Note 3 - Sale-leaseback of Poway Facility

12 Months Ended

Dec. 26, 2015

Notes to Financial Statements

Sale Leaseback Transaction Disclosure [Text Block]

3.     Sale-leaseback of Poway Facility

On December 4, 2015, we completed the sale of our headquarters facility located in Poway, California (the “Poway Facility”) for $34.1 million. After payment of commissions and other fees associated with the sale we realized net cash proceeds of approximately $33.3 million which resulted in a total gain of $18.5 million. Concurrent with the closing of the sale, we entered into two leases. One lease, with a ten-year term through 2025, provides for base rent of approximately $1.6 million per annum, with 3% annual adjustments for inflation and a pro rata share of property operating costs. The lease, covers approximately 43% of the Poway Facility that Cohu and our wholly owned subsidiary, Delta Design, Inc. will consolidate into. This lease also contains two five-year renewal options. The other lease is for a term of one year, provides for base rent of approximately $0.6 million and a pro rata share of property operating costs, and covers the balance of the Poway Facility. The transaction allows us to reduce the utilized space within the Poway Facility to better fit our current and anticipated future needs, as we transition manufacturing activities to Asia.

We accounted for this transaction in accordance with ASC subtopic 840-40,

Sale-leaseback transactions

, and recognized a gain on the sale-leaseback totaling $3.2 million. The remaining $15.3 million portion of the gain not recognized at the time of sale has been deferred and will be recognized on a straight-line basis over the 10-year term lease in line with the recognition of rental expense related to the lease.