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arrangement, should be separately recognized and measured in accordance with FASB Statement No. 5, Accounting
for Contingencies. FSP EITF 00-19-2 also requires additional disclosure regarding the nature of any registration
payment arrangements, alternative settlement methods, the maximum potential amount of consideration and the
current carrying amount of the liability, if any. FSP EITF 00-19-2 is effective beginning fiscal 2008. The adoption of
FSP EITF 00-19-2 will not have a material effect on the Company’s consolidated financial statements.
In September 2006, the SEC issued Staff Accounting Bulletin No. 108, Considering the Effects of Prior Year
Misstatements when Quantifying Current Year Misstatements (“SAB 108”). SAB 108 requires analysis of
misstatements using both an income statement (rollover) approach and a balance sheet (iron curtain) approach
in assessing materiality and provides for a one-time cumulative effect transition adjustment. SAB 108 is effective
for fiscal year end 2007. The adoption of SAB 108 did not have a material impact on the Company’s consolidated
financial statements.
In September 2006, the FASB issued Statement of Financial Accounting Standard (“SFAS”) No. 158,
Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans (“SFAS 158”). SFAS 158
requires the recognition in the balance sheet of the overfunded or underfunded positions of defined benefit pension
and other postretirement plans, along with a corresponding non-cash after-tax adjustment to stockholders’ equity.
SFAS 158 is effective for fiscal year end 2007. Other than enhanced disclosure, the adoption of SFAS 158 did not
have a material impact on the Company’s consolidated financial statements. See Note 10 for further discussion.
In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements (“SFAS 157”),which defines
fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and
expands disclosures about fair value measurements. SFAS 157 does not require any new fair value measurements,
but provides guidance on how to measure fair value by providing a fair value hierarchy used to classify the source of
the information. SFAS 157 is effective for fiscal year 2009. The Company is evaluating the potential impact on its
consolidated financial statements upon adoption of SFAS 157.
In July 2006, the FASB issued Interpretation No. 48 (“FIN 48”), Accounting for Uncertainty in Income
Taxes — an interpretation of FASB Statement No. 109 (“SFAS 109”). FIN 48 clarifies the accounting for uncertainty
in income taxes recognized in an entity’s financial statements in accordance with SFAS 109 and prescribes that a
company should use a more-likely-than-not recognition threshold based on the technical merits of the tax position
taken or expected to be taken. Tax positions that meet the more-likely-than-not recognition threshold should be
measured in order to determine the tax benefit to be recognized in the financial statements. Additionally, FIN 48
provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure
and transition. The Company will adopt FIN 48 (as amended by FASB Staff Position No. FIN 48-1, Definition of
Settlement in FASB Interpretation No. 48) beginning fiscal 2008. The adoption of FIN 48 will not have a material
impact on the Company’s consolidated financial statements.
In March 2006, FASB issued SFAS No. 156, Accounting for Servicing of Financial Assets — an Amendment of
FASB Statement No. 140” (“SFAS 156”). SFAS 156 provides guidance on the accounting for servicing assets and
liabilities when an entity undertakes an obligation to service a financial asset by entering into a servicing contract.
This statement is effective for all transactions at the beginning of fiscal 2008. The adoption of SFAS 156 will not
have a material impact on the Company’s consolidated financial condition or results of operations.
In February 2006, the FASB issued SFAS No. 155, Accounting for Certain Hybrid Financial Instruments — an
Amendment of FASB Statements No. 133 and 140 (“SFAS 155”). SFAS 155 allows financial instruments that contain
an embedded derivative and that otherwise would require bifurcation to be accounted for as a whole on a fair value
basis, at the holders’ election. SFAS 155 also clarifies and amends certain other provisions of SFAS 133 and
SFAS 140. SFAS 155 is effective beginning fiscal 2008. The adoption of SFAS 155 will not have a material effect on
the Company’s consolidated financial statements.
55
AVNET, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)