Pep Boys 2007 Annual Report Download - page 94

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THE PEP BOYS—MANNY, MOE & JACK AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Years ended February 2, 2008, February 3, 2007 and January 28, 2006
(dollar amounts in thousands, except share data)
Accumulated Other Comprehensive Loss of $123. This net charge to Retained Earnings represents the
after-tax pension expense for the period from January 1, 2008 to February 2, 2008.
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. The Company has not chosen 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. The Company anticipates the adoption of EITF 06-10 will result in a $1,855 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 prospectively, except for
taxes, to business combinations for which the acquisition date is on or after the beginning of the first
annual reporting period on or after December 15, 2008.
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10-K