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This excerpt taken from the SPAN 10-K filed Jan 3, 2005. Impairment of Long-Lived Assets As required by SFAS No. 144 we evaluate long-lived assets for potential impairment whenever events occur or circumstances indicate that the carrying amount of the assets may not be recoverable. The carrying amount of a long-lived asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. If the carrying amount of a long-lived asset is not recoverable and is greater than its fair value, the asset is impaired and an impairment loss must be recognized. To date the Company has had no indicators of impairment for long-lived assets. However, the Company’s investment in the safety catheter business unit raises the likelihood of a future impairment loss because the new business unit has little sales and production history and is still in a development phase. Management does not currently expect this segment to suffer impairment in the foreseeable future; however, there can be no assurance to this effect. If the assets associated with the safety catheter segment became impaired, the impairment loss could be up to $3.0 million as measured by the total assets of the safety catheter segment as of October 2, 2004. (See Note 17 in the Notes to Financial Statements.) If such an event occurred, the Company’s assets and operating income could be reduced by up to $3.0 million, and net income after taxes could be reduced by up to $1.9 million. The actual amount of any future impairment loss could be more or less, depending on the level of assets and the degree of impairment at the time the Company determines an impairment charge is necessary.
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