Seagate 2008 Annual Report Download - page 86

Table of Contents
SEAGATE TECHNOLOGY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
1. Summary of Significant Accounting Policies (Continued)
In December 2007, the FASB issued SFAS No. 141 (revised 2007), Business Combinations (SFAS No. 141(R)). Under SFAS No. 141(R),
an entity is required to recognize the assets acquired, liabilities assumed, contractual contingencies, and contingent consideration at their fair
value on the acquisition date. It further requires that acquisition-related costs be recognized separately from the acquisition and expensed as
incurred; that restructuring costs generally be expensed in periods subsequent to the acquisition date; and that changes in accounting for deferred
tax asset valuation allowances and acquired income tax uncertainties after the measurement period be recognized as a component of provision
for taxes. In addition, acquired in-process research and development is capitalized as an intangible asset and amortized over its estimated useful
life. This pronouncement should be applied prospectively to business combinations for which the acquisition date is on or after the beginning of
the first annual reporting period beginning on or after December 15, 2008. The adoption of SFAS No. 141(R) will change the Company's
accounting treatment for business combinations on a prospective basis beginning in its first quarter of fiscal year 2010.
In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements (SFAS No. 157). In the first quarter of fiscal year 2009, the
Company adopted the recognition and disclosure requirements of SFAS No. 157 for all financial assets and financial liabilities recognized or
disclosed at fair value in the financial statements on a recurring basis (at least annually). SFAS No. 157 defines fair value, establishes a
framework for measuring fair value, and enhances fair value measurement disclosure. The adoption of this part of SFAS No. 157 did not have a
material impact on the Company's consolidated financial statements, and the resulting fair values of the Company's financial assets and financial
liabilities calculated under SFAS No. 157 after adoption were not significantly different than the fair values that would have been calculated
under previous guidance. See Note 8 for further details on the Company's fair value measurements. With respect to the recognition and
disclosure requirements of SFAS No. 157 related to non-financial assets and non-
financial liabilities, the Company will adopt these requirements
beginning in the first quarter of its fiscal year 2010.
In February 2008, the FASB issued FASB Staff Position (FSP) No. FAS 157-1, Application of FASB Statement No. 157 to FASB Statement
No. 13 and Other Accounting Pronouncements That Address Fair Value Measurements for Purposes of Lease Classification or Measurement
under Statement 13 (FSP FAS 152-1) and FSP No. FAS 157-2, Effective Date of FASB Statement No. 157 (FSP FAS 152-2). Collectively, the
Staff Positions defer the effective date of SFAS No. 157 to fiscal years beginning after November 15, 2008 for nonfinancial assets and
nonfinancial liabilities except for items that are recognized or disclosed at fair value on a recurring basis at least annually, and amend the scope
of SFAS No. 157. As described in Note 8, the Company has adopted SFAS No. 157 and the related FASB staff positions except for those items
specifically deferred under FSP FAS 157-2. The Company is currently evaluating the impact of the full adoption of SFAS No. 157 on its fiscal
year 2010 consolidated results of operations and financial condition.
In June 2008, FASB EITF issued Issue No. 07-5,
Determining Whether an Instrument (or Embedded Feature) Is Indexed to an Entity's Own
Stock (EITF No. 07-5). EITF No. 07-5 addresses the determination of whether an instrument (or an embedded feature) is indexed to an entity's
own stock. EITF No. 07-5 would require the Company to account for its embedded conversion options as derivatives and record them on its
balance sheet as a liability with subsequent fair value changes recorded in the income statement. Subsequent fair value adjustments may result in
significant charges or credits recorded in the Company's consolidated statement of operations. As a result, its financial position and results of
operations and earnings per share may be impacted. EITF No. 07-5 is effective for financial statements issued for fiscal years beginning after
December 15, 2008, and interim periods within those fiscal years.
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