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Recent Accounting
Pronouncements In May 2004, the FASB issued FASB Staff Position
(FSP) No. 106-2, “Accounting and Disclosure Requirements Related to the
Medicare Prescription Drug, Improvement and Modernization Act of 2003.”
FSP No. 106-2 was effective for the first quarter after June 15, 2004,
and replaces FSP No. 106-1. FSP No. 106-1 was effective for the
Company’s consolidated financial statements for the year ended December
31, 2003. The Company has determined its retiree health plan is
actuarially equivalent and would qualify for the subsidy that would
begin in 2006. Because the Company is regulated, FSP No. 106-2 did not
have an impact on the income statement or cash flows in 2004. The
adjustment for FSP No. 106-2 impacted the balance sheet only, decreasing
liabilities and regulatory assets by $663 in 2004. In 2005, the Company
elected to apply the entire subsidy to reduce the cost of the retiree
health care expense. The impact on the net periodic postretirement
benefit costs for 2005 was to reduce the expense by $1,574.
In November 2004, the FASB issued SFAS No. 151, “Inventory Costs – an
Amendment to ARB No. 43, Chapter 4.” The statement clarifies the
accounting for abnormal amounts of idle facility expense, freight,
handling costs, and wasted material. The statement is effective for
fiscal years beginning after June 15, 2005. The adoption of this
statement is not expected to impact the Company’s financial position,
results of operations, or cash flows.
In December 2004, the FASB issued SFAS No. 153, “Exchange of Nonmonetary
Assets.” The statement amends Opinion 29 to eliminate the exception for
nonmonetary exchanges of similar productive assets and replaces it with
a general exception for exchanges of nonmonetary assets that do not have
commercial substance. The statement is effective for fiscal years
beginning after June 15, 2005. The adoption of this statement is not
expected to impact the Company’s financial position, results of
operations, or cash flows.
In December 2004, the FASB issued SFAS No. 123 (revised 2004)
“Share-Based Payment,” which revises SFAS No. 123, “Accounting for
Stock-Based Compensation.” The statement requires a public entity to
measure the cost of employee services received in exchange for an award
of equity instruments based on the grant-date fair value of the award
(with limited exceptions). The statement is effective for the Company in
the first quarter of 2006. The adoption of this statement is not
expected to materially impact the Company’s financial position, results
of operations, or cash flows for equity instruments based upon the level
of options
previously granted and the level of awards granted in January 2006. In
January 2006, Restrict Stock Awards were granted for 9,142 shares of
common stock and Stock Appreciation Rights Awards were granted for
37,500 shares of common stock.
In December 2004, the FASB issued FSP No. 109-1, “Application of FASB
Statement No. 109, Accounting for Income Tax, to the Tax Deduction on
Qualified Production Activities Provided by the American Jobs Creations
Act of 2004.” FSP No. 109-1 provides guidance on the application of SFAS
No. 109 to the provision within the American Jobs Creation Act of 2004
(Act) that provides a tax deduction on qualified production activities.
The guidance states that the deduction should be accounted for as a
special deduction in accordance with SFAS No. 109. The adoption of this
guidance did not have a material impact on the Company’s
financial position, results of operations, or cash flows. |
