CDW 2006 Annual Report Download - page 48

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2. Recently Issued Accounting Standards
FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes – an Interpretation of
FASB Statement 109” (“FIN 48”)
In June 2006, the Financial Accounting Standards Board (“FASB”) issued FIN 48. FIN 48
prescribes a two-step process for the financial statement measurement and recognition of a tax
position taken or expected to be taken in an income tax return. The first step involves the
determination of whether it is more likely than not that a tax position will be sustained upon
examination, based on the technical merits of the position. The second step requires that any tax
position that meets the more-likely-than-not recognition threshold be measured and recognized in
the financial statements at the largest amount of benefit that is greater than 50 percent likely of
being realized upon ultimate settlement. FIN 48 also provides guidance on the accounting for
related interest and penalties, financial statement classification, and disclosure. FIN 48 is
effective for fiscal years beginning after December 15, 2006. We do not expect the adoption of
FIN 48 to have a material impact on our financial statements.
Statement of Financial Accounting Standards No. 157, “Fair Value Measurements” (“SFAS 157”)
In September 2006, the FASB issued SFAS 157. SFAS 157 defines fair value, establishes a
framework for measuring fair value, and expands disclosures about fair value measurements.
SFAS 157 applies where other accounting pronouncements require or permit fair value
measurements; it does not require any new fair value measurements. The effects of adopting
SFAS 157 will be determined by the types of instruments carried at fair value in our financial
statements at the time of adoption as well as the method utilized to determine their fair values
prior to adoption. SFAS 157 is effective for fiscal years beginning after November 15, 2007. We
are currently evaluating the impact SFAS 157 will have on our financial statements.
3. Acquisition of Berbee Information Networks Corporation
On October 11, 2006, we completed the acquisition of Berbee Information Networks Corporation
(“Berbee”) for a total purchase price of $186.1 million, including an adjustment for working capital.
Through the purchase of Berbee, our business strategy has evolved to include providing
information technology solutions and engineering capabilities in advanced technologies.
Berbee provides information technology solutions and engineering capabilities in advanced
technologies primarily across the Cisco, IBM, and Microsoft platforms. Areas of expertise include
strategic technology planning, network infrastructure and unified communications, systems and
storage, security, productivity applications and managed services. Berbee’s customer base
includes corporate, healthcare, education, and state and local government customers. Berbee
operates as a separate strategic business unit of CDW with its current product and service
offerings.
The acquisition was accounted for as the purchase of a business and, accordingly, the results of
operations of the acquired business subsequent to the completion of the purchase are included in
the accompanying consolidated financial statements, and the acquired assets and liabilities were
recorded based upon their fair values at the date of acquisition. The excess of the purchase
price over the net assets acquired is recorded as goodwill. The following table summarizes the
purchase price and the fair values of the assets acquired and liabilities assumed at the date of
acquisition (in thousands):