Allstate 2008 Annual Report Download - page 255

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
SFAS No. 123 (revised 2004), Share-Based Payment (‘‘SFAS No. 123(R)’’)
SFAS No. 123(R) revised SFAS No. 123 ‘‘Accounting for Stock-based Compensation’’ and superseded APB
Opinion No. 25 ‘‘Accounting for Stock Issued to Employees’’. SFAS No. 123(R) requires all share-based payment
transactions to be accounted for using a fair value based method to recognize the cost of awards over the period
in which the requisite service is rendered. The Company adopted SFAS No. 123(R) on January 1, 2006 using the
modified prospective application method for adoption, and therefore the prior year results were not restated. The
adoption impacts of SFAS No. 123(R), which included the recognition of compensation expense related to options
with a four year vesting requirement that were granted in 2002 and not fully vested on January 1, 2006, were not
material to the results of operations or financial position of the Company. The Company previously adopted the
expense provisions of SFAS No. 123 for awards granted or modified subsequent to January 1, 2003, which also
did not have a material effect on the results of operations or financial position of the Company.
FASB Staff Position No. FAS 123(R)-3, Transition Election Related to Accounting for the Tax Effects of Share-Based
Payment Awards (‘‘FSP FAS 123(R)-3’’)
FSP FAS 123(R)-3 provided companies an option to elect an alternative calculation method for determining
the pool of excess tax benefits available to absorb tax deficiencies recognized subsequent to the adoption of
SFAS No. 123(R). SFAS No. 123(R) requires companies to calculate the pool of excess tax benefits as the net
excess tax benefits that would have qualified had the company adopted SFAS No. 123 for recognition purposes
when first effective in 1995. FSP FAS 123(R)-3 provided an alternative calculation based on actual increases to
additional paid-in capital related to tax benefits from share-based compensation subsequent to the effective date
of SFAS No. 123, less the tax on the cumulative incremental compensation costs the company included in its pro
forma net income disclosures as if the company had applied the fair-value method to all awards, less the share-
based compensation costs included in net income as reported. In conjunction with its adoption of SFAS
No. 123(R) on January 1, 2006, the Company elected the alternative transition method described in FSP
FAS 123(R)-3. The effect of the transition calculation did not have a material effect on the results of operations or
financial position of the Company.
FSP No. FAS 133-1 and FIN 45-4, Disclosures about Credit Derivatives and Certain Guarantees: An Amendment of
FASB Statement No. 133 and FASB Interpretation No. 45; and Clarification of the Effective Date of FASB
Statement No. 161 (‘‘FSP FAS 133-1 and FIN 45-4’’)
In September 2008, the FASB issued FSP FAS 133-1 and FIN 45-4, which amends SFAS No. 133 ‘‘Accounting
for Derivative Instruments and Hedging Activities’’ (‘‘SFAS No. 133’’), and FIN 45, ‘‘Guarantor’s Accounting and
Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others’’ (‘‘FIN 45’’), to
both enhance and synchronize the disclosure requirements of the two statements with respect to the potential for
adverse effects of changes in credit risk on the financial statements of the sellers of credit derivatives and certain
guarantees. SFAS No. 133 was amended to require disclosures by sellers of credit derivatives, including credit
derivatives embedded in a hybrid instrument. FIN 45 was amended to require an additional disclosure about the
current status of the payment/performance risk of a guarantee. The FSP clarifies the FASB’s intent that the
disclosures required by SFAS No. 161 should be provided for any reporting period (annual or quarterly interim)
beginning after November 15, 2008. The provisions of this FASB staff position that amend SFAS No. 133 and
FIN 45 are effective for reporting periods ending after November 15, 2008, and the provisions that clarify the
effective date SFAS No. 161 are effective upon the adoption of that statement; therefore, the disclosure
requirements, which have no impact to the Company’s results of operations or financial position, were adopted at
December 31, 2008.
FSP No. FAS 140-4 and FIN 46(R)-8, Disclosures by Public Entities (Enterprises) about Transfers of Financial Assets
and Interests in Variable Interest Entities (‘‘FSP FAS 140-4 and FIN 46(R)-8’’)
In December 2008, the FASB issued FSP FAS 140-4 and FIN 46(R)-8, which amends SFAS No. 140
‘‘Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities’’ (‘‘SFAS No. 140’’),
to require additional disclosures about transfers of financial assets and FIN 46, ‘‘Consolidation of Variable Interest
Entities’’ (‘‘FIN 46’’), to require additional disclosures about variable interest entities for both public enterprises
and sponsors that have a variable interest in a variable interest entity. The disclosures required are intended to
provide greater transparency to financial statement users about a transferor’s continuing involvement with
transferred financial assets and an enterprise’s involvement with variable interest entities and qualifying special
purpose entities. The provisions of this FASB staff position are effective for reporting periods ending after
November 15, 2008; therefore, the disclosure requirements, which have no impact to the Company’s results of
operations or financial position, were adopted at December 31, 2008.
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Notes