What changed in COHU INC's 10-K — 2023 vs 2024
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Paragraph-level year-over-year comparison of COHU INC's 2023 and 2024 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 2024 report.
+534 added−530 removedSource: 10-K (2025-02-20) vs 10-K (2024-02-16)
Top changes in COHU INC's 2024 10-K
534 paragraphs added · 530 removed · 177 edited across 8 sections
- Item 1. Business+51 / −364 · 44 edited
- Item 1A. Risk Factors+328 / −3 · 1 edited
- Item 7. Management's Discussion & Analysis+112 / −118 · 94 edited
- Item 5. Market for Registrant's Common Equity+9 / −14 · 8 edited
- Item 7A. Quantitative and Qualitative Disclosures About Market Risk+15 / −13 · 13 edited
Item 1. Business
Business — how the company describes what it does
44 edited+7 added−320 removed32 unchanged
Item 1. Business
Business — how the company describes what it does
44 edited+7 added−320 removed32 unchanged
2023 filing
2024 filing
Biggest changeFinancial 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.
Biggest changeFinancial information on our reportable segment 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 Our Products We currently sell the following products: Semiconductor Automated Test Equipment (“ATE”) is used both for wafer-level and device package testing.
Bohrson held several executive positions at Bosch Automotive Service Solutions/SPX lastly as Vice President and General Manager of the OEM Diagnostics and Information Solutions group. Prior to that, Mr. Bohrson spent twenty years working in a variety of management and technical roles at Teradyne, Inc.’s semiconductor and broadband test division in the U.S. and Asia. Mr.
Bohrson held several executive positions at Bosch Automotive Service Solutions/SPX lastly as Vice President and General Manager of the OEM Diagnostics and Information Solutions group. Prior to that, Mr. Bohrson spent twenty years working in a variety of management and technical roles at Teradyne, Inc.’s semiconductor and broadband test division in the U.S. and Asia.
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.
Item 1. Business. Cohu, Inc. (“Cohu”, “we”, “our”, “us” and the “Company”) is a global technology leader supplying test, interface, automation, inspection and metrology, and software products and related services to the semiconductor industry. Cohu’s differentiated and broad product portfolio enables optimized yield and productivity, accelerating customers’ manufacturing time-to-market.
Our Sustainability Report is available on our website and contains further information on our ESG initiatives and performance, including data indices that reflect the Technology and Communications Sector – Semiconductor Standard of the Sustainability Accounting Standards Board. We also submit responses to Carbon Disclosure Project’s (“CDP”) climate change questionnaire and post our responses on our website.
Our Sustainability Report is available on our website and contains further information on our initiatives and performance, including data indices that reflect the Technology and Communications Sector – Semiconductor Standard of the Sustainability Accounting Standards Board. We also submit responses to Carbon Disclosure Project’s (“CDP”) climate change questionnaire and post our responses on our website.
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.
With the 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.
We offer a broad range of test handlers, including pick-and-place, turret, gravity, strip, film frame, laser mark, micro-electromechanical system (MEMS) and thermal sub-systems. T-Core is our proprietary thermal technology for improving device under test temperature accuracy, enabling higher test yield, particularly for power dissipative devices such as microprocessors, graphic processor units, and high-performance semiconductors used in artificial intelligence data centers.
We offer a broad range of test handlers, including pick-and-place, turret, gravity, strip, film frame, laser marker, micro-electromechanical system (MEMS) and thermal sub-systems. T-Core is our proprietary thermal technology for improving device under test temperature accuracy, enabling higher test yield, particularly for power dissipative devices such as microprocessors, graphic processor units, and high-performance semiconductors used in artificial intelligence data centers.
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.
The level of capital expenditure 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.
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 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.
The contents of the Sustainability Report, the responses to CDP’s questionnaire, and our website are not intended to be incorporated by reference into this Annual Report on Form 10-K or in any other report or document we file or furnish with the SEC, and any reference to the Sustainability Report and our website are intended to be inactive textual references only.
The contents of the Sustainability Report, the responses to CDP’s questionnaire, and our website are not intended to be incorporated by reference into this Annual Report on Form 10-K or in any other report or document we file or furnish with the Securities and Exchange Commission (the “SEC”), and any references to the Sustainability Report and our website are intended to be inactive textual references only.
Additional financial information on revenues from external customers by geographic area 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. Backlog Our backlog of unfilled orders for products was $160.4 million at December 30, 2023 and $279.8 million at December 31, 2022.
Additional financial information on revenues from external customers by geographic area 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. Backlog Our backlog of unfilled orders for products was $138.0 million at December 28, 2024 and $160.4 million at December 30, 2023.
We anticipate that the markets for newer generations of semiconductors and semiconductor equipment will be subject to similar cycles and our business will continue to experience similar fluctuations. 4 Table of Contents Information About Our Executive Officers The following sets forth the names, ages, positions and offices held by all executive officers of Cohu as of February 7, 2024.
We anticipate that the markets for newer generations of semiconductors and semiconductor equipment will be subject to similar cycles and our business will continue to experience similar fluctuations. Information About Our Executive Officers The following sets forth the names, ages, positions and offices held by all executive officers of Cohu as of February 5, 2025.
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.
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 $84.8 million in fiscal 2024, $88.6 million in fiscal 2023 and $92.6 million in fiscal 2022.
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.
DI-Core TM Data Analytics is a comprehensive software suite used to optimize Cohu equipment performance. 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.
Sales by Product Line and Related Marketing Efforts During the last three years, our consolidated net sales were distributed as follows: 2023 2022 2021 Semiconductor test & inspection systems (including kits) 51 % 58 % 61 % Recurring revenues (1) 49 % 42 % 37 % PCB test systems - % - % 2 % (1) Recurring revenues include interface products, spares, kits (not as part of system sales), DI-Core software and services We market our products worldwide through a combination of a direct sales force and independent sales representatives.
Services are included in our recurring revenues. 2 Table of Contents Sales by Product Line and Related Marketing Efforts During the last three years, our consolidated net sales were distributed as follows: 2024 2023 2022 Semiconductor test & inspection systems (including kits) 35 % 51 % 58 % Recurring revenues (1) 65 % 49 % 42 % (1) Recurring revenues include interface products, spares, kits (not as part of system sales), DI-Core software and services We market our products worldwide through a combination of a direct sales force and independent sales representatives.
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.
Executive officers serve at the discretion of the Board of Directors, until their successors are appointed. Name Age Position Luis A. Müller 55 President and Chief Executive Officer Jeffrey D. Jones 63 Senior Vice President, Finance and Chief Financial Officer Christopher G. Bohrson 65 Senior Vice President and Chief Customer Officer Dr.
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”).
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 SEC.
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.
The acquisition of Tignis was a fiscal 2025 event. On January 30, 2023, we completed the acquisition of MCT Worldwide, LLC (“MCT”), a U.S.-based company. 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.
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.
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.
This includes respecting principles of freedom of association and the right to engage in collective bargaining in accordance with applicable laws. Our employees in the U.S. and most locations in Asia are not covered by collective bargaining agreements.
We pride ourselves at fostering an innovative environment and collaborative work relationships. This includes respecting principles of freedom of association and the right to engage in collective bargaining in accordance with applicable laws. Our employees in the U.S. and most locations in Asia are not covered by collective bargaining agreements.
Semiconductor Handlers are used in conjunction with semiconductor ATE to automate the testing of packaged semiconductor devices. Our handlers support a variety of package sizes and device types, including those used in automotive, mobility, industrial and computing applications, among others.
The PAx tester is a focused tester for RF Front End IC and Module applications. Semiconductor Handlers are used in conjunction with semiconductor ATE to automate the testing of packaged semiconductor devices. Our handlers support a variety of package sizes and device types, including those used in automotive, mobile, industrial and computing applications, among others.
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.
During the last three years, customers that comprised 10% or greater of our consolidated net sales were as follows: 2024 2023 2022 STMicroelectronics * 12.0 % * * Less than 10% of consolidated net sales.
Prior to SBS Technologies, Mr. Jones was an Audit Manager for Coopers & Lybrand (now PricewaterhouseCoopers). Mr. Bohrson was promoted to Senior Vice President and Chief Customer Officer on February 2, 2023, and prior to that he served as Senior Vice President, Global Customer Group since February 8, 2021. Previously, Mr. Bohrson served as Sr.
Bohrson was promoted to Senior Vice President and Chief Customer Officer on February 2, 2023, and prior to that he served as Senior Vice President, Global Customer Group since February 8, 2021. Previously, Mr. Bohrson served as Sr.
Our failure to introduce new products in a timely manner, the introduction by our competitors of products with perceived or actual advantages, or disputes over rights to use certain intellectual property or technology could result in a loss of our competitive position and reduced sales of, or margins on our 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.
A reduction in backlog during any period could have a material adverse effect on our business, financial condition, and results of operations. 3 Table of Contents Competition The semiconductor equipment industry is intensely competitive and is characterized by rapid technological change and demanding worldwide service requirements.
Furthermore, many orders are subject to cancellation or rescheduling by the customer with limited or no penalty. A reduction in backlog during any period could have a material adverse effect on our business, financial condition, and results of operations. Competition The semiconductor equipment industry is intensely competitive and is characterized by rapid technological change and demanding worldwide service requirements.
We continue to evolve a governance framework that exercises appropriate oversight of responsibilities at all levels throughout the company and manage our affairs consistent with high principles of business ethics.
Sustainability We believe that sound corporate governance is critical to helping us achieve our goals, including with respect to sustainability considerations. We continue to evolve a governance framework that exercises appropriate oversight of responsibilities at all levels throughout the Company and manage our affairs consistent with high principles of business ethics.
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.
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.
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.
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. 5 Table of Contents Management Engagement and Workplace Practices We adhere to our core values and Code of Business Conduct and Ethics with a commitment to treating our employees and all our partners with professionalism, dignity and respect.
Human Capital Management Employees As of December 30, 2023, we had approximately 3,259 employees, including approximately 68 temporary employees, in 24 countries. Approximately 18% of our employees are located in the Americas, 12% are located in EMEA (Europe, the Middle East and Africa) and 70% are located in Asia Pacific.
Human Capital Management Employees As of December 28, 2024, we had approximately 3,024 employees, including approximately 38 temporary employees, in 25 countries. Approximately 16% of our employees are located in the Americas, 12% are located in EMEA (Europe, the Middle East and Africa) and 72% are located in Asia Pacific.
Manufacturing and Raw Materials Our principal manufacturing operations are currently located in Melaka, Malaysia; Laguna, Philippines; Lincoln, Rhode Island; Osaka, Japan; and Singapore. We outsource the manufacturing of many of our semiconductor automated test equipment products to Jabil Circuit, Inc.’s facility in Penang, Malaysia. Our contract manufacturing partner is responsible for significant material procurement, assembly and test.
We outsource the manufacturing of many of our semiconductor automated test equipment products to Jabil Circuit, Inc.’s facility in Penang, Malaysia. Our contract manufacturing partner is responsible for significant material procurement, assembly and test.
Outside of the U.S., we have provided other innovative benefits to help address market-specific needs, such as supplemental medical coverage or reimbursements, paid time off programs, wellness and development events and programs, transportation subsidies, etc.
Outside of the U.S., we have provided other innovative benefits to help address market-specific needs, such as supplemental medical coverage or reimbursements, paid time off programs, wellness and development events and programs, transportation subsidies, etc. 6 Table of Contents Succession Planning We perform succession planning annually to ensure that we develop and sustain a strong bench of talent capable of performing at the highest levels.
(“EQT”), a Singapore-based company. EQT is a provider of semiconductor test contactors and other test consumables. MCT and EQT are included in Cohu’s consolidated results from operations as of the date of acquisition. On June 24, 2021, we completed the sale of our PCB Test Equipment (“PCB Test”) business, that represented the entirety of our PCB Test reportable segment.
(“EQT”), a Singapore-based company. EQT is a provider of semiconductor test contactors and other test consumables. MCT and EQT are included in Cohu’s consolidated results from operations as of the date of acquisition. We have one reportable segment, Semiconductor Test and Inspection Equipment (“Semiconductor Test & Inspection”).
Müller spent nine years at Teradyne Inc., where he held management positions in engineering and business development. Dr. Müller also serves as a director for Celestica Inc., a solutions-based company providing design, manufacturing and hardware platform and supply chain solutions. Mr. Jones joined Cohu’s Delta Design subsidiary in July 2005 as Vice President Finance and Controller. In November 2007, Mr.
Müller spent nine years at Teradyne Inc., where he held management positions in engineering and business development. Dr. Müller also serves as a director and Chair of the Audit Committee at Celestica Inc., a solutions-based company providing design, manufacturing and hardware platform and supply chain solutions. 4 Table of Contents Mr.
Inspection and Metrology are products that provide advanced vision capabilities. We offer a wide range of solutions for inspection of singulated molded leaded and leadless devices, and post-singulated wafer-level chip scale packages (“WLCSP”) and bare dies.
Inspection Metrology are products that provide advanced vision capabilities. We offer a wide range of solutions for inspection of singulated molded leaded and leadless devices, and post-singulated wafer-level chip scale packages (“WLCSP”) and bare dies. NV-Core is our unique vision technology, enabling advanced inspection metrology, such as 3-dimensional topographic inspection, sidewall micro-crack detection, and infrared inspection for sub-surface defect detection.
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.
Müller has been the President and Chief Executive Officer of Cohu since December 28, 2014.
Kampfer served in various legal and business development executive roles with Proxima Corporation, and also held various positions in manufacturing engineering and legal at IBM. Governmental Regulations Our business activities are worldwide and are subject to various federal, state, local, and foreign laws and our products and services are governed by a number of rules and regulations.
Governmental Regulations Our business activities are worldwide and are subject to various federal, state, local, and foreign laws and our products and services are governed by a number of rules and regulations.
Spares and Kits are included in our recurring revenues. 2 Table of Contents Services are provided by our worldwide service organization and include installation and necessary maintenance of our systems’ installed base. We provide various parts and labor warranties on our test and handling systems and instruments.
Services are provided by our worldwide service organization and include installation and necessary maintenance of our systems’ installed base. We provide various parts and labor warranties on our test and handling systems and instruments. 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.
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.
Our semiconductor ATE solutions consist primarily of two platforms for the system on a chip (“SoC”) device market. The Diamond x 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.
We provide protective equipment (e.g., eye protection, masks and gloves) as required by applicable standards and as appropriate given employee job duties. Compensation and Benefits Cohu is committed to providing market competitive compensation programs to attract, retain and motivate a high performing workforce critical to our long-term success.
Compensation and Benefits Cohu is committed to providing market competitive compensation programs to attract, retain and motivate a high performing workforce critical to our long-term success.
Jones was named Vice President, Finance and Chief Financial Officer of Cohu, and was subsequently promoted on February 3, 2022 to Senior Vice President, Finance and Chief Financial Officer. Prior to joining Delta Design, Mr. Jones, was Vice President and General Manager of the Systems Group at SBS Technologies, Inc., a designer and manufacturer of embedded computer products.
Jones, was Vice President and General Manager of the Systems Group at SBS Technologies, Inc., a designer and manufacturer of embedded computer products. Prior to SBS Technologies, Mr. Jones was an Audit Manager for Coopers & Lybrand (now PricewaterhouseCoopers). Mr.
We encourage and strive to have every employee actively champion those behaviors and the attitudes necessary to prevent work-related injuries, illnesses, property damage, and adverse impact to the environment. Our ultimate goal is to achieve a level of work-related injuries and adverse health impacts as close to zero as possible through continuous investment in our safety programs.
Cohu works to protect the health and safety of employees and our customers and intends to conduct all business activities in an environmentally and socially responsible manner. We encourage and strive to have every employee actively champion those behaviors and the attitudes necessary to prevent work-related injuries, illnesses, property damage, and adverse impact to the environment.
Succession Planning We perform succession planning annually to ensure that we develop and sustain a strong bench of talent capable of performing at the highest levels. Not only is talent identified, but potential paths of development are discussed to ensure that employees have an opportunity to build their skills and are well-prepared for future roles.
Not only is talent identified, but potential paths of development are discussed to ensure that employees have an opportunity to build their skills and are well-prepared for future roles. The strength of our succession planning process is evident through our long history of promoting our leaders from within the organization, including 67% of our current executive leadership team.
We have not experienced any work stoppages and consider relations with our employees to be good. Health and Safety The health and safety of our employees is of utmost importance to us. Cohu works to protect the health and safety of employees and our customers and intends to conduct all business activities in an environmentally and socially responsible manner.
We have not experienced any work stoppages and consider relations with our employees to be good.
Information contained on our web site is not deemed part of this report. Item 1A. Risk Factors. In addition to the other information in this Annual Report on Form 10-K, you should carefully consider the risk factors discussed in this Annual Report on Form 10-K in evaluating Cohu and our business (the “ risk factors ” ).
Information contained on our web site is not deemed part of this report.
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.
Jones joined Cohu’s Delta Design subsidiary in July 2005 as Vice President Finance and Controller. In November 2007, Mr. Jones was named Vice President, Finance and Chief Financial Officer of Cohu, and was subsequently promoted on February 3, 2022 to Senior Vice President, Finance and Chief Financial Officer. Prior to joining Delta Design, Mr.
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As part of this divestiture, we also sold certain intellectual property held by our Semiconductor Test & Inspection segment that was used by the PCB Test business. Unless otherwise noted, all amounts presented are from continuing operations. We have determined that we have one reportable segment, Semiconductor Test and Inspection Equipment (“Semiconductor Test & Inspection”).
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On January 7, 2025, we completed the acquisition of Tignis, Inc. (“Tignis”), a provider of artificial intelligence (AI) process control and analytics-based monitoring software. This strategic acquisition is intended to enable us to expand our analytics offerings to the semiconductor process control market.
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Prior to the sale of our PCB Test business, we reported two segments, Semiconductor Test & Inspection and PCB Test.
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Tignis’ PAICe Monitor and PAICe Maker solutions leverage the insights of physical phenomena with cutting-edge AI, machine learning (ML), and data science to deliver advanced predictive and prescriptive automation solutions for semiconductor manufacturing. Tignis is also expected to deepen Cohu’s expertise in data science while adding advanced analytics to our DI-Core software.
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Our Products We currently sell the following products: Semiconductor Automated Test Equipment (“ATE”) is used both for wafer-level and device package testing. Our semiconductor ATE solutions consist primarily of two platforms for the system on a chip (“SoC”) device market.
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No assurance can be given that we will continue to compete successfully throughout the world. 3 Table of Contents Manufacturing and Raw Materials Our principal manufacturing operations are currently located in Melaka, Malaysia; Laguna, Philippines; Lincoln, Rhode Island; Osaka, Japan; and Singapore.
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NV-Core is our unique vision technology, enabling advanced inspection and metrology, such as 3-dimensional topographic inspection, sidewall micro-crack detection, and infrared inspection for sub-surface defect detection. DI-Core TM Data Analytics is a comprehensive software suite used to optimize Cohu equipment performance.
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We make hiring decisions based on the skills, experience and qualifications of candidates for each job opening. We are committed to respecting and protecting the human rights of all our employees. Health and Safety The health and safety of our employees is of utmost importance to us.
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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.
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Our ultimate goal is to achieve a level of work-related injuries and adverse health impacts as close to zero as possible through continuous investment in our safety programs. We provide protective equipment (e.g., eye protection, masks and gloves) as required by applicable standards and as appropriate given employee job duties.
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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.
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Cohu also complies with applicable wage, work hours, overtime and benefits laws.
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Furthermore, many orders are subject to cancellation or rescheduling by the customer with limited or no penalty.
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In fiscal 2024 we deployed a new Emerging Leader Program to approximately 10% of employees to enhance the internal talent pipeline and continuing our investment in educating and growing our next generation of leaders. Available Information Our website address is www.cohu.com.
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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.
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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.
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Diversity, Inclusion, and Non-discrimination We welcome and value diversity ensuring that our work benefits from a broad range of viewpoints and perspectives.
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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.
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Management Engagement Practices We adhere to our core values and Code of Business Conduct and Ethics with a commitment to treating our employees and all our partners with professionalism, dignity and respect. We pride ourselves at fostering an innovative environment and collaborative work relationships.
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The strength of our succession planning process is evident through our long history of promoting our leaders from within the organization, including 58% of our current executive leadership team. In 2023 we deployed a new development plan process to a select group of high potential managers and contributors, continuing to invest in educating and growing our next generation of leaders.
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If any of the identified risks actually occur, our business, financial condition and results of operations could be materially adversely affected, the trading price of our common stock could decline, and you may lose all or part of your investment in our common stock.
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The risks and uncertainties described in this Annual Report on Form 10-K are not the only ones we face. Additional risks that we currently do not know about, or that we currently deem to be immaterial, may also impair our business operations or the trading price of our common stock.
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Risk Factors Summary Investing in our securities involves a high degree of risk. The following is a summary of the principal factors that make an investment in our securities speculative or risky, all of which are more fully described below.
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This 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.
Removed
Risks Associated with Operating a Global Business ● We are exposed to the risks of operating in certain foreign locations where Cohu manufactures certain products and supports our sales and services to the global semiconductor industry. ● Geopolitical instability in locations critical to Cohu and its customers may adversely impact our operations, sales and profitability. ● The occurrence of natural disasters, health epidemics, and geopolitical instability caused by terrorist attacks and other threats may adversely impact our operations and sales. ● Our business could be adversely affected by climate change effects and related matters. ● We are exposed to additional risks as a result of increased attention by our stakeholders to sustainability, including environmental, social and governance matters. 8 Table of Contents Risks Relating to Acquisitions and Other Strategic Transactions ● We may choose to acquire new and complementary businesses, products or technologies instead of developing them ourselves, and we may be unable to complete these acquisitions or may not be able to successfully integrate an acquired business in a cost-effective and non-disruptive manner.
Removed
Risks Relating to our Indebtedness, Financing and Future Access to Capital ● Due to the nature of our business, we need continued access to capital, which if not available to us or if not available on favorable terms, could harm our ability to operate or expand our business. ● Our foreign operations expose us to additional risks relating to currency fluctuations. ● We have recorded restructuring, inventory write-offs and asset impairment charges in the past, and may do so again in the future, which could have a material negative impact on our business. ● We are exposed to the instability of financial institutions where we maintain cash deposits or other liquid holdings, which could result in a lack of liquidity. ● Cohu could be required to write off some or all of this goodwill and other intangibles, which may adversely affect the combined company’s financial condition and results of operations.
Removed
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. ● If we fail to maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results, and current and potential stockholders may lose confidence in our financial reporting. ● We have experienced significant volatility in our stock price. ● We may underperform relative to our expectations. ● Provisions of our certificate of incorporation and bylaws and Delaware law may make a takeover of Cohu more difficult. ● 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. ● Cohu’s stock repurchase program may not have an impact that is fully reflected in the current stock valuation.
Removed
Risks Relating to Regulatory Matters ● There may be changes in, and uncertainty with respect to, legislation, regulation and governmental policy in the United States. ● Trade regulations and restrictions impact our ability to manufacture certain products and to sell to customers, specifically in China, which may materially harm and limit Cohu’s business. ● Unanticipated changes in our tax provisions, enactment of new tax laws, or exposure to additional income tax liabilities could affect our profitability. ● Compliance with regulations may impact sales to foreign customers and impose costs and any failure to comply with such laws may result in severe sanctions and liabilities, which may negatively affect our business, operating results and financial condition. ● Any failure to comply with environmental laws and regulations could subject us to significant fines and liabilities, and new laws and regulations (such as involving climate change) or changes in regulatory interpretation or enforcement could make compliance more difficult and costly. 9 Table of Contents 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. ● We may fail to adequately protect our intellectual property and, therefore, lose our competitive advantage. ● We may not be able to adequately protect or defend ourselves against intellectual property infringement claims, which may be time consuming and expensive, or affect the freedom to operate our business. ● Data privacy, identity protection and information security compliance may require significant resources and presents certain risks. ● We currently are, and in the future may be, subject to litigation or regulatory proceedings that could have an adverse effect on our business.
Removed
For a more complete discussion of the material risks facing our business, see below. 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.
Removed
Semiconductor equipment and processes are subject to rapid technological change. We believe that our future success will depend in part on our ability to enhance existing products and develop new products with improved performance capabilities.
Removed
We expect to continue to invest heavily in research and development and must manage product transitions successfully, as introductions of new products, including the products obtained in our acquisitions, may adversely impact sales and/or margins of existing products.
Removed
In addition, the introduction of new products by us or by our competitors, the concentration of our revenues in a limited number of large customers, the migration to new semiconductor testing methodologies and the custom nature of our inventory parts increases the risk that our established products and related inventory may become obsolete, resulting in significant excess and obsolete inventory exposure.
Removed
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.
Removed
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.
Removed
We expect to continue to make investments and we may, at any time, based on product need or marketplace demand, decide to significantly increase our product development expenditures in these or other products. The cost of investments in new product offerings and product enhancements can have a negative impact on our operating results.
Removed
We have in the past made material investments in new product platforms that for various reasons, such as technical challenges or lack of customer adoption, have not generated the expected sales or return. There can be no assurance that other new products we develop will be accepted in the marketplace or generate material revenues for us.
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Item 1A. Risk Factors
Risk Factors — what could go wrong, per management
1 edited+327 added−2 removed0 unchanged
Item 1A. Risk Factors
Risk Factors — what could go wrong, per management
1 edited+327 added−2 removed0 unchanged
2023 filing
2024 filing
Biggest changeItem 1A: Risk Factors, ” and elsewhere in this Annual Report on Form 10-K. This Form 10-K also contains estimates, projections and other information concerning our industry, our business, and the markets for certain of our products, including data regarding the estimated size of those markets.
Biggest changeItem 1A. Risk Factors. In addition to the other information in this Annual Report on Form 10-K, you should carefully consider the risk factors discussed in this Annual Report on Form 10-K in evaluating Cohu and our business (the “ risk factors ” ).
Removed
Information that is based on estimates, forecasts, projections, market research or similar methodologies is inherently subject to uncertainties and actual events or circumstances may differ materially from events and circumstances reflected in this information.
Added
If any of the identified risks actually occur, our business, financial condition and results of operations could be materially adversely affected, the trading price of our common stock could decline, and you may lose all or part of your investment in our common stock.
Removed
Unless otherwise expressly stated, we obtained this industry, business, market, and other data from reports, research surveys, studies, and similar data prepared by market research firms and other third parties, industry, general publications, government data, and similar sources. PART I
Added
The risks and uncertainties described in this Annual Report on Form 10-K are not the only ones we face. Additional risks that we currently do not know about, or that we currently deem to be immaterial, may also impair our business operations or the trading price of our common stock.
Added
Risk Factors Summary Investing in our securities involves a high degree of risk. The following is a summary of the principal factors that make an investment in our securities speculative or risky, all of which are more fully described below.
Added
This 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.
Added
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 mobile automotive & industrial as well as consumer, computing and other 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. 7 Table of Contents ● 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 Artificial Intelligence (“AI”) within Cohu’s product development involves risks and uncertainties that may impact our operational performance and be subject to legal and/or regulatory action.
Added
Risks Associated with Operating a Global Business ● We are exposed to the risks of operating in certain foreign locations where Cohu manufactures certain products and supports our sales and services to the global semiconductor industry. ● Geopolitical instability in locations critical to Cohu and its customers may adversely impact our operations, sales and profitability. ● The occurrence of natural disasters, health epidemics, and geopolitical instability caused by terrorist attacks and other threats may adversely impact our operations and sales. ● Our business could be adversely affected by climate change effects and related matters. ● We are exposed to additional risks as a result of increased attention by our stakeholders to sustainability, including environmental, social and governance matters.
Added
Risks Relating to Acquisitions and Other Strategic Transactions ● We may choose to acquire new and complementary businesses, products or technologies instead of developing them ourselves, and we may be unable to complete these acquisitions or may not be able to successfully integrate an acquired business in a cost-effective and non-disruptive manner.
Added
Risks Relating to our Indebtedness, Financing and Future Access to Capital ● Due to the nature of our business, we need continued access to capital, which if not available to us or if not available on favorable terms, could harm our ability to operate or expand our business. ● Our foreign operations expose us to additional risks relating to currency fluctuations. ● We have recorded restructuring, inventory write-offs and asset impairment charges in the past, and may do so again in the future, which could have a material negative impact on our financial results. ● We are exposed to the instability of financial institutions where we maintain cash deposits or other liquid holdings, which could result in a lack of liquidity. ● Cohu could be required to write off some or all of its goodwill and other intangibles, which may adversely affect the combined company’s financial condition and results of operations. 8 Table of Contents 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. ● If we fail to maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results, and current and potential stockholders may lose confidence in our financial reporting. ● We have experienced significant volatility in our stock price. ● We may underperform relative to our expectations. ● Provisions of our certificate of incorporation and bylaws and Delaware law may make a takeover of Cohu more difficult. ● 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 c ompany. ● Cohu’s stock repurchase program may not have an impact that is fully reflected in the current stock valuation.
Added
Risks Relating to Regulatory Matters ● There may be changes in, and uncertainty with respect to, legislation, regulation and governmental policy in the United States. ● Trade regulations and restrictions impact our ability to manufacture certain products and to sell to customers, specifically in China, which may materially harm and limit Cohu’s business. ● Unanticipated changes in our tax provisions, enactment of new tax laws, or exposure to additional income tax liabilities could affect our profitability. ● Compliance with regulations may impact sales to foreign customers and impose costs and any failure to comply with such laws may result in severe sanctions and liabilities, which may negatively affect our business, operating results and financial condition. ● Any failure to comply with environmental laws and regulations could subject us to significant fines and liabilities, and new laws and regulations (such as involving climate change) or changes in regulatory interpretation or enforcement could make compliance more difficult and costly.
Added
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. ● We may fail to adequately protect our intellectual property and, therefore, lose our competitive advantage. ● We may not be able to adequately protect or defend ourselves against intellectual property infringement claims, which may be time consuming and expensive, or affect the freedom to operate our business. ● Data privacy, identity protection and information security compliance may require significant resources and presents certain risks. ● We currently are, and in the future may be, subject to litigation or regulatory proceedings that could have an adverse effect on our business.
Added
For a more complete discussion of the material risks facing our business, see below. 9 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.
Added
Semiconductor equipment and processes are subject to rapid technological change. We believe that our future success will depend in part on our ability to enhance existing products and develop new products with improved performance capabilities.
Added
We expect to continue to invest heavily in research and development and must manage product transitions successfully, as introductions of new products, including the products obtained in our acquisitions, may adversely impact sales and/or margins of existing products.
Added
In addition, the introduction of new products by us or by our competitors, the concentration of our revenues in a limited number of large customers, the migration to new semiconductor testing methodologies and the custom nature of our inventory parts increases the risk that our established products and related inventory may become obsolete, resulting in significant excess and obsolete inventory exposure.
Added
This exposure resulted in charges to operations during each of the years in the three-year period ended December 28, 2024. Future inventory write-offs and increased inventory reserve requirements could have a material adverse impact on our results of operations and financial condition.
Added
We are investing significantly in new product development programs relating to test handlers, test contactors and automated test equipment. In fiscal 2024, we incurred $84.8 million in research and development expenses.
Added
We expect to continue to make investments and we may, at any time, based on product need or marketplace demand, decide to significantly increase our product development expenditures in these or other products. The cost of investments in new product offerings and product enhancements can have a negative impact on our operating results.
Added
We have in the past made material investments in new product platforms that for various reasons, such as technical challenges or lack of customer adoption, have not generated the expected sales or return.
Added
For example, in January 2025, we acquired Tignis, Inc., a provider of AI process control and analytics-based monitoring software to expand our analytics offerings to a broader market, but there can be no assurance that this or other new products we develop or acquire will be accepted in the marketplace or generate material revenues for us.
Added
The design, development, commercial introduction and manufacture of new semiconductor equipment is an inherently complex process that involves a number of risks and uncertainties.
Added
These risks include potential problems in meeting customer acceptance and performance requirements, integration of the equipment with other suppliers’ equipment and the customers’ manufacturing processes, transitioning from product development to volume manufacturing and the ability of the equipment to satisfy the semiconductor industry’s constantly evolving needs and achieve commercial acceptance at prices that produce satisfactory profit margins.
Added
The design and development of new semiconductor equipment is heavily influenced by changes in integrated circuit assembly, test and final manufacturing processes and integrated circuit package design changes. We believe that the rate of change in such processes and integrated circuit packages is accelerating.
Added
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.
Added
Differences in such processes make it difficult to design standard test products that can achieve broad market acceptance. As a result, we might not accurately assess the semiconductor industry’s future equipment requirements and fail to design and develop products that meet such requirements and achieve market acceptance.
Added
Failure to accurately assess customer requirements and market trends for new semiconductor test products may have a material adverse impact on our operations, financial condition and results of operations. 10 Table of Contents 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.
Added
Capital equipment providers in the semiconductor industry, such as Cohu, have, in the past, been negatively impacted by both sudden slowdowns in global economies and recurring cyclicality within the markets we serve. These cycles have resulted in periods of over-supply and excess capacity; a trend we believe will continue to occur.
Added
Our business and results of operations depend, in significant part, upon capital expenditures of manufacturers and designers of semiconductor devices and other industrial products, which in turn depend upon the current and anticipated market demand for those products. Disruption or deterioration in economic conditions may reduce customer purchases of our products, thereby reducing our revenues and earnings.
Added
In addition, such adverse changes in economic conditions, and resulting slowdowns in the market for our products, may, among other things, result in increased price competition for our products, increased risk of excess and obsolete inventories, increased risk in the collectability of our accounts receivable from our customers, potential reserves for doubtful accounts and write-offs of accounts receivable, increased risk of restructuring charges, and higher operating costs as a percentage of revenues, which, in each case and together, adversely affect our operating results.
Added
We are unable to predict the likely duration, frequency and severity of disruptions in financial markets, credit availability, and adverse economic conditions throughout the world will have on our customers, and we cannot ensure that the level of revenues or new orders for a fiscal year or quarter will be sustained in subsequent periods.
Added
In fiscal 2024, 2023 and 2022, we recorded pre-tax inventory-related charges of approximately $5.4 million, $4.5 million, and $7.2 million, respectively, primarily as a result of changes in customer forecasts. From quarter-to-quarter, we may see material swings in product mix among our product offerings.
Added
Given the cyclical nature of our industry, we generally cannot accurately predict swings in product mix from quarter-to-quarter and such changes may have sudden adverse impacts on our gross margin. The erosion in mobile automotive and industrial as well as consumer, computing and other market sales are collectively causing an adverse impact on our sales.
Added
A material portion of Cohu’s sales have historically been derived from customers that provide semiconductor devices for use within the mobile and automotive & industrial markets. The demand in these markets continued to soften in fiscal 2024.
Added
For example, mobile market sales declined 54% year over year in fiscal 2023 compared with fiscal 2022 and further declined by about 10% year over year in fiscal 2024 as compared with fiscal 2023. Additionally, automotive & industrial system sales declined 24% year over year in fiscal 2023 and further declined 65% year over year in fiscal 2024.
Added
This decline, coupled with additional declines as of the end of fiscal 2024 of 64% in consumer products, 64% in computing, and 73% in other markets, has had, and is expected to continue to have, an adverse impact on our business and operating results.
Added
Given the inherent uncertainty and volatility within our industry, at this time, we are unable to predict when the mobile, and automotive & industrial markets, or the overall market, will recover or the extent of any such recovery. Any failure to effectively manage multiple overseas manufacturing operations could harm our sales, service levels and reputation.
Added
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.
Added
If we should fail to effectively manage overseas manufacturing operations or logistics, or if one or more of them should experience delays, disruptions or quality control problems, or if we had to change or add additional manufacturing sites, our ability to ship products to our customers could be delayed.
Added
Also, the addition of overseas manufacturing locations increases the demands on our administrative and operations infrastructure and the complexity of our supply chain management and logistics.
Added
Our overseas sites are more susceptible to impacts from natural disasters, health epidemics and geopolitical instability (see risk factor entitled “ The occurrence of natural disasters, health epidemics, corruption and geopolitical instability caused by terrorist attacks and other threats may adversely impact our operations and sales ”).
Added
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.
Added
They may also be impacted by possible import, export, tariff and other trade barriers, increasing costs of raw materials, labor and distribution, resulting in demands for less attractive contract terms or an inability for them to meet our requirements or conduct their own businesses.
Added
On February 1, 2025, President Trump issued executive orders directing the United States to impose new tariffs on imports from Canada, Mexico and China.
Added
Although a portion of these new tariffs have been temporarily suspended, other parts of these new tariffs are now in effect, and it is unclear for how long and to what extent such suspensions will remain in effect. The U.S. has also announced new tariffs on foreign steel and aluminum, with such tariffs taking effect in early March.
Added
The U.S. has further raised the possibility of new tariffs on imports from additional countries, including those in Europe. The new tariffs likely will increase the cost of the products the Company sources from these international jurisdictions and affect future shipments from the Company’s foreign suppliers.
Added
The Company may not be able to pass along increases in tariffs and freight charges to its customers, and any alterations the Company may make to its business strategy or operations to adapt to the foregoing, including sourcing products from suppliers in other countries, would be time consuming and expensive.
Added
These and other changes in the U.S. trade policy, U.S. social, political, regulatory and economic conditions or in laws and policies governing foreign trade, manufacturing, development and investment in the territories and countries where we currently manufacture and sell products, and any resulting negative sentiments towards the United States as a result of such changes, could have an adverse effect on our business, financial condition and results of operation.
Added
Additionally, consolidation in our supply chain due to mergers and acquisitions may reduce the number of suppliers or change our relationships with them.
Added
The performance and financial condition of a supplier may cause us to alter our business terms or to cease doing business with a particular supplier, or change our sourcing practices generally, which could in turn adversely affect our own business and financial condition.
Added
Failure to effectively manage our manufacturing and our relationships with our suppliers could have a material adverse effect on our business and results of operations. We outsource select manufacturing activities to third-party service providers, which decreases our control over the performance of these functions. We outsource certain product manufacturing to third-party service providers.
Added
Outsourcing reduces our control over the performance of the outsourced functions. Dependence on outsourcing may also adversely affect our ability to bring new products to market. For example, we depend upon Jabil Manufacturing Co. (“Jabil”) to manufacture most of our semiconductor test systems from its facility located in Malaysia.
Added
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.
Added
If we experienced significant delays or disruptions with Jabil, it would take us significant time to ramp up a new manufacturer for our semiconductor test products, either in-house or with another contract manufacturer. There can be no assurance that alternative capacity could be obtained on favorable terms, if at all.
Added
If we do not effectively manage our outsourcing strategy or if third-party service providers do not perform as anticipated, we may experience operational difficulties, increased costs, manufacturing interruptions or inefficiencies in the operation of our supply chain, any or all of which could delay our delivery of products to our customers, and materially and adversely affect our business, financial condition, and results of operations.
Added
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.
Added
In the course of conducting our business, we must adequately address quality issues associated with our products and services, including defects in our engineering, design and manufacturing processes, as well as defects in third-party components included in our products. Our systems are complex and have occasionally contained errors, defects and bugs when introduced.
Added
When this occurs, our credibility and the market acceptance and sales of our systems may be harmed. Further, if our systems contain errors, defects or bugs, computer viruses or malicious code as a result of cyber-attacks to our computer networks, we may be required to expend significant capital and resources to alleviate these problems.
Added
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.
Added
In addition, if any of our products contain defects or have reliability, quality or safety issues, we may need to conduct a product recall which could result in significant repair or replacement costs and substantial delays in product shipments and may damage our reputation, which could make it more difficult to sell our products.
Added
Defects could also lead to product liability lawsuits against us or against our customers. Our product liability insurance policy currently provides both aggregate coverage as well as overall umbrella coverage. In the event of a successful product liability claim, we could be obligated to pay damages significantly in excess of our product liability insurance limits.
Added
Any of these occurrences could have a material adverse effect on our business, results of operations or financial condition.
Added
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. 12 Table of Contents Failure of critical suppliers to deliver sufficient quantities of parts in a timely and cost-effective manner could adversely impact our operations.
Added
We use numerous vendors to supply parts, components and subassemblies for the manufacture of our products. It is not always possible to maintain multiple qualified suppliers for all of our parts, components and subassemblies. As a result, many key parts may be available only from a single supplier (“sole source”) or a limited number of suppliers.
Added
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. On occasion, we have experienced problems in obtaining adequate and reliable quantities of various parts and components from certain key or sole source suppliers.
Added
For example, at the beginning of fiscal 2022, we experienced supply constraints and delays in accessing certain specialty semiconductors necessary for the production of test instruments for our semiconductor ATE products, and these supply constraints adversely impacted our overall gross margin in fiscal 2022.
Added
Although the supply constraints subsided during fiscal 2023, they may reoccur at any time due to factors beyond our control. More broadly, our results of operations may be materially and adversely impacted if we do not receive sufficient parts to meet our requirements in a timely and cost-effective manner.
Added
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. As a global manufacturer, we rely on raw materials, packaging materials, direct labor, energy, a large network of suppliers, distribution resources and transportation providers.
Added
In fiscal 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. In addition, we also continue to incur higher employee wage costs and generally higher costs for outside services.
Added
These economic events are driven by factors beyond our control, and although inflationary pressures have recently moderated, we are unable to predict the future impacts, and such cost pressures may continue to adversely impact us. Our efforts to offset these cost pressures, such as through product price increases, or attempting to reduce operating costs elsewhere, may not be successful.
Added
Higher product prices may result in reductions in sales volume as customers may be less willing to pay a price differential for our products and may purchase lower-priced competitive offerings or may delay some purchases altogether. To the extent that this may result in decreases in sales volume, our financial condition or operating results may be adversely affected.
Added
Further, an extended period of higher prices may lead to continued regulatory efforts to tame price inflation, resulting in an increased risk of recession. Our financial condition or operating results may also be affected by increased interest rates, which the Federal Reserve raised multiple times in fiscal 2023.
Added
Increased interest rates intended to reduce price inflation may also contribute to the risk of recession, which may result in customer projections of slowed growth and an overall impact on customers’ and Cohu’s corporate earnings. We saw slowing customer demand in fiscal 2023 and 2024. Although the U.S.
Added
Federal Reserve lowered interest rates in 2024, it is not known whether additional action will be taken to lower interest rates and if this decrease, and any other decreases, will have an impact on inflation. Additionally, there can be no assurance that such rate cuts will result in a reduction in expense to Cohu or its customers.
Added
Cohu is incurring interest expenses on our remaining indebtedness.
Added
In addition, our indebtedness may make us more vulnerable to changes in general economic conditions, with future inflationary pressures and efforts to rein in such an impact coupled with continued interest rate increases, thereby making it more costly for us to satisfy our obligations or causing an adverse effect on our free cashflows.
Added
The semiconductor equipment industry is intensely competitive and we may not be able to win business over that of our competition. The industries we serve are intensely competitive, and we face substantial competition from numerous companies throughout the world.
Added
The test handler industry, while relatively small in terms of worldwide market size compared to other segments of the semiconductor equipment industry, has several participants resulting in intense competitive pricing pressures. Future competition may include companies that do not currently supply test handlers.
Added
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.
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Item 1C. Cybersecurity
Cybersecurity — threats and controls disclosure
12 edited+2 added−0 removed5 unchanged
Item 1C. Cybersecurity
Cybersecurity — threats and controls disclosure
12 edited+2 added−0 removed5 unchanged
2023 filing
2024 filing
Biggest changeIn the last three fiscal years, we have not experienced any material cybersecurity incidents and the expenses we have incurred from security incidents were immaterial. As a result, we do not believe that risks from cybersecurity threats, including as a result of any previous cybersecurity incidents, have materially affected us, our results of operations or financial condition.
Biggest changeAs a result, we do not believe that risks from cybersecurity threats, including as a result of any previous cybersecurity incidents, have materially affected us, our results of operations or financial condition.
This review helps in identifying areas for improvement and in aligning cybersecurity efforts with the overall risk management framework and promotion of our business objective and operational needs. In addition to our scheduled meetings, the Audit Committee maintains an ongoing dialogue with management, including emerging or potential cybersecurity risks.
This review helps in identifying areas for improvement and in aligning cybersecurity efforts with the overall risk management framework and promotion of our business objective and operational needs. In addition to our scheduled meetings, the Audit Committee maintains an ongoing dialogue with management, including regarding emerging or potential cybersecurity risks.
Our CISO has over 35 years of experience in various roles in information technology and information security, including serving as SVP and CIO or VP and CIO at various defense, aerospace and semiconductor supplier companies. He holds a bachelor’s degree in Computer Science, an MBA, and holds several relevant certifications, including ITIL Certification.
Our CISO has over 35 years of experience in various roles in information technology and information security, including serving as SVP and CIO or VP and CIO at various defense, aerospace and semiconductor supplier companies. He holds a bachelor’s degree in Computer Science, an MBA, and holds several relevant certifications, including Information Technology Infrastructure Library (ITIL) Certification.
Item 1C. Cybersecurity. We recognize the critical importance of developing, implementing, and maintaining robust cybersecurity measures to safeguard our information systems and protect the confidentiality, integrity, and availability of our intellectual property and data. We maintain policies and procedures designed to allow management to assess, identify, and manage material risks from cybersecurity threats.
Item 1C. Cybersecurity. Risk Management and Strategy We recognize the critical importance of developing, implementing, and maintaining robust cybersecurity measures to safeguard our information systems and protect the confidentiality, integrity, and availability of our intellectual property and data. We maintain policies and procedures designed to allow management to assess, identify, and manage material risks from cybersecurity threats.
We integrate our cybersecurity policies and procedures into our overall enterprise risk management program, which is implemented by management and overseen by the Board of Directors through its Audit Committee. 28 Table of Contents We utilize the Center for Internet Security (“CIS”) Critical Security Controls as a framework for managing our cybersecurity program.
We integrate our cybersecurity policies and procedures into our overall enterprise risk management program, which is implemented by management and overseen by the Board of Directors (the “Board”) through its Audit Committee. We utilize the Center for Internet Security (“CIS”) Critical Security Controls as a framework for managing our cybersecurity program.
Our corporate information security organization, led by our Chief Information Security Officer (“CISO”), is responsible for our overall information security strategy, policy, security engineering, operations and cyber threat detection and response.
Role of Management Our corporate information security organization, led by our Chief Information Security Officer (“CISO”), is responsible for our overall information security strategy, policy, security engineering, operations and cyber threat detection and response.
In the event of an incident, we intend to follow our incident response plan, which outlines the steps to be followed from incident detection to mitigation, mitigation or eradication, recovery and notification, including notifying key functional areas, as well as the CEO, Chairperson and Chairperson of the Audit Committee and other members of the Board, as appropriate.
In the event of an incident, we intend to follow our incident response plan, which outlines the steps to be followed from incident detection to mitigation, mitigation or eradication, recovery and notification, including notifying key functional areas, as well as the CISO, General Counsel, CEO, Chairperson of the Board and Chairperson of the Audit Committee and other members of the Board, as appropriate. 30 Table of Contents
As part of the Board of Directors’ role in overseeing our enterprise risk management program, which includes our cybersecurity risk management, the Board is responsible for exercising oversight of management’s identification and management of, and planning for, material cybersecurity risks that may reasonably be expected to have an adverse effect on us.
Governance Role of the Board of Directors and the Audit Committee As part of the Board’s role in overseeing our enterprise risk management program, which includes our cybersecurity risk management, the Board is responsible for exercising oversight of management’s identification and management of, and planning for, material cybersecurity risks that may reasonably be expected to have an adverse effect on us.
For a discussion of how risks from identified cybersecurity threats, including as a result of any previous cybersecurity incidents, may materially affect or are reasonably likely to materially affect us, see the risk factor entitled “ Our business and operations could suffer in the event of cybersecurity breaches within our operational systems or products ”. 29 Table of Contents
For a discussion of how risks from identified cybersecurity threats, including as a result of any previous cybersecurity incidents, may materially affect or are reasonably likely to materially affect us, including our business strategy, results of operations or financial condition, see the risk factor entitled “ Our business and operations could suffer in the event of cybersecurity breaches within our operational systems or products ”.
Notwithstanding the measures we take to assess, identify, and manage cybersecurity risks, we may not be successful in preventing or mitigating a cybersecurity incident that could have a material adverse effect on us.
Notwithstanding the measures we take to assess, identify, and manage cybersecurity risks, we may not be successful in preventing or mitigating a cybersecurity incident that could have a material adverse effect on us and we may experience such incidents in the future and the scope and impact of any such future incidents cannot be predicted.
While the full Board has overall responsibility for risk oversight, the Board has delegated oversight responsibility related to risks from cybersecurity threats to the Audit Committee. The Audit Committee conducts reviews of the effectiveness of our risk management strategies.
While the full Board has overall responsibility for risk oversight, the Board has delegated oversight responsibility related to risks from cybersecurity threats to the Audit Committee.
In addition, all Cohu employees are required to complete regular security awareness training including testing, each of which are designed to promote a company-wide culture of cybersecurity risk awareness and management.
In addition, all Cohu employees are required to complete continuous security awareness training including annual training, weekly testing and frequent notifications regarding updates on trends or types of attacks, each of which are designed to promote a company-wide culture of cybersecurity risk awareness and management.
Added
In the last three fiscal years, we have not experienced any material cybersecurity incidents and the expenses we have incurred from cybersecurity incidents, including penalties and settlements, were immaterial.
Added
The Audit Committee is informed of the Company’s cybersecurity risk management and receives an overview of its cybersecurity program from management at least annually, which typically includes a table top simulation and covers topics including, among others, recent cybersecurity risk landscape and trends, data security posture, results from third-party assessments, training and vulnerability testing, our incident response plan, material cybersecurity risks, whether developing or actual, as well as the steps management has taken to respond to such risks, emerging cybersecurity regulations, technologies and best practices.
Item 2. Properties
Properties — owned and leased real estate
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Item 2. Properties
Properties — owned and leased real estate
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2023 filing
2024 filing
Biggest changeCorporate Administration/Principal Executive Offices and Global Headquarters, 2. Sales, Service and Customer Support, 3. Manufacturing, 4. Engineering and Product Development, and 5. Marketing, Finance and General Administration In addition to the locations listed above, we lease other properties primarily for manufacturing, sales, service, engineering, and general administration in various locations.
Biggest changeMarketing, Finance and General Administration In addition to the locations listed above, we lease other properties primarily for sales and service, engineering, and general administration in various locations. We believe our facilities are suitable for their respective uses and are adequate for our present needs.
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.
Ownership Poway, California 1, 2, 3, 4, 5 147,000 Leased Melaka, Malaysia (1) 2, 3, 4, 5 117,000 Leased Calamba City, Laguna, Philippines 2, 3, 4, 5 92,000 Owned 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 La Chaux-de-Fonds, Switzerland 2, 4, 5 33,000 Leased Milpitas, California 2, 4, 5 31,000 Leased Singapore 2, 3, 4, 5 27,000 Leased Lincoln, Rhode Island 2, 3, 4, 5 22,000 Leased St.
Item 2. Properties. Certain information concerning our principal properties at December 30, 2023, is set forth below: Major Approx. Location Activities Sq. Ft.
Item 2. Properties. Certain information concerning our principal properties at December 28, 2024, is set forth below: Major Approx. Location Activities Sq. Ft.
Paul, 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.
Paul, Minnesota 2, 3, 4, 5 17,000 Leased (1) On December 30, 2024, we completed the purchase of our leased facility in Melaka, Malaysia. Major activities have been separated into the following categories: 1. Corporate Administration/Principal Executive Offices and Global Headquarters, 2. Sales, Service and Customer Support, 3. Manufacturing, 4. Engineering and Product Development, and 5.
Removed
We believe our facilities are suitable for their respective uses and are adequate for our present needs.
Item 5. Market for Registrant's Common Equity
Market for Common Equity — stock, dividends, buybacks
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Item 5. Market for Registrant's Common Equity
Market for Common Equity — stock, dividends, buybacks
8 edited+1 added−6 removed5 unchanged
2023 filing
2024 filing
Biggest changeComparative 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.
Biggest changeEquity 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. 32 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.
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.
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. 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.
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.
Recent Sales of Unregistered Securities During fiscal 2024, 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 29, 2018, 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 28, 2019, and reinvestment of all dividends).
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.
The custom peer group in fiscal 2024 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., Penguin Solutions, 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 7, 2024, Cohu had 499 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 5, 2025, Cohu had 427 stockholders of record.
In 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
In 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. 2019 2020 2021 2022 2023 2024 Cohu, Inc. $ 100 $ 174 $ 171 $ 144 $ 159 $ 121 NASDAQ Index $ 100 $ 145 $ 177 $ 119 $ 173 $ 224 Russell 2000 $ 100 $ 120 $ 138 $ 110 $ 128 $ 143 Peer Group $ 100 $ 128 $ 183 $ 138 $ 191 $ 207
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. The total number of shares of common stock we purchased during the fiscal year ended December 28, 2024 was 915,504 shares. We did not repurchase any shares of our stock during the three months ended December 28, 2024.
Removed
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.
Added
The only change from the custom peer group used in fiscal 2023 was that Smart Global Holdings, Inc. announced the completion of its brand transition to Penguin Solutions, Inc. on October 14, 2024.
Removed
(2) The total purchase cost includes the cost of commissions. (3) 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.
Removed
This share repurchase program is 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.
Removed
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.
Removed
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
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.
Item 6. [Reserved]
Selected Financial Data — reserved (removed by SEC in 2021)
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Item 6. [Reserved]
Selected Financial Data — reserved (removed by SEC in 2021)
1 edited+0 added−0 removed1 unchanged
2023 filing
2024 filing
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.
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.
Item 7. Management's Discussion & Analysis
Management's Discussion & Analysis (MD&A) — revenue / margin commentary
94 edited+18 added−24 removed52 unchanged
Item 7. Management's Discussion & Analysis
Management's Discussion & Analysis (MD&A) — revenue / margin commentary
94 edited+18 added−24 removed52 unchanged
2023 filing
2024 filing
Biggest changeDue 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.
Biggest changeMCT and EQT are included in Cohu’s consolidated results from operations as of the date they were acquired by Cohu. 37 Table of Contents The following table summarizes certain operating data as a percentage of net sales: 2024 2023 2022 Net sales 100.0 % 100.0 % 100.0 % Cost of sales (55.1 ) (52.4 ) (52.8 ) Gross margin 44.9 47.6 47.2 Research and development (21.1 ) (13.9 ) (11.4 ) Selling, general and administrative (31.9 ) (20.8 ) (16.2 ) Amortization of purchased intangible assets (9.7 ) (5.7 ) (4.1 ) Restructuring charges (0.0 ) (0.4 ) (0.1 ) Income (loss) from operations (17.8 )% 6.8 % 15.4 % Please refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 in our 2023 Annual Report on Form 10-K, filed with the SEC on February 16, 2024, for comparative discussion of our fiscal years ended December 30, 2023 and December 31, 2022. 2024 Compared to 2023 Net Sales Cohu’s consolidated net sales decreased 36.9% from $636.3 million in fiscal 2023 to $401.8 million in fiscal 2024.
As allowed under ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”), we have opted to not disclose unsatisfied performance obligations for contracts with original expected durations of less than one year. We generally sell our equipment with a product warranty.
As allowed under ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”), we have opted not to disclose unsatisfied performance obligations for contracts with original expected durations of less than one year. We generally sell our equipment with a product warranty.
On shipments where sales are not recognized, gross profit is generally recorded as deferred profit in our consolidated balance sheet representing the difference between the receivable recorded and the inventory shipped. Accounts Receivable: We maintain an allowance for credit losses for estimated losses resulting from the inability of our customers to make required payments.
On shipments where sales are not recognized, gross profit is generally recorded as deferred profit in our consolidated balance sheet representing the difference between the receivable recorded and the inventory shipped. Accounts Receivable: We maintain an allowance for estimated credit losses resulting from the inability of our customers to make required payments.
Cash provided by operating activities was also impacted by changes in current assets and liabilities which included decreases in accounts payable and accounts receivable.
Cash provided by operating activities was also impacted by changes in current assets and liabilities which included decreases in accounts receivable and accounts payable.
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.
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. 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.
(2) On February 9, 2024, we made a cash payment of $29.3 million to repay the remaining outstanding amounts owed under our Term Loan Credit Facility. The table above does not include pension, post-retirement benefit and warranty obligations because it is not certain when these liabilities will be funded.
(3) On February 9, 2024, we made a cash payment of $29.3 million to repay the remaining outstanding amounts owed under our Term Loan Credit Facility. The table above does not include pension, post-retirement benefit and warranty obligations because it is not certain when these liabilities will be funded.
An operating segment is defined as a component that engages in business activities whose operating results are reviewed by the chief operating decision maker and for which discrete financial information is available. We have determined that our three identified operating segments are: Test Handler Group (“THG”), Semiconductor Tester Group (“STG”) and Interface Solutions Group (“ISG”).
An operating segment is defined as a component that engages in business activities whose operating results are reviewed by the Chief Operating Decision Maker (“CODM”) and for which discrete financial information is available. We have determined that our three identified operating segments are: Test Handler Group (“THG”), Semiconductor Tester Group (“STG”) and Interface Solutions Group (“ISG”).
Variable consideration arrangements are rare; however, when they occur, we estimate variable consideration as the expected value to which we expect to be entitled. Included in the transaction price estimate are amounts in which it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved.
Variable consideration arrangements are rare; however, when they occur, we estimate variable consideration as the expected value to which we expect to be entitled. Included in the transaction price estimate are amounts for which it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved.
We recognize revenue when the obligations under the terms of a contract with our customers are satisfied; generally, this occurs with the transfer of control of our systems, non-system products or the completion of services. In circumstances where control is not transferred until destination or acceptance, we defer revenue recognition until such events occur.
We recognize revenue when the obligations under the terms of a contract with our customers are satisfied; generally, this occurs with the transfer of control of our systems and non-system products or the completion of services. In circumstances where control is not transferred until destination or acceptance, we defer revenue recognition until such events occur.
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.
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.
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.
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 & Inspection.
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.
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 goodwill, which primarily impacts gross margin or operating expenses if we are required to record impairments of assets or accelerate their depreciation.
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.
Despite weakness in the semiconductor industry based on our ongoing assessment of business conditions and the results from our operations, we continued to take actions to reduce outstanding principal debt under our Term Loan Credit Facility through voluntary prepayments.
The Loan Facilities are being utilized to finance the expansion of our facility in Kolbermoor, Germany and are secured by the land and the existing building on the site. The Loan Facilities bear interest at agreed upon rates based on the facility amounts as discussed below.
The Loan Facilities were utilized to finance the expansion of our facility in Kolbermoor, Germany and are secured by the land and the existing building on the site. The Loan Facilities bear interest at agreed upon rates based on the facility amounts as discussed below.
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.
The level of expenditure 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.
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.
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 1 each year and have determined there was no impairment as of October 1, 2024, as we determined that the estimated fair values of our reporting units exceeded their carrying values on that date.
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.
Capital Resources We have access to credit facilities 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.
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.
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 28, 2024, and the effect such obligations are expected to have on our liquidity and cash flows in future periods.
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.
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 28, 2024 and December 30, 2023, no amounts were outstanding under this line of credit.
All outstanding principal and interest in respect of the Term Loan Credit Facility was due on or before October 1, 2025. The loans under the Term Loan Credit Facility bore interest, at Cohu’s option, at a floating annual rate equal to the London Interbank Offered Rate (“LIBOR”) plus a margin of 3.00%.
All outstanding principal and interest in respect of the Term Loan Credit Facility would have been due on or before October 1, 2025. The loans under the Term Loan Credit Facility bore interest, at Cohu’s option, at a floating annual rate equal to the London Interbank Offered Rate (“LIBOR”) plus a margin of 3.00%.
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.
We accounted for the repurchase as a debt extinguishment, which resulted in a loss of $0.4 million reflected in our consolidated statement of operations, as well as a $0.4 million reduction in debt discounts and deferred financing costs in our consolidated balance sheets.
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.
The decrease in cash used to settle tax withholding requirements between fiscal 2024 and 2023 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. 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.
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.
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.
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.
A discussion of cash flows for the year ended December 31, 2022 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 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.
The fair value of the debt approximates the carrying value at December 28, 2024. 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.
Gross Margin (exclusive of amortization of acquisition-related intangible assets described below) Gross margin consists of net sales less cost of sales (excluding the impact of amortization of developed technology). Cost of sales consists primarily of the materials, assembly and test labor and overhead from operations.
Gross Margin (exclusive of amortization of acquisition-related intangible assets described below) Gross margin consists of net sales less cost of sales. Cost of sales consists primarily of the materials, assembly and test labor and overhead from operations.
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.
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. 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 30, 2023.
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 28, 2024.
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.
During the ordinary course of business, we provide standby letters of credit instruments to certain parties as required. As of December 28, 2024, $0.3 million was outstanding under standby letters of credit.
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.
In fiscal 2024, 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 $0.1 million.
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.
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 28, 2024, $0.4 million was outstanding under standby letters of credit and bank guarantees.
Dollar weakened against foreign currencies we operate in resulting in foreign currency losses. During 2023 we recognized losses of $5.2 million, net of $2.1 million of gains generated by our foreign currency forward contracts. In 2022, the U.S. Dollar strengthened against foreign currencies we operate in resulting in foreign currency gains.
During fiscal 2024 we recognized losses of $2.4 million, net of $7.5 million in losses generated by our foreign currency forward contracts. In fiscal 2023, the U.S. Dollar weakened against foreign currencies we operate in resulting in recognized losses of $5.2 million, net of $2.1 million of gains generated by our foreign currency forward contracts.
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.
Amounts excluded are our liability for unrecognized tax benefits that totaled approximately $33.8 million at December 28, 2024. We are currently unable to provide a reasonably reliable estimate of the amount or period(s) the cash settlement of this liability may occur.
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 fiscal 2024 we used $78.6 million in cash for purchases of short-term investments and generated $114.2 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.
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.
During fiscal 2024, we recorded net charges to cost of sales of approximately $5.4 million for excess and obsolete inventory. In fiscal 2023, net charges to cost of sales for excess and obsolete inventory were $4.5 million.
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.
During fiscal 2024 and 2023, we made payments totaling $27.0 million and $23.6 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, including performance stock units, and maintain an employee stock purchase plan as components of our overall employee compensation.
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.
We continue to capture new customers and new opportunities 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, increasing focus on automation and Industry 4.0 initiatives, and continued proliferation of electronics in a variety of products across the automotive, mobile, industrial, computing, and consumer markets.
In response to the higher cost of capital and slowing demand, many chip companies are cutting costs, reducing employee headcount, and pushing out capital expenditures for additional capacity.
In response to the higher cost of capital and slowing demand, and above targeted inventory levels, many chip companies have been cutting costs, reducing employee headcount, and pushing out capital expenditures for additional capacity.
In 2023 and 2022, we repurchased 700,270 shares and 1,767,070 shares of our outstanding common stock for $23.6 million and $50.7 million to be held as treasury stock, respectively. We believe that our sources of liquidity will be sufficient to satisfy our anticipated cash requirements through at least the next 12 months.
In fiscal 2024 and 2023, we repurchased 915,504 shares and 700,270 shares of our outstanding common stock for $27.0 million and $23.6 million, respectively, to be held as treasury stock. We believe that our sources of liquidity will be sufficient to satisfy our anticipated cash requirements through at least the next 12 months.
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.
Item 7. Management ’ s Discussion and Analysis of Financial Condition and Results of Operations. OVERVIEW Cohu is a leading supplier of test and inspection metrology automation systems, MEMS test modules, test contactors, thermal subsystems, data analytics software to optimize manufacturing yield and productivity, and automated test equipment (ATE) used by global semiconductor manufacturers and test subcontractors.
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.
The credit facilities renew monthly and provide Kita with access to working capital totaling up to 960 million Japanese Yen of which 100 million Japanese Yen is drawn. At December 28, 2024, total borrowings outstanding under the revolving lines of credit were $0.6 million.
The four sources of taxable income that must be considered in determining whether DTAs will be realized are, (1) future reversals of existing taxable temporary differences (i.e. offset of gross deferred tax assets against gross deferred tax liabilities); (2) taxable income in prior carryback years, if carryback is permitted under the tax law; (3) tax planning strategies and (4) future taxable income exclusive of reversing temporary differences and carryforwards.
The four sources of taxable income that must be considered in determining whether DTAs will be realized are, (1) future reversals of existing taxable temporary differences (i.e. offset of gross deferred tax assets against gross deferred tax liabilities); (2) taxable income in prior carryback years, if carryback is permitted under the tax law; (3) tax planning strategies and (4) future taxable income exclusive of reversing temporary differences and carryforwards. 39 Table of Contents In assessing whether a valuation allowance is required, significant weight is to be given to evidence that can be objectively verified.
Revenue for established products that have previously satisfied a customer’s acceptance requirements is generally recognized upon shipment. In cases where a prior history of customer acceptance cannot be demonstrated or from sales where customer payment dates are not determinable and in the case of new products, revenue and cost of sales are deferred until customer acceptance has been received.
Revenue for established products that have previously satisfied a customer’s acceptance requirements is generally recognized upon shipment. In cases where a prior history of customer acceptance cannot be demonstrated and in the case of new products, revenue and cost of sales are deferred until customer acceptance has been received. Our post-shipment obligations typically include standard warranties.
These adjustments include impairment charges, depreciation expense on property, plant and equipment, share-based compensation expense, amortization of intangible assets, deferred income taxes, amortization of cloud-based software implementation costs, loss on extinguishment of debt, interest capitalized associated with cloud computing implementation, amortization of debt discounts and issuance costs and gains from the sale of our PCB Test business and property, plant and equipment.
These adjustments include impairment charges, depreciation expense on property, plant and equipment, share-based compensation expense, amortization of intangible assets, deferred income taxes, amortization of cloud-based software implementation costs, amortization of debt discounts and issuance costs and gains from the sale of property, plant and equipment.
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.
At December 28, 2024, total outstanding borrowings under the Loan Facilities was $6.5 million with $0.9 million of the total outstanding balance being presented as current installments of long-term debt in our consolidated balance sheets.
Investing Activities: Investing cash flows consist primarily of cash used for capital expenditures in support of our business, purchases of investments, business acquisitions and proceeds from investment maturities, asset disposals and business divestitures. Our net cash used in investing activities in 2023 totaled $30.2 million.
Investing Activities: Investing cash flows consist primarily of cash used for capital expenditures in support of our business, purchases of investments, business acquisitions and proceeds from investment maturities and asset disposals. Our net cash provided by investing activities in fiscal 2024 totaled $21.9 million.
Management’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.
Management’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 30, 2023, filed with the SEC on February 16, 2024, 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 28, 2024 and December 30, 2023: (in thousands) 2024 2023 Decrease Percentage Change Cash, cash equivalents and short-term investments $ 262,092 $ 335,698 $ (73,606 ) (21.9 )% Working capital $ 449,123 $ 535,397 $ (86,274 ) (16.1 )% Cash Flows Operating Activities: Cash provided by operating activities consists of our net loss adjusted for non-cash expenses and changes in operating assets and liabilities.
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.
Net sales in the fourth quarter of fiscal 2024 and the timing of the resulting cash conversion cycle drove the $34.9 million decrease in accounts receivable, and the timing of payments to our suppliers resulted in the $3.6 million decrease in accounts payable.
In 2022, net cash used to settle the minimum statutory tax withholding requirements on behalf of our employees totaled $2.0 million.
In fiscal 2023, net cash used to settle the minimum statutory tax withholding requirements on behalf of our employees totaled $5.7 million.
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.
Our net cash flows provided by operating activities in fiscal 2024 totaled $2.8 million compared to $101.5 million in fiscal 2023. The decrease in cash provided by operating activities in the current year was a result of weaker business conditions, which drove a net loss in the current fiscal year.
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.
We enter 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 fiscal 2024, the U.S. Dollar strengthened against foreign currencies we operate in.
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.
Repayments of short-term borrowings and long-term debt during fiscal 2024 totaled $31.3 million, which includes $29.3 million of cash prepayments of our Term Loan Credit Facility. During fiscal 2023 our repayments totaled $38.8 million and included $34.1 million of cash prepayments of our Term Loan Credit Facility.
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.
Unsatisfied performance obligations primarily represent contracts for products with future delivery dates. At December 28, 2024, and December 30, 2023, we had $5.6 million and $6.2 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.
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.
Interest income was $10.0 million and $11.5 million in fiscal 2024 and 2023, respectively. The decrease in interest income year-over-year is a result of lower cash and investment balances and lower interest rates. Foreign Transaction Gain (Loss) and Other We have operations in foreign countries and conduct business in the local currency in these countries.
Approximately $29.3 million in principal of the Term Loan Credit Facility remained outstanding as of December 30, 2023. 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 amounts owed under our Term Loan Credit Facility.
On February 9, 2024, we made a cash payment of $29.3 million to repay the remaining outstanding amounts owed under our Term Loan Credit Facility.
Our long-term market drivers and market strategy remain intact, and we are encouraged by increased use of semiconductors including the most recent developments in artificial intelligence (“AI”), along with customer traction with our new products.
We continue to focus on building a well-balanced and resilient business model, executing on customer design-wins and in developing innovative products. Our long-term market drivers and market strategy remain intact, and we are encouraged by increased use of semiconductors including the most recent developments in artificial intelligence (“AI”), along with customer traction with our new products.
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 valuation allowance on our DTAs at December 28, 2024, and December 30, 2023, was approximately $114.5 million and $99.9 million, respectively.
If the fair value is determined to be less than the book value, a second step is performed to compute the amount of impairment as the difference between the fair value of the reporting unit and it’s carrying value of goodwill. We estimated the fair values of our reporting units using a weighting of the income and market approaches.
If the fair value is determined to be less than the book value, a second step is performed to compute the amount of impairment as the difference between the fair value of the reporting unit and its carrying value of goodwill, not to exceed the carrying value of goodwill.
Our warranty obligation estimates are affected by historical product shipment levels, product performance and material and labor costs incurred in correcting product performance problems. Should product performance, material usage or labor repair costs differ from our estimates, revisions to the estimated warranty liability would be required.
Should product performance, material usage or labor repair costs differ from our estimates, revisions to the estimated warranty liability would be required.
For long-lived assets, impairment losses are only recorded if the asset’s carrying amount is not recoverable through its undiscounted future cash flows. We measure the impairment loss based on the difference between the carrying amount and estimated fair value. Warranty: We provide for the estimated costs of product warranties in the period sales are recognized.
For long-lived assets, impairment losses are only recorded if the asset’s carrying amount is not recoverable through its undiscounted future cash flows. We measure the impairment loss based on the difference between the carrying amount and estimated fair value. As of December 28, 2024, no events or conditions occurred suggesting an impairment in our long-lived assets.
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. During 2023 we repurchased 700,270 shares of our common stock for approximately $23.6 million. We continue to focus on building a well-balanced and resilient business model.
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 and during fiscal 2024 we repurchased 915,504 shares of our common stock for approximately $27.0 million.
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.
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.
Construction Loans In July 2019 and June 2020, one of our wholly owned subsidiaries located in Germany entered into a series of construction loans (“Loan Facilities”) with a German financial institution providing it with total borrowings of up to €10.1 million.
The term loans are denominated in Japanese Yen and, as a result, amounts disclosed herein will fluctuate because of changes in currency exchange rates. 42 Table of Contents Construction Loans In July 2019 and June 2020, one of our wholly owned subsidiaries located in Germany entered into a series of construction loans (“Loan Facilities”) with a German financial institution providing it with total borrowings of up to €10.1 million.
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.
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. 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.
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.
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.
Financing Activities: Financing cash flows consist primarily of net proceeds under our employee stock purchase plans, repurchases of shares made under our share repurchase program and repayments of debt, net of new borrowings. In fiscal 2024, our cash used in financing activities totaled $59.0 million. In fiscal 2023, our cash used in financing activities totaled $68.1 million.
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.
Other events and changes in circumstances may also require goodwill to be tested for impairment between annual measurement dates. As of December 28, 2024, we do not believe that there were indicators of impairment requiring additional testing.
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.
Fiscal 2024 and 2023 included $1.6 million and $0.3 million of incremental costs from EQT, respectively. 38 Table of Contents 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.
SG&A expense as a percentage of net sales increased to 20.8% in 2023, from 16.2% in 2022, increasing from $131.4 million in 2022 to $132.2 million in 2023.
SG&A expense as a percentage of net sales increased to 31.9% in fiscal 2024, from 20.8% in fiscal 2023, decreasing from $132.2 million in fiscal 2023 to $128.0 million in fiscal 2024.
The decrease was due to the current global macroeconomic environment, which is driving lower demand for automotive, industrial, and mobility products (including 5G-related products). Our consolidated net sales in 2023 also include the net sales of MCT and EQT, which Cohu acquired during 2023, and totaled $13.8 million.
The decrease in our net sales was due to the current global macroeconomic environment, which is driving lower demand for automotive, industrial, consumer, and mobile applications. Our consolidated net sales include the net sales of EQT, which Cohu acquired in October of fiscal 2023. EQT sales totaled $14.1 million and $3.6 million, in fiscal 2024 and 2023, respectively.
R&D expense in 2023 was $88.6 million, or 13.9% of net sales, compared to $92.6 million, or 11.4% of net sales in 2022. R&D expenses decreased during fiscal 2023 due to lower spending on material costs associated with product development during the current year. Our R&D costs in 2023 include $0.9 million of incremental R&D costs from MCT and EQT.
R&D expense in fiscal 2024 was $84.8 million, or 21.1% of net sales, compared to $88.6 million, or 13.9% of net sales in fiscal 2023. R&D expenses decreased during fiscal 2024 due to lower spending on material costs associated with new product development and lower incentive compensation due to current business conditions.
As a result, our recurring products provide a more stable recurring source of revenue and generally do not have the same degree of cyclicality as our capital equipment products. 33 Table of Contents In 2023, global macroeconomic and geopolitical factors impacted the semiconductor industry.
As a result, our recurring products provide a more stable recurring source of revenue and generally do not have the same degree of cyclicality as our capital equipment products. 33 Table of Contents On January 30, 2023, we completed the acquisition of MCT, a U.S.-based company.
For arrangements containing multiple performance obligations, the revenue relating to the undelivered performance obligation is deferred using the relative standalone selling price method utilizing estimated sales prices until satisfaction of the deferred performance obligation. Unsatisfied performance obligations primarily represent contracts for products with future delivery dates.
These arrangements involve the delivery or performance of multiple performance obligations, that may occur at different points in time or over different periods of time. For arrangements containing multiple performance obligations, the revenue relating to the undelivered performance obligation is deferred using the relative standalone selling price method utilizing estimated sales prices until satisfaction of the deferred performance obligation.
Our gross deferred tax asset balance as of December 30, 2023, was approximately $124.0 million, with a valuation allowance of approximately $99.9 million.
Our gross deferred tax asset balance as of December 28, 2024, was approximately $138.2 million, with a valuation allowance of approximately $114.5 million.
Goodwill and Indefinite-Lived Intangibles, Other Intangible Assets and Long-lived Assets: We evaluate goodwill and other indefinite-lived intangible assets, which are solely comprised of in-process research and development (“IPR&D”), for impairment annually and when an event occurs or circumstances change that indicate that the carrying value may not be recoverable.
Goodwill, Intangible Assets and Other Long-lived Assets: We evaluate goodwill for impairment annually and when an event occurs or circumstances change that indicate that the carrying value may not be recoverable. We test goodwill for impairment by first comparing the book value of net assets to the fair value of the reporting unit.
During 2023, we used $26.3 million of cash, net of cash received, for the acquisition of MCT which was a strategic transaction for our test handler group. In 2023, we also used $43.4 million of cash, net of cash received, for the acquisition of EQT, which was a strategic transaction for our interface solutions group.
In fiscal 2023 we used $97.3 million in cash for purchases of short-term investments and generated $152.6 million from sales and maturities. During fiscal 2023, we used $26.3 million of cash, net of cash received, for the acquisition of MCT which was a strategic transaction for our test handler group.
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.
The increase in expenses recorded during the current year was a result of the amortization of acquired intangible assets from EQT. Restructuring Charges During fiscal 2023, we began a strategic restructuring and integration program in connection with our acquisition of MCT to reposition our organization and improve our cost structure as part of our integration plan.
Additions to property, plant and equipment in 2023 were $16.1 million and were made to support our operating and development activities. Our net cash used in investing activities in 2022 totaled $67.9 million.
Additions to property, plant and equipment in fiscal 2024 were $10.6 million and were made to support our operating and development activities. Cash paid for the settlement of net investment hedges totaled $3.2 million in fiscal 2024. Our net cash used in investing activities in fiscal 2023 totaled $30.2 million.
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.
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. 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.
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.
At December 28, 2024, the outstanding loan balance was $1.7 million and $0.2 million of the outstanding balance is presented as current installments of long-term debt in our consolidated balance sheets.
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Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Market Risk — interest-rate, FX, commodity exposure
13 edited+2 added−0 removed7 unchanged
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Market Risk — interest-rate, FX, commodity exposure
13 edited+2 added−0 removed7 unchanged
2023 filing
2024 filing
Biggest changeAt 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.
Biggest changeOn 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. We have operations in several foreign countries and conduct business in the local currency in these countries.
Under this program, our strategy is to have increases or decreases in our foreign currency exposures mitigated by gains or losses on the foreign currency forward contracts in order to mitigate the risks and volatility associated with foreign currency transaction gains or losses. Fluctuations in currency exchange rates also impact the U.S.
Under this program, our strategy is to have increases or decreases in our foreign currency exposures mitigated by gains or losses on the foreign currency forward contracts in order to reduce the risks and volatility associated with foreign currency transaction gains or losses. Fluctuations in currency exchange rates also impact the U.S.
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 30, 2023, we had approximately $29.3 million of long-term debt due under a Term Loan Credit Facility that was subject to quarterly interest payments that were 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.
The interest rate otherwise payable under the Term Loan Credit Facility would be subject to increase by 2.0% per annum during the continuance of a payment default and may be subject to increase by 2.0% per annum with respect to the overdue principal amount of any loans outstanding and overdue interest payments and other overdue fees and amounts.
The interest rate otherwise payable under the Term Loan Credit Facility would be subject to increase by 2.0% per annum during the continuance of a payment default and could have been subject to increase by 2.0% per annum with respect to the overdue principal amount of any loans outstanding and overdue interest payments and other overdue fees and amounts.
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.
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 28, 2024 would result in an approximate $28.3 million positive translation adjustment recorded in other comprehensive income within stockholders’ equity.
We have operations in several foreign countries and conduct business in the local currency in these countries. As a result, we have risk associated with currency fluctuations as the value of foreign currencies fluctuate against the U.S. dollar, in particular the Swiss Franc, Euro, Malaysian Ringgit, Chinese Yuan, Philippine Peso and Japanese Yen. These fluctuations can impact our reported earnings.
As a result, we have risk associated with currency fluctuations as the value of foreign currencies fluctuate against the U.S. dollar, in particular the Swiss Franc, Euro, Malaysian Ringgit, Chinese Yuan, Philippine Peso and Japanese Yen. These fluctuations can impact our reported earnings.
As we classify our short-term securities as available-for-sale, no gains or losses are recognized due to changes in interest rates unless such securities are sold prior to maturity or declines in fair value are determined to be other-than-temporary.
As we classify our short-term securities as available-for-sale, no gains or losses are recognized due to changes in interest rates unless such securities are sold prior to maturity or declines in fair value are determined to be credit-related.
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.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk. Investment and Interest Rate Risk. At December 28, 2024, our investment portfolio included short-term, fixed-income investment securities with a fair value of approximately $55.7 million, and we did not hold or issue financial instruments for trading purposes.
During the fourth quarter of 2020, we began entering into foreign currency forward contracts with a financial institution to hedge against future movements in foreign exchange rates that affect certain existing U.S. Dollar denominated assets and liabilities at our subsidiaries whose functional currency is the local currency.
We enter into foreign currency forward contracts with a financial institution to hedge against future movements in foreign exchange rates that affect certain existing U.S. Dollar denominated assets and liabilities at our subsidiaries whose functional currency is the local currency.
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.
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 28, 2024 compared to December 30, 2023, our stockholders’ equity decreased by $16.8 million as a result of the foreign currency translation.
The selection of the interest rate formula is at our discretion.
The selection of the interest rate formula was at our discretion.
Conversely, 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
Conversely, a hypothetical 10% appreciation of the U.S. dollar as compared to these currencies as of December 28, 2024 would result in an approximate $28.3 million negative translation adjustment recorded in other comprehensive income within stockholders’ equity. 45 Table of Contents Item 8. Financial Statements and Supplementary Data.
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.
As of December 28, 2024, the cost and fair value of investments we held with loss positions were approximately $20.5 million and $20.4 million, respectively.
Added
Dollar amount of our net investment in foreign operations and in the third quarter of fiscal 2024 we began hedging foreign currency risk associated with net investment positions in certain of our foreign subsidiaries by entering foreign currency forward contracts that are designated as hedges of net investment. Fluctuations in currency exchange rates also impact the U.S.
Added
The information required by this Item is included in Part IV, Item 15(a). Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. None.