US Bank 2002 Annual Report Download - page 72

VIEs created or entered into after January 31, 2003, and disclosure of the impact of stock options utilizing the Black-
for pre-existing VIEs in the first reporting period beginning Scholes valuation method.
after June 15, 2003. If applicable, transition rules allow the Guarantees In November 2002, the Financial Accounting
restatement of financial statements or prospective Standards Board issued Interpretation No. 45 (‘‘FIN 45’’),
application with a cumulative effect adjustment. In addition, ‘‘Guarantor’s Accounting and Disclosure Requirements for
FIN 46 expands the disclosure requirements for the Guarantees, Including Indirect Guarantees of Indebtedness
beneficiary of a significant or a majority of the variable of Others,’’ to clarify accounting and disclosure
interests to provide information regarding the nature, requirements relating to a guarantor’s issuance of certain
purpose and financial characteristics of the entities. types of guarantees. FIN 45 requires entities to disclose
The Company has various relationships with special additional information about certain guarantees, or groups
purpose entities (‘‘SPEs’’). For details of the Company’s of similar guarantees, even if the likelihood of the
involvement with SPEs, refer to Note 9 of the Notes to guarantor’s having to make any payments under the
Consolidated Financial Statements. The Company is in the guarantee is remote. The disclosure provisions are effective
process of determining whether its off-balance sheet for financial statements for fiscal years ended after
structures are subject to the provisions of FIN 46. Because December 15, 2002. For certain guarantees, the
the loan and investment conduits and the asset-backed interpretation also requires that guarantors recognize a
securitizations are QSPEs, which are exempted from liability equal to the fair value of the guarantee upon its
consolidation, the Company does not believe the conduits issuance. This initial recognition and measurement provision
or securitizations will require consolidation in its financial is to be applied only on a prospective basis to guarantees
statements. Refer to Note 9 of the Notes to Consolidated issued or modified after December 31, 2002. The Company
Financial Statements for additional information on conduits does not expect the recognition and measurement provision
and securitizations. The Company believes it is reasonably to have a material impact on the Company’s financial
possible that synthetic leases will be consolidated under the statements and has provided additional disclosures required
provisions of FIN 46. At this time, the Company does not by FIN 45 in the financial statements. Refer to Note 23 of
believe that the adoption of FIN 46 will have a material the Notes to Consolidated Financial Statements for further
adverse impact on the Company’s financial statements. information on guarantees.
Stock-Based Compensation In December 2002, the Business Combinations and Goodwill and Other Intangible
Financial Accounting Standards Board issued Statement of Assets In June 2001, the Financial Accounting Standards
Financial Accounting Standards No. 148 (‘‘SFAS 148’’), Board issued Statement of Financial Accounting Standards
‘‘Accounting for Stock-Based Compensation—Transition No. 141 (‘‘SFAS 141’’), ‘‘Business Combinations,’’ and
and Disclosure,’’ an amendment of Statement of Financial Statement of Financial Accounting Standards No. 142
Accounting Standards No. 123. SFAS 148 provides (‘‘SFAS 142’’), ‘‘Goodwill and Other Intangible Assets.’’
alternative methods of transition for a voluntary change to SFAS 141 mandates that the purchase method of accounting
the fair value based method of accounting for stock-based be used for all business combinations initiated after
employee compensation. In addition, SFAS 148 requires June 30, 2001, and establishes specific criteria for the
prominent disclosures in interim as well as annual financial recognition of intangible assets separately from goodwill.
statements about the method of accounting for stock-based SFAS 142 addresses the accounting for goodwill and
employee compensation and the effect of the method used intangible assets subsequent to their acquisition. The
on reported net income. SFAS 148 is effective for fiscal Company adopted SFAS 142 on January 1, 2002. The most
years ended after December 15, 2002. The Company plans significant changes made by SFAS 142 are that goodwill and
to continue to account for stock-based employee indefinite lived intangible assets are no longer amortized
compensation under the intrinsic value based method and to and are to be tested for impairment at least annually.
provide disclosure of the impact of the fair value based Impairment charges from the initial impairment test were
method on reported income. Employee stock options have recognized as a ‘‘cumulative effect of change in accounting
characteristics that are significantly different from those of principles’’ in the income statement. The amortization
traded options, including vesting provisions and trading provisions of SFAS 142 apply to goodwill and intangible
limitations that impact their liquidity. Therefore, the assets acquired after June 30, 2001. With respect to
existing option pricing models, such as Black-Scholes, do goodwill and intangible assets acquired prior to July 1,
not necessarily provide a reliable measure of the fair value 2001, the amortization provisions of SFAS 142 were
of employee stock options. Refer to Note 19 of the Notes effective upon adoption of SFAS 142.
to Consolidated Financial Statements for proforma Applying the provisions of SFAS 141 to recent
acquisitions and the provisions of SFAS 142 to purchase
70 U.S. Bancorp