SunTrust 2003 Annual Report Download - page 65

Annual Report 2003 SunTrust Banks, Inc. 63
In November 2002, FASB issued FIN 45, “Guarantor’s
Accounting and Disclosure Requirements for Guarantees,
Including Indirect Guarantees of Indebtedness of Others, an inter-
pretation of FASB Statements No. 5, 57, and 107 and Rescission
of FIN 34.” FIN 45 details the disclosures that should be made
by a guarantor in its interim and annual financial statements
about its obligations under certain guarantees that it has issued.
The Interpretation also requires a company to record a liability for
certain guarantees that have been issued. The disclosure provi-
sions were effective for interim or annual periods ending after
December 15, 2002. The recognition requirements of the
Interpretation were effective for all guarantees issued or modified
subsequent to December 31, 2002. The Company adopted the
recognition requirements of FIN 45 on January 1, 2003, and
they did not have a material impact on the Company’s financial
position or results of operations. The required disclosures are
included in Note 18 to the Consolidated Financial Statements.
In December 2002, the FASB issued SFAS No. 148,
“Accounting for Stock-Based Compensation-Transition and
Disclosure.” SFAS No.148 amended SFAS No. 123, “Accounting
for Stock-Based Compensation,” to provide three alternative meth-
ods of transition to SFAS 123’s fair-value method of accounting for
stock-based compensation. The Statement also amended disclo-
sure provisions of SFAS No. 123 and APB Opinion No. 28, “Interim
Financial Reporting,” to require additional disclosures in annual
and interim financial statements. The Statement was effective for
fiscal years ending after December 15, 2002. The amendment of
the disclosure requirements of Opinion No. 28 was effective for
interim financial reports beginning after December 15, 2002.
Effective January 1, 2002, the Company adopted the fair-value
method using the prospective method of transition. The prospective
method required the Company to apply the provisions of SFAS
No. 123 to new stock awards granted from the beginning of the
year of adoption and going forward. Note 16 includes the annual
disclosures required by SFAS No. 148.
In January 2003, the FASB issued FIN 46, “Consolidation
of Variable Interest Entities.” FIN 46 is an Interpretation of ARB
No. 51 and addresses consolidation by business enterprises of
variable interest entities (VIEs). The Interpretation is based on
the concept that an enterprise controlling another entity through
interests other than voting interests should consolidate the con-
trolled entity. Business enterprises are required under the
provisions of the Interpretation to identify VIEs, based on speci-
fied characteristics, and then determine whether they should be
consolidated. An enterprise that holds a majority of the variable
interests is considered the primary beneficiary and would con-
solidate the VIE. In addition to the primary beneficiary, an
enterprise that holds a significant variable interest in a VIE is
required to make certain interim and annual disclosures.
The Interpretation was effective immediately for all enter-
prises with variable interests in VIEs created after January 31,
2003. A public entity with variable interests in a VIE created
before February 1, 2003, was required to apply the provisions of
this Interpretation for the first interim or annual reporting period
ending after December 15, 2003; however, early adoption was
permitted. As of July 1, 2003, the Company adopted the
Interpretation and the disclosures related to certain of the
Company’s variable interests in VIEs.
On December 24, 2003, the FASB issued a revision of
FIN 46 (FIN 46(R)), which replaces the Interpretation issued in
January 2003. The revised Interpretation clarifies some of the
provisions of FIN 46 and provides additional exemptions for cer-
tain entities. Under the provisions of FIN 46(R), SunTrust is
permitted to continue the application of FIN 46 until the report-
ing period ending March 31, 2004, at which time the Company
will adopt the provisions of FIN 46(R).
The Company does not expect the adoption of FIN 46(R) to
have a material impact on the Company’s financial position or
results of operations. The required disclosures related to the
Company’s variable interests in VIEs are included in Note 17 to
the Consolidated Financial Statements.
In April 2003, the FASB issued SFAS No. 149,
“Amendment of Statement 133 on Derivative Instruments and
Hedging Activities.” SFAS No. 149 amends and clarifies
accounting for derivative instruments, including certain deriva-
tive instruments embedded in other contracts, and for hedging
activities under SFAS No. 133. The Statement was effective for
contracts entered into or modified after June 30, 2003 and for
hedging relationships designated after June 30, 2003. The
adoption of this Statement did not have a material impact on
the Company’s financial position or results of operations.
In May 2003, the FASB issued SFAS No. 150, “Accounting
for Certain Financial Instruments with Characteristics of both
Liabilities and Equity.” SFAS No. 150 establishes guidelines on
how instruments sharing the characteristics of both liabilities and
equity should be classified and measured. Financial instruments
falling within the scope of the Statement must be classified as
liabilities. SFAS No.150 was effective for financial instruments
entered into or modified after May 31, 2003 and otherwise was
effective for the first interim period beginning after June 15,
2003; however, in November 2003, the FASB decided to defer
the provisions of SFAS No. 150 as they apply to certain mandato-
rily redeemable noncontrolling interests. The deferral for this type
of instrument is expected to remain in effect while these interests
are addressed by the FASB. SunTrust will continue to monitor
and evaluate the impact of FASB’s decisions as they relate to the
deferral provisions of SFAS No. 150. The adoption of the remainder
of this statement did not have a material impact on the
Company’s financial position or results of operations.