Financial Analysis

12. Contingencies From time to time we are involved in various legal proceedings, examinations by various tax authorities and claims that have arisen in the ordinary course of our business. The outcome of any litigation is inherently uncertain. While there can be no assurance, we do not believe at the present time that the resolution of these matters will have a material adverse effect on our assets, financial position or results of operations.

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3. Borrowings and Credit Agreements The following table is a summary of our borrowings ( in thousands) : June 27, December 27, 2026 2025 Convertible notes $ 287,500 $ 287,500 Revolving Credit Facility 9,667 9,360 Construction loan-Cohu GmbH 5,532 6,252 Bank Term Loans-Kita 1,395 1,530 Lines of Credit 309 447 Total debt 304,403 305,089 Less: financing fees and discount (8,172 ) (9,012 ) Less: current portion (11,182 ) (11,051 ) Total long-term debt $ 285,049 $ 285,026 Convertible Senior Notes Due 2031 On September 29, 2025, we issued $287.5 million aggregate principal amount of 1.50% convertible senior notes due 2031. The Notes include the full exercise by the initial purchasers on September 25, 2025, of their option to purchase up to an additional $27.5 million principal amount of the Notes. The Notes are senior unsecured obligations and bear interest at a coupon rate of 1.50% per annum, with interest payable semiannually in arrears on January 15 and July 15 of each year, beginning on January 15, 2026. The Notes will mature on January 15, 2031, unless earlier converted, redeemed or repurchased in accordance with their terms. Prior to the close of business on the business day immediately preceding October 15, 2030, noteholders will have the right to convert their Notes only upon the occurrence of certain events. On or after October 15, 2030, noteholders may convert all or any portion of their Notes at any time at their election until the close of business on the second schedul …

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Three Months Ended Six Months Ended Disaggregated Net Sales June 27, 2026 June 28, 2025 June 27, 2026 June 28, 2025 Systems $ 70,662 $ 39,643 $ 120,102 $ 75,285 Non-systems 78,340 68,037 154,019 129,192 Total net sales $ 149,002 $ 107,680 $ 274,121 $ 204,477 Three Months Ended Six Months Ended Disaggregated Net Sales June 27, 2026 June 28, 2025 June 27, 2026 June 28, 2025 Malaysia $ 26,547 $ 10,847 $ 47,386 $ 29,009 Taiwan 19,908 22,581 34,726 28,868 Philippines 17,704 15,803 34,490 28,989 China 17,617 16,971 31,124 31,099 Rest of the World 67,226 41,478 126,395 86,512 Total net sales $ 149,002 $ 107,680 $ 274,121 $ 204,477

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6. Employee Stock Benefit Plans On May 15, 2026, our stockholders approved the Cohu, Inc. 2026 Equity Incentive Plan (2026 Plan). The 2026 Plan replaced the Cohu, Inc. 2005 Equity Incentive Plan (2005 Plan), under which no further awards may be granted. Outstanding awards under the 2005 Plan remain in effect under their original terms, and any shares that return to the share reserve through forfeiture, expiration, or cash settlement become available for issuance under the 2026 Plan. The initial number of common shares that are reserved for issuance pursuant to equity awards granted under the 2026 Plan shall not exceed 3.4 million plus any Returning Shares (as defined in the 2026 Plan). On May 15, 2026, our stockholders also approved an amendment to our 1997 Employee Stock Purchase Plan (ESPP), which increased the number of ESPP shares that may be issued by 600,000. Our 2026 Plan and our ESPP are broad-based, long-term retention programs intended to attract, motivate, and retain talented employees as well as align stockholder and employee interests. Awards that may be granted under the 2026 Plan include, but are not limited to, non-qualified and incentive stock options, restricted stock units, and performance stock units. We settle employee stock option exercises, employee stock purchase plan purchases, and the vesting of restricted stock units and performance stock units with newly issued common shares. On June 27, 2026, there were 3,430,546 shares available for future equity …

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9. Income Taxes We account for income taxes in accordance with ASC Topic 740, Income Taxes (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 in the U.S., changes in uncertain tax benefit positions, changes to valuation allowances, the accrual of taxes on unremitted income of our foreign subsidiaries, state taxes, and foreign withholding taxes. 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. 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 Germany, the Philippines, Malaysia, Taiwan, and California. We believe our financial statement accruals for income taxes are appropriate. Companies are required to assess whether a valuation allowance …

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Recent Accounting Pronouncements Recently Issued Accounting Pronouncements In November 2024, the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses , requiring public entities to disclose additional information about specific expense categories in the notes to the financial statements on an interim and annual basis. The FASB subsequently issued ASU 2025-01, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date , to clarify the effective date of ASU 2024-03. The guidance is effective for fiscal years beginning after December 15, 2026, and for interim periods beginning after December 15, 2027, with early adoption permitted. We are currently evaluating the impact of adopting the new standard; however, we do not expect it to have a material impact on Cohus financial statements other than enhanced disclosures. …

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4. Restructuring Charges Poway Volume Manufacturing Transition 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. These changes have allowed us to better utilize our corporate infrastructure, drive improvements in inventory management, optimize our warehousing and better support our long-term goals. Total pretax charges related to the Poway volume manufacturing transition for the first six months ended June 28, 2025 were $1.2 million. The Poway volume manufacturing transition was substantially complete as of the first quarter of fiscal 2026, and costs incurred during the six months ended June 27, 2026, were insignificant. The following table summarizes the activity within the restructuring related accounts for the Poway volume manufacturing transition during the first six months ended June 28, 2025 (in thousands) : Severance and Other Exit Other Payroll Costs Total Balance, December 28, 2024 $ - $ - $ - Costs accrued 766 458 1,224 Amounts paid or charged (243 ) (340 ) (583 ) Balance, June 28, 2025 $ 523 $ 118 $ 641 2025 Strategic Restructuring On February 19, 2025, we approved and began executing a strategic restructuring program designed to reposition our organization and improve our cost structure (the 2025 Restructuring Program). As part of this program, we consolidated certain of our operations in La Chaux-de-Fonds, Switzerland, and Kolbermoor, Ger …

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10. Segment and Geographic Information We applied the provisions of ASC 280, which sets forth a management approach to segment reporting and establishes requirements to report selected segment information quarterly and to report annually entity-wide disclosures about products, major customers and the geographies in which the entity holds material assets and reports revenue. An operating segment is defined as a component that engages in business activities whose operating results are reviewed by the CODM, which is our Chief Executive Officer Luis A. Muller, and for which discrete financial information is available. We have determined that our three identified operating segments are: TH, ST and IS. Our three 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, which derives revenue from the design and manufacture of equipment and components used in the testing of semiconductors. The CODM assesses performance of the Semiconductor Test & Inspection segment and decides how to allocate resources based on income (loss) before taxes. The table below summarizes selected financial information for our single reportable segment. Three Months Ended Three Months Ended Six Months Ended Six Months Ended June 27, June 28, June 27, June 28, (in thousands) 2026 2025 2026 2025 Net sales $ 149, …

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1. Summary of Significant Accounting Policies Basis of Presentation Our fiscal years are based on a 52- or 53-week period ending on the last Saturday in December. The condensed consolidated balance sheet at December 27, 2025, has been derived from our audited financial statements at that date. The interim condensed consolidated financial statements as of June 27, 2026, (also referred to as the second quarter of fiscal 2026 and the first six months of fiscal 2026) and June 28, 2025, (also referred to as the second quarter of fiscal 2025 and the first six months of fiscal 2025) are unaudited. However, in managements opinion, these financial statements reflect all adjustments (consisting only of normal, recurring items) necessary to provide a fair presentation of our financial position, results of operations and cash flows for the periods presented. Both the three- and six-month periods ended June 27, 2026, and June 28, 2025, were comprised of 13 and 26 weeks, respectively. Our interim results are not necessarily indicative of the results that should be expected for the full year. The condensed consolidated financial statements presented herein reflect estimates and assumptions made by management at June 27, 2026, and for the three- and six-month periods ended June 27, 2026. For a better understanding of Cohu, Inc. and our financial statements, we recommend reading these interim condensed consolidated financial statements in conjunction with our audited financial statements for …

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8. Equity Common Stock On May 15, 2026, our stockholders approved an amendment to Cohus Amended and Restated Certificate of Incorporation to increase the number of authorized shares of common stock from 90,000,000 to 150,000,000 shares. Accordingly, on May 15, 2026, we filed with the Secretary of State of the State of Delaware an Amended and Restated Certificate of Incorporation implementing the approved changes (the Restated Certificate), and the Restated Certificate was effective as of that date. Capped Call Transactions In connection with the Notes offering described in Note 3, Borrowings and Credit Agreements, on September 24, 2025, we entered into privately negotiated capped call transactions (the Base Capped Call Transactions) with an affiliate of one or more of the initial purchasers of the Notes and certain other financial institutions (the Option Counterparties). In addition, on September 25, 2025, in connection with the initial purchasers exercise in full of their option to purchase additional Notes, we entered into additional capped call transactions (the Additional Capped Call Transactions, and, together with the Base Capped Call Transactions, the Capped Call Transactions) with each of the Option Counterparties. The Capped Call Transactions are separate from the Notes and do not change the holders' rights under the Notes. Holders of the Notes do not have any rights with respect to the Capped Call Transactions. The Capped Call Transactions are generally expected to …

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