liabilities, except those that are recognized or disclosed at fair value in the financial statements on a
recurring basis (at least annually). SFAS No. 157 and FSP 157-b are effective for financial statements
issued for fiscal years beginning after November 15, 2007. We have elected a partial deferral of SFAS
No. 157 under the provisions of FSP 157-b related to the measurement of fair value used when
evaluating intangible assets and other long-lived assets for impairment and valuing liabilities for exit or
disposal activities. The impact of partially adopting SFAS No. 157 effective January 1, 2008 is not
expected to be material to our consolidated financial statements.
In February 2007, the FASB issued SFAS No. 159, ‘‘The Fair Value Option for Financial Assets
and Financial Liabilities—Including an Amendment of SFAS 115’’ (SFAS No. 159), which permits, but
does not require, us to measure financial instruments and certain other items at fair value. Unrealized
gains and losses on items for which the fair value option has been elected are reported in earnings.
This statement is effective for financial statements issued for fiscal years beginning after November 15,
2007. As we have not elected to fair value any of our financial instruments under the provisions of
SFAS No. 159, the adoption of this statement will not have any impact to our financial statements.
In June 2007, the Emerging Issues Task Force issued EITF Issue 07-03, ‘‘Accounting for Advance
Payments for Goods or Services to Be Used in Future Research and Development’’ (EITF 07-03).
EITF 07-03 addresses the diversity in practice with respect to accounting for non-refundable portions of
payments made by a research and development entity for future research and development activities.
Under EITF 07-03, an entity would defer and capitalize non-refundable advance payments made for
research and development activities until the related goods are delivered or the related services are
performed. EITF 07-03 is effective for fiscal years beginning after December 15, 2007 and interim
periods within those years. We do not expect the adoption of EITF 07-03 will have a material impact
on our consolidated financial position or results of operations.
In December 2007, the FASB issued SFAS No. 141(R), ‘‘Business Combinations’’ (SFAS
No. 141(R)), to replace SFAS No. 141, ‘‘Business Combinations’’. SFAS No. 141(R) requires use of the
acquisition method of accounting, defines the acquirer, establishes the acquisition date and broadens
the scope to all transactions and other events in which one entity obtains control over one or more
other businesses. This statement is effective for financial statements issued for fiscal years beginning on
or after December 15, 2008 with earlier adoption prohibited. While there will be no impact to our
financial statements on the accounting for acquisitions completed prior to December 31, 2008, the
adoption of SFAS No. 141(R) on January 1, 2009 could materially change the accounting for business
combinations consummated after that date.
In December 2007, the FASB issued SFAS No. 160, ‘‘Noncontrolling Interests in Consolidated
Financial Statements—an amendment of ARB No. 51’’ (SFAS No. 160). SFAS No. 160 establishes
accounting and reporting standards for the noncontrolling interest in a subsidiary and for the retained
interest and gain or loss when a subsidiary is deconsolidated. This statement is effective for financial
statements issued for fiscal years beginning on or after December 15, 2008 with earlier adoption
prohibited. We do not expect the adoption of SFAS No. 160 to have a material impact on our financial
statements as we currently do not have any noncontrolling interests. However, the adoption of
SFAS 160 could materially change the accounting for such interests outstanding as of, or subsequent to,
the date of adoption.
Application of Critical Accounting Estimates
The discussion and analysis of our financial condition and results of operations is based on our
consolidated financial statements, which have been prepared in accordance with U.S. generally accepted
accounting principles. The preparation of these financial statements requires us to make estimates and
judgments that affect our reported assets and liabilities, revenues and expenses, and other financial
information. Actual results may differ significantly from these estimates under different assumptions
and conditions. In addition, our reported financial condition and results of operations could vary due to
a change in the application of a particular accounting standard.
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