CVS 2008 Annual Report Download - page 54

50 CVS CAREMARK
Notes to Consolidated Financial Statements
As of December 31, 2008, the Company had $202.3 million
of unrecognized tax benefi ts (after considering the federal benefi t
of state taxes) related to business combinations that would have
been treated as an adjustment to the purchase price allocation if
they had been recognized under SFAS 141. It is possible that a
signifi cant portion of these benefi ts will be recognized within the
next twelve months. To the extent these benefi ts are recognized
after the adoption of SFAS 141R, their recognition would affect
the Company’s effective income tax rate rather than being treated
as an adjustment to the purchase price allocation of the acquiree.
In February 2008, the FASB issued FASB Staff Position (“FSP”)
No. SFAS 157-2, “Effective Date of FASB Statement No. 157,”
which defers the effective date of SFAS 157 for nonfi nancial
assets and nonfi nancial liabilities, except those that are recog-
nized or disclosed at fair value in the fi nancial statements on
a recurring basis (at least annually), to fi scal years and interim
periods within those fi scal years, beginning after November 15,
2008. The Company does not believe the adoption of this
statement will have a material effect on its consolidated results
of operations, fi nancial position and cash fl ows.
In April 2008, the FASB issued FSP No. FAS 142-3, “Determining
the Useful Life of Intangible Assets,” which amends the factors
an entity should consider in developing renewal or extension
assumptions used in determining the useful lives of recognized
intangible assets. This statement is effective for fi scal years
beginning after December 15, 2008. The Company does not
believe the adoption of this statement will have a material effect
on its consolidated results of operations, fi nancial position and
cash fl ows.
In June 2008, the FASB reached consensus on EITF Issue
No. 08-3, “Accounting by Lessees for Nonrefundable
Maintenance Deposits” (“EITF 08-3”). Under EITF 08-3,
lessees should account for nonrefundable maintenance deposits
as deposit assets if it is probable that maintenance activities will
occur and the deposit is therefore realizable. Amounts on deposit
that are not probable of being used to fund future maintenance
activities should be expensed. EITF 08-3 is effective for fi scal
years beginning after December 15, 2008. Early application is
not permitted. The Company does not believe the adoption of
this statement will have a material effect on its consolidated
results of operations, fi nancial position and cash fl ows.
In December 2008, the FASB issued FSP No. FAS 132(R)-1,
“Employers’ Disclosures about Postretirement Benefi t Plan
Assets,” which enhances the required disclosures about plan
assets in an employer’s defi ned benefi t pension or other postre-
tirement plan, including investment allocations decisions, inputs
New accounting pronouncements. In the fi rst quarter of 2008,
the Company adopted EITF Issue No. 06-4, “Accounting for
Deferred Compensation and Postretirement Benefi t Aspects of
Endorsement Split-Dollar Life Insurance Arrangements” (“EITF
06-4”). EITF 06-4 requires the application of the provisions
of SFAS No. 106, “Employers’ Accounting for Postretirement
Benefi ts Other Than Pensions” (“SFAS 106”) (if, in substance,
a postretirement benefi t plan exists), or Accounting Principles
Board Opinion No. 12 (if the arrangement is, in substance, an
individual deferred compensation contract) to endorsement
split-dollar life insurance arrangements. SFAS 106 requires the
recognition of a liability for the discounted value of the future
premium benefi ts that will be incurred through the death of
the underlying insureds. The adoption of this statement did not
have a material effect on the Company’s consolidated results
of operations, fi nancial position and cash fl ows.
In the fi rst quarter of 2008, the Company adopted EITF
No. 06-10 “Accounting for Collateral Assignment Split-Dollar
Life Insurance Agreements” (“EITF 06-10”) effective fi scal
2008. EITF 06-10 provides guidance for determining a liability
for the postretirement benefi t obligation as well as recognition and
measurement of the associated asset on the basis of the terms of
the collateral assignment agreement. The adoption of this state-
ment did not have a material effect on the Company’s consolidated
results of operations, fi nancial position and cash fl ows.
In the fi rst quarter of 2008, the Company adopted Financial
Accounting Standards Board (“FASB”) Staff Position No. FAS
157-3, “Determining the Fair Value of a Financial Asset When
the Market for That Asset Is Not Active,” which clarifi es the
application of SFAS No. 157 in a market that is not active. The
adoption of this statement did not have a material impact on the
Company’s consolidated results of operations, fi nancial position
and cash fl ows.
In December 2007, the FASB issued SFAS No. 141 (revised
2007), Business Combinations (“SFAS 141R”), which replaces
SFAS 141. SFAS 141R establishes the principles and require-
ments for how an acquirer recognizes and measures in its
fi nancial statements the identifi able assets acquired, the liabilities
assumed, any noncontrolling interest in the acquiree and the
goodwill acquired. The Statement also establishes disclosure
requirements which will enable users to evaluate the nature and
fi nancial effects of business combinations. SFAS 141R is effective
for fi scal years beginning after December 15, 2008.