COHU INC

Previous wording

Global macroeconomic and geopolitical factors have impacted the semiconductor industry. In response to the higher cost of capital, slowing customer demand, and inventory levels higher than target, many semiconductor companies have been cutting costs, reducing employee headcount, and pushing out capital expenditures for additional capacity. For the three-month period ending June 28, 2025, our net sales increased 2.8%, on a year-over-year basis, to $107.7 million. In response to the current economic conditions, we initiated a global restructuring program designed to improve profitability without negatively impacting product development activities. Once fully implemented in 2025, quarterly cost savings are expected to total approximately $2.0 million including $1.0 million from manufacturing overhead and $1.0 million from operating expenses. Based on our ongoing assessment of business conditions in the semiconductor industry and the results from our operations, we repurchased 432,288 shares of our common stock for approximately $8.6 million during the six-month period ending June 28, 2025.

Current wording

Global macroeconomic and geopolitical factors have impacted the semiconductor industry. In response to the higher cost of capital, slowing customer demand, and inventory levels higher than target, many semiconductor companies have been cutting costs, reducing employee headcount, and pushing out capital expenditures for additional capacity. In response to the current economic conditions, we initiated a global restructuring program designed to improve profitability without negatively impacting product development activities. Once fully implemented in 2025, quarterly cost savings are expected to total approximately $2.0 million including $1.0 million from manufacturing overhead and $1.0 million from operating expenses. Based on the results from our operations and to offset dilution from our employee compensation share based plans, we repurchased 432,288 shares of our common stock for approximately $8.6 million during the nine-month period ending September 27, 2025.

Previous wording

Revenue Recognition: Our net sales are derived from the sale of products and services and are adjusted for estimated returns and allowances, which historically have been insignificant. We 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. 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. 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. 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. Unsatisfied performance obligations primarily represent contracts for products with future delivery dates. On June 28, 2025, we had $4.7 million of revenue expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) with expected durations of over one year. As allowed under 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. The product warranty provides assurance to customers that delivered products are as specified in the contract (an “assurance-type warranty”). Therefore, we account for such product warranties under ASC 460, and not as a separate performance obligation. The transaction price reflects our expectations about the consideration we will be entitled to receive from the customer and may include fixed or variable amounts. Fixed consideration primarily includes sales to customers that are known as of the end of the reporting period. Variable consideration includes sales in which the amount of consideration that we will receive is unknown as of the end of a reporting period. Such consideration primarily includes sales made to certain custome…

Excerpt shortened here; the source contains the full paragraph.

Current wording

Revenue Recognition: Our net sales are derived from the sale of products and services and are adjusted for estimated returns and allowances, which historically have been insignificant. We 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. 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. 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. 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. Unsatisfied performance obligations primarily represent contracts for products with future delivery dates. On September 27, 2025, we had $4.6 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. As allowed under 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. The product warranty provides assurance to customers that delivered products are as specified in the contract (an “assurance-type warranty”). Therefore, we account for such product warranties under ASC 460, and not as a separate performance obligation. The transaction price reflects our expectations about the consideration we will be entitled to receive from the customer and may include fixed or variable amounts. Fixed consideration primarily includes sales to customers that are known as of the end of the reporting period. Variable consideration includes sales in which the amount of consideration that we will receive is unknown as of the end of a reporting period. Such consideration primarily includes sales made to certain cu…

Excerpt shortened here; the source contains the full paragraph.

Previous wording

***Income Taxes:***We estimate our liability for income taxes based on the various jurisdictions where we conduct business. This requires us to estimate our (i) current taxes; (ii) temporary differences that result from differing treatment of certain items for tax and accounting purposes; and (iii) unrecognized tax benefits. Temporary differences result in deferred tax assets and liabilities that are reflected in the condensed consolidated balance sheet. The deferred tax assets are reduced by a valuation allowance if, based upon all available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. 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 deferred tax assets consist primarily of research and development costs that are required to be capitalized under IRC Section 174, net of related amortization, reserves and accruals that are not yet deductible for tax, and tax credit and net operating loss carryforwards.

Current wording

***Income Taxes:***We estimate our liability for income taxes based on the various jurisdictions where we conduct business. This requires us to estimate our (i) current taxes; (ii) temporary differences that result from differing treatment of certain items for tax and accounting purposes; and (iii) unrecognized tax benefits. Temporary differences result in deferred tax assets and liabilities that are reflected in the condensed consolidated balance sheet. The deferred tax assets are reduced by a valuation allowance if, based upon all available evidence, it is more likely than not that some or all the deferred tax assets will not be realized. 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 deferred tax assets consist primarily of research and development costs that were required to be capitalized under IRC Section 174, net of related amortization, reserves and accruals that are not yet deductible for tax, and tax credit and net operating loss carryforwards.

Previous wording

During the first six months of fiscal 2025, no events or conditions occurred suggesting an impairment in our long-lived assets.

Current wording

During the first nine months of fiscal 2025, no events or conditions occurred suggesting an impairment in our long-lived assets.

Previous wording

Our consolidated net sales increased 2.8% to $107.7 million in 2025, compared to $104.7 million in 2024. Net sales for the second quarter of fiscal 2025 were impacted by the current global macroeconomic environment which continues to show lower demand for automotive industrial and consumer applications, however, in the second quarter of fiscal 2025 we saw increased demand for mobile and AI-based computing applications as compared to the second quarter of fiscal 2024. Cohu acquired Tignis on January 7, 2025, and the results of its operations are included since that date. In the second quarter of fiscal 2025, Tignis’ net sales were not material to Cohu.

Current wording

Our consolidated net sales increased 32.4% to $126.2 million in 2025, compared to $95.3 million in 2024. Net sales for the third quarter of fiscal 2025 increased compared to the same period in fiscal 2024, driven by stronger demand for mobile and AI-based computing applications. While the global macroeconomic environment continues to weigh on automotive, industrial, and consumer segments, demand for mobile and AI-based computing applications helped offset these pressures. Cohu acquired Tignis on January 7, 2025, and the results of its operations are included since that date. Tignis’ net sales in the third quarter of fiscal 2025 were not material to overall results.

Previous wording

Gross margin consists of net sales less cost of sales. Cost of sales consists primarily of materials, assembly, test labor, and overhead from operations. Our gross margin can fluctuate due to a number of factors, including, but not limited to, the mix and volume of products sold, product support costs, changes in inventory reserves, the sale of previously reserved inventory and business volume which impacts the utilization of our manufacturing capacity. Our gross margin, as a percentage of net sales for the second fiscal quarter, was 43.7% in 2025 and 44.8% in 2024. Gross margin in the second quarter of fiscal 2025 declined as it was impacted by the mix of systems sold to customers, and $0.3 million of additional manufacturing employee compensation and inventory charges resulting from transitioning certain of our manufacturing activities from the U.S. and Europe to our factories in the Philippines and Malaysia.

Current wording

Gross margin consists of net sales, less cost of sales. Cost of sales consists primarily of materials, assembly, test labor, and overhead from operations. Our gross margin can fluctuate due to a number of factors, including, but not limited to, the mix and volume of products sold, product support costs, changes in inventory reserves, the sale of previously reserved inventory and business volume which impacts the utilization of our manufacturing capacity. Our gross margin, as a percentage of net sales for the third quarter, was 43.8% in fiscal 2025 and 46.8% in fiscal 2024. Gross margin in the third quarter of fiscal 2025 was impacted by the mix of systems sold to customers, and additional manufacturing employee compensation and inventory charges resulting from transitioning certain of our manufacturing activities from the U.S. and Europe to our factories in the Philippines and Malaysia.

Previous wording

We compute the majority of our excess and obsolete inventory reserve requirements using inventory usage forecasts. During the second quarter of fiscal 2025 and 2024, we recorded charges to cost of sales of $1.5 million and $0.3 million for excess and obsolete inventory, respectively. We believe our reserves for excess and obsolete inventory and lower of cost or net realizable value are adequate to cover known exposures as of June 28, 2025. Further reductions in customer forecasts, continued modifications to products, or our failure to meet specifications or other customer requirements, may result in additional charges to operations that could negatively impact our gross margin in future periods.

Current wording

We compute the majority of our excess and obsolete inventory reserve requirements using inventory usage forecasts. During the third quarter of fiscal 2025 and 2024, we recorded charges to cost of sales of $0.9 million and $0.8 million for excess and obsolete inventory, respectively. We believe our reserves for excess and obsolete inventory and lower of cost or net realizable value are adequate to cover known exposures as of September 27, 2025. Further reductions in customer forecasts, continued modifications to products, or our failure to meet specifications or other customer requirements, may result in additional charges to operations that could negatively impact our gross margin in future periods.

Previous wording

R&D expense consists primarily of salaries and related costs of employees engaged in ongoing research, product design and development activities, costs of engineering materials and supplies and professional consulting expenses. R&D expense was $23.2 million in fiscal 2025 and $21.3 million in fiscal 2024 representing 21.5% and 20.4% of net sales, respectively. During the second quarter of fiscal 2025 R&D expenses increased due to higher material costs associated with new product development and $0.9 million of incremental costs from the Tignis business.

Current wording

R&D expense consists primarily of salaries and related costs of employees engaged in ongoing research, product design and development activities, costs of engineering materials and supplies and professional consulting expenses. R&D expense was $22.5 million in fiscal 2025 and $20.3 million in fiscal 2024, representing 17.8% and 21.3% of net sales, respectively. During the third quarter of fiscal 2025 R&D expenses increased due to higher material costs associated with new product development and $1.0 million of incremental costs from the Tignis business.

Previous wording

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 was $29.9 million or 27.7% of net sales in fiscal 2025, compared to $32.1 million or 30.7% in fiscal 2024. SG&A expense during the second fiscal quarter of 2025 was down on a year-over-year basis due to lower incentive compensation due to current business conditions and cost controls. SG&A expense in the second quarter of fiscal 2025 includes $0.6 million of incremental SG&A costs from the operations of Tignis. The second quarter of fiscal 2024 included $1.2 million of one-time severance costs resulting from manufacturing transition related to the expansion of our factories in the Philippines and Malaysia. Transaction related costs incurred related to the acquisition of Tignis incurred in the second quarter of fiscal 2025 were not significant.

Current wording

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 was $31.8 million or 25.2% of net sales in fiscal 2025, compared to $30.3 million or 31.8% in fiscal 2024. SG&A expense during the third fiscal quarter of 2025 increased on a year-over-year basis, primarily driven by higher business volume and associated costs. SG&A expense in the third quarter of fiscal 2025 also was impacted by $0.4 million of incremental SG&A costs from the operations of Tignis. The third quarter of fiscal 2024 included $0.5 million of one-time severance costs resulting from the manufacturing transition related to the expansion of our factories in the Philippines and Malaysia. Transaction related costs incurred related to the acquisition of Tignis incurred in the third quarter of fiscal 2025 were not significant.

Previous wording

Amortization of purchased intangibles is the process of expensing the cost of an intangible asset acquired through a business combination over the projected life of the asset. Amortization of acquisition-related intangible assets was $10.0 million and $9.7 million in the second fiscal quarter of 2025 and 2024, respectively. The increase in expense recorded during the second quarter of fiscal 2025 resulted from the amortization of acquired intangible assets from the acquisition of Tignis.

Current wording

Amortization of purchased intangibles is the process of expensing the cost of an intangible asset acquired through a business combination over the projected life of the asset. Amortization of acquisition-related intangible assets was $10.2 million and $9.8 million in the third fiscal quarter of 2025 and 2024, respectively. The increase in expense recorded during the third quarter of fiscal 2025 resulted from the amortization of acquired intangible assets from the acquisition of Tignis.

Previous wording

During the fourth quarter of fiscal 2024, we made the decision to transition all remaining volume manufacturing out of Poway, CA, and consolidate it into our factories in Asia. Restructuring costs incurred in the second quarter of fiscal 2025 related to the Poway volume manufacturing transition totaled $0.8 million. During the first quarter of fiscal 2025, we began executing a strategic restructuring program designed to reposition our global organization and improve our cost structure. Restructuring costs incurred in the second quarter of fiscal 2025 related to the 2025 Restructuring Program totaled $0.4 million. Amounts for restructuring recorded in the second quarter of fiscal 2024 were not material.

Current wording

In the fourth quarter of fiscal 2024, we initiated a strategic decision to transition all remaining volume manufacturing operations out of Poway, California, consolidating production into our facilities in Asia to enhance efficiency and scalability. Building on this initiative, we launched a broader restructuring program in the first quarter of fiscal 2025 aimed at repositioning our global organization and optimizing our cost structure. During the third quarter of fiscal 2025, we incurred restructuring charges totaling $0.5 million. Amounts for restructuring recorded in the third quarter of fiscal 2024 were not material.

Previous wording

Interest expense was $0.1 million in both the second fiscal quarter of 2025 and 2024, respectively.

Current wording

Interest expense was $0.1 million in both the third fiscal quarter of 2025 and 2024, respectively.

Previous wording

Interest income was $1.4 million and $2.3 million in the second quarter of fiscal 2025 and 2024, respectively. The decrease in interest income year-over-year is a result of lower investment balances in fiscal 2025 due to the acquisition of Tignis.

Current wording

Interest income was $1.3 million and $2.6 million in the third quarter of fiscal 2025 and 2024, respectively. The decrease in interest income year-over-year is a result of lower investment balances in fiscal 2025 due to the acquisition of Tignis.

Previous wording

We account for income taxes in accordance with ASC 740. The provision or benefit for income taxes is attributable to U.S. federal, state, and foreign income taxes. Our effective tax rate (“ETR”) used for interim periods is based on an estimated annual effective tax rate, adjusted for the tax effect of items required to be recorded discretely in the interim periods in which those items occur. Our ETR is different than the statutory rate in the U.S. due to foreign income taxed at different rates than the U.S., generation of tax credits, changes in uncertain tax benefit positions, changes to valuation allowances, and the impact of Global Intangible Low-Taxed Income (“GILTI”). In addition, we have numerous tax holidays related to our manufacturing operations in Malaysia and the Philippines. The tax holiday periods expire at various times in the future; however, we actively seek to obtain new tax holidays.

Current wording

We account for income taxes in accordance with ASC 740. The provision or benefit for income taxes is attributable to U.S. federal, state, and foreign income taxes. Our effective tax rate (“ETR”) used for interim periods is based on an estimated annual effective tax rate, adjusted for the tax effect of items required to be recorded discretely in the interim periods in which those items occur. Our ETR is different than the statutory rate in the U.S. due to foreign income taxed at different rates than the U.S., changes in uncertain tax benefit positions, and the accrual of taxes on unremitted income of our foreign subsidiaries. In addition, we have numerous tax holidays related to our manufacturing operations in Malaysia and the Philippines. The tax holiday periods expire at various times in the future; however, we actively seek to obtain new tax holidays.

Previous wording

Our second quarter 2025 ETR is higher than the second quarter 2024 ETR primarily due to a change in mix of income between tax jurisdictions, an increase in our uncertain tax positions, and certain true ups.

Current wording

Our third quarter 2025 tax provision is lower than the third quarter 2024 tax provision primarily due to a change in mix of income between tax jurisdictions, a decrease in our uncertain tax positions and certain true ups.

Previous wording

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

Current wording

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

Previous wording

As a result of the factors set forth above, our net loss was $16.9 million for the three months ended June 28, 2025 and $15.8 million for the three months ended June 29, 2024.

Current wording

As a result of the factors set forth above, our net loss was $4.1 million for the three months ended September 27, 2025 and $18.1 million for the three months ended September 28, 2024.

Previous wording

Our consolidated net sales decreased 3.7% to $204.5 million in 2025, compared to $212.3 million in 2024. The decrease in net sales recognized for the first six months of fiscal 2025 resulted from the current global macroeconomic environment which continues to show lower demand for automotive, industrial, and mobile applications partly offset by increased demand for AI-based computing applications. Cohu acquired Tignis on January 7, 2025, and the results of its operations are included since that date. For the first six months of fiscal 2025, Tignis’ net sales were not material to Cohu.

Current wording

Our consolidated net sales increased 7.5% to $330.7 million in 2025, compared to $307.7 million in 2024, driven by stronger demand for mobile and AI-based computing applications. While the global macroeconomic environment continues to weigh on automotive, industrial, and consumer segments, demand for mobile and AI-based computing applications helped offset these pressures. Cohu acquired Tignis on January 7, 2025, and the results of its operations are included since that date. For the first nine months of fiscal 2025, Tignis’ net sales were not material to Cohu.

Previous wording

Our gross margin, as a percentage of net sales, decreased to 43.7% in 2025 from 45.3% in 2024. Gross margin during the first six months of fiscal 2025 declined as it was impacted by the mix of systems sold to customers and $0.5 million of additional manufacturing employee compensation and inventory charges resulting from transitioning certain of our manufacturing activities from the U.S. and Europe to our factories in the Philippines and Malaysia.

Current wording

Our gross margin, as a percentage of net sales, decreased to 43.7% in 2025 from 45.8% in 2024. Gross margin during the first nine months of fiscal 2025 declined as it was impacted by the mix of systems sold to customers.

Previous wording

In the first six months of fiscal 2025 and 2024 we recorded charges to cost of sales for excess and obsolete inventory of approximately $3.2 million and $2.0 million, respectively. We believe our reserves for excess and obsolete inventory and lower of cost or market concerns are adequate to cover known exposures as of June 28, 2025. Reductions in customer forecasts or continued modifications to products, or our failure to meet specifications or other customer requirements may result in additional charges to operations that could negatively impact our results of operations and gross margin in future periods.

Current wording

In the first nine months of fiscal 2025 and 2024 we recorded charges to cost of sales for excess and obsolete inventory of approximately $4.1 million and $2.8 million, respectively. We believe our reserves for excess and obsolete inventory and lower of cost or market concerns are adequate to cover known exposures as of September 27, 2025. Reductions in customer forecasts or continued modifications to products, or our failure to meet specifications or other customer requirements may result in additional charges to operations that could negatively impact our results of operations and gross margin in future periods.

Previous wording

R&D expense was $46.3 million or 22.7% of net sales in 2025, compared to $43.7 million or 20.6% in 2024. R&D expense increased during the first six months of fiscal 2025 due to higher material costs associated with new product development during the current year. Additionally, the first six months of fiscal 2025 included $1.9 million of incremental costs from Tignis.

Current wording

R&D expense was $68.8 million or 20.8% of net sales in fiscal 2025, compared to $64.0 million or 20.8% in fiscal 2024. R&D expense increased during the first nine months of fiscal 2025 due to higher material costs associated with new product development during the current year. Additionally, the first nine months of fiscal 2025 included $2.9 million of incremental costs from Tignis.

Previous wording

SG&A expense was $59.9 million or 29.3% of net sales in 2025, compared to $67.2 million or 31.6% in 2024. The relative decrease in SG&A expense as a percentage of net sales is a result of lower sales in the first six months of fiscal 2025. SG&A expense during the first six months of fiscal 2025 was down on a year-over-year basis due to lower incentive compensation due to current business conditions and a $1.7 million benefit from and adjustment made to contingent consideration related to the acquisition of Tignis. SG&A expense during the first six months of fiscal 2025 includes $0.1 million of one-time severance costs resulting from manufacturing transition related to the expansion of our factories in the Philippines and Malaysia, $1.2 million of incremental SG&A costs from the operations of Tignis, and $0.3 million of transaction costs related to our acquisition of Tignis. The first six months of fiscal 2024 included $2.9 million of one-time severance costs resulting from manufacturing transition related to the expansion of our factories in the Philippines and Malaysia and a $1.0 million impairment charge related to our investment in Fraes-und Technologiezentrum GmbH Frasdorf (“FTZ”), a company based in Germany that provides milling services to one of our wholly owned subsidiaries and $0.2 million of transaction costs related to our acquisition of MCT and EQT.

Current wording

SG&A expense was $91.6 million or 27.7% of net sales in 2025, compared to $97.5 million or 31.7% in 2024. The decrease in SG&A expense as a percentage of net sales is a result of lower expenses relative to sales in the first nine months of fiscal 2025. SG&A expense during the first nine months of fiscal 2025 was down on a year-over-year basis due to the impact of cost control measures, lower incentive compensation due to current business conditions and a $1.7 million adjustment made to contingent consideration related to the acquisition of Tignis. SG&A expense during the first nine months of fiscal 2025 includes $1.6 million of incremental SG&A costs from the operations of Tignis and $0.4 million of transaction costs related to our acquisition of Tignis. The first nine months of fiscal 2024 included $3.4 million of one-time severance costs resulting from the manufacturing transition related to the expansion of our factories in the Philippines and Malaysia and a $0.9 million impairment charge related to our investment in Fraes-und Technologiezentrum GmbH Frasdorf (“FTZ”), a company based in Germany that provides milling services to one of our wholly owned subsidiaries and $0.2 million of transaction costs related to our acquisition of MCT Worldwide, LLC and Equiptest Engineering Pte. Ltd..

Previous wording

Amortization of acquisition-related intangible assets was $19.9 million and $19.5 million for the first six months of 2025 and 2024, respectively. The increase in expense recorded during the first six months of fiscal 2025 was a result of the amortization of acquired intangible assets from Tignis.

Current wording

Amortization of acquisition-related intangible assets was $30.2 million and $29.3 million for the first nine months of fiscal 2025 and fiscal 2024, respectively. The increase in expense recorded during the first nine months of fiscal 2025 was a result of the amortization of acquired intangible assets from Tignis.

Previous wording

Interest expense was $0.3 million and $0.4 million in the first six months of 2025 and 2024, respectively. On February 9, 2024, we repaid the remaining outstanding amounts owed under our Term Loan Credit Facility.

Current wording

Interest expense was $0.4 million and $0.5 million in the first nine months of fiscal 2025 and fiscal 2024, respectively. On February 9, 2024, we repaid the remaining outstanding amounts owed under our Term Loan Credit Facility.

Previous wording

Interest income was $3.0 million and $5.0 million in the first six months of 2025 and 2024, respectively. The year-over-year decrease resulted from lower cash and investment balances in the first six months of fiscal 2025 due to the repayment of the Term Loan Credit Facility and the acquisition of Tignis.

Current wording

Interest income was $4.3 million and $7.7 million in the first nine months of fiscal 2025 and fiscal 2024, respectively. The year-over-year decrease resulted from lower cash and investment balances in the first nine months of fiscal 2025 due to the repayment of the Term Loan Credit Facility and the acquisition of Tignis.

Previous wording

We account for income taxes in accordance with ASC 740. The provision or benefit for income taxes is attributable to U.S. federal, state, and foreign income taxes. Our effective tax rate (“ETR”) used for interim periods is based on an estimated annual effective tax rate, adjusted for the tax effect of items required to be recorded discretely in the interim periods in which those items occur. Our ETR is different than the statutory rate in the U.S. due to foreign income taxed at different rates than the U.S., generation of tax credits, changes in uncertain tax benefit positions, changes to valuation allowances, and the impact of Global Intangible Low-Taxed Income (“GILTI”). In addition, we have numerous tax holidays related to our manufacturing operations in Malaysia and the Philippines. The tax holiday periods expire at various times in the future; however, we actively seek to obtain new tax holidays.

Current wording

We account for income taxes in accordance with ASC 740. The provision or benefit for income taxes is attributable to U.S. federal, state, and foreign income taxes. Our ETR used for interim periods is based on an estimated annual effective tax rate, adjusted for the tax effect of items required to be recorded discretely in the interim periods in which those items occur. Our ETR is different than the statutory rate in the U.S. due to foreign income taxed at different rates than the U.S., changes in uncertain tax benefit positions, and the accrual of taxes on unremitted income of our foreign subsidiaries. In addition, we have numerous tax holidays related to our manufacturing operations in Malaysia and the Philippines. The tax holiday periods expire at various times in the future; however, we actively seek to obtain new tax holidays.

Previous wording

The ETR on income for the six months ended June 28, 2025 is higher than the ETR for the six months ended June 29, 2024 primarily due to a change in mix of income between tax jurisdictions and an increase in our uncertain tax positions.

Current wording

The tax provision for the nine months ended September 27, 2025 is higher than the tax provision for the nine months ended September 28, 2024 primarily due to a change in mix of income between tax jurisdictions, an increase in our uncertain tax positions, a decrease in excess benefits of stock based compensation and certain true ups.

Previous wording

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

Current wording

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

Previous wording

In accordance with the disclosure requirements in ASC 740, we have classified unrecognized tax benefits as non-current income tax liabilities, or a reduction in non-current deferred tax assets, unless expected to be paid within one year. Our continuing practice is to recognize interest and/or penalties related to income tax matters in income tax expense. There were no material changes to our unrecognized tax benefits and interest accrued related to unrecognized tax benefits during the six months ended June 28, 2025.

Current wording

In accordance with the disclosure requirements in ASC 740, we have classified unrecognized tax benefits as non-current income tax liabilities, or a reduction in non-current deferred tax assets, unless expected to be paid within one year. Our continuing practice is to recognize interest and/or penalties related to income tax matters in income tax expense. There were no material changes to our unrecognized tax benefits and interest accrued related to unrecognized tax benefits during the nine months ended September 27, 2025.

Previous wording

As a result of the factors set forth above, our net loss was $47.7 million for the six months ended June 28, 2025. For the six months ended June 29, 2024, our net loss was $30.4 million.

Current wording

As a result of the factors set forth above, our net loss was $51.8 million for the nine months ended September 27, 2025. For the nine months ended September 28, 2024, our net loss was $48.5 million.

Previous wording

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. We use cash to fund growth in our operating assets and to fund new products and product enhancements primarily through research and development. As of June 28, 2025, $131.6 million or 80.0% of our cash and cash equivalents was held by our foreign subsidiaries. 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.

Current wording

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. We use cash to fund growth in our operating assets and to fund new products and product enhancements primarily through research and development. As of September 27, 2025, $126.8 million or 84.6% of our cash and cash equivalents was held by our foreign subsidiaries. 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.

Previous wording

On June 28, 2025, our total indebtedness included $1.8 million outstanding under Kita’s term loans, $6.8 million outstanding under Cohu GmbH’s construction loan, $8.9 million outstanding under Cohu Malaysia’s revolving credit facility and $0.9 million outstanding under Kita’s lines of credit. We repurchased 432,288 shares of our outstanding common stock, to be held as treasury stock, for $8.6 million, during the first six months of fiscal 2025.

Current wording

On September 27, 2025, our total indebtedness included $1.6 million outstanding under Kita’s term loans, $6.5 million outstanding under Cohu GmbH’s construction loan, $8.9 million outstanding under Cohu Malaysia’s revolving credit facility and $0.8 million outstanding under Kita’s lines of credit. We repurchased 432,288 shares of our outstanding common stock, to be held as treasury stock, for $8.6 million, during the first nine months of fiscal 2025.

Previous wording

Operating Activities:* *Operating cash flows for the first six months of fiscal 2025 consisted of our net loss, adjusted for non-cash expenses and changes in operating assets and liabilities. These adjustments include 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, adjustments to contingent consideration, amortization of debt discounts and issuance costs, pension curtailment gains and gains on sales of property, plant and equipment. Our net cash provided by operating activities in the first six months of fiscal 2025 totaled $5.9 million. Net cash provided by operating activities was impacted by changes in current assets and liabilities and included increases in accounts payable of $14.7 million, other current assets of $8.8 million, income taxes payable of $3.5 million, deferred profit of $1.3 million, accrued compensation, warranty and other liabilities of $1.6 million, decreases in accounts receivable of $4.6 million and inventory of $1.2 million. The increase in accounts payable is a result of the timing of payments to suppliers. Other current assets, which includes prepaids and income taxes receivable, increased from prepayments of certain expenses that will be utilized throughout fiscal 2025 and the timing difference of accrual and receipt of income taxes. Changes in income taxes payable are a result of the estimation and timing of income taxes in certain jurisdictions in which we operate. The increase in deferred profit is due to deferrals of revenue made in accordance with our revenue recognition policy. Accrued compensation, warranty and other liabilities increased due to accruals for restructuring severance, offset by payments of incentive compensation related to the prior year that were paid in the first quarter of 2025. The decrease in accounts receivable was a result of the timing of cash collections and inventory decreased due to a reduction in purchases in response to current business conditions.

Current wording

Operating Activities:* *Operating cash flows for the first nine months of fiscal 2025 consisted of our net loss, adjusted for non-cash expenses and changes in operating assets and liabilities. Significant non-cash adjustments included depreciation and amortization, share-based compensation expense, inventory-related charges and amortization of cloud-based software implementation costs. These amounts were partially offset by a pension curtailment gain, a mark-to-market adjustment to contingent consideration, and a reduction in deferred income taxes. Our net cash used in operating activities in the first nine months of fiscal 2025 totaled $8.1 million. Net cash used in operating activities was negatively impacted by working capital changes, including a $28.5 million increase in accounts receivable, a $13.0 million increase in other current assets and a $2.9 million increase in deferred profit. The increase in accounts receivable was primarily due to the timing of customer billings and collections, including higher sales volume late in the quarter that had not yet been collected as of period-end. The increase in other current assets was largely driven by higher prepaid expenses and income tax receivables, reflecting the timing of payments and accruals for certain operating costs and tax positions. The increase in deferred profit is due to deferrals of revenue made in accordance with our revenue recognition policy. These were partially offset by a $18.0 million increase in accounts payable and a $6.3 million increase in accrued compensation, warranty, and other liabilities. The increase in accounts payable was primarily due to the timing of supplier payments, while the increase in other accrued compensation, warranty, and other liabilities was a result of increased business activity. Inventory decreased by $3.6 million during the first nine months of fiscal 2025. This reduction reflects a strategic adjustment in purchasing and production levels in response to current business conditions, including lower demand in certain end markets. The decrease also aligns with efforts to optimize working capital and manage inventory more efficiently across global operations.

Previous wording

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 used in investing activities in the first six months of fiscal 2025 totaled $34.7 million. We generated $36.6 million from sales and maturities and used $25.5 million of cash for purchases of short-term investments in the first six months of fiscal 2025. We invest our excess cash, in an attempt to seek the highest available return while preserving capital, in short-term investments since excess cash may be required for a business-related purpose. Additions to property, plant and equipment in the first six months of fiscal 2025 were $13.6 million, and were made to support our operating and development activities. Cash received for the settlement of net investment hedges totaled $2.6 million in first six months of fiscal 2025 and in the first six months of fiscal 2025, we used $34.9 million of cash, net of cash received, for the acquisition of Tignis, which was a strategic transaction of AI-driven data analytics software for our interface solutions group.

Current wording

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 used in investing activities in the first nine months of fiscal 2025 totaled $47.4 million. We generated $48.4 million from sales and maturities and used $40.3 million of cash for purchases of short-term investments in the first nine months of fiscal 2025. We invest our excess cash to seek the highest available return while preserving capital, in short-term investments since excess cash may be required for a business-related purpose. Additions to property, plant and equipment in the first nine months of fiscal 2025 were $17.6 million, and were made to support our operating and development activities. Cash paid for the settlement of net investment hedges totaled $3.1 million in first nine months of fiscal 2025 and in the first nine months of fiscal 2025, we used $34.9 million of cash, net of cash received, for the acquisition of Tignis, which was a strategic transaction of AI-driven data analytics software for our interface solutions segment.

Previous wording

Financing Activities: Financing cash flows consist primarily of net proceeds from the issuance of common stock under our stock option and employee stock purchase plans and repayments of debt. We issue restricted stock units, including performance stock units, and maintain an employee stock purchase plan as components of our overall employee compensation. In the first six months of fiscal 2025, 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, was $0.5 million. We made payments totaling $8.6 million in the first six months of fiscal 2025 for shares of our common stock repurchased under our share repurchase program to be held as treasury stock. Proceeds from borrowings on a revolving line of credit used to finance the purchase of our factory in Malaysia were $8.7 million during the first six months of fiscal 2025. Repayments of debt during the first six months of fiscal 2025 totaled $0.7 million.

Current wording

Financing Activities: Financing cash flows consist primarily of net proceeds from the issuance of common stock under our stock option and employee stock purchase plans and repayments of debt. We issue restricted stock units, including performance stock units, and maintain an employee stock purchase plan as components of our overall employee compensation. In the first nine months of fiscal 2025, 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, was $0.6 million. We made payments totaling $8.6 million in the first nine months of fiscal 2025 for shares of our common stock repurchased under our share repurchase program to be held as treasury stock. Proceeds from borrowings on a revolving line of credit used to finance the purchase of our factory in Malaysia were $8.7 million during the first nine months of fiscal 2025. Repayments of debt during the first nine months of fiscal 2025 totaled $1.1 million.

Previous wording

On October 28, 2021, we announced that our Board of Directors authorized a $70 million share repurchase program. This share repurchase program was effective as of November 2, 2021, and has no expiration date. On October 25, 2022, our Board of Directors authorized an additional $70 million under the share repurchase program. 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. 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. For the six months ended June 28, 2025, we repurchased 432,288 shares of our common stock for $8.6 million to be held as treasury stock. As of June 28, 2025, $22.8 million remained available for us to repurchase shares of our common stock under our share repurchase program.

Current wording

On October 28, 2021, we announced that our Board of Directors authorized a $70 million share repurchase program. This share repurchase program was effective as of November 2, 2021, and has no expiration date. On October 25, 2022, our Board of Directors authorized an additional $70 million under the share repurchase program. 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. 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. For the nine months ended September 27, 2025, we repurchased 432,288 shares of our common stock for $8.6 million to be held as treasury stock. As of September 27, 2025, $22.8 million remained available for us to repurchase shares of our common stock under our share repurchase program.

Previous wording

We have a series of term loans with Japanese financial institutions primarily related to the expansion of our facility in Osaka, Japan. The loans are collateralized by the facility and land, carry interest at rates ranging from 0.05% to 0.95%, and expire at various dates through 2034. At June 28, 2025, the outstanding loan balance was $1.8 million and $0.2 million of the outstanding balance is presented as current installments of long-term debt in our condensed 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 condensed consolidated balance sheets. The term loans are denominated in Japanese Yen and, as a result, amounts disclosed herein will fluctuate because of changes in currency exchange rates.

Current wording

We have a series of term loans with Japanese financial institutions primarily related to the expansion of our facility in Osaka, Japan. The loans are collateralized by the facility and land, carry interest at rates ranging from 0.05% to 0.94%, and expire at various dates through 2034. At September 27, 2025, the outstanding loan balance was $1.6 million and $0.2 million of the outstanding balance is presented as current installments of long-term debt in our condensed 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 condensed consolidated balance sheets. The term loans are denominated in Japanese Yen and, as a result, amounts disclosed herein will fluctuate because of changes in currency exchange rates.

Previous wording

At June 28, 2025, total outstanding borrowings under the Loan Facilities was $6.8 million with $1.1 million of the total outstanding balance being presented as current installments of long-term debt in our condensed 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 condensed 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. The fair value of the debt approximates the carrying value at June 28, 2025.

Current wording

At September 27, 2025, total outstanding borrowings under the Loan Facilities was $6.5 million with $1.1 million of the total outstanding balance being presented as current installments of long-term debt in our condensed 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 condensed 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. The fair value of the debt approximates the carrying value at September 27, 2025.

Previous wording

On December 30, 2024, our wholly owned subsidiary in Malaysia entered into a revolving credit facility with a Malaysian financial institution that provides up to MYR 40 million, of which MYR 37.6 million was subsequently withdrawn. The revolving credit facility was utilized to finance the purchase of our leased facility in Melaka, Malaysia. Interest is due monthly and is calculated based on the lender’s Effective Cost of Funds (“ECOF”) plus a spread of 0.5%. The revolving credit facility is secured by the land and building. At June 28, 2025, $8.9 million was outstanding under the revolving credit facility and the rate of interest was 4.23%. As this revolving credit facility agreement renews monthly, it has been included in short-term borrowings in our condensed consolidated balance sheets. The revolving credit is denominated in Malaysian Ringgits and, as a result, amounts disclosed herein will fluctuate because of changes in currency exchange rates.

Current wording

On December 30, 2024, our wholly owned subsidiary in Malaysia entered into a revolving credit facility with a Malaysian financial institution that provides up to MYR 40 million, of which MYR 37.6 million was subsequently withdrawn. The revolving credit facility was utilized to finance the purchase of our leased facility in Melaka, Malaysia. Interest is due monthly and is calculated based on the lender’s Effective Cost of Funds (“ECOF”) plus a spread of 0.5%. The revolving credit facility is secured by the land and building. At September 27, 2025, $8.9 million was outstanding under the revolving credit facility and the rate of interest was 4.04%. As this revolving credit facility agreement renews monthly, it has been included in short-term borrowings in our condensed consolidated balance sheets. The revolving credit is denominated in Malaysian Ringgits and, as a result, amounts disclosed herein will fluctuate because of changes in currency exchange rates.

Previous wording

As a result of our acquisition of Kita, we assumed a series of revolving credit facilities with various financial institutions in Japan. The credit facilities renew monthly and provide Kita with access to working capital totaling up to 960 million Japanese Yen of which 135 million Japanese Yen is drawn. At June 28, 2025, total borrowings outstanding under the revolving lines of credit were $0.9 million. As these credit facility agreements renew monthly, they have been included in short-term borrowings in our condensed consolidated balance sheets.

Current wording

As a result of our acquisition of Kita, we assumed a series of revolving credit facilities with various financial institutions in Japan. The credit facilities renew monthly and provide Kita with access to working capital totaling up to 960 million Japanese Yen of which 120 million Japanese Yen is drawn. At September 27, 2025, total borrowings outstanding under the revolving lines of credit were $0.8 million. As these credit facility agreements renew monthly, they have been included in short-term borrowings in our condensed consolidated balance sheets.