Sunbeam 2007 Annual Report Download - page 80

subsidiary is deconsolidated; and requires expanded disclosures in the consolidated financial statements that
clearly identify and distinguish between the interests of the parent’s owners and the interests of the
noncontrolling owners of a subsidiary. SFAS 160 is effective for fiscal years, and interim periods within those
fiscal years, beginning on or after December 15, 2008. Earlier adoption is prohibited. The Company is currently
assessing the impact of SFAS 160 on its consolidated financial position and results of operations.
2. Adoption of New Accounting Pronouncements
In December 2004, the FASB issued SFAS 123r, which requires companies to expense the value of share
based payment awards. Under SFAS 123r, share-based payment awards result in compensation cost that will be
measured at fair value on the grant date of the awards, based on the estimated number of awards expected to vest,
and is recognized over the requisite service periods. Compensation cost for stock options that vest would not be
reversed if the awards expire without being exercised, and compensation cost would not be reversed for awards
where service periods have been rendered but market or performance criterion are not met. The Company
adopted SFAS 123r effective October 1, 2005 using the modified prospective transition method for all unvested
and outstanding share awards as of the date of adoption, and as such, the Company’s consolidated financial
statements for the three months ended December 31, 2005 reflect the impact of SFAS 123r. Under this method,
the Company did not restate its financial statements for prior periods to reflect compensation cost under SFAS
123r. During the three months ended December 31, 2005, the Company recorded compensation costs related to
this pronouncement, which included the effects of any grants made during the quarter, of approximately $31.8.
The impact of this cumulative effect of change in accounting principle, net of taxes, was $0.1 attributable to
estimated forfeitures on restricted stock awards for prior periods.
On November 10, 2005, the FASB issued FASB Staff Position (“FSP”) No. FAS 123(R)-3 “Transition
Election Related to Accounting for Tax Effects of Share-Based Payment Awards.” The Company elected to
adopt the alternative transition method provided in this FSP for calculating the tax effects of stock-based
compensation pursuant to SFAS 123r, which method includes simplified methods to establish the beginning
balance of the additional paid-in capital pool (“APIC pool”) related to the tax effects of employee stock-based
compensation, and to determine the subsequent impacts on the APIC pool and Consolidated Statements of Cash
Flows of the tax effects of employee stock-based compensation awards that are outstanding upon adoption of
SFAS 123r.
In May 2005, the FASB issued SFAS No. 154, “Accounting Changes and Error Correction,” effective for
accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005. SFAS
No. 154 supersedes APB Opinion No. 20, “Accounting Changes” and SFAS No. 3, “Reporting Accounting
Changes in Interim Financial Statements” and requires retrospective application to prior periods of any voluntary
changes to alternatively permitted accounting principles, unless impracticable.
In February 2006, the FASB issued SFAS No. 155 “Accounting for Certain Hybrid Financial Instrument—
an amendment of FASB No. 133 and 140” (“SFAS 155”). SFAS 155 is effective for all financial instruments
acquired or issued after the beginning of an entity’s first fiscal year that begins after September 15, 2006. The
adoption of this statement in 2007 had no material impact on the Company’s financial position, results of
operations or cash flows.
In March 2006, the FASB issued SFAS No. 156, “Accounting for Servicing of Financial Assets—an
amendment of FASB Statement No. 140” (“SFAS 156”). SFAS 156 is effective for fiscal years beginning after
September 15, 2006. The adoption of this statement in 2007 had no material impact on the Company’s financial
position, results of operations or cash flows.
In June 2006, the FASB issued FASB interpretation No. 48, “Accounting for Uncertainty in Income
Taxes—an interpretation of FASB No. 109” (“FIN 48”). FIN 48 prescribes a comprehensive model for
recognizing, measuring, presenting and disclosing in the financial statements tax positions taken or expected to
be taken on a tax return, including a decision whether to file or not to file in a particular jurisdiction. FIN 48 is
effective for fiscal years beginning after December 15, 2006. If there are changes in net assets as a result of
application of FIN 48 these will be accounted for as an adjustment to retained earnings. The effect of the
adoption of the FIN 48 is disclosed in Note 12.
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