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62
conversion of our convertible debt. However, potential common shares arenot included in the
denominatorofthediluted earnings persharecalculationwhen inclusionof such shares wouldbe anti-
dilutive, such as in a period in which a netloss is recorded.
Recently Issued Accounting Pronouncements. In February 2006, the Financial Accounting Standards
Board (“FASB”) issued SFAS No. 155,“Accounting for Certain Hybrid Financial Instruments”
(“FAS 155”), an amendment of SFAS No. 133, “Accounting forDerivativeInstruments andHedging
Activities”, and SFAS No. 140, “Accountingfor Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities”, allowing companies to elect fair value measurementforinstrumentsin
their entirety in cases otherwise requiring a derivative to be bifurcated. FAS 155iseffective for allfinancial
instruments acquired or issued in fiscal years beginning after September 15, 2006, which will be our fiscal
year 2008.Wedo notexpect theadoption of this statementto have amaterialimpact on ourresults of
operations, financial position or cash flows.
In July 2006, the FASB issued InterpretationNo.48, “Accounting for Uncertainty in Income Taxes—an
interpretation of FASB Statement No. 109” (“FIN 48”). FIN 48 contains a two step approach to
recognizing and measuring uncertain tax positions accounted for in accordance with SFAS No. 109. The
first step is to evaluate thetax position for recognition by determining if theweight of available evidence
indicates it is more likely thannot thatthe position will be sustainedon audit, including resolution of
related appeals or litigationprocesses, if any. If a tax position is to be recognized after the first step, the
second step is to measurethetaxbenefitas the largestamount whichis more than 50%likely of being
realized upon ultimate settlement. FIN 48 is effective for fiscal years beginning after December 15, 2006,
which will be the first quarterofour fiscal year 2008. We areevaluating theimpact, if any, the adoption of
this statementwill have on our results of operations, financial position or cash flows.
In September2006, the SEC issued Staff Accounting BulletinNo. 108 (“SAB 108”). SAB108 states that
both a balance sheet (iron curtain) approach and an income statement (rollover) approach should be used
when quantifying and evaluating the materiality of a misstatement. SAB108 contains guidance on
correcting errors under the dual approachand provides transition guidance for correcting errors existing in
prior years. SAB 108 is effective for fiscal years beginningafter November 15,2006, which will be our fiscal
year 2008. We do notexpectthe adoption of this statement to have material impact on our results of
operations, financial position or cash flows.
In September2006, the FASB issued SFAS No. 157, “Fair Value Measurement” (“FAS 157”). FAS 157
provides a single definition of fair value, together with a framework for measuring it, andrequires
additional disclosure about the use of fair valueto measureassets and liabilities. FAS 157 emphasizes that
fair value is a market-based measurement, not an entity-specific measurement, and sets out afair value
hierarchy with the highest priority being quoted prices in active markets.FAS 157 is effective for fiscal
years beginning after November 15, 2007, which will be our fiscal year 2009. We are evaluatingthe impact,
if any, the adoption of this statementwill have on our results of operations, financial position or cash flows.
In February 2007, the FASB issued SFAS No.159, “The Fair Value Optionfor Financial Assets and
Financial Liabilities—Including an Amendment of FASB Statement No. 115” (“FAS 159”). FAS 159
permits an entity to choose to measure many financial instruments and certain other items at fair value at
specified election dates. Subsequent unrealized gains and losses on items for which the fair value option
has been elected will be reported in earnings. FAS 159 is effective for fiscalyears beginning after
November 15, 2007, which will be our fiscal year 2009.We are evaluatingthe impact, if any, the adoption
of this statement will have on our results of operations, financial position or cash flows.