SanDisk 2007 Annual Report Download - page 108

effects will depend upon the nature, terms and size of the acquisitions the Company consummates after the effective
date. The Company is assessing the impact of SFAS 141(R) to its future consolidated financial statements.
SFAS No. 157. In September 2006, the FASB issued Statement of Financial Accounting Standards No. 157
(“SFAS 157”), Fair Value Measurements. SFAS 157 defines fair value, establishes a market-based framework or
hierarchy for measuring fair value, and expands disclosures about fair value measurements. SFAS 157 is applicable
whenever another accounting pronouncement requires or permits assets and liabilities to be measured at fair value.
SFAS 157 does not expand or require any new fair value measures. The provisions of SFAS 157 are to be applied
prospectively and are effective for financial statements issued for fiscal years beginning after November 15, 2007.
The Company will adopt SFAS 157 beginning in the first quarter of fiscal year 2008 and does not expect the
adoption of SFAS 157 to have a material impact to its consolidated results of operations and financial position.
In February 2008, the FASB issued Staff Position No. FAS 157-1 (“FSP FAS 157-1”), Application of FASB
Statement No. 157 to FASB Statement No. 13 and Other Accounting Pronouncements That Address Fair Value
Measurements for Purposes of Lease Classification or Measurement Under Statement 13 and Staff Position
No. FAS 157-2 (“FSP FAS 157-2”), Effective Date of FASB Statement No. 157. FSP FAS 157-1 excludes Statement
of Financial Accounting Standards No. 13 (“SFAS 13”), Accounting for Leases, as well as other accounting
pronouncements that address fair value measurements on lease classification or measurement under SFAS 13 from
the scope of SFAS 157. FSP FAS 157-2 delays the effective date of SFAS 157 for all nonrecurring fair value
measurements of nonfinancial assets and nonfinancial liabilities until fiscal years beginning after November 15,
2008. Both FSP FAS 157-1 and FSP FAS 157-2 are effective upon an entity’s initial adoption of SFAS 157, which is
the Company’s first quarter of fiscal year 2008.
SFAS No. 159. In February 2007, the FASB issued Statement of Financial Accounting Standards No. 159
(“SFAS 159”), Establishing the Fair Value Option for Financial Assets and Liabilities. The FASB has issued
SFAS 159 to permit all entities to elect, at specified election dates, to measure eligible financial instruments at fair
value. An entity shall report unrealized gains and losses on items for which the fair value option has been elected in
earnings at each subsequent reporting date, and recognize upfront costs and fees related to those items in earnings as
incurred and not deferred. SFAS 159 applies to fiscal years beginning after November 15, 2007, with early adoption
permitted for an entity that has also elected to apply the provisions of SFAS 157. An entity is prohibited from
retrospectively applying SFAS 159, unless it chooses early adoption. SFAS 159 also applies to eligible items
existing at November 15, 2007 (or early adoption date). The Company will adopt SFAS 159 beginning in the first
quarter of fiscal year 2008 and does not expect SFAS 159 to have a material impact to its consolidated results of
operations and financial condition.
EITF Issue No. 07-3. In the June 2007 meeting, the Emerging Issues Task Force (“EITF”), reached a final
consensus on EITF Issue No. 07-3 (“EITF 07-3”), Accounting for Advance Payments for Goods or Services to be
Received for Use in Future Research and Development Activities. The consensus requires companies to defer and
capitalize prepaid, nonrefundable research and development payments to third parties over the period that the
research and development activities are performed or the services are provided, subject to an assessment of
recoverability. EITF 07-3 is effective for new contracts entered into in fiscal years beginning after December 15,
2007, including interim periods within those fiscal years. The Company will adopt this pronouncement beginning in
the first quarter of fiscal year 2008 and does not expect the adoption of EITF 07-3 to have a material impact on its
consolidated results of operations and financial condition.
FSP No. APB 14-a. The FASB issued a proposed FASB Staff Position (“FSP”) No. APB 14-a, Accounting for
Convertible Debt Instruments That May Be Settled in Cash Upon Conversion (Including Partial Cash Settlement).
The proposed FSP would require the issuer to separately account for the liability and equity components of the
instrument in a manner that reflects the issuer’s economic interest cost. Further, the proposed FSP would require
bifurcation of a component of the debt, classification of that component to equity, and then accretion of the resulting
discount on the debt to result in the “economic interest cost” being reflected in the statement of operations. In
November 2007, the FASB announced it is expected to begin its redeliberations of the proposed FSP in February
2008. Therefore, final guidance will not be issued until at least the end of the first quarter of 2008, and earlier
F-12
Notes to Consolidated Financial Statements — (Continued)