Greetings, and welcome to the Cohu, Inc's Fourth Quarter and Full Year 2015 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions]. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Jeff Jones. Please go ahead sir.

Thank you. Good afternoon and welcome to our discussion of Cohu’s most recent financial results. I am joined today by our President and CEO, Luis Müller. Following our opening remarks, we’ll provide details of our performance for both the fourth quarter and full year 2015 as well as our outlook for the first quarter of this year. If you need a copy of our earnings release, you may obtain one from our website, cohu.com, or by contacting Cohu Investor Relations. Before we begin, you should all be aware that during the course of this conference call, we will make forward-looking statements reflecting management’s current expectations concerning the company’s future business. These statements are based on current information that we have assessed, but which by its nature is subject to rapid and even abrupt changes. Forward-looking statements include our comments regarding the company’s expectations for industry conditions, future operations, financial results, market share gains, expansion into new markets, and any comments we make about the company’s future in response to your questions. Our comments speak only as of today, February 11, 2016 and the company assumes no obligation to update these comments. We encourage you to review the forward-looking statement section of the earnings release as well as Cohu’s filings with the Securities and Exchange Commission, including the most recently filed Form 10-K and Form 10-Q. Cohu assumes no obligation to update these statements as a result of developments occurring after this call. Further, our comments and responses to any questions will not make reference to any specific customers, as we are precluded from disclosing such information by our non-disclosure agreements. Now I’ll turn it over to Luis. Luis A. Müller: Thanks, Jeff and good afternoon everyone. We delivered strong results in a challenging environment and another sequential increase in orders…

Thanks Luis. Before I move into Q4 financial details and our Q1 outlook, I’d like to touch on a few highlights from 2015. Cohu had strong cash generation from operations of approximately 22 million. We also realized 33.3 million of cash from the sale of our San Diego facility and approximately 5 million from the sale of our last non-semiconductor equipment business BMS. Cohu returned to 6.2 million to shareholders through quarterly cash dividends. Non-GAAP gross margin for the year was 35.3% and comparable to 2014 despite challenging handler market conditions in 2015. Gross margin is benefitting from the expansion of Cohu’s Asia manufacturing which has enabled us to reduce our footprint in the U.S. and monetize the San Diego facility. Throughout 2015 we achieved non-GAAP profits each quarter in line with our near term financial model and Q4 was Cohu’s eighth consecutive quarter of profitability. Adjusted EBITDA was 24 million or 9% of sales. For Q4, the GAAP to non-GAAP adjustments include approximately 1.7 million of stock based compensation expense, 1.8 million of purchased intangible amortization expense, and 400,000 of restructuring cost. My comments are based on Cohu’s non-GAAP results which exclude the impact of these items. The reconciliation of non-GAAP measures to equivalent GAAP measures can be found in our earnings release located on the investor section of Cohu’s website. As a reminder in 2014 we sold our video camera business and on June 10, 2015 we sold our microwave communications business. The operating results for these businesses are presented as discontinued operations with all prior period amounts being reclassified. Unless otherwise noted all amounts discussed on this call are from continuing operations. Now moving into the Q4 results, sales were $63.5 million, in line with the guidance and profitability was better than expected. Core customers each represented…

Thank you. [Operator Instructions]. Our first question today is coming from Craig Ellis from B. Riley. please proceed with your question.

Hi, thanks for taking the question. I was hoping Luis you can just start by going into a little bit more detail in terms of what you’re seeing with customer forecast and orders to start the year, you had mentioned something in the transcript and there were some good end market color on 2015 and some of the momentum that’s persisting into the year but further color on the ordering front would be helpful? Luis A. Müller: Sure I mean it’s a little difficult to predict too far out in this industry as you know, but what we’re seeing right now is very much in line with a typical seasonal pattern for the first half of the year. We have a pretty -- supply business across many end markets and as I mentioned strongest in the automotive that has a secular trends. And I think more importantly we are hard working here to increase our addressable market so we can deliver profitable growth and not be at the mercy of macroeconomics.

On that point you mentioned that you were interested in acquisitions for partnerships, can you provide some further color on where acquisitions make more sense and where partnerships might be a better pass for Cohu? Luis A. Müller: That will vary on a case by case basis Craig and beyond doubt I would say, we don’t typically provide any more comments on acquisitions per say. But the differentiation is a case by case basis.

Okay and then I’ll just follow up with Jeff on a gross margin question. Just looking at the gross margin guidance in the quarter it looks like it’s related to products that were built in the fourth quarter and shifting in one quarter rather than the pace of the manufacturing transition over to Malaysia, is that the right way or do I have things turned around here?

Craig, that’s the right read. Those units were built Q4 expected to deliver in Q4 but they are now being shipped in Q1.

Thanks guys, congratulations on a nice performance. Luis A. Müller: Okay. Thank you.

Thanks. Our next question is coming from Edwin Mok from Needham & Company. Please proceeds with your question.

Hey guys, thanks for taking my question. So first thing is on those systems that you mentioned that was going to be built, I guess now shipped in the first quarter how much was that cost, a short fall that you make up by seeing growth in some of that? Luis A. Müller: Not sure I totally understood that question Edwin, but I can tell you that again these are the new eclipse units that we manufactured in Q4. They are manufactured in San Diego at a higher cost. Looking at the margin for Q2 of 32% that is below the model, financial model for that level of revenue. And the impact of these handlers is anywhere -- is about 150 basis points.

I was trying to get some -- since you were expecting those eclipse handler to be shipped in the fourth quarter I was expecting your previous guidance of 63 million in the fourth quarter would have included revenue from that but then you meet your or you slightly beat that guidance even those there was a slip in the first quarter so you might have seen strength on that, I am trying to understand the puts and takes here?

That you’re absolutely right, that revenue dip we made up that revenue with higher sales of both the gravity feed products and the turret based products.

Got it, okay great, thanks for clarifying that. And then for the quarter any color you can provide on booking. I think Luis you may have said that bookings increased sequentially and so maybe some color that looked at your goal of about 1.0 this quarter and if not can you provide booking for the full year and I think you talked about strengthening -- in the first quarter, are you anticipate stronger bookings for the first quarter? Luis A. Müller: Yes, we are definitely going into the first quarter with a lot of momentum, interest from customers in our products, and a strong forecast going into Q1.

I see, so no book to bill number, you cannot say book was over 1.0 for the quarter and…?

We haven't, Edwin, we haven't communicated book to bill in prior quarters. It’s not something that we talk about.

Okay. That’s fair. On your commentary about the auto industry, I noticed that as percentage of total as well since your total revenue is down, has the negative [ph] auto has also declined a few points this year versus last year. Is this why it has -– it’s probably one of the weaker performing end markets for you guys in 2015, what contributed to that and your comments suggested that you can create hot growth area for this in 2016, what turned that ship around? Luis A. Müller: Yes. You're correct in the observation. It was about 45% of our total systems in 2014 and 40% in 2015. As you may recall and I made these comments in prior quarters, we saw with the consolidation of two major customers in the auto space, in the automotive market last year, that as usual there was a pause or a delay in orders in few of those consolidations completed, which as you know, a major one has just closed at the beginning of this last December here, few months ago. So that was a key contributor to sort of a slow down or a hold up in the automotive market through a good portion of last year.

I see. So given that these deals are done we expect the ordering trend and the business to be more stabilized plus the growth of auto when we have on order to drive profit share? Luis A. Müller: Exactly, that’s exactly correct. I would expect the -– now that this is behind us, that we're going to see more of a normal pattern from those customers and in general from the automotive market.

Okay. Last question and I’ll let the other guys ask. So talking about now end market mobility, there's this fear on investor that weakness in the high-end mobile handset will impact not just the handset guys but also supply chain. And you guys have, I think your mobile business actually grew last year and you have these new wins. Can you give us like the puts and take on that, have you seen any slow down or impact from common three -- the large mobile handset guys and there's a high-end market, have you seen any impact to your business and how are you going to maybe off grow that in fact the market is slowing?

Yes. When we described the mobile market that means a variety of applications for us from the high end mobile processor to the RF content, to power and management ICs, free [ph] semiconductors, so it’s a very broad application base, not necessarily tied to only high-end smart phones but across the full spectrum. We continue to do well and capture new customers and new sockets in socket applications at existing customers throughout last year. So I think the momentum for us continues to be positive as we exit 2015, into 2016 in the mobility market.

Alright, I actually had brief one just on the contactor, with the equity investment in place, how much was contactor revenue, if you can talk about high level roughly how much was contactor revenue for last year and how do you kind of think about that business, like kind of look out three to five year, how do you think that business will transpire?

I’ll answer at least the first part of it Edwin. So contactor revenue for the year was about 6% and Luis mentioned in his comments about all the sort of ground work that we're doing for meaningful revenue growth in 2016 and beyond. In terms of anticipated growth rate, I don’t know if we've shared those before. We shared at the Analyst day that we have a double-digit actually on the 20% growth rate projection revenue for contactors over a mid-term. So it is definitely an area of focus as I mentioned in my prepared remarks and we should see substantial growth from the numbers that we had last year, but just as common.

Great. That’s all I have. Thank you.

And our next question is coming from Rick Ryan from Dougherty & Company. Please proceed with your questions.

Thank you. Hey Luis I am not sure if I heard your utilization commentary coming out of Q3 going into Q4 and I think it would drop from low 80s or something in Q2? Luis A. Müller: Yes, utilization was at above 77% at the end of Q3 and it increased a couple of points to 79% at the end of Q4.

Okay and you mentioned evaluation on the WLP probe, has that started yet or could you give a little more color on that evaluation and has the first order shipped yet or when do you expect shipment on that? Luis A. Müller: I would rather save that discussion for when we -- after we actually publicly introduce the product to market.

Okay and Jeff the customer concentration for Q4 do you have what that was for the year?

I do, that was two customers, one was computing and the other one was automotive.

Okay great. Thank you.

Thanks. The next question today comes from David Duley from Steelhead. Please proceed with your questions.

Hey, thanks for taking my questions. Typically when you see some significant weakness in the back half of the calendar year which is typically a strong seasonal period for you, just following recovery is you snap back pretty strongly, do you think that there is any reason that we wouldn’t see that type of behavior coming out of this particular downturn in the second half of last year? Luis A. Müller: That’s perhaps a good question asked to the semiconductor manufacturers because ultimately they are the ones that drive the demand for our products. And let's say they probably have at least a few months visibility ahead of our visibility. So I don’t know how to answer that question other than with speculation and I don’t have facts beyond our time horizon.

Has that in the past, let me ask in a different way, in the past where you have seen this type of behavior of make a slowdown in the second half of the year with seasonal uptick that you see coming out of it, have they been larger than normal or do you expected normal seasonal uptick from kind of the market down 20%, there has got to be some snap back, historically has that been the pattern? Luis A. Müller: Yes, you are correct. I mean this industry moves on so famous stick and split and when you stick for too long eventually the split is faster that’s your snap back effect. It’s the typical behavior in the kind of capacity equipment based business.

Major mobility platform is coming out new calendar year and it is not just an upgrade from the previous ones that both guys are putting out new phones, we’ve seen the test guys particularly Paradigm see a significant increase in the tick tock, necessity using your -– do you see that type of phenomenon with your mobility business as well? Luis A. Müller: Yes, I mean if you have an increase in test capacity that generally applies to both the electronic components of tester as well the automation component, the progress [ph] and the handlers nevertheless handler orders usually lag testers by a few months.

And did you mention that you received a big subsystem order this quarter or a subsystem order this quarter that’s usually for the computing application process is there CPU type product is correct? Luis A. Müller: Yes, we have received orders in beginning of this quarter for thermal subsystems as I mentioned in my prepared remarks here and these are used for essentially testing of processors.

Okay, thank you so much. And I imagine that was one of the reasons why your orders were up sequentially? Luis A. Müller: Well the comment I just made here was actually Q1, starting at the beginning of this quarter of Q1 and…

Oh, I see. So you defer more of this more to Q1 not in Q1. Luis A. Müller: Actually it is related to Q4.

Okay. Thank you.

Thank you. [Operator Instructions]. Our next question today is coming from Patrick Ho from Stifel. Please proceed with your question.

Hi, there. This is actually Brian on for Patrick. Thanks for taking my question. First question, maybe is can you provide a rough idea of how much the overall test handler market contracted in 2015 and also explain your market expectations for 2016?

Sure. Well, first of all we don’t have hard facts on 2015 overall market yet. But as I mentioned in the beginning, we do estimate that the test handler contracted about 20% year-on-year in 2015. Regarding the second part of your question here, 2016 is very difficult to predict a full year ahead in this industry and all I can really say is that near-term we are seeing an increasing customer interest in auto momentum and that suggests a typical seasonal pattern for the first half of the year. We do have a business that’s pretty diversified, so I think I can only speak mostly about this momentum that we're seeing now for the first half of 2016.

Okay. Thanks for some of the color there. And just a follow up on the wafer-level package prober, I think that someone asked about earlier and you disclosed in the release. Just how normal is it to book a system prior to formal introduction and what does that say in terms of your typical booking policies about the revenue recognition, timing is it typically sort of a six-month turn around or maybe any discussions you can provide there? Luis A. Müller: Yes. On any new products, Brian there will be up to a six-month timeframe typically before the customer is satisfied with the performance of the machine and that it meets their criteria. So I think six months is a pretty typical standard timeframe based on the experience before we can recognize revenue on delivery of a new unit.

Okay. Great, thank you.

Thank you. We've reached the end of our question–and-answer session. I’d like to turn the floor back over to management at this time.

Okay. Thank you for joining us on today’s call. And we look forward to speaking with you during one of our marketing trips or when we report our first quarter 2016 results. Have a good day.

Thank you. That does conclude today’s teleconference. You may disconnect your lines at this time and have a wonderful day. We thank you for your participation today.