Management believes the presentation of these non-GAAP financial measures, when taken together with the corresponding GAAP financial measures, provides meaningful supplemental information regarding the Company's operating performance. Our management uses these non-GAAP financial measures in assessing the Company's operating results, as well as when planning, forecasting and analyzing future periods and these non-GAAP measures allow investors to evaluate the Company’s financial performance using some of the same measures as management. Management views share-based compensation as an expense that is unrelated to the Company’s operational performance as it does not require cash payments and can vary in amount from period to period and the elimination of amortization charges provides better comparability of pre and post-acquisition operating results and to results of businesses utilizing internally developed intangible assets. Management has initiated certain restructuring activities including employee headcount reductions and other organizational changes to align our business strategies in anticipation of the completion of the merger with Xcerra. Restructuring costs have been excluded because such expense is not used by Management to assess the core profitability of Cohu’s business operations. Manufacturing transition costs relate principally to employee severance expenses incurred as a result of moving certain manufacturing activities to Asia as part of our cost reduction efforts and employee severance are costs incurred in conjunction with the termination of certain employees to streamline our operations and reduce costs. Management has excluded these costs primarily because they are not reflective of the ongoing operating results and they are not used to assess ongoing operational performance. Acquisition costs, fair value adjustment to contingent consideration and inventory step-up costs have been excluded by management as they are unrelated to the core operating activities of the Company and the frequency and variability in the nature of the charges can vary significantly from period to period. Excluding this data provides investors with a basis to compare Cohu’s performance against the performance of other companies without this variability. However, the non-GAAP financial measures should not be regarded as a replacement for (or superior to) corresponding, similarly captioned, GAAP measures. The presentation of non-GAAP financial measures above may not be comparable to similarly titled measures reported by other companies and investors should be careful when comparing our non-GAAP financial measures to those of other companies.

(a)				10.9% and 11.2% of net sales, respectively.
(b)				To eliminate compensation expense for employee stock options, stock units and our employee stock purchase plan.
(c)				To eliminate the amortization of acquired intangible assets.
(d)				To eliminate restructuring costs incurred during third quarter of 2018 in anticipation of the closing of the Xcerra acquisition.
(e)				To eliminate manufacturing transition costs.
(f)				To eliminate fair value adjustment to contingent consideration related to the acquisition of Kita.
(g)				To eliminate professional fees and other direct incremental expenses incurred related to the acquisitions.
(h)				To eliminate the inventory step-up costs incurred related to acquisitions.
(i)				16.2% and 15.4% of net sales, respectively.
(j)				To adjust the provision for income taxes related to the adjustments described above based on applicable tax rates.
(k)				All periods presented were computed using the number of GAAP diluted shares outstanding.

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