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Recently Issued Accounting Pronouncements
In July 2006, the FASB issued FASB Interpretation
No. 48, “Accounting for Uncertainty in Income Taxes--an Interpretation
of FASB Statement 109” (“FIN 48”), which clarifies the accounting
for uncertainty in tax positions taken or expected to be taken in
a tax return, including issues relating to financial statement recognition
and measurement. FIN 48 provides that the tax effects from an uncertain
tax position can be recognized in the financial statements only
if the position is “more-likely-than-not” of being sustained if
the position were to be challenged by a taxing authority. The assessment
of the tax position is based solely on the technical merits of the
position, without regard to the likelihood that the tax position
may be challenged. If an uncertain tax position meets the “more-likely-than-not”
threshold, the largest amount of tax benefit that is greater than
50 percent likely of being recognized upon ultimate settlement with
the taxing authority, is recorded. The provisions of FIN 48 are
effective for fiscal years beginning after December 15, 2006, with
the cumulative effect of the change in accounting principle recorded
as an adjustment to opening retained earnings. We are currently
evaluating the impact of adopting FIN 48 on our consolidated financial
statements.
In September 2006, the FASB issued SFAS
No. 157, “Fair Value Measurements.” SFAS No. 157 defines fair value,
establishes a framework for measuring fair value under Generally
Accepted Accounting Principles and requires enhanced disclosures
about fair value measurements. It does not require any new fair
value measurements. SFAS No. 157 is effective for financial statements
issued for fiscal years beginning after November 15, 2007 and interim
periods within those fiscal years. We are currently assessing whether
we will early adopt SFAS No. 157 as of the first quarter of fiscal
2007 as permitted, and are currently evaluating the impact adoption
may have on our consolidated financial statements.
In September 2006, the FASB issued SFAS
No. 158 “Employers’ Accounting for Defined Benefit Pension and Other
Postretirement Plans.” This Statement amends Statement 87, FASB
Statement No. 88, “Employers’ Accounting for Settlements and Curtailments
of Defined Benefit Pension Plans and for Termination Benefits,”
Statement 106, and FASB Statement No. 132 (revised 2003), “Employers’
Disclosures about Pensions and Other Postretirement Benefits,” and
other related accounting literature. SFAS No. 158 requires an employer
to recognize the overfunded or underfunded status of a defined benefit
postretirement plan (other than a multiemployer plan) as an asset
or liability in its statement of financial position and to recognize
changes in the funded status in the year in which the changes occur
through comprehensive income. This statement also requires employers
to measure the funded status of a plan as of the date of its year-end
statement of financial position, with limited exceptions. Employers
with publicly traded equity securities are required to initially
recognize the funded status of a defined benefit postretirement
plan and to provide the required disclosures as of the end of the
fiscal year ending after December 15, 2006. We currently have no
defined benefit or other post retirement plans subject to this standard.
In February 2007, the FASB issued SFAS
No. 159, “The Fair Value Option for Financial Assets and Financial
Liabilities,” which permits entities to choose to measure many financial
instruments and certain other items at fair value. The objective
is to improve financial reporting by providing entities with the
opportunity to mitigate volatility in reported earnings caused by
measuring related assets and liabilities differently without having
to apply complex hedge accounting provisions. SFAS No. 159 applies
to all entities and is effective for fiscal years beginning after
November 15, 2007. The Company is currently determining the impact,
if any, that SFAS No. 159 will have on its financial statements.
Recently Adopted Accounting Pronouncements
On December 16, 2004, the FASB issued SFAS
No. 123 (revised 2004), “Share-Based Payment” (“SFAS No. 123(R)”).
SFAS No. 123(R) requires companies to measure all employee stock-based
compensation awards using a fair value method and record such expense
in their consolidated financial statements. In addition, the adoption
of SFAS No. 123(R) requires additional accounting and disclosure
related to the income tax and cash flow effects resulting from share-based
payment arrangements. SFAS No. 123(R) was effective beginning as
of the first annual reporting period after June 15, 2005. We adopted
the provisions of SFAS No. 123(R) during the first quarter of 2006
using the modified prospective method for transition and recognized
approximately $0.5 million in stock-based compensation expense for
the year ended December 31, 2006.
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