8-KFinancial Events

TERADYNE, INC 8-K Report, Material Impairment (Sep 5, 2008)

Filed September 5, 2008For Securities:TER

Summary

Teradyne, Inc. (TER) filed an 8-K on September 5, 2008, reporting a material impairment charge related to the sale of two buildings in North Reading, Massachusetts. The sale, completed on September 4, 2008, is part of Teradyne's ongoing strategy to reduce its quarterly breakeven level and consolidate manufacturing with an outsourced partner. The company received net cash proceeds of approximately $26 million from the sale. However, this transaction will result in an estimated non-cash impairment charge of approximately $27 million to be recorded in the third quarter of fiscal 2008. Teradyne is leasing back portions of both buildings, with a nine-month lease on one and a five-year lease on approximately 45% of the second building's square footage.

Key Highlights

  • 1Teradyne sold two buildings in North Reading, MA, on September 4, 2008.
  • 2The sale is part of a plan to reduce quarterly breakeven levels and consolidate manufacturing.
  • 3Net cash proceeds from the sale amounted to approximately $26 million.
  • 4An estimated non-cash impairment charge of approximately $27 million will be recorded in Q3 2008.
  • 5The company is executing sale-leaseback agreements for portions of both sold buildings.
  • 6A nine-month leaseback is in place for one building.
  • 7A five-year leaseback is in place for approximately 45% of the second building's space.

Frequently Asked Questions

The 8-K filing is primarily to report a material impairment charge resulting from the sale of two company buildings as part of Teradyne's ongoing strategy to reduce its breakeven costs and streamline operations through manufacturing consolidation.

Teradyne received approximately $26 million in net cash proceeds from the sale of the two buildings.

The sale is expected to result in a non-cash impairment charge of approximately $27 million, which will be recorded in the third quarter of fiscal 2008. While cash was generated, the accounting charge reflects a reduction in the book value of the assets.

Yes, Teradyne will continue to use portions of both buildings through leaseback agreements. One building will be leased back for nine months, and approximately 45% of the square footage of the second building will be leased back for five years.