Windstream 2006 Annual Report Download - page 127

Recently Issued Accounting Pronouncements
In July 2006, the Financial Accounting Standards Board (“FASB”) issued FASB Interpretation No. 48, “Accounting
for Uncertainty in Income Taxes - an interpretation of FASB Statement No. 109” (“FIN 48”). FIN 48 prescribes a
comprehensive model for how companies should recognize, measure, present and disclose in their financial statements
uncertain tax positions taken or expected to be taken on a tax return. FIN 48 requires that realization of an uncertain
income tax position must be “more likely than not” (i.e., greater than 50% likelihood of receiving a benefit) before it
can be recognized in the financial statements. Further, FIN 48 prescribes the benefit to be recorded in the financial
statements as the amount most likely to be realized assuming a review by tax authorities having all relevant
information and applying current conventions. FIN 48 also sets forth new disclosure requirements regarding
unrecognized tax benefits and clarifies the financial statement classification of tax-related interest and penalties.
Consistent with Windstream’s past practices, interest charges on potential assessments and any penalties assessed by
taxing authorities will be classified as income tax expense within the Company’s consolidated statements of income.
FIN 48 is effective for fiscal years beginning after December 15, 2006, and we will be required to adopt this
interpretation in the first quarter of 2007. We do not expect that the adoption of FIN 48 will have a material impact on
our financial statements.
In September 2006, the FASB issued 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 related to fair
value measurements that are included in a company’s financial statements. SFAS No. 157 does not expand the use of
fair value measurements in financial statements, but emphasizes that fair value is a market-based measurement and not
an entity-specific measurement that should be based on an exchange transaction in which a company sells an asset or
transfers a liability (exit price). SFAS No. 157 also establishes a fair value hierarchy in which observable market data
would be considered the highest level, while fair value measurements based on an entity’s own assumptions would be
considered the lowest level. For calendar year companies like Windstream, SFAS No. 157 is effective beginning
January 1, 2008. The Company is currently evaluating the effects, if any, that SFAS No. 157 will have on its
consolidated financial statements.
In February 2007, the FASB issued SFAS 159, “The Fair Value Option for Financial Assets and Financial Liabilities -
Including an amendment of FASB Statement No. 115” (SFAS 159). SFAS 159 allows measurement at fair value of
eligible financial assets and liabilities that are not otherwise measured at fair value. If the fair value option for an
eligible item is elected, unrealized gains and losses for that item shall be reported in current earnings at each
subsequent reporting date. SFAS 159 also establishes presentation and disclosure requirements designed to draw
comparison between the different measurement attributes the company elects for similar types of assets and liabilities.
This statement is effective for fiscal years beginning after November 15, 2007. The company is in the process of
evaluating the application of the fair value option and its effect on its consolidated financial statements.
F-26