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In June 2006, the Financial Accounting Standards Board
(“FASB”) issued Interpretation No. 48, “Accounting for
Uncertainty in Income Taxes - an interpretation of FASB
Statement No. 109” (“FIN 48”). FIN 48, which clarifies the
accounting for uncertainty, if any, in income taxes as
recognized in financial statements in accordance with FASB
Statement No. 109, “Accounting for Income Taxes,” represents
a significant change in the accounting and reporting of income
taxes. FIN 48 prescribes the accounting for uncertainty in
income taxes by providing guidance on the recognition
threshold and measurement of a position taken in a tax return
or a position expected to be taken in a tax return. Additionally,
FIN 48 provides guidance on derecognition, classification,
interest and penalties, accounting in interim periods,
disclosure, and transition. FIN 48 requires the cumulative effect
of adoption to be recorded as an adjustment to the opening
balance of retained earnings. The effective date of FIN 48 is for
fiscal years beginning after December 15, 2006. Accordingly,
we will adopt FIN 48 in the first quarter of our fiscal year
ending May 31, 2008. We are in the process of determining the
impact of the adoption of FIN 48 on our financial statements.
In September 2006, the FASB issued Statement No. 157
(“SFAS No. 157”), “Fair Value Measurements.” SFAS No. 157
clarifies the definition of fair value, establishes a framework
for measuring fair value, and expands the disclosures on fair
value measurements. This statement is effective for fiscal years
beginning after November 15, 2007.
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We are currently
evaluating the impact, if any, the adoption of this statement
will have on our financial statements.
In September 2006, the FASB issued Statement No. 158
(“SFAS No. 158”), “Employers’ Accounting for Defined Benefit
Pension and Other Postretirement Plans, an amendment of
FASB Statements No. 87, 88, 106 and 132(R).” SFAS No. 158
requires an employer to recognize a net liability or asset and
an offsetting adjustment to accumulated other comprehensive
income to report the funded status of defined benefit pension
and other postretirement benefit plans. The provisions of
SFAS No. 158 were adopted pursuant to the transition
provisions therein. Please refer to Note G, “Pension Plans,” for
further details.
SFAS No. 158 requires employers to measure plan assets and
obligations at their year-end balance sheet date. With the
exception of balances related to newly-added plans associated
with recent acquisitions, for which we have elected to apply a
May 31 measurement date, we currently measure defined
benefit pension plan assets and obligations as of the end of
February each year and postretirement health care benefit
obligations as of the end of May each year. We plan to change
our measurement dates to May 31 for all of our plans in
accordance with the transition provisions included per this
new pronouncement.
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