Sears 2008 Annual Report Download - page 62

SEARS HOLDINGS CORPORATION
Notes to Consolidated Financial Statements—(Continued)
New Accounting Pronouncements
In December 2007, the FASB issued SFAS No. 141(R), “Business Combinations” which revised SFAS
No. 141, “Business Combinations.” SFAS No. 141(R) is effective for fiscal years beginning on or after
December 15, 2008, with early adoption prohibited. SFAS No. 141(R) will have a significant impact on the
accounting for transaction costs, restructuring costs as well as the initial recognition of contingent assets and
liabilities assumed during a business combination. The provisions of SFAS No. 141(R) are applied prospectively
from the date of adoption, except for adjustments to a previously acquired entity’s deferred tax assets and
uncertain tax position balances occurring outside the measurement period, which are recorded as a component of
income tax expense in the period of adjustment, rather than goodwill. We expect SFAS 141(R) will have an
impact on our consolidated financial statements when effective, but the nature and magnitude of the specific
effects will depend upon the nature, terms and size of the acquisitions we consummate after the effective date. As
of January 31, 2009, we have recorded income tax liabilities and related interest of $71 million, net of federal
benefit on interest and state tax, for tax positions of the Predecessor Company and tax positions of acquired
entities taken prior to their acquisition by Holdings. Liabilities settled for different amounts will affect our
income tax expense in the period of settlement or reversal.
In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements.” See Note 5 for further
discussion regarding our adoption of SFAS No. 157 in the first quarter of fiscal 2008.
In September 2006, the FASB issued SFAS No. 158, “Employer’s Accounting for Defined Benefit Pension
and Other Postretirement Plans,” which changes the recognition and disclosure provisions and measurement date
requirements for an employer’s accounting for defined benefit pension and other postretirement plans. The
recognition and disclosure provisions require an employer to (1) recognize the funded status of a benefit plan—
measured as the difference between plan assets at fair value and the benefit obligation—in its statement of
financial position, (2) recognize as a component of other comprehensive income (“OCI”), net of tax, the gains or
losses and prior service costs or credits that arise during the period but are not recognized as components of net
periodic benefit cost, and (3) disclose in the notes to financial statements certain additional information. SFAS
No. 158 does not change the amounts recognized in the statement of income as net periodic benefit cost. As
required by SFAS No. 158, we adopted the recognition and disclosure provisions of the Statement as of
February 3, 2007, and accordingly recognized the funded status of our defined benefit pension and other
postretirement plans and provided the required additional disclosures. The adoption of these provisions of SFAS
No. 158 did not have any material impact on our consolidated results of operations or financial position. See
Note 7 for further information regarding the impact of adopting SFAS 158.
As required under SFAS 158, we adopted the measurement-date requirements of SFAS No. 158 effective
January 31, 2009. Under the measurement-date requirements, an employer is required to measure defined benefit
plan assets and obligations as of the date of the employer’s fiscal year end. Prior to adoption of the measurement-
date requirements, we measured our plan assets and obligations as of December 31 of each year. We adopted the
change in measurement date by re-measuring plan assets and benefit obligations as of our fiscal year end in 2008,
pursuant to the transition requirements of SFAS No. 158. The change in our measurement date did not have a
material impact on our results of operations or financial condition. See Note 7 for further information concerning
our pension plans.
In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and
Financial Liabilities.” See Note 5 for further discussion regarding our adoption of SFAS No. 159 in the first
quarter of fiscal 2008.
In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial
Statements, an amendment of Accounting Research Bulletin (“ARB”) No. 51.” SFAS No. 160 is effective for
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