Pioneer 2007 Annual Report Download - page 42

PIONEER CORPORATION41
qualifying as hedges of future cash flows, the effective portion
of changes in fair value is recorded in other comprehensive
income, then recognized in earnings along with the related
effects of the hedged items. Any ineffective portion of hedges
is reported in earnings as it occurs.
Forward exchange contracts and currency swaps are utilized
to hedge certain foreign currency and interest rate exposures.
However, none of these derivatives were designated as hedg-
ing instruments under SFAS No. 133 at March 31, 2005, 2006
and 2007. Unrealized gains and losses on such instruments are
recognized currently in earnings.
New Accounting Standards—
In March 2006, the Financial Accounting Standards Board
(“FASB”) issued SFAS No. 156, “Accounting for Servicing of
Financial Assets.” SFAS No. 156 was issued to simplify the
accounting for servicing assets and servicing liabilities and
reduce the volatility that results from the use of different
measurement attributes for servicing rights and the related
financial instruments used to hedge risks associated with those
servicing rights. SFAS No. 156 clarifies when to separately
account for servicing rights, requires separately recognized
servicing rights to be initially measured at fair value, and pro-
vides the option to subsequently account for those servicing
rights at either fair value or under the amortization method
previously required under SFAS No. 140, “Accounting for
Transfers and Servicing of Financial Assets and Extinguishments
of Liabilities.” SFAS No. 156 is effective for fiscal years begin-
ning after September 15, 2006. The adoption of this standard
is not expected to have any material impact on the Company’s
consolidated statements of operations or financial position.
In June 2006, the FASB issued FASB Interpretation No. 48,
“Accounting for Uncertainty in Income Taxes, an interpretation
of FASB Statement No. 109” (“FIN 48”). FIN 48 clarifies the
accounting for uncertainty in income taxes recognized in accor-
dance with SFAS No. 109, ”Accounting for Income Taxes.” FIN
48 prescribes a two-step recognition threshold and measure-
ment attribute for financial statement recognition and
measurement of a tax position taken or expected to be taken
in a tax return. This interpretation requires that realization of
an uncertain income tax position must be “more likely than
not” before it can be recognized in the financial statements. In
addition, FIN 48 provides guidance on measurement,
derecognition, classification, interest and penalties, accounting
in interim periods, and disclosure and transition. FIN 48 is effec-
tive for fiscal years beginning after December 15, 2006. The
adoption of this interpretation is not expected to have any
material impact on the Company’s consolidated statements of
operations or financial position.
In June 2006, the EITF reached a consensus on EITF Issue
No. 06-2, “Accounting for Sabbatical Leave and Other Similar
Benefits” (“EITF 06-2”). EITF 06-2 provides that an employee’s
right to a compensated absence under a sabbatical leave or
similar benefit arrangement in which the employee is not
required to perform any duties during the absence is an accu-
mulating benefit. Therefore, such arrangements should be
accounted for as a liability with the cost recognized over the
service period during which the employee earns the benefit.
EITF 06-2 is effective for fiscal years beginning after December
15, 2006. The adoption of this guidance is not expected to
have any material impact on the Company’s consolidated state-
ments of operations or financial position.
In September 2006, the FASB issued SFAS No. 157, “Fair
Value Measurements.” SFAS No. 157 defines fair value, estab-
lishes a framework for measuring fair value in accordance with
generally accepted accounting principles, and expands disclo-
sures about fair value measurements. SFAS No. 157 is appli-
cable whenever another accounting pronouncement requires
or permits assets and liabilities to be measured at fair value.
SFAS No. 157 does not expand or require any new fair value
measures. SFAS No. 157 is effective for fiscal years beginning
after November 15, 2007. The adoption of this standard is not
expected to have any material impact on the Company’s
consolidated statements of operations or financial position.
In September 2006, the FASB issued 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 No. 158 requires an employer
to: (a) recognize the over-funded or under-funded status of a
defined benefit postretirement plan as an asset or liability in its
statement of financial position, (b) recognize changes in that
funded status in the year in which the changes occur through
comprehensive income, (c) measure the funded status of a plan
as of the date of its year-end statement of financial position,
with limited exceptions, and (d) disclose in the notes to finan-
cial statements certain additional information. The Company
initially adopted the recognition and related disclosure provi-
sions (a), (b) and (d) above of SFAS No. 158 as of the end of
the year ended March 31, 2007. See Note 12, “Pension plans
and accrued severance cost” for the incremental effect of
applying the provisions. The adoption of the measurement date
provisions (c) above will be effective for the year ending March
31, 2009, however, the Company has already measured its plans
as of the date of its year-end statement of financial position.