Circuit City 2007 Annual Report Download - page 47

With the exception of the current liability of $2,264,000, the Company’s remaining tax liabilities and interest with respect to unrecognized
tax benefits have been reclassified to other non-current liabilities on the balance sheet because payment of cash is not anticipated within one
year. This amount at January 1, 2007 aggregates to approximately $1,115,000, including $305,000 for interest and penalties. The
Company’s continuing practice is to record interest and penalties related to tax positions in income tax expense in its consolidated statement
of operations.
During 2007, the Company resolved a state tax issue by paying an assessment of approximately $1,901,000 (including $169,000 in interest)
to a state taxing authority. As of December 2007 the Company’s liability for unrecognized tax benefits was approximately $1,547,000
(including interest and penalties of approximately $632,000).
Recent Accounting Pronouncements
In September 2006, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”)
No. 157 “Fair Value Measurements” which is effective for fiscal years beginning after November 15, 2007. This statement was issued to
increase consistency and comparability in fair value measurements and for expanded disclosures about fair value measurements. The
Company is currently evaluating the potential impact, if any, of this pronouncement.
In February 2007, the FASB issued SFAS No. 159 “The Fair Value Option for Financial Assets and Financial Liabilities (including an
amendment of FASB Statement No. 115)” which is effective for fiscal years beginning after November 15, 2007. This interpretation was
issued to improve financial reporting by providing entities with the opportunity to mitigate volatility in reported earnings caused by
measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. The Company is currently
evaluating the potential impact, if any, of this pronouncement.
In December 2007, the FASB issued SFAS No. 141R, “Business Combinations,” which replaces FASB Statement 141. SFAS No.141R
retains the requirement that the acquisition method of accounting be used for business combinations. The objective of SFAS No. 141R is to
improve the relevance, representational faithfulness and comparability that reporting entities provide in their financial reports about business
combinations and their effects. SFAS 141R establishes principles and requirements for how an acquirer 1) recognizes and measures
identifiable assets acquired, the liabilities assumed and any noncontrolling interest in the acquiree, 2) recognizes and measures the goodwill
acquired in the combination or a gain from a bargain purchase and 3) determines what information to disclose to enable users of the
financial statements to evaluate the nature and financial effects of the business combination. SFAS No. 141R is effective for business
combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning after December 15,
2008. The Company is currently evaluating the potential impact, if any, of this pronouncement.
In December 2007, the FASB issued SFAS No. 160, “Accounting and Reporting of Noncontrolling Interest” (“SFAS No. 160”). The
objective of SFAS 160 is to improve the relevance, comparability and transparency of the financial information that reporting entities
provide related to noncontrolling interests, sometimes referred to as minority interests. SFAS No. 160 requires, among other things, that
noncontrolling interests be shown separately in the consolidated entity’s equity section of the balance sheet. SFAS No. 160 also establishes
accounting and reporting standards for ownership interest in subsidiaries held by parties other than the parent, for presentation of amounts of
consolidated net income attributable to the parent and the noncontrolling interest, for consistency in accounting for changes in a parent’s
ownership interest when the parent retains a controlling interest, for the valuation of retained noncontrolling equity interests when a
subsidiary is deconsolidated and for providing sufficient disclosure that identifies and distinguishes the interests of the parent and the
interests of the noncontrolling owners. SFAS No. 160 is effective beginning January 1, 2009. The Company is currently evaluating the
potential impact, if any, of this pronouncement.
2.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment, net consist of the following (in thousands):
Included in property, plant and equipment are assets under capital leases, as follows (in thousands):
45
December 31,
2007 2006
Land and buildings
$
33,950
$
33,525
Furniture and fixtures, office, computer and other equipment and software
82,838
77,478
Leasehold improvements
12,748
12,762
129,536
123,765
Less accumulated depreciation and amortization
81,056
75,179
Property, plant and equipment, net
$
48,480
$
48,586
2007 2006
Furniture and fixtures, office, computer and other equipment
$
2,609
$
2,358
Less: Accumulated amortization
1,813
1,270
$
796
$
1,088