Cohu Reports Second Quarter 2004 Operating Results.

POWAY, Calif. -- Cohu, Inc. (NASDAQ:COHU) today announced that sales were $47.3 million for the second quarter ended June 30, 2004 compared to $32.1 million for the second quarter of 2003 and $35.9 million for the first quarter of 2004. Net income for the second quarter of 2004 was $6.9 million, or $0.32 per share compared to net income of $4.1 million or $0.19 per share for the second quarter of 2003 and net income of $2.1 million or $0.10 per share for the first quarter of 2004. Included in the second quarter 2003 results were a $7.9 million gain related to the sale of land and a $2.5 million investment writedown.

Net sales for the first six months of 2004 were $83.3 million with net income of $9.0 million and net income per share of $0.41 compared to net sales of $63.2 million with net income of $2.7 million and net income per share of $0.13 for the first six months of 2003.

Orders for the second quarter of 2004 were $59.9 million compared to $58.2 million for the first quarter of 2004. Backlog was $72.4 million at June 30, 2004 compared to $59.8 million at March 31, 2004. Second quarter 2004 sales of semiconductor test handling equipment accounted for 83% of total sales. Sales of television cameras and related equipment were 11% of sales and metal detection and microwave communications equipment contributed 6% of sales.

James A. Donahue, President and Chief Executive Officer, stated, "This was a great quarter for Cohu as sales increased 48% year over year and 32% sequentially. We are especially pleased with the significant improvement in operating income, resulting primarily from favorable product mix and improved gross margin in our IC test handling business. Orders were very strong as we saw demand increase across our semiconductor equipment product line, from a broader base of customers."

Donahue concluded, "We are encouraged by the breadth of the recovery. The investments we've made in new product development, proprietary technologies and manufacturing infrastructure put us in an excellent position to benefit from improved business conditions. Our balance sheet remains strong, with cash of nearly $116 million and no debt."

Cohu's Board of Directors approved a quarterly cash dividend of $0.05 per share payable on November 5, 2004 to shareholders of record on September 10, 2004. Cohu has paid consecutive quarterly cash dividends since 1977.

Certain matters discussed in this release including statements concerning Cohu's expectations of industry conditions and 2004 operations are forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from those projected or forecasted. Such risks and uncertainties include, but are not limited to, the concentration of our revenues in a limited number of customers; intense competition in the semiconductor test handler industry; inventory write-offs; failure to obtain customer acceptance and recognize revenue; the cyclical and unpredictable nature of capital expenditures by semiconductor manufacturers; Cohu's ability to convert new products under development into production on a timely basis, support product development and meet customer delivery and acceptance requirements for next generation equipment; difficulties in integrating acquisitions and new technologies and other risks addressed in 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 the information in this release.

Cohu is a leading supplier of test handling solutions used by the global semiconductor industry as well as a supplier of closed circuit television, metal detection and microwave communications equipment.

Cohu will be conducting their conference call on Thursday, July 22, 2004 at 2:00 p.m. Pacific Time. The call will be webcast at www.cohu.com. Replays of the call can be accessed at www.cohu.com.

(Financial Tables Follow)

Cohu, Inc.
Condensed Consolidated Statements of Income
(in thousands, except per share amounts) (unaudited)

                                         Three Months     Six Months
                                            Ended            Ended
                                           June 30,         June 30,
                                         2004    2003    2004    2003
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Net sales                             $47,337 $32,084 $83,276 $63,163
Cost and expenses:
Cost of sales                          26,425  21,109  47,442  41,805
Research and development                6,576   5,556  12,760  12,494
Selling, general and administrative     7,230   6,028  14,090  11,943
----------------------------------------------------------------------
                                       40,231  32,693  74,292  66,242
----------------------------------------------------------------------
Income (loss) from operations           7,106    (609)  8,984  (3,079)
Gain from sale of land                      -   7,873       -   7,873
Investment impairment writedown             -  (2,500)      -  (2,500)
Interest income                           336     442     956   1,142
----------------------------------------------------------------------
Income before income taxes              7,442   5,206   9,940   3,436
Income tax provision                      500   1,100     900     700
----------------------------------------------------------------------
Net income                             $6,942  $4,106  $9,040  $2,736
----------------------------------------------------------------------
Income per share:
 Basic                                  $0.32   $0.19   $0.42   $0.13
 Diluted                                $0.32   $0.19   $0.41   $0.13
Weighted average shares used in
 computing income per share:
 Basic                                 21,484  21,098  21,452  21,005
 Diluted                               21,978  21,631  22,026  21,457
----------------------------------------------------------------------

Condensed Consolidated Balance Sheets
(in thousands) (unaudited)
                                                 June 30,    Dec. 31,
                                                   2004        2003
Assets:
Current assets:
Cash and investments                             $115,613    $107,620
Accounts receivable                                39,349      25,578
Inventories                                        38,634      31,636
Deferred taxes and other                            6,539       6,704
                                                 ---------------------
                                                  200,135     171,538
Note receivable                                         -       8,978
Property, plant & equipment, net                   30,327      30,683
Goodwill                                            8,340       8,340
Other assets                                          971       1,191
----------------------------------------------------------------------
  Total assets                                   $239,773    $220,730
----------------------------------------------------------------------
Liabilities & Stockholders' Equity:
Current liabilities:
Deferred profit                                    $9,831      $4,132
Other current liabilities                          27,533      22,685
                                                  --------------------
                                                   37,364      26,817
Deferred taxes and other noncurrent liabilities     1,701       1,683
Stockholders' equity                              200,708     192,230
----------------------------------------------------------------------
  Total liabilities & equity                     $239,773    $220,730
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For press releases and other information of interest to investors, please visit Cohu's website at www.cohu.com.