Pep Boys 2007 Annual Report Download - page 77

accepted accounting principles and expands disclosures about its measurements. In February 2008, the
FASB issued Staff Position No. FAS 157-2 (FSP No.157-2), ‘‘Effective Date of FASB Statement
No. 157,’’ that defers the effective date of SFAS 157 for one year for certain nonfinancial assets and
nonfinancial liabilities. We do not anticipate that the adoption of SFAS 157 in fiscal 2008 for financial
assets and financial liabilities will have a material effect on our financial statements. SFAS 157 is
effective for certain nonfinancial assets and nonfinancial liabilities for financial statements issued for
fiscal years beginning after November 15, 2008. We are currently evaluating the impact SFAS No. 157
will have on our consolidated financial statements beginning in fiscal 2009.
In February 2007, the FASB issued SFAS No. 159, ‘‘The Fair Value Option for Financial Assets
and Financial Liabilities.’’ SFAS No. 159 permits entities to choose to measure many financial
instruments and certain other items at fair value. SFAS 159 is effective for fiscal years beginning after
November 15, 2007. Beginning in fiscal 2008 we have chosen not to measure any asset or liability using
SFAS 159.
In March 2007, the EITF reached a consensus on Issue Number 06-10, ‘‘Accounting for Deferred
Compensation and Postretirement Benefit Aspects of Collateral Assignment Split-Dollar Life Insurance
Arrangements’’ (EITF 06-10). EITF 06-10 provides guidance to help companies determine whether a
liability for the postretirement benefit associated with a collateral assignment split-dollar life insurance
arrangement should be recorded in accordance with either SFAS No. 106, ‘‘Employers’ Accounting for
Postretirement Benefits Other Than Pensions’’ (if, in substance, a postretirement benefit plan exists), or
Accounting Principles Board Opinion No. 12 (if the arrangement is, in substance, an individual
deferred compensation contract). EITF 06-10 also provides guidance on how a company should
recognize and measure the asset in a collateral assignment split-dollar life insurance contract.
EITF 06-10 is effective for fiscal years beginning after December 15, 2007, although early adoption is
permitted. We anticipate that the adoption of EITF 06-10 will result in a $1,855,000 pretax charge to
retained earnings on February 3, 2008.
In June 2007, the FASB ratified EITF Issue Number 06-11, ‘‘Accounting for Income Tax Benefits
of Dividends on Share-Based Payment Awards’’ (EITF 06-11). EITF 06-11 applies to share-based
payment arrangements with dividend protection features that entitle employees to receive (a) dividends
on equity-classified nonvested shares, (b) dividend equivalents on equity-classified nonvested share
units, or (c) payments equal to the dividends paid on the underlying shares while an equity-classified
share option is outstanding, when those dividends or dividend equivalents are charged to retained
earnings under SFAS No. 123(R), ‘‘Share-Based Payment,’’ and result in an income tax deduction for
the employer. A consensus was reached that a realized income tax benefit from dividends or dividend
equivalents that are charged to retained earnings and are paid to employees for equity-classified
non-vested equity shares, non-vested equity share units, and outstanding equity share options should be
recognized as an increase in additional paid-in capital. EITF 06-11 is effective prospectively for the
income tax benefits that result from dividends on equity-classified employee share-based payment
awards that are declared in fiscal years beginning after December 15, 2007, and interim periods within
those fiscal years. The Company has determined that the effects of EITF 06-11 will have an immaterial
impact on its consolidated financial statements beginning in fiscal 2008.
In December 2007, the FASB issued SFAS No. 141R, ‘‘Business Combinations,’’ which replaces
SFAS No. 141, ‘‘Business Combinations.’’ SFAS No. 141R, among other things, establishes principles
and requirements for how an acquirer entity recognizes and measures in its financial statements the
identifiable assets acquired, the liabilities assumed and any controlling interests in the acquired entity;
recognizes and measures the goodwill acquired in the business combination or a gain from a bargain
purchase; and determines what information to disclose to enable users of the financial statements to
evaluate the nature and financial effects of the business combination. Costs of the acquisition will be
recognized separately from the business combination. SFAS No. 141R applies to business combinations
for fiscal years beginning after December 15, 2008.
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10-K