SanDisk 2008 Annual Report Download - page 77

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Notes To Consolidated Financial Statements
Note 2: Recent Accounting Pronouncements
SFAS No. 160. In December 2007, the FASB issued Statement of Financial Accounting Standards No. 160
(“SFAS 160”), Noncontrolling Interests in Consolidated Financial Statements, an amendment of ARB No. 51.
SFAS 160 changes the accounting for noncontrolling (minority) interests in consolidated financial statements,
including the requirements to classify noncontrolling interests as a component of consolidated stockholders’
equity, to identify earnings attributable to noncontrolling interests reported as part of consolidated earnings, and
to measure gain or loss on the deconsolidated subsidiary based upon the fair value of the noncontrolling equity
investment. Additionally, SFAS 160 revises the accounting for both increases and decreases in a parent’s
controlling ownership interest. SFAS 160 is effective for fiscal years beginning after December 15, 2008, with
early adoption prohibited. The Company believes that the adoption of SFAS 160 will not have a material effect to
its consolidated results of operations and financial position.
SFAS No. 141 (revised).In December 2007, the FASB issued Statement of Financial Accounting Standards
No. 141 (revised) (“SFAS 141(R)”), Business Combinations. SFAS 141(R) changes the accounting for business
combinations by requiring that an acquiring entity measure and recognize identifiable assets acquired and
liabilities assumed at fair value with limited exceptions on the acquisition date. The changes include the
treatment of acquisition-related transaction costs, the valuation of any noncontrolling interest at acquisition date
fair value, the recording of acquired contingent liabilities at acquisition date fair value and the subsequent
re-measurement of such liabilities after the acquisition date, the recognition of capitalized in-process research
and development, the accounting for acquisition-related restructuring cost accruals subsequent to the acquisition
date, and the recognition of changes in the acquirer’s income tax valuation allowance. In addition, any changes to
the recognition or measurement of uncertain tax positions related to pre-acquisition periods will be recorded
through income tax expense, whereas the current accounting treatment requires any adjustment to be recognized
through the purchase price. SFAS 141(R) is effective for fiscal years beginning after December 15, 2008, with
early adoption prohibited. The adoption of SFAS 141(R) is expected to change the Company’s accounting
treatment prospectively for all business combinations consummated after the effective date.
FSP No. APB 14-1. In May 2008, the FASB issued FASB Staff Position (“FSP”) No. APB 14-1 (“FSP APB
14-1”), Accounting for Convertible Debt Instruments That May Be Settled in Cash Upon Conversion (Including
Partial Cash Settlement). FSP APB 14-1 requires the issuer to separately account for the liability and equity
components of the convertible debt instrument that may be settled in cash upon conversion (including partial
cash settlement) in a manner that reflects the issuer’s economic interest cost. Further, FSP APB 14-1 requires
bifurcation of a component of the debt, classification of that component to equity, and then accretion of the
resulting discount on the debt to result in the “economic interest cost” being reflected in the statement of
operations. FSP APB 14-1 is effective for fiscal years beginning after December 15, 2008, with early application
prohibited, and requires retrospective application to all periods presented.
The following tables illustrate the Company’s convertible long-term debt, net income (loss) and net income
(loss) per share on an as reported basis and the estimated pro forma effect if the Company had applied the
provisions of FSP APB 14-1 for all periods affected (in thousands):
December 28,
2008
December 30,
2007
Convertible long-term debt, as reported .................................... $1,225,000 $1,225,000
Convertible long-term debt, pro forma ..................................... 947,926 897,518
F-12