National Grid 2008 Annual Report Download - page 305

BOWNE INTEGRATED TYPESETTING SYSTEM
CRC: 61497
Name: NATIONAL GRID
Date: 17-JUN-2008 03:10:51.35Operator: BNY99999TPhone: [phone]Site: BOWNE OF NEW YORK
Y59930.SUB, DocName: EX-2.B.6.1, Doc: 6, Page: 99
Description: EXH 2(B).6.1
0/2703.00.00.00Y59930BNY
[E/O] EDGAR 2 *Y59930/703/2*
BOWNE INTEGRATED TYPESETTING SYSTEM
CRC: 61497
Name: NATIONAL GRID
Date: 17-JUN-2008 03:10:51.35Operator: BNY99999TPhone: [phone]Site: BOWNE OF NEW YORK
Y59930.SUB, DocName: EX-2.B.6.1, Doc: 6, Page: 99 Description: EXH 2(B).6.1
0/2703.00.00.00Y59930BNY
[E/O] EDGAR 2 *Y59930/703/2*
F-14
SFAS No. 154 becomes effective for fiscal years endin
g
after December 15, 2005. The Company adopted it as of its March 31,
2006 fiscal year and the adoption did not have a material impact on the Company’s results of operations or its financial position.
FASB Interpretation No. 48
In July 2006, the FASB issued Interpretation No. 48 (FIN 48), “Accounting for Uncertainty in Income Taxes – an interpretation of
FASB Statement No. 109.” FIN 48 clarifies the accountin
g
and reportin
g
for uncertainties in income tax law. FIN 48 prescribes a
comprehensive model for the financial statement reco
g
nition, measurement, presentation and disclosure of uncertain tax
positions taken or expected to be taken in income tax returns. The cumulative effect of applyin
g
the provision of this
interpretation is required to be reported separately as an adjustment to the openin
g
balance of retained earnin
g
s in the year of
adoption. FIN 48 is effective for fiscal years be
g
innin
g
after December 15, 2006 and will be effective for the Company in its
2008 fiscal year. The Company is currently evaluatin
g
the impact the adoption of FIN 48 will have on its financial statements
and is not yet in a position to determine such effects.
SFAS No. 157
In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements,” which provides enhanced
g
uidance for usin
g
fair value measurements in financial reportin
g
. While the standard does not expand the use of fair value in any new
circumstance, it has applicability to several current accountin
g
standards that require or permit entities to measure assets and
liabilities at fair value. This standard defines fair value, establishes a framework for measurin
g
fair value in GAAP and expands
disclosures about fair value measurements. The Company is currently evaluatin
g
SFAS No. 157 and at this time cannot
determine im
p
act, if an
y
, that the
p
otential re
q
uirements ma
y
have on its financial statements.
SFAS No. 158
In September 2006, the FASB issued SFAS No. 158, “Employers’ Accountin
g
for Defined Benefit Pension and Other
Postretirement Plans.” This standard amends SFAS Nos. 87, 88, 106 and 132(R). SFAS No. 158 requires an employer with a
defined benefit pension plan or postretirement benefit plan other than pensions to reco
g
nize an asset or liability on its balance
sheet for the over funded or under funded status of the plan as defined by SFAS No. 158. The Company adopted SFAS
No. 158 on March 31, 2007. The pension asset or liability is the difference between the fair value of the pension plan’s assets
and the projected benefit obli
g
ation as of the year end. For postretirement benefit plans other than pensions (PBOPs), the asset
or liability is the difference between the fair value of the plan’s assets and the accumulated postretirement benefit obli
g
ation as
of year end. At March 31, 2007, the Company recorded a combined liability of $1.2 billion in connection with the adoption of
SFAS No. 158. While the offset to this entry would normally be a char
g
e to accumulated other comprehensive income (OCI),
certain Company subsidiaries have recorded regulatory assets because they will fully recover their costs. See Note F –
“Employee Benefits” for the impact of the adoption of the new standard on the Company’s consolidated financial statements.
Staff Accounting Bulletin No. 108
In September 2006, the SEC issued Staff Accounting Bulletin (SAB) No. 108, “Considerin
g
the Effects of Prior Year
Misstatements when Quantifying Misstatements in Current Year Financial Statements.” SAB No. 108 requires companies to
quantify the impact of correctin
g
misstatements usin
g
both an income statement (rollover) approach and a balance sheet (iron
curtain) approach. If the misstatement of prior year expense is material to the current year, after all of the relevant quantitative
and qualitative factors are considered, the prior year financial statements should be corrected. Correctin
g
prior year financial
statements for immaterial errors would not require previously filed reports to be amended. The new standard had no impact on
the Com
p
an
y
’s consolidated financial statements.