Office Depot 2007 Annual Report Download - page 58

56
inventory and cost of goods sold during the year. This estimate is regularly monitored and adjusted for current or
anticipated changes in purchase levels and for sales activity. Other promotional consideration received is event-
based or represents general support and is recognized as a reduction of cost of goods sold or inventory, as
appropriate based on the type of promotion and the agreement with the vendor.
New Accounting Standards: In September 2006, the FASB issued Statement of Financial Accounting Standards
No. 157, Fair Value Measurements, (“FAS 157”). This Standard defines fair value, establishes a framework for
measuring fair value in generally accepted accounting principles and expands disclosures about fair value
measurements. FAS 157 is effective for fiscal years beginning after November 15, 2007 for financial assets and
liabilities, as well as for any other assets and liabilities that are carried at fair value on a recurring basis in financial
statements. In November 2007, the FASB provided a one year deferral for the implementation of FAS 157 for other
nonfinancial assets and liabilities. We do not anticipate that adoption of FAS 157 will have a material impact on our
financial condition, results of operations or cash flows.
In September 2006, the FASB also issued Statement of Financial Accounting Standards No. 158, Employers’
Accounting for Defined Benefit Pension and Other Postretirement Plans — an amendment of FASB Statement No.
87, 88, 106 and 132(R), (“FAS 158”).This Standard prescribes two phases of implementation. In the first phase,
which we adopted in 2006, deferred pension gains and losses are reflected in accumulated other comprehensive
income. The second phase of FAS 158 requires that the valuation date of plan accounts be as of the end of the fiscal
year, with that change required to be implemented by fiscal years ending after December 15, 2008. We will change
the valuation date relating to our foreign plan and do not anticipate that this change will have a material impact on
our financial condition, results of operations or cash flows.
In February 2007, the FASB issued Statement of Financial Accounting Standards No. 159, The Fair Value Option
for Financial Assets and Financial Liabilities (“FAS 159”). This Standard allows companies to elect to follow fair
value accounting for certain financial assets and liabilities in an effort to mitigate volatility in earnings without
having to apply complex hedge accounting provisions. FAS 159 is applicable only to certain financial instruments
and is effective for fiscal years beginning after November 15, 2007. We do not anticipate that adoption of FAS 159
will have a material impact on our financial condition, results of operations or cash flows.
In December 2007, the FASB issued Statement of Financial Accounting Standards No. 141 (R), Business
Combinations (“FAS 141R”).This Standard retains the fundamental acquisition method of accounting established in
Statement 141; however, among other things, FAS 141R requires recognition of assets and liabilities of
noncontrolling interests acquired, fair value measurement of consideration and contingent consideration, expense
recognition for transaction costs and certain integration costs, recognition of the fair value of contingencies, and
adjustments to income tax expense for changes in an acquirer’s existing valuation allowances or uncertain tax
positions that result from the business combination. The Standard is effective for annual reporting periods beginning
after December 15, 2008 and shall be applied prospectively. We have not yet completed our assessment of the
impact FAS 141R will have on our financial condition, results of operations or cash flows.
In December 2007, the FASB issued Statement of Financial Accounting Standards No. 160, Noncontrolling
Interests in Consolidated Financial Statements. This Standard changes the way consolidated net income is
presented, requiring consolidated net income to report amounts attributable to both the parent and the noncontrolling
interest but earnings per share will be based on amounts attributable to the parent. It also establishes protocol for
recognizing certain ownership changes as equity transactions or gain or loss and requires presentation of
noncontrolling ownership interest as a component of consolidated equity. The Standard is effective for annual
reporting periods beginning after December 15, 2008 and shall be applied prospectively. We have not yet completed
our assessment of the impact FAS 160 will have on our financial condition, results of operations or cash flows.