Radio Shack 2008 Annual Report Download - page 65

Recently Issued Accounting Pronouncements: In September 2006, the Financial Accounting
Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 157, "Fair
Value Measurements" ("SFAS 157"). SFAS 157 defines fair value, establishes a framework for measuring
fair value, and expands disclosures about fair value measurements. We adopted SFAS 157 on January 1,
2008, as required for our financial assets and financial liabilities. However, the FASB deferred the effective
date of SFAS 157 for one year as it relates to fair value measurement requirements for nonfinancial
assets and nonfinancial liabilities that are not recognized or disclosed at fair value on a recurring basis.
The adoption of SFAS 157 for our financial assets and financial liabilities did not have a material impact on
our consolidated financial statements. While we are currently evaluating the impact of adopting the
remaining provisions of SFAS No. 157, we do not expect these provisions to have a material impact on
our consolidated financial statements.
In February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for Financial Assets and
Financial Liabilities" ("SFAS 159"). SFAS 159 permits entities to choose to measure certain financial
instruments and other eligible items at fair value when the items are not otherwise currently required to be
measured at fair value. We adopted SFAS 159 effective January 1, 2008. Upon adoption, we did not elect
the fair value option for any items within the scope of SFAS 159 and, therefore, the adoption of SFAS 159
did not have an impact on our consolidated financial statements.
In December 2007, the FASB issued SFAS No. 141 (revised 2007), “Business Combinations” (“SFAS
141R”). SFAS 141R addresses the recognition and accounting for identifiable assets acquired, liabilities
assumed, and noncontrolling interests in business combinations. SFAS 141R also establishes expanded
disclosure requirements for business combinations. SFAS 141R is effective for us on January 1, 2009,
and we will apply SFAS 141R prospectively to all business combinations subsequent to the effective date.
In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial
Statements - an amendment of ARB No. 51” (“SFAS 160”). SFAS 160 establishes accounting and
reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a
subsidiary. SFAS 160 requires that noncontrolling interests in subsidiaries be reported in the equity
section of the controlling company’s balance sheet. It also changes the manner in which the net income of
the subsidiary is reported and disclosed in the controlling company’s income statement. SFAS 160 is
effective for fiscal years beginning after December 15, 2008. We adopted SFAS 160 on January 1, 2009,
and it had no impact on our consolidated financial statements.
In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging
Activities - an amendment of FASB Statement No. 133” (“SFAS 161”). SFAS 161 amends and expands the
disclosure requirements of Statement 133 to provide a better understanding of how and why an entity uses
derivative instruments, how derivative instruments and related hedged items are accounted for, and their
effect on an entity’s financial position, financial performance, and cash flows. SFAS 161 is effective for fiscal
years beginning after November 15, 2008. We adopted SFAS 161 on January 1, 2009, but we do not
expect it to have a material impact on our consolidated financial statements.
In May 2008, the FASB issued SFAS No. 162, “The Hierarchy of Generally Accepted Accounting
Principles” (“SFAS 162”). SFAS 162 identifies the sources of accounting principles and the framework for
selecting the principles used in the preparation of financial statements that are presented in conformity
with generally accepted accounting principles (“GAAP”) in the United States. SFAS 162 became effective
on November 15, 2008, but did not have a material impact on our consolidated financial statements.
In May 2008, the FASB issued FASB Staff Position No. APB 14-1, “Accounting for Convertible Debt
Instruments That May Be Settled in Cash Upon Conversion.” This staff position will require us to separately
account for the liability and equity components of our convertible notes in a manner that reflects our
nonconvertible debt borrowing rate when interest cost is recognized in subsequent periods. This staff position
will require bifurcation of a component of the debt, classification of that component in equity and then
accretion of the resulting discount on the debt as part of interest expense being reflected in the income
statement. This staff position will be effective for fiscal years beginning after December 15, 2008, and we are
required to adopt it in our first quarter of 2009. The staff position does not permit early application and
requires retrospective application to all periods presented. See Note 5 – “Indebtedness and Borrowing
Facilities” for further discussion of the effects of this staff position on our consolidated financial statements.
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