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86 being focused: being better
In April 2002, the FASB issued SFAS 145, “Rescission of FASB Statements No. 4, 44,
and 64, Amendment of FASB Statement No. 13, and Technical Corrections.” This statement
re-regulates gains and losses on premature extinguishments of debt, as well as the treatment
of transactions from financing leases which are treated as rental agreements in future due to
modifications of the agreement. These transactions must be treated as sale and leaseback
transactions in accordance with SFAS 98. SFAS 145 also contains diverse technical changes.
The provisions of SFAS 145 are effective for fiscal years beginning after May 15, 2002, although
they can be applied prior to this date. The Company will apply SFAS 145 from January
1, 2003. The Company does not expect the application of SFAS 145 to have a significant
impact on the consolidated financial statements.
In July 2002, the FASB issued SFAS 146 “Accounting for Costs Associated with Exit or
Disposal Activities”, which annuls Emerging Issues Task Force (EITF) Issue 94-3, “Liability
Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including
Certain Costs Incurred in a Restructuring).” SFAS 146 requires that expenses resulting
from the exit or disposal of activities be first recognized when costs resulting from an obligation
to a third party are incurred, and not at the point in time when the management has
committed to an exit or disposal plan. These expenses include certain compensation payments
to employees, costs incurred through early termination of contracts and costs related to the
closure of plants or the relocation of employees. SFAS 146 also rules that the obligation be
valued at fair market value and modified in accordance with estimated cash flows. The rules of
the new statement are to be applied where there is a prospect of closure or sale of operations
which will be initiated after December 31, 2002. The statement can be applied earlier. Calculations
of any effects arising from application of SFAS 146 on the consolidated financial
statements have not been concluded. The Company will apply the statement from January 1,
2003.
In October 2002, the FASB issued SFAS 147 “Acquisitions of Certain Financial Institutions
– an Amendment of FASB Statement No. 72 and 144 and FASB Interpretation No. 9.”
This standard deals with how to account for the acquisition of a financial institution, as well as
how to account for long-standing customer relationships as intangible assets in connection
with SFAS 144 “Accounting for the Impairment or Disposal of Long-Lived Assets”. SFAS 147
must be applied to fiscal years starting after October 1, 2002. The Company will apply SFAS
147 with effect from January 1, 2003. Pfleiderer does not expect the application of SFAS 147
to have a significant impact on the consolidated financial statements.
In December 2002, the FASB issued SFAS 148 “Accounting for Stock-Based Compensation
– Transition and Disclosure”. SFAS 148 amends FASB Statement No. 123 “Accounting
for Stock-Based Compensation” and offers alternative methods of transition to the fair-value
method under SFAS 123. SFAS 148 also changes the disclosure requirements for the notes
under SFAS 123 and APB Opinion No. 28 “Interim Financial Reporting”. Accordingly, in the
summary of main accounting principles, the effect of the method of accounting chosen (either
APB 25 or SFAS 123) on results and earnings per share with regard to employee subscription
rights must be given in the annual and quarterly reports. SFAS 148 does not require the company
to use the fair-value method pursuant to SFAS 123. However, all companies must prepare