Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
SFAS 157 In September 2006, the FASB issued SFAS 157, which establishes a framework for measuring fair value and requires expanded disclosures regarding fair value measurements. SFAS 157 does not require any new fair value measurements. However, it eliminates inconsistencies in the guidance provided in previous accounting pronouncements.
SFAS 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. Earlier application is encouraged, provided that the reporting entity has not yet issued financial statements for that fiscal year, including financial statements for an interim period within that fiscal year. All valuation adjustments will be recognized as cumulative-effect adjustments to the opening balance of retained earnings for the fiscal year in which SFAS 157 is initially applied. In December 2007, the FASB provided a one year deferral of SFAS 157 for nonfinancial assets and nonfinancial liabilities, except those that are recognized or disclosed at fair value on a recurring basis, at least annually. We will adopt SFAS 157 on January 1, 2008, for our financial assets and liabilities, which primarily consists of derivatives we record in accordance with SFAS 133, and on January 1, 2009, for our non-financial assets and liabilities. For our financial assets and liabilities, we expect that our adoption of SFAS 157 will primarily impact our disclosures and not have a material impact on our consolidated results of operations, cash flows or financial position. We are currently evaluating the impact with respect to our non-financial assets and liabilities.
SFAS 159 In February 2007, the FASB issued SFAS 159 which is effective for fiscal years beginning after November 15, 2007, but is not required to be adopted. SFAS 159 establishes a framework for measuring fair value for eligible financial assets and liabilities with the intention of reducing earnings volatility. We currently have no financial assets or liabilities eligible for this treatment and have no plans to adopt SFAS 159.
SFAS 160 In December 2007, the FASB issued SFAS 160, which is effective for fiscal years beginning after December 15, 2008. Early adoption is prohibited. SFAS 160 will require us to present our minority interest, to be referred to as a noncontrolling interest, separately within the capitalization section of our consolidated balance sheet. We will adopt SFAS 160 as of January 1, 2009.
FIN 39 was issued in March 1992 and provides guidance related to offsetting payable and receivable amounts related to certain contracts, including derivative contracts. It was effective for financial statements issued for periods beginning after December 15, 1993.
FSP FIN 39-1 was issued in April 2007 and is effective for us on January 1, 2008. FIN 39-1 amends FIN 39 and allows a company to elect to report certain derivative assets and liabilities subject to master netting agreements on either a gross basis or net basis on the balance sheet. The guidance also addresses reporting of collateral amounts relating to the netting agreements. We enter into derivative contracts, but FSP FIN 39-1 will not have a material effect on our consolidated financial condition.