Vectren 2008 Annual Report Download - page 50

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48
Impact of Recently Issued Accounting Guidance
SFAS 158
The Company accounts for its pension and post-retirement obligations in accordance with SFAS No. 158,
“Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans-an amendment of FASB
Statements No. 87, 88, 106, and 132(R)” (SFAS 158). Under SFAS 158, the Company recognizes the funded status
of its pension plans and postretirement plans. SFAS 158 requires, among other things, an employer to measure the
funded status of a plan as of the date of its year-end balance sheet and requires disclosure in the notes to financial
statements certain additional information related to net periodic benefit cost for the next fiscal year. These
measurement date provisions were adopted on January 1, 2008. Prior to the adoption of SFAS 158, Vectren had a
September 30 measurement date. The effects of adopting SFAS 158 were calculated using a measurement of plan
assets and benefit obligations as of September 30, 2007 and a 15-month projection of periodic cost to December 31,
2008. The Company recorded three months of that cost totaling $2.7 million, or $1.6 million after tax, to Retained
earnings on January 1, 2008. Related adjustments to Accumulated other comprehensive income and Regulatory
assets were not material.
SFAS 157
On January 1, 2008, the Company adopted SFAS No. 157, “Fair Value Measurements” (SFAS 157), except as it
applies to nonfinancial assets and nonfinancial liabilities. FSP FAS 157-2 delayed the effective date of SFAS 157
for all nonfinancial assets and nonfinancial liabilities, except those that are recognized or disclosed at fair value on
a recurring basis (at least annually). This FSP deferred the effective date of Statement 157 for those items to fiscal
years beginning after November 15, 2008.
SFAS 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting
principles (GAAP), and expands disclosures about fair value measurements. This statement does not require any
new fair value measurements; however, the standard impacts how other fair value based GAAP is applied. The
partial adoption of SFAS 157 did not have a material impact on the Company’s financial position, results of
operations or cash flows. Disclosures impacted by SFAS 157 are included in Note 17 to the consolidated financial
statements. The adoption of the remaining components of SFAS 157 on January 1, 2009 is also not expected to be
material on the Company’s financial position, results of operations or cash flows.
SFAS 159
Also on January 1, 2008, the Company adopted SFAS No. 159, “The Fair Value Option for Financial Assets and
Financial Liabilities – Including an Amendment of FASB Statement No. 115” (SFAS 159). SFAS 159 permits
entities to choose to measure many financial instruments and certain other items at fair value. The Company did
not choose to apply the option provided in SFAS 159 to any of its eligible items; therefore, its adoption did not
have any impact on the Company’s financial statements or results of operations.
SFAS 141 (Revised 2007)
In December 2007, the FASB issued SFAS No. 141, “Business Combinations” (SFAS 141R). SFAS 141R
establishes principles and requirements for how the acquirer of an entity (1) recognizes and measures the
identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree (2) recognizes
and measures acquired goodwill or a bargain purchase gain and (3) determines what information to disclose in its
financial statements in order to enable users to assess the nature and financial effects of the business combination.
SFAS 141R applies to all transactions or other events in which one entity acquires control of one or more
businesses and applies to all business entities. SFAS 141R applies prospectively to business combinations with an
acquisition date on or after the beginning of the first annual reporting period beginning on or after December 15,
2008. Early adoption is not permitted. The Company will adopt SFAS 141R on January 1, 2009, and because the
provisions of this standard are applied prospectively, the impact to the Company cannot be determined until the
transactions occur.