This excerpt taken from the VLG 10-K filed Sep 28, 2006.
New Accounting Standards
In November 2004, the FASB issued SFAS No. 151 that requires that items such as idle facility expense, excessive spoilage, double freight and handling costs be recognized as current period charges. In addition, it requires that the allocation of fixed production overheads to the costs of conversion be based on the normal capacity of the production facilities. The standard was effective July 1, 2005 and no current period charges were required to be recognized.
In December 2004, the FASB issued Staff Position (FSP) No. 109-1 providing guidance on accounting for the manufacturing tax deduction provided for in the American Jobs Creation Act of 2004. The staff position calls for the tax deduction to be accounted for as a special deduction, beginning with our 2006 tax year. The adoption of this position did not materially affect our effective tax rate.
In February 2005, the FASB issued Emerging Issues Task Force (EITF) No. 04-10, Determining Whether to Aggregate Segments That Do Not Meet the Quantitative Thresholds. This statement clarifies the aggregation criteria of operating segments as defined in SFAS No. 131. This statement was effective for fiscal years ending after September 15, 2005. This statement resulted in Valley reporting four reportable segments for the year ended June 30, 2006. (See Note 15).
In May 2005, the FASB issued Statement of Financial Accounting Standards No. 154, Accounting Changes and Error Corrections. This statement replaces APB 20 cumulative effect accounting with retroactive restatement of comparative financial statements. It applies to all voluntary changes in accounting principle and defines retrospective application to differentiate it from restatements due to incorrect accounting. The provisions of this statement are effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005 and will become effective for Valley for the fiscal year ended June 30, 2007.
In June 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 method of recognition, measurement, presentation and disclosure within the financial statements for uncertain tax positions that a company has taken or expects to take in a tax return. FIN 48 is effective for Valley on July 1, 2007. We are in the process of evaluating the provisions of FIN 48 to determine if there will be any impact of adoption on our results of operations or financial condition.