in their business.
Our wholly owned subsidiary in Switzerland has one available line of credit which provides it with borrowings of up to a total of 2.0 million Swiss Francs, a portion of which is reserved for tax guarantees. At December 31, 2022 and December 25, 2021, no amounts were outstanding under this line of credit.
Our wholly owned subsidiary in Switzerland has one available line of credit which provides it with borrowings of up to a total of 2.0 million Swiss Francs, a portion of which is reserved for tax guarantees. At December 30, 2023 and December 31, 2022, no amounts were outstanding under this line of credit.
Starting in the fourth quarter of 2020, we began entering into foreign currency forward contracts to hedge against future movements in foreign exchange rates that affect certain U.S. Dollar denominated assets and liabilities that are held at our subsidiaries whose functional currency is the local currency. During both 2022 and 2021, the U.S.
Starting in the fourth quarter of 2020, we began entering into foreign currency forward contracts to hedge against future movements in foreign exchange rates that affect certain U.S. Dollar denominated assets and liabilities that are held at our subsidiaries whose functional currency is the local currency. During 2023, the U.S.
The level of capital expenditures by these companies depends on the current and anticipated market demand for semiconductor devices and the products that incorporate them. Our consumable products are driven by the number of semiconductor devices that are tested and by the continuous introduction of new products and new technologies by our customers.
The level of expenditures by these companies depends on the current and anticipated market demand for semiconductor devices and the products that incorporate them. Our recurring products are driven by the number of semiconductor devices that are tested and by the continuous introduction of new products and new technologies by our customers.
We accounted for the repurchase as a debt extinguishment, which resulted in a loss of $3.4 million reflected in our consolidated statement of operations, as well as a $3.4 million reduction in debt discounts and deferred financing costs in our consolidated balance sheets.
We accounted for the repurchase as a debt extinguishment, which resulted in a loss of $0.3 million reflected in our consolidated statement of income, as well as a $0.4 million reduction in debt discounts and deferred financing costs in our consolidated balance sheets.
Our THG, STG and ISG operating segments qualify for aggregation under ASC 280 due to similarities in their customers, their economic characteristics, and the nature of products and services provided. As a result, we report in one segment, Semiconductor Test and Inspection Equipment (“Semiconductor Test & Inspection”).
Our THG, STG and ISG operating segments qualify for aggregation under ASC 280 due to similarities in their customers, their economic characteristics, and the nature of products and services provided. As a result, we report in one segment, Test & Inspection.
Other events and changes in circumstances may also require goodwill to be tested for impairment between annual measurement dates. As of December 31, 2022, we do not believe that circumstances have occurred that indicate impairment of our goodwill is more-likely-than-not.
Other events and changes in circumstances may also require goodwill to be tested for impairment between annual measurement dates. As of December 30, 2023, we do not believe that circumstances have occurred that indicate impairment of our goodwill is more-likely-than-not.
Deferred profit decreased $5.0 million as a result of the recognition of revenue that had been previously deferred in accordance with our revenue recognition policy, and accrued compensation, warranty and other liabilities decreased $4.0 million due to lower business volume resulting in lower rates of accrual.
Deferred profit decreased $4.4 million as a result of the recognition of revenue that had been previously deferred in accordance with our revenue recognition policy, and accrued compensation, warranty and other liabilities decreased $14.9 million due to lower business volume resulting in lower rates of accrual.
Financing Activities: Financing cash flows consist primarily of net proceeds from the issuance of common stock from an underwritten public offering and under our stock option and employee stock purchase plans and repayments of debt, net of new borrowings. In fiscal 2022, our cash used in financing activities totaled $91.1 million.
Financing Activities: Financing cash flows consist primarily of net proceeds from the issuance of common stock from an underwritten public offering and under our stock option and employee stock purchase plans and repayments of debt, net of new borrowings. In fiscal 2023, our cash used in financing activities totaled $68.1 million.
During 2022 and 2021, we made payments totaling $50.7 million and $7.3 million, respectively for shares of our common stock repurchased under our share repurchase program to be held as treasury stock. We issue restricted stock units, stock options and maintain an employee stock purchase plan as components of our overall employee compensation.
During 2023 and 2022, we made payments totaling $23.6 million and $50.7 million, respectively for shares of our common stock repurchased under our share repurchase program to be held as treasury stock. We issue restricted stock units, stock options and maintain an employee stock purchase plan as components of our overall employee compensation.
In addition, our wholly owned subsidiary, Xcerra, has arrangements with various financial institutions for the issuance of letters of credit and bank guarantees. As of December 31, 2022, $0.3 million was outstanding under standby letters of credit and bank guarantees.
In addition, our wholly owned subsidiary, Xcerra, has arrangements with various financial institutions for the issuance of letters of credit and bank guarantees. As of December 30, 2023, $0.3 million was outstanding under standby letters of credit and bank guarantees.
A discussion of cash flows for the year ended December 26, 2020 has been omitted from this Annual Report on Form 10-K, but may be found in “Item 7.
A discussion of cash flows for the year ended December 25, 2021 has been omitted from this Annual Report on Form 10-K, but may be found in “Item 7.
The fair value of the debt approximates the carrying value at December 31, 2022. Lines of Credit As a result of our acquisition of Kita, we assumed a series of revolving credit facilities with various financial institutions in Japan.
The fair value of the debt approximates the carrying value at December 30, 2023. Lines of Credit As a result of our acquisition of Kita, we assumed a series of revolving credit facilities with various financial institutions in Japan.
Net Income As a result of the factors set forth above, our net income was $96.8 million in 2022 and $167.3 million in 2021. LIQUIDITY AND CAPITAL RESOURCES Our business is dependent on capital expenditures by semiconductor manufacturers and test subcontractors that are, in turn, dependent on the current and anticipated market demand for semiconductors.
Net Income As a result of the factors set forth above, our net income was $28.2 million in 2023 and $96.8 million in 2022. LIQUIDITY AND CAPITAL RESOURCES Our business is dependent on capital expenditures by semiconductor manufacturers and test subcontractors that are, in turn, dependent on the current and anticipated market demand for semiconductors.
Our gross margin, as a percentage of net sales, increased to 47.2% in 2022 from 43.6% in 2021. During 2022 our gross margin improved compared to 2021 due to favorable product mix, increased insourcing of contactor manufacturing and foreign currency fluctuations. We compute the majority of our excess and obsolete inventory reserve requirements using inventory usage forecasts.
Our gross margin, as a percentage of net sales, increased to 47.6% in 2023 from 47.2% in 2022. During 2023, our gross margin improved compared to 2022 due to favorable product mix and increased insourcing of contactor manufacturing. We compute the majority of our excess and obsolete inventory reserve requirements using inventory usage forecasts.
At December 25, 2021, total outstanding borrowings under the Loan Facilities was $10.0 million with $1.0 million of the total outstanding balance being presented as current installments of long-term debt in our consolidated balance sheets. The loans are denominated in Euros and, as a result, amounts disclosed herein will fluctuate because of changes in currency exchange rates.
At December 31, 2022, total outstanding borrowings under the Loan Facilities was $8.4 million with $1.0 million of the total outstanding balance being presented as current installments of long-term debt in our consolidated balance sheets. The loans are denominated in Euros and, as a result, amounts disclosed herein will fluctuate because of changes in currency exchange rates.
We believe our reserves for excess and obsolete inventory and lower of cost or net realizable value are adequate to cover known exposures at December 31, 2022.
We believe our reserves for excess and obsolete inventory and lower of cost or net realizable value are adequate to cover known exposures at December 30, 2023.
In 2022, cash used to settle the minimum statutory tax withholding requirements on behalf of our employees upon vesting of restricted and performance stock awards, net of proceeds from shares issued under our employee stock purchase plan and from the exercise of employee stock options was $2.0 million.
In 2023, cash used to settle the minimum statutory tax withholding requirements on behalf of our employees upon vesting of restricted and performance stock awards, net of proceeds from shares issued under our employee stock purchase plan and from the exercise of employee stock options was $5.7 million.
During the ordinary course of business, we provide standby letters of credit instruments to certain parties as required. As of December 31, 2022, $0.3 million was outstanding under standby letters of credit.
During the ordinary course of business, we provide standby letters of credit instruments to certain parties as required. As of December 30, 2023, $0.3 million was outstanding under standby letters of credit.
At December 25, 2021, the outstanding loan balance was $3.1 million and $0.2 million of the outstanding balance is presented as current installments of long-term debt in our consolidated balance sheets. The term loans are denominated in Japanese Yen and, as a result, amounts disclosed herein will fluctuate because of changes in currency exchange rates.
At December 31, 2022, the outstanding loan balance was $2.5 million and $0.2 million of the outstanding balance is presented as current installments of long-term debt in our consolidated balance sheets. The term loans are denominated in Japanese Yen and, as a result, amounts disclosed herein will fluctuate because of changes in currency exchange rates.
The credit facilities renew monthly and provide Kita with access to working capital totaling up to 960 million Japanese Yen of which 250 million Japanese Yen is drawn. At December 31, 2022, total borrowings outstanding under the revolving lines of credit were $1.9 million.
The credit facilities renew monthly and provide Kita with access to working capital totaling up to 960 million Japanese Yen of which 250 million Japanese Yen is drawn. At December 30, 2023, total borrowings outstanding under the revolving lines of credit were $1.8 million.
At December 31, 2022, and December 25, 2021, we had $7.1 million and $7.7 million of revenue expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) with expected durations of over one year, respectively.
At December 30, 2023, and December 31, 2022, we had $6.2 million and $7.1 million of revenue expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) with expected durations of over one year, respectively.
At December 31, 2022, the outstanding loan balance, net of discount and deferred financing costs, was $66.2 million and $3.2 million of the outstanding balance is presented as current installments of long-term debt in our consolidated balance sheets.
At December 31, 2022, the outstanding loan balance, net of discount and deferred financing costs, was $66.2 million and $3.2 million of the outstanding balance is presented as current installments of long-term debt in our consolidated balance sheets. As of December 30, 2023, the fair value of the debt was $29.4 million.
We continue to capture new customers and remain optimistic about the long-term prospects for our business due to the increasing ubiquity of semiconductors, the continued rollout of 5G networks, increasing semiconductor complexity, increasing quality demands from semiconductor customers, increasing test intensity and continued proliferation of electronics in a variety of products across the automotive, mobility, industrial and consumer markets.
We continue to capture new customers and new opportunities within our current customers’ business and remain optimistic about the long-term prospects for our business due to the increasing ubiquity of semiconductors, increasing semiconductor complexity, increasing quality demands from semiconductor customers, increasing test intensity and continued proliferation of electronics in a variety of products across the automotive, mobility, industrial, computing, and consumer markets.
The measurement of the fair value of debt is based on the average of the bid and ask trading quotes as of December 31, 2022 and is considered a Level 2 fair value measurement.
The measurement of the fair value of debt is based on the average of the bid and ask trading quotes as of December 30, 2023 and is considered a Level 2 fair value measurement.
The loans are collateralized by the facility and land, carry interest rates ranging from 0.05% to 0.43%, and expire at various dates through 2034. At December 31, 2022, the outstanding loan balance was $2.5 million and $0.2 million of the outstanding balance is presented as current installments of long-term debt in our consolidated balance sheets.
The loans are collateralized by the facility and land, carry interest rates ranging from 0.05% to 0.45%, and expire at various dates through 2034. At December 30, 2023, the outstanding loan balance was $2.1 million and $0.2 million of the outstanding balance is presented as current installments of long-term debt in our consolidated balance sheets.
During 2022, we recorded net charges to cost of sales of approximately $7.2 million for excess and obsolete inventory. In 2021, net charges to cost of sales for excess and obsolete inventory were $7.1 million.
During 2023, we recorded net charges to cost of sales of approximately $4.5 million for excess and obsolete inventory. In 2022, net charges to cost of sales for excess and obsolete inventory were $7.2 million.
We accounted for the prepayment as a debt extinguishment, which resulted in a loss of $0.3 million reflected in our consolidated statement of operations and a $0.4 million reduction in debt discounts and deferred financing costs in our consolidated balance sheets. During 2021, we repurchased $200.0 million in principal of our Term Loan Credit Facility for $200.0 million in cash.
We accounted for the prepayment as a debt extinguishment, which resulted in a loss of $0.4 million reflected in our consolidated statement of income and a $0.4 million reduction in debt discounts and deferred financing costs in our consolidated balance sheets. During 2022, we repurchased $31.8 million in principal of our Term Loan Credit Facility for $31.7 million in cash.
During 2022 we recognized gains of $1.6 million, net of $5.4 million of losses generated by our foreign currency forward contracts and in 2021 we recognized gains of $0.4 million, net of $3.4 million of losses generated by our foreign currency forward contracts. 34 Table of Contents See Note 7 “Derivative Financial Instruments” in Part IV, Item 15(a) of this Form 10-K for additional information with respect to our foreign currency forward contracts.
In 2022 we recognized gains of $1.6 million, net of $5.4 million of losses generated by our foreign currency forward contracts. See Note 8 “Derivative Financial Instruments” in Part IV, Item 15(a) of this Form 10-K for additional information with respect to our foreign currency forward contracts.
Item 7. Management ’ s Discussion and Analysis of Financial Condition and Results of Operations. OVERVIEW Cohu is a leading supplier of semiconductor test and inspection automation systems (handlers), micro-electromechanical system (“MEMS”) test modules, test contactors and thermal subsystems, and semiconductor automated test equipment used by global semiconductor manufacturers and test subcontractors.
Item 7. Management ’ s Discussion and Analysis of Financial Condition and Results of Operations. OVERVIEW Cohu is a leading supplier of semiconductor test and inspection and metrology automation systems (handlers), MEMS test modules, test contactors, thermal subsystems, and semiconductor ATE used by global semiconductor manufacturers and test subcontractors.
In addition, we may make acquisitions or increase our capital expenditures and may need to raise additional capital through debt or equity financing to provide for greater flexibility to fund these activities. Additional financing may not be available or not available on terms favorable to us.
Our liquidity could be negatively affected by a decrease in demand for our products. In addition, we may make acquisitions or increase our capital expenditures and may need to raise additional capital through debt or equity financing to provide for greater flexibility to fund these activities. Additional financing may not be available or not available on terms favorable to us.
Prior to the sale of our PCB Test Group (“PTG”) on June 24, 2021, we reported in two segments, Semiconductor Test & Inspection and PCB Test Equipment (“PCB Test”).
Prior to the sale of our PCB Test business on June 24, 2021, we reported in two segments, Semiconductor Test & Inspection and PCB Test.
The increase in interest income year-over-year is a result of increased investments and higher rates. Foreign Transaction Gain (Loss) and Other We have operations in foreign countries and conduct business in the local currency in these countries.
Interest income was $11.5 million and $4.0 million in 2023 and 2022, respectively. The increase in interest income year-over-year is a result of increased investments and higher rates. Foreign Transaction Gain (Loss) and Other We have operations in foreign countries and conduct business in the local currency in these countries.
Unless otherwise indicated, the discussion below covers the comparative results from continuing operations. 32 Table of Contents The following table summarizes certain operating data as a percentage of net sales: 2022 2021 2020 Net sales 100.0 % 100.0 % 100.0 % Cost of sales (52.8 ) (56.4 ) (57.3 ) Gross margin 47.2 43.6 42.7 Research and development (11.4 ) (10.4 ) (13.5 ) Selling, general and administrative (16.2 ) (14.3 ) (20.3 ) Amortization of purchased intangible assets (4.1 ) (4.0 ) (6.1 ) Gain on sale of PCB Test business - 8.0 - Restructuring charges (0.1 ) (0.2 ) (1.2 ) Impairment charges - (0.0 ) (1.8 ) Gain on sale of facilities - - 0.7 Income from operations 15.4 % 22.7 % 0.5 % Please refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 in our 2021 Annual Report on Form 10-K, filed with the SEC on February 18, 2022, for comparative discussion of our fiscal years ended December 25, 2021 and December 26, 2020. 2022 Compared to 2021 Net Sales Cohu’s consolidated net sales decreased 8.4% from $887.2 million in 2021 to $812.8 million in 2022.
Due to the timing of the divestment of this business our results for 2021 include our PCB Test business for the six months ended June 24, 2021. 37 Table of Contents The following table summarizes certain operating data as a percentage of net sales: 2023 2022 2021 Net sales 100.0 % 100.0 % 100.0 % Cost of sales (52.4 ) (52.8 ) (56.4 ) Gross margin 47.6 47.2 43.6 Research and development (13.9 ) (11.4 ) (10.4 ) Selling, general and administrative (20.8 ) (16.2 ) (14.3 ) Amortization of purchased intangible assets (5.7 ) (4.1 ) (4.0 ) Gain on sale of PCB Test business - - 8.0 Restructuring charges (0.4 ) (0.1 ) (0.2 ) Impairment charges - - 0.0 Income from operations 6.8 % 15.4 % 22.7 % Please refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 in our 2022 Annual Report on Form 10-K, filed with the SEC on February 17, 2023, for comparative discussion of our fiscal years ended December 31, 2022 and December 25, 2021. 2023 Compared to 2022 Net Sales Cohu’s consolidated net sales decreased 21.7% from $812.8 million in 2022 to $636.3 million in 2023.
Temporary differences result in deferred tax assets and liabilities that are reflected in the consolidated balance sheet. The deferred tax assets are reduced by a valuation allowance if, based upon all available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.
The deferred tax assets are reduced by a valuation allowance if, based upon all available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.
We use cash to fund growth in our operating assets and to fund new products and product enhancements primarily through research and development. As of December 31, 2022, $154.5 million or 40.1% of our cash, cash equivalents and short-term investments was held by our foreign subsidiaries.
We use cash to fund growth in our operating assets and to fund new products and product enhancements primarily through research and development. As of December 30, 2023, $155.7 million or 46.4% of our cash, cash equivalents and short-term investments was held by our foreign subsidiaries.
As of December 31, 2022, we believe no such events of default have occurred. During 2022, we prepaid $31.8 million in principal of our Term Loan Credit Facility for $31.7 million in cash.
As of December 30, 2023, we believe no such events of default have occurred. During 2023, we prepaid $34.1 million in principal of our Term Loan Credit Facility in cash.
If future product demand, market conditions or product selling prices are less than those projected by management or if continued modifications to products are required to meet specifications or other customer requirements, increases to inventory reserves may be required which would have a negative impact on our gross margin.
If future product demand, market conditions or product selling prices are less than those projected by management or if continued modifications to products are required to meet specifications or other customer requirements, increases to inventory reserves may be required which would have a negative impact on our gross margin. 35 Table of Contents Income Taxes: We estimate our liability for income taxes based on the various jurisdictions where we conduct business.
The timing of payments to our suppliers resulted in the $33.1 million decrease in accounts payable, and net sales in the fourth quarter of 2022 and the timing of the resulting cash conversion cycle drove the $12.5 million decrease in accounts receivable.
The timing of payments to our suppliers resulted in the $21.4 million decrease in accounts payable, and net sales in the fourth quarter of 2023 and the timing of the resulting cash conversion cycle drove the $61.9 million decrease in accounts receivable.
The third facility totaling €0.9 million has been fully drawn and is payable over 10 years at an annual interest rate of 1.2%.
The third facility totaling €0.9 million has been fully drawn and is payable over 10 years at an annual interest rate of 1.2%. Principal and interest payments are due each month over the duration of the facility ending in May 2030.
Our post-shipment obligations typically include installation and standard warranties. The estimated fair value of installation related revenue is recognized in the period the installation is performed. Service revenue is recognized over time as the transfer of control is completed for the related contract or upon completion of the services if they are short-term in nature.
Our post-shipment obligations typically include standard warranties. Service revenue is recognized over time as the transfer of control is completed for the related contract or upon completion of the services if they are short-term in nature. Spares, contactor and kit revenue is generally recognized upon shipment. Certain of our equipment sales have multiple performance obligations.
Repayments of short-term borrowings and long-term debt during 2022 totaled $38.2 million, which includes $31.7 million of cash prepayments of our Term Loan Credit Facility.
In fiscal 2022, our cash used in financing activities totaled $91.1 million. Repayments of short-term borrowings and long-term debt during 2023 totaled $38.8 million, which includes $34.1 million of cash prepayments of our Term Loan Credit Facility. During 2022 our repayments totaled $38.2 million and included $31.7 million of cash prepayments of our Term Loan Credit Facility.
Our valuation allowance on our DTAs at December 31, 2022, and December 25, 2021, was approximately $89.2 million and $76.3 million, respectively.
Our valuation allowance on our DTAs at December 30, 2023, and December 31, 2022, was approximately $99.9 million and $89.2 million, respectively.
Our gross deferred tax asset balance as of December 31, 2022, was approximately $114.5 million, with a valuation allowance of approximately $89.2 million. 30 Table of Contents During December 2022, the Organization for Economic Cooperation and Development (OECD) announced that it has reached agreement among its 136-member countries that certain multinational enterprises will be subject to a global minimum tax rate of 15%, also known as Pillar Two.
During December 2022, the Organization for Economic Cooperation and Development (“OECD”) announced that it has reached agreement among its 136-member countries that certain multinational enterprises will be subject to a global minimum tax rate of 15%, also known as Pillar Two.
At December 25, 2021, the outstanding loan balance, net of discount and deferred financing costs, was $101.6 million and $10.1 million of the outstanding balance is presented as current installments of long-term debt in our consolidated balance sheets. As of December 31, 2022, the fair value of the debt was $66.6 million.
At December 30, 2023, the outstanding loan balance, net of discount and deferred financing costs, was $29.1 million and $3.4 million of the outstanding balance is presented as current installments of long-term debt in our consolidated balance sheets.
Restructuring Charges Subsequent to the merger with Xcerra in the fourth quarter 2018, we began a strategic restructuring program designed to reposition our organization and improve our cost structure as part of our targeted integration plan regarding Xcerra. In connection with the integration plan, we recorded restructuring charges totaling $0.6 million and $1.8 million in 2022 and 2021, respectively.
Restructuring Charges After the merger with Xcerra in the fourth quarter 2018, we began a strategic restructuring program designed to reposition our organization and improve our cost structure as part of our targeted integration plan. During the first quarter of 2023, we began a strategic restructuring and integration program in connection with the acquisition of MCT.
Our net cash used in investing activities in 2022 totaled $67.9 million. In 2022 we used $208.9 million in cash for purchases of short-term investments and generated $155.4 million from sales and maturities.
In 2022 we used $14.8 million for additions to property, plant and equipment and we used $208.9 million in cash for purchases of short-term investments and generated $155.4 million from sales and maturities.
During 2022 R&D expense increased due to higher spending on labor and materials associated with product development. Selling, General and Administrative Expense ( “ SG&A Expense ” ) SG&A expense consists primarily of salaries and benefit costs of employees, commission expense for independent sales representatives, product promotion and costs of professional services.
Selling, General and Administrative Expense ( “ SG&A Expense ” ) SG&A expense consists primarily of salaries and benefit costs of employees, commission expense for independent sales representatives, product promotion and costs of professional services.
Based on the evidence available including a lack of sustainable earnings and history of expiring unused NOLs, and tax credits, we continue to maintain our judgement that a previously recorded valuation allowance against substantially of our net deferred tax assets in the United States is still required.
We have evaluated our DTAs at each reporting period, including an assessment of our cumulative income or loss over the prior three-year period and future periods, to determine if a valuation allowance was required. 39 Table of Contents Based on the evidence available including a lack of sustainable earnings and history of expiring unused NOLs, and tax credits, we continue to maintain our judgement that a previously recorded valuation allowance against substantially of our net deferred tax assets in the United States is still required.
If these funds are needed for our operations in the U.S., we may be required to accrue and pay foreign withholding taxes if we repatriate these funds.
If these funds are needed for our operations in the U.S., we may be required to accrue and pay foreign withholding taxes if we repatriate these funds. Except for working capital requirements in certain jurisdictions, we provide for all withholding and other residual taxes related to unremitted earnings of our foreign subsidiaries.
Spares, contactor and kit revenue is generally recognized upon shipment. Certain of our equipment sales have multiple performance obligations. These arrangements involve the delivery or performance of multiple performance obligations, and transfer of control of performance obligations may occur at different points in time or over different periods of time.
These arrangements involve the delivery or performance of multiple performance obligations, and transfer of control of performance obligations may occur at different points in time or over different periods of time.
Our net cash flows provided by operating activities in 2022 totaled $112.9 million compared to $97.9 million in 2021. Cash provided by operating activities in the current year was a result of an increase in net income as compared to a net loss in the prior year.
Our net cash flows provided by operating activities in 2023 totaled $101.5 million compared to $112.9 million in 2022. The decrease in cash provided by operating activities in the current year was a result of weaker business conditions.
Income Taxes: We estimate our liability for income taxes based on the various jurisdictions where we conduct business. This requires us to estimate our (i) current taxes; (ii) temporary differences that result from differing treatment of certain items for tax and accounting purposes and (iii) unrecognized tax benefits.
This requires us to estimate our (i) current taxes; (ii) temporary differences that result from differing treatment of certain items for tax and accounting purposes and (iii) unrecognized tax benefits. Temporary differences result in deferred tax assets and liabilities that are reflected in the consolidated balance sheet.
Share Repurchase Program On October 28, 2021, we announced that our Board of Directors authorized a $70 million share repurchase program. On October 25, 2022, our Board of Directors authorized an additional $70 million under the share repurchase program. This share repurchase program was effective as of November 2, 2021, and has no expiration date.
On October 25, 2022, our Board of Directors authorized an additional $70 million under the share repurchase program. This share repurchase program was effective as of November 2, 2021, and has no expiration date. The timing of share repurchases and the number of shares of common stock to be repurchased will depend upon prevailing market conditions and other factors.
The table above does not include pension, post-retirement benefit and warranty obligations because it is not certain when these liabilities will be funded. For additional information regarding our pension and post-retirement benefits obligations see Note 6, “Employee Benefit Plans” and for more information on our contractual obligations, see Note 13, “Guarantees” in Part IV, Item 15(a) of this Form 10-K.
For additional information regarding our pension and post-retirement benefits obligations see Note 6, “Employee Benefit Plans” and for more information on our contractual obligations, see Note 14, “Guarantees” in Part IV, Item 15(a) of this Form 10-K. Commitments to contract manufacturers and suppliers.
We are currently unable to provide a reasonably reliable estimate of the amount or period(s) the cash settlement of this liability may occur.
Amounts excluded are our liability for unrecognized tax benefits that totaled approximately $35.9 million at December 30, 2023. We are currently unable to provide a reasonably reliable estimate of the amount or period(s) the cash settlement of this liability may occur.
We invest our excess cash, in an attempt to seek the highest available return while preserving capital, in short-term investments since excess cash may be required for a business-related purpose. Additions to property, plant and equipment in 2022 were $14.8 million and were made to support our operating and development activities.
In 2023 we used $97.3 million in cash for purchases of short-term investments and generated $152.6 million from sales and maturities. We invest our excess cash, in an attempt to seek the highest available return while preserving capital, in short-term investments since excess cash may be required for a business-related purpose.
In 2021, net cash used to settle the minimum statutory tax withholding requirements on behalf of our employees totaled $4.4 million. The decrease in cash used to settle tax withholding requirements between 2022 and 2021 is directly correlated to the decrease in Cohu’s stock price at the end of March year over year when the majority of awards vest.
The increase in cash used to settle tax withholding requirements between 2023 and 2022 is directly correlated to the increase in Cohu’s stock price at the end of March year over year when the majority of awards vest. 41 Table of Contents Share Repurchase Program On October 28, 2021, we announced that our Board of Directors authorized a $70 million share repurchase program.
Principal and interest payments are due each month over the duration of the facility ending in May 2030. 38 Table of Contents At December 31, 2022, total outstanding borrowings under the Loan Facilities was $8.4 million with $1.0 million of the total outstanding balance being presented as current installments of long-term debt in our consolidated balance sheets.
At December 30, 2023, total outstanding borrowings under the Loan Facilities was $7.7 million with $1.0 million of the total outstanding balance being presented as current installments of long-term debt in our consolidated balance sheets.
We expect that we will continue to make capital expenditures to support our business and we anticipate that present working capital will be sufficient to meet our operating requirements for at least the next twelve months.
We expect that we will continue to make capital expenditures to support our business and we anticipate that present working capital will be sufficient to meet our operating requirements for at least the next twelve months. 43 Table of Contents Contractual Obligations The following table summarizes our significant contractual obligations at December 30, 2023, and the effect such obligations are expected to have on our liquidity and cash flows in future periods.
A summary of our borrowings and available credit is as follows. 37 Table of Contents Credit Agreement On October 1, 2018, we entered into a Credit Agreement providing for a $350.0 million Term Loan Credit Facility and borrowed the full amount to finance a portion of the Xcerra acquisition.
Credit Agreement On October 1, 2018, we entered into a Credit Agreement providing for a $350.0 million Term Loan Credit Facility and borrowed the full amount to finance a portion of the Xcerra acquisition. Loans under the Term Loan Credit Facility amortize in equal quarterly installments of 0.25% of the original principal amount, with the balance payable at maturity.
As of December 31, 2022, we may purchase up to $82.0 million of shares of our common stock under our share repurchase program. Capital Resources We have access to credit facilitates and other borrowings provided by financial institutions to finance acquisitions, capital expenditures and our operations if needed.
Capital Resources We have access to credit facilitates and other borrowings provided by financial institutions to finance acquisitions, capital expenditures and our operations if needed. A summary of our borrowings and available credit is as follows.
Based on the strength of current business conditions and the results from our operations, we have continued to take actions to reduce outstanding principal under our Term Loan Credit Facility through voluntary prepayments and we have also repurchased 1,767,070 shares of our common stock for $50.7 million during 2022.
Despite recent weakness in the semiconductor industry based on our ongoing assessment of business conditions and the results from our operations, we have continued to take actions to reduce outstanding principal debt under our Term Loan Credit Facility through voluntary prepayments.
Interest Expense and Income Interest expense was $4.2 million in 2022 compared to $6.4 million in 2021. The year-over-year decrease in our interest expense resulted from a reduction in the outstanding balance of our Term Loan Credit Facility. Interest income was $4.0 million and $0.2 million in 2022 and 2021, respectively.
See Note 4, “Restructuring Charges” in Part IV, Item 15(a) of this Form 10-K for additional information with respect to restructuring charges. Interest Expense and Income Interest expense was $3.4 million in 2023 compared to $4.2 million in 2022. The year-over-year decrease in our interest expense resulted from a reduction in the outstanding balance of our Term Loan Credit Facility.
On June 30, 2021, we prepaid an additional $100.0 million of our Term Loan Credit Facility utilizing a portion of the net proceeds from the sale of our PCB Test business. In 2022, we repurchased 1,767,070 shares of our outstanding common stock for $50.7 million to be held as treasury stock.
On June 30, 2021, we prepaid an additional $100.0 million of our Term Loan Credit Facility utilizing a portion of the net proceeds from the sale of our PCB Test business. On February 9, 2024, we made a cash payment of $29.3 million to repay the remaining outstanding principal of our Term Loan Credit Facility.

… 64 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

7 edited+2 added−8 removed11 unchanged
Biggest changeConversely, a hypothetical 10% appreciation of the U.S. dollar as compared to these currencies as of December 31, 2022 would result in an approximate $34.2 million negative translation adjustment recorded in other comprehensive income within stockholders’ equity. Item 8. Financial Statements and Supplementary Data. The information required by this Item is included in Part IV, Item 15(a). Item 9.
Biggest changeConversely, a hypothetical 10% appreciation of the U.S. dollar as compared to these currencies as of December 30, 2023 would result in an approximate $34.3 million negative translation adjustment recorded in other comprehensive income within stockholders’ equity. 45 Table of Contents
We evaluated the nature of these investments, credit worthiness of the issuer and the duration of these impairments and concluded that these losses were temporary and we have the ability and intent to hold these investments to maturity. Our long-term debt is carried at amortized cost, and fluctuations in interest rates do not impact our consolidated financial statements.
We evaluated the nature of these investments, credit worthiness of the issuer and the duration of these impairments and concluded that these losses were temporary and we have the ability and intent to hold these investments to maturity. 44 Table of Contents Our long-term debt is carried at amortized cost, and fluctuations in interest rates do not impact our consolidated financial statements.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk. Investment and Interest Rate Risk. At December 31, 2022, our investment portfolio included short-term, fixed-income investment securities with a fair value of approximately $143.2 million, and we did not hold or issue financial instruments for trading purposes.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk. Investment and Interest Rate Risk. At December 30, 2023, our investment portfolio included short-term, fixed-income investment securities with a fair value of approximately $90.2 million, and we did not hold or issue financial instruments for trading purposes.
Based upon the current levels of net foreign assets, a hypothetical 10% devaluation of the U.S. dollar as compared to these currencies as of December 31, 2022 would result in an approximate $34.2 million positive translation adjustment recorded in other comprehensive income within stockholders’ equity.
Based upon the current levels of net foreign assets, a hypothetical 10% devaluation of the U.S. dollar as compared to these currencies as of December 30, 2023 would result in an approximate $34.3 million positive translation adjustment recorded in other comprehensive income within stockholders’ equity.
The resulting translation adjustments are recorded in stockholders’ equity as a component of accumulated other comprehensive loss. As a result of fluctuations in certain foreign currency exchange rates in relation to the U.S. Dollar as of December 31, 2022 compared to December 25, 2021, our stockholders’ equity decreased by $18.0 million as a result of the foreign currency translation.
The resulting translation adjustments are recorded in stockholders’ equity as a component of accumulated other comprehensive loss. As a result of fluctuations in certain foreign currency exchange rates in relation to the U.S. Dollar as of December 30, 2023 compared to December 31, 2022, our stockholders’ equity increased by $6.8 million as a result of the foreign currency translation.
As of December 31, 2022, we have approximately $67.0 million of long-term debt due under a Term Loan Credit Facility that is subject to quarterly interest payments that are based on either a base rate plus a margin of up to 2.0% per annum, or the London Interbank Offered Rate (“LIBOR”) plus a margin of up to 3.0% per annum.
As of December 30, 2023, we had approximately $29.3 million of long-term debt due under a Term Loan Credit Facility that is subject to quarterly interest payments that are based on either a base rate plus a margin of up to 2.0% per annum, or SOFR plus a margin of up to 3.0% per annum.
As of December 31, 2022, the cost and fair value of investments with loss positions were approximately $86.3 million and $85.5 million, respectively.
As of December 30, 2023, the cost and fair value of investments with loss positions were approximately $38.5 million and $38.4 million, respectively.
Removed
At December 31, 2022, the interest rate in effect on these borrowings was 6.37%. In July 2017, the UK’s Financial Conduct Authority (“FCA”), which regulates the LIBOR, announced that it intended to phase out LIBOR by the end of 2021.
Added
Prior to the discontinuation of LIBOR and the amendment of our Term Loan Credit Facility on June 30, 2023, our quarterly interest payments were based on either a base rate plus a margin of up to 2.0% per annum, or LIBOR plus a margin of up to 3.0% per annum.
Removed
In March 2021, the FCA announced an extension of the phase out in the case of U.S. dollar settings for certain tenors until the end of June 2023. Various central bank committees and working groups continue to discuss replacement of benchmark rates, the process for amending existing LIBOR-based contracts, and the potential economic impacts of different alternatives.
Added
At December 30, 2023, the interest rate in effect on these borrowings was 8.88%. Subsequent to our fiscal year ended December 30, 2023, on February 9, 2024, we made a cash payment of $29.3 million to repay the remaining outstanding principal of our Term Loan Credit Facility. Foreign Currency Exchange Risk.
Removed
It is unclear whether new methods of calculating LIBOR will be established such that it continues to exist after 2023. While the U.S.
Removed
Federal Reserve, in conjunction with the Alternative Reference Rates Committee, has chosen the secured overnight financing rate (“SOFR”) as the recommended risk-free reference rate for the U.S, we cannot currently predict the extent to which this index will gain widespread acceptance as a replacement for LIBOR.
Removed
We cannot currently predict the effect of the discontinuation of, or other changes to, LIBOR or any establishment of alternative reference rates in the United States, the European Union or elsewhere on the global capital markets.
Removed
The uncertainty regarding the future of LIBOR, as well as the transition from LIBOR to any alternative reference rate or rates, could have adverse impacts on floating rate obligations, loans, deposits, derivatives and other financial instruments that currently use LIBOR as a benchmark rate.
Removed
Our Term Loan Credit Facility constitutes our most significant exposure to this transition and there is no guarantee that a shift from LIBOR to a new reference rate will not result in increases to our borrowing costs. 40 Table of Contents Foreign Currency Exchange Risk.
Removed
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. None.

Other COHU 10-K year-over-year comparisons