This excerpt taken from the CREE 10-Q filed Apr 22, 2009.
Guidance on Fair Value Measurements and Impairments
The Company intends to adopt the FASBs recently issued (April 2009) FSP FAS 157-4 Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly in its fourth quarter of fiscal 2009. This FSP relates to determining fair values when there is no active market or where the price inputs being used represent distressed sales. It reaffirms what SFAS 157 states is the objective of fair value measurementto reflect how much an asset would be sold for in an orderly transaction (as opposed to a distressed or forced transaction) at the date of the financial statements under current market conditions. Specifically, it reaffirms the need to use judgment to ascertain if a formerly active market has become inactive and in determining fair values when markets have become inactive.
The Company intends to adopt the FASBs recently issued (April 2009) FSP FAS 107-1 and APB 28-1 Interim Disclosures about Fair Value of Financial Instruments in its fourth quarter of fiscal 2009. This FSP relates to fair value disclosures for any financial instruments that are not currently reflected on the balance sheet of companies at fair value. Prior to issuing this FSP, fair values for these assets and liabilities were only disclosed once a year. The FSP now requires these disclosures on a quarterly basis, providing qualitative and quantitative information about fair value estimates for all those financial instruments not measured on the balance sheet at fair value.
The Company intends to adopt the FASBs recently issued (April 2009) FSP FAS 115-2 and FAS 124-2 Recognition and Presentation of Other-Than-Temporary Impairments in its fourth quarter of fiscal 2009. This FSP addresses other-than-temporary impairments and is intended to bring greater consistency to the timing of impairment recognition, and provide greater clarity to investors about the credit and
noncredit components of impaired debt securities that are not expected to be sold. The measure of impairment in comprehensive income remains fair value. The FSP also requires increased and more timely disclosures sought by investors regarding expected cash flows, credit losses, and an aging of securities with unrealized losses.
The adoption of these three FASB Staff Positions concerning fair value measurements and impairments is not expected to have a significant impact on the Companys consolidated financial position, results of operations or cash flows.