This excerpt taken from the ATML 10-K filed Jun 8, 2007.
Assets Held for Sale and Impairment Charges
Under SFAS No. 144 Accounting for the Impairment or Disposal of Long-Lived Assets, we assess the recoverability of long-lived assets with finite useful lives whenever events or changes in circumstances indicate that the Company may not be able to recover the assets carrying amount. The Company measures the amount of impairment of such long-lived assets by the amount by which the carrying value of the asset exceeds the fair market value of the asset, which is generally determined based on projected discounted future cash flows or appraised values. We present impairment charges as a separate line item within operating expenses in our consolidated statements of operations. The Company classifies long-lived assets to be disposed of other than by sale as held-and-used until they are disposed. The Company reports long-lived assets to be disposed of by sale as held-for-sale and recognizes those assets on the consolidated balance sheet at the lower of carrying amount or fair value less cost to sell.
We classified the assets and liabilities of the North Tyneside, United Kingdom, facility and the assets of the Irving, Texas, facility as held-for-sale during the quarter ended December 31, 2006. Certain of our debt facilities contain terms that subject us to financial and other covenants. We were not in compliance with covenants requiring timely filing of U.S. GAAP financial statements as of December 31, 2006, and, as a result, requested waivers from our lenders to avoid default under these facilities. Waivers were received from all but one lender, and as a result of not receiving a waiver from that lender, we reclassified approximately $23 million of non-current liabilities related to assets held for sale to current liabilities related to assets held for sale on the consolidated balance sheet as of December 31, 2006.
The following table details the items which are reflected as assets and liabilities held for sale in the consolidated balance sheet as of December 31, 2006 (in thousands):