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Accounting for Convertible
Instruments
James Barker
Michael Mueller
Mark Bolton
Magnus Orrell
July 31, 2007
Financial Reporting Presents:
Copyright © 2007 Deloitte Development LLC. All rights reserved.
Agenda
• Flashback to 1st Convertibles Dbriefs
• Let’s Meet Ms. Host
• Let’s Meet Mr. Conventional
• Let’s Meet Mr. ―Not-So‖ Conventional
• What’s left…
Copyright © 2007 Deloitte Development LLC. All rights reserved.
Learning Objectives
At the end of the webcast, participants should have
an understanding of
• how the host contract of a convertible instrument
is determined
• when a convertible instrument qualifies as
―conventional‖ – impact on EITF 00-19 analysis
• the 8 factors in paragraphs 12-32 of EITF 00-19.
Copyright © 2007 Deloitte Development LLC. All rights reserved.
Keep in Mind
• This webcast does not provide official Deloitte &
Touche LLP interpretative accounting guidance.
• Don’t expect this webcast to turn you into a convertibles
expert.
• Remember, the Convertibles Dbriefs are designed to
build on each other.
• If you haven’t yet had the opportunity to view the
previous webcast, you are out of luck…just joking, you
can retrieve the webcast (see last slide).
• Seriously, try to have some fun with this stuff
because, otherwise, you’ll look like this guy…
Copyright © 2007 Deloitte Development LLC. All rights reserved.
Polling Question #1
Did you attend the previous webcast?
•Yes
•No
Copyright © 2007 Deloitte Development LLC. All rights reserved.
Flashback to 1st Convertibles Dbriefs
Back then (1969)…
Convertible into a fixed
# of shares
Standard antidilution
provisions
If-converted method
Convertible Debt
1
Copyright © 2007 Deloitte Development LLC. All rights reserved.
Flashback to 1st Convertibles Dbriefs
…Today (2007)
Contingently
convertible
Conversion spread
settled in net shares,
principal settled in
cash
Non-standard
antidilution provisions
Treasury stock method
Instrument C
2
Copyright © 2007 Deloitte Development LLC. All rights reserved.
Flashback to 1st Convertibles Dbriefs
CONVERTIBLES – Accounting Challenges
Attractiveness of Convertibles
Issuer: Low cost financing
Investor: Upside potential
Product Complexity
Too many form-driven rules in too many
places in GAAP
# of Restatements
Accounting Complexity
CoCos, Instrument C, Instrument X,
other features to minimize EPS/
economic dilution…
3
Copyright © 2007 Deloitte Development LLC. All rights reserved.
Flashback to 1st Convertibles Dbriefs
… Need to identify embedded derivatives and
evaluate them for separation under FAS 133
… Need to determine host contract and recognize
that it might change
… Need to determine accounting
for host contract and separated embedded
derivatives
… Need to determine EPS impact
Complex because…
Initially and
Subsequently
!
4
Copyright © 2007 Deloitte Development LLC. All rights reserved.
Flashback to 1st Convertibles Dbriefs
Information compiled from Audit Analytics, 2006 Financial Restatements – A Six Year
Comparison (Audit Analytics Briefing: February 2007)
1,599
329
1,876
511
0
250
500
750
1,000
1,250
1,500
1,750
2,000
2005 2006
Restatements in 2005 and 2006: in the aggregate +
debt/equity related
27.2%20.6%
5
Single
largest
category!
Copyright © 2007 Deloitte Development LLC. All rights reserved.
Flashback to 1st Convertibles Dbriefs
12a: Not clearly and closely related to host contract?
12b: Hybrid = Not marked to market under other GAAP?
12c: If freestanding, derivative?
6a: Underlying, notional?
6b: Small initial net investment?
6c: Net settleable?
11a: Qualify for Scope Exception?
EITF 01-6: Indexed to Issuer’s Own Stock?
EITF 00-19: Classified in Equity?
Does the conversion option in a convertible instrument
require bifurcation from the host contract?
6
Copyright © 2007 Deloitte Development LLC. All rights reserved.
Flashback to 1st Convertibles Dbriefs
12a: Not clearly and closely related to host contract?
12b: Hybrid = Not marked to market under other GAAP?
12c: If freestanding, derivative?
6a: Underlying, notional?
6b: Small initial net investment?
6c: Net settleable?
11a: Qualify for Scope Exception?
EITF 01-6: Indexed to Issuer’s Own Stock?
EITF 00-19: Classified in Equity?
Does the conversion option in a convertible instrument
require bifurcation from the host contract?
7
Today’s
focus
Copyright © 2007 Deloitte Development LLC. All rights reserved.
Polling Question #2
Test question: What are the accounting implications
of applying SFAS 133 to the conversion option?
•Income statement volatility for the issuer
•Higher interest expense on the debt
•Valuation challenges
•All of the above
•Don't know/Not applicable
Copyright © 2007 Deloitte Development LLC. All rights reserved.
Let’s Meet Ms. Host
8
Before we say “hi” to Ms.
Host, let’s go back to the
host discussion in 1st
Dbriefs…
Copyright © 2007 Deloitte Development LLC. All rights reserved.
Let’s Meet Ms. Host
Debt/Equity Host
(“Host Contract”)
Previously…
Conversion Option
(“Embedded Feature”)
Convertible Debt/Preferred Stock (“Hybrid Instrument”)
9
Copyright © 2007 Deloitte Development LLC. All rights reserved.
Let’s Meet Ms. Host
Previously… (continued)
$950
$50
$1,000
10
DR. Cash $1,000
DR. Debt Discount $50
CR. Derivative Liability $50
CR. Debt $1,000
Initial Accounting
Derivative liability remeasured at FV, with
changes in FV being recorded in P/L
Debt discount accreted to interest
expense via effective yield method
Subsequent Accounting
(Example ignores issue costs)
Copyright © 2007 Deloitte Development LLC. All rights reserved.
Let’s Meet Ms. Host
Guiding principle: Does the host contract encompass a residual interest in the issuing entity (para. 60 of FAS 133)?
Equity Host Debt Host
Yes No
EITF Topic D-109:
Consider ALL
substantive terms
of the convertible!
11
Copyright © 2007 Deloitte Development LLC. All rights reserved.
Let’s Meet Ms. Host
• Debt instrument
• Cumulative fixed-rate preferred stock with mandatory redemption feature
Cumulative participating perpetual preferred stock
Equity Host Debt Host
12
Copyright © 2007 Deloitte Development LLC. All rights reserved.
Let’s Meet Ms. Host
• Debt instrument
• Cumulative fixed-rate preferred stock with mandatory redemption feature
Cumulative participating perpetual preferred stock
Equity Host Debt Host
Impact of embedding a
fixed-price put option?
Impact of mandatory redemption
at FV?
13
Copyright © 2007 Deloitte Development LLC. All rights reserved.
Let’s Meet Ms. Host
Example #1
A issues perpetual preferred shares:• liquidation preference of $1,000 per share• dividends of 6% per annum• convertible into 100 shares of A’s common stock• puttable by investor for cash of $1,000 per share,
plus accrued dividends.
Question: When evaluating the conversion option, what is the host contract (debt or equity)?
14
Copyright © 2007 Deloitte Development LLC. All rights reserved.
Let’s Meet Ms. Host
Example #1 (continued)
Terms of Convertible Equity-Like Debt-Like
No creditor rights
Seniority in liquidation
Stated dividend
Conversion option
(fixed # of shares)
Ignore embedded feature that
is being evaluated for
bifurcation
Put option (fixed price)
15
Seems like a debt host. Let’s look
at it graphically…
Copyright © 2007 Deloitte Development LLC. All rights reserved.
Let’s Meet Ms. Host
Example #1 (continued): Payoff for HYBRID
$10
$1,000
Stock Price
Payoff
Downside
protection like a
debt holder
Upside
potential like
residual
interest holder
16
Copyright © 2007 Deloitte Development LLC. All rights reserved.
Let’s Meet Ms. Host
Example #1 (continued): Payoff for HOST
$10
$1,000
Stock Price
Payoff
Downside
protection like a
debt holder
17
Copyright © 2007 Deloitte Development LLC. All rights reserved.
Let’s Meet Ms. Host
Example #1 (continued)
A issues perpetual preferred shares:• liquidation preference of $1,000 per share• dividends of 6% per annum• convertible into 100 shares of A’s common stock• puttable by investor for cash of $1,000 per share,
plus accrued dividends.
Answer: DEBT HOST as embedded put at a fixed $ amount provides for downside protection, which is more debt-like.
18
Copyright © 2007 Deloitte Development LLC. All rights reserved.
Let’s Meet Ms. Host
Example #2
A issues perpetual preferred shares:• liquidation preference of $1,000 per share• dividends of 6% per annum• convertible into 100 shares of A’s common stock• puttable by investor for cash of $1,000 per share,
plus accrued dividends.
Question: When evaluating the put option, what is the host contract (debt or equity)?
Let’s say
hi to Ms.
Host!
19
Copyright © 2007 Deloitte Development LLC. All rights reserved.
Let’s Meet Ms. Host
Example #2 (continued)
Terms of Convertible Equity-Like Debt-Like
No creditor rights
Seniority in liquidation
Stated dividend
Conversion option
(fixed # of shares)
Put option (fixed price) Ignore embedded feature that
is being evaluated for
bifurcation
20
Copyright © 2007 Deloitte Development LLC. All rights reserved.
Let’s Meet Ms. Host
Example #2 (continued): Payoff for HYBRID
$10
$1,000
Stock Price
Payoff
Downside
protection like a
debt holder
Upside
potential like
residual
interest holder
21
Copyright © 2007 Deloitte Development LLC. All rights reserved.
Let’s Meet Ms. Host
Example #2 (continued): Payoff for HOST
$10
$1,000
Stock Price
Payoff
Upside
potential like
residual
interest holder
22
No principal
protection like a
debt holder
Copyright © 2007 Deloitte Development LLC. All rights reserved.
Let’s Meet Ms. Host
Example #2 (continued)
A issues perpetual preferred shares:• liquidation preference of $1,000 per share• dividends of 6% per annum• convertible into 100 shares of A’s common stock• puttable by investor for cash of $1,000 per share,
plus accrued dividends.
Answer: EQUITY HOST as absent the fixed-price put, the economic profile of the preferred stock is more akin to that of a residual interest holder.
23
Copyright © 2007 Deloitte Development LLC. All rights reserved. 24
When evaluating the
conversion option…
Equity Host
Put Option
HybridDebt Host
Conversion Option
Hybrid
When evaluating the
put option…
Chama…Chama…Chama…Chameleon
Let’s Meet Ms. Host
Copyright © 2007 Deloitte Development LLC. All rights reserved. 25
To be clear: The Chameleon host approach is one of the acceptable approaches in EITF Topic D-109.
Let’s Meet Ms. Host
The ―clean-host‖ approach is no longer acceptable under EITF Topic D-109.
Remember: Consider all substantive terms of the convertible (absent the embedded feature being evaluated for bifurcation)!
Copyright © 2007 Deloitte Development LLC. All rights reserved.
Polling Question #3
Test Question - Fill in the missing word:
The Chameleon host approach considers all substantive terms of a convertible, _________ the embedded feature that is being evaluated for bifurcation under FAS 133.
• Including
• Excluding
• Don’t know
Copyright © 2007 Deloitte Development LLC. All rights reserved.
Let’s Meet Mr. Conventional
26
Let’s see why he is so
popular…
Copyright © 2007 Deloitte Development LLC. All rights reserved.
Let’s Meet Mr. Conventional
12a: Not clearly and closely related to host contract?
12b: Hybrid = Not marked to market under other GAAP?
12c: If freestanding, derivative?
6a: Underlying, notional?
6b: Small initial net investment?
6c: Net settleable?
11a: Qualify for Scope Exception?
EITF 01-6: Indexed to Issuer’s Own Stock?
EITF 00-19: Classified in Equity?
Does the conversion option in a convertible instrument
require bifurcation from host contract?
27
Copyright © 2007 Deloitte Development LLC. All rights reserved.
Let’s Meet Mr. Conventional
As defined in EITF 00-19:
• Physical Settlement – the party designated in the contract as the buyer delivers the full stated amount of cash to the seller, and the seller delivers the full stated number of shares to the buyer
• Net-Share Settlement – the party with a loss delivers to the party with a gain shares with a current fair value equal to the gain
• Net-Cash Settlement – the party with a loss delivers to the party with a gain a cash payment equal to the gain, and no shares are exchanged.
28
Copyright © 2007 Deloitte Development LLC. All rights reserved.
Let’s Meet Mr. Conventional
Example: Settlement Methods
Assume:
• Entity A issues $1,000 of debt at par.
• Debt is convertible into 100 shares of Entity A
common stock at a strike price of $10/shr.
• Entity A’s stock price rises to $15/shr.
• Entity B, the holder of the conversion option,
exercises that option
29
Copyright © 2007 Deloitte Development LLC. All rights reserved.
Let’s Meet Mr. Conventional
Physical Settlement:
B pays A $1,000 (100 shrs @ $10/shr)
A issues 100 shares, having a fair value of $1,500,
to B
Net Share Settlement:
B has recognized an economic gain of $500 on the
contract
A issues 33.33 of its shares to B ($500/$15 per
share)
Net Cash Settlement:
A makes a cash payment of $500 to B 30
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Let’s Meet Mr. Conventional
31
Classified in Equity
(EITF 00-19)?
Generally, equity if
(a) contract must be
share settled, OR
(b) if issuer controls form
of settlement of
contract.
Previously…
Copyright © 2007 Deloitte Development LLC. All rights reserved.
Let’s Meet Mr. Conventional
32
Classified in Equity
(EITF 00-19)?
Generally, equity if
(a) contract must be
share settled, OR
(b) if issuer controls form
of settlement of
contract.
Certain factors might be present
that indicate that share
settlement is not really w/in
issuer’s control (para. 12-32)!
But the contract allows the
Company to share-settle it!?
Previously…
Copyright © 2007 Deloitte Development LLC. All rights reserved.
Let’s Meet Mr. Conventional
33
Classified in Equity
(EITF 00-19)?
Generally, equity if
(a) contract must be
share settled, OR
(b) if issuer controls form
of settlement of
contract.
Certain factors might be present
that indicate that share
settlement is not really w/in
issuer’s control (para. 12-32)!
But the contract allows the
Company to share-settle it!?
Previously…
BUT: If convertible instrument qualifies as
CONVENTIONAL, those factors would not apply
to an otherwise share-settlable contract (see
EITF 05-2 for what qualifies as ―conventional‖).
Copyright © 2007 Deloitte Development LLC. All rights reserved. 34
Let’s Meet Mr. Conventional
Upon conversion, holder receives entire proceeds as a fixed number of shares or equivalent cash (at option of issuer)
Ability to exercise based upon passage of time or contingent event (incl. CoCo’s)
General Overview of EITFs 00-19 and 05-2:
“Conventional” if…
OK if number of shares could change due to
“standard” anti-dilution provisions
Copyright © 2007 Deloitte Development LLC. All rights reserved.
Let’s Meet Mr. Conventional
Also ―conventional‖ - convertible preferred stock that:
• Has a mandatory redemption date, AND
• Is more akin to debt than equity –consider:
• Creditor rights
• Dividend rights
• Voting rights
• Conversion rights
• Redemption provisions
35
Copyright © 2007 Deloitte Development LLC. All rights reserved.
Let’s Meet Mr. Conventional
Examples of Adjustments to Conversion Price
Antidilution Provision Standard/
Nonstandard?
• Subdivision (stock split, stock dividend)
• Combination (reverse stock split) of
outstanding common shares
Standard
Issuance of common shares at a lower
price than the conversion price in effect
immediately prior to such issuance
Nonstandard
Recurring quarterly cash dividend to all
common shareholders
Nonstandard
Recapitalization through a large
nonrecurring cash dividend
Standard
36
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Let’s Meet Mr. ―Not-So‖ Conventional
37
Let’s see why he loses the
popularity contest against
Mr. Conventional…
Copyright © 2007 Deloitte Development LLC. All rights reserved.
Let’s Meet Mr. ―Not-So‖ Conventional
Say, a debt instrument
contains a conversion
option that, by its terms,
can only be share-settled.
Now must apply strict
factors in para. 12-32
of EITF 00-19 to
conversion option.
Say, convertible
debt doesn’t qualify
as ―conventional‖
under EITF 05-2.
If any of the factors in para.
12-32 are present, EITF 00-19
presumes the issuer is forced
to net-cash settle the
conversion option, resulting in
liability classification.Conversion option doesn’t qualify for
11a scope exception in FAS 133
and must be bifurcated as a
separate derivative (assuming
shares are readily convertible to
cash).
38
1
2
3
4
5
Copyright © 2007 Deloitte Development LLC. All rights reserved.
Polling Question #4
Test question: ―Instrument C‖ qualifies as conventional convertible debt.
(Reminder: ―Instrument C‖ requires cash settlement for the accreted value of the debt and permits the issuer to settle the conversion spread in either cash or shares.)
• True
• False
• Don’t Know/Not Applicable
Copyright © 2007 Deloitte Development LLC. All rights reserved.
Let’s Meet Mr. ―Not-So‖ Conventional
1. Contract must permit settlement in UNREGISTERED shares.
2. Company must have enough authorized shares to settle the
contract.
3. Contract must cap # of shares to be delivered.
4. No cash payments if Company does not timely file with SEC.
5. Contract does not contain cash-settled ―make-whole‖
provisions.
6. Requirement to net-cash settle only if underlying shareholders
also receive cash.
7. Contract does not give counterparty rights senior to the rights
of underlying shareholders.
8. No requirement to post collateral.
Finally, the factors in para. 12-32 of EITF 00-19…
39
Copyright © 2007 Deloitte Development LLC. All rights reserved.
Let’s Meet Mr. ―Not-So‖ Conventional
Factor #1: Contract must permit settlement in UNREGISTERED shares.
OK if contract requires delivery of
•Registered shares if registered at inception AND
no further timely filing/registration requirements
•Unregistered shares in a private placement
absent
–a failed registration in prior 6 months, or
–a unreasonable discount from value of corresponding
registered shares
Finally, the factors in para. 12-32 of EITF 00-19…
40
Copyright © 2007 Deloitte Development LLC. All rights reserved.
Let’s Meet Mr. ―Not-So‖ Conventional
Factor #1: Contract must permit settlement in UNREGISTERED shares. (continued)
If contract is silent, don’t assume settlement in
unregistered shares (matter of contract terms AND
Federal Securities Law – see Stephanie
Hunsaker’s speech at 2006 AICPA Conference)
Finally, the factors in para. 12-32 of EITF 00-19…
OK if prospectus explicitly states that if the issuer cannot deliver
registered shares, non-settlement is an acceptable alternative
41
Copyright © 2007 Deloitte Development LLC. All rights reserved.
Let’s Meet Mr. ―Not-So‖ Conventional
Factor #2: Company must have enough authorized shares to settle the contract.
•Consider # of shares to be delivered under other
outstanding commitments in making this
assessment
•If this criterion is failed, consider whether other
instruments no longer qualify for equity
classification (Todd Hardiman’s speech at 2005
AICPA Conference)
Finally, the factors in para. 12-32 of EITF 00-19…
42
Copyright © 2007 Deloitte Development LLC. All rights reserved.
Let’s Meet Mr. ―Not-So‖ Conventional
Factor #3: Contract must cap # of shares to be delivered.
•Compare cap to available authorized shares (i.e.,
after considering # of shares to be delivered under
other outstanding commitments, including ―make-
whole‖ provisions)
•Consider whether Company has obligation to
settle contract value in excess of cap
Finally, the factors in para. 12-32 of EITF 00-19…
OK if Company can share-settle excess obligation when authorized shares
become available
43
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Polling Question #5
Is Mr. Conventional looking better to you?
• Yes
• No
• Don’t Know/Not Applicable
Copyright © 2007 Deloitte Development LLC. All rights reserved.
Let’s Meet Mr. ―Not-So‖ Conventional
Factor #5: Contract does not contain cash-settled “make-whole” provisions.
OK if make-whole is net-share settled and
maximum # of shares to be delivered is fixed and
less than available authorized shares (again, after
considering # of shares to be delivered under other
outstanding commitments)
Finally, the factors in para. 12-32 of EITF 00-19…
Factor #4: No cash payments if Company does not timely file with SEC.
44
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Let’s Meet Mr. ―Not-So‖ Conventional
Factor #6: Requirement to net-cash settle only if underlying shareholders also receive cash.
OK (i.e., contract would still be considered to be
indexed to stock of purchaser) if, upon change-in
control, contract holder and shareholders all were
to receive the same stock of acquirer
Finally, the factors in para. 12-32 of EITF 00-19…
Factor #7: Contract does not give counterparty rights senior to the rights of underlying shareholders.
45
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Let’s Meet Mr. ―Not-So‖ Conventional
Factor #8: No requirement to post collateral.
OK if issuer posts shares underlying the
contract (limited to maximum # of shares that
could be delivered)
Finally, the factors in para. 12-32 of EITF 00-19…
46
Copyright © 2007 Deloitte Development LLC. All rights reserved.
Let’s Meet Mr. ―Not-So‖ Conventional
Example
On 1/1/07, ABC issues $75 million in notes: • Convertible into 7.5 million ABC common shares• Notes are not ―conventional‖ under EITF 05-2.• ABC has 12 million authorized shares available
(after considering share commitments from other outstanding contracts).
47
OK under EITF 00-19 at inception(12 million authorized shares > 7.5
million shares underlying conversion option).
Copyright © 2007 Deloitte Development LLC. All rights reserved.
Let’s Meet Mr. ―Not-So‖ Conventional
Example (continued)
On 2/1/07, ABC issues 9 million common shares.
48
Question: What impact, if any, does the stock offering on 2/1/07 have on the evaluation of whether the embedded conversion option qualifies for the 11a scope exception in FAS 133?
Copyright © 2007 Deloitte Development LLC. All rights reserved.
Let’s Meet Mr. ―Not-So‖ Conventional
# of authorized shares available 12,000,000
# of shares issued in seasoned offering 9,000,000
# of authorized shares remaining 3,000,000
# of shares underlying conversion option 7,500,000
# of excess underlying shares 4,500,000
translated in aggregate face value of notes $45,000,000
Example (continued)
49
Answer: As of 2/1/07, conversion option embedded in $45 million of notes would no longer qualify for the 11(a) scope exception in FAS 133 (fails Factor #2 in EITF 00-19).
Copyright © 2007 Deloitte Development LLC. All rights reserved.
The Contest
50
Being conventional involves
less maintenance…in
accounting terms, less work
because:
Now we know why Mr. Conventional is so popular…
• Don’t have to analyze
factors in para. 12-32 of
EITF 00-19
• Don’t need a law degree to
figure out whether issuer
can settle in unregistered
shares
Copyright © 2007 Deloitte Development LLC. All rights reserved.
Polling Question #6
Test question: A conversion option is net-cash settleable upon a change of control. Equity or liability under EITF 00-19?
• Liability
• Equity
• Not enough facts
• Don’t know
Copyright © 2007 Deloitte Development LLC. All rights reserved.
Recap of Who We Met Today
12a: Not clearly and closely related to host contract?
12b: Hybrid = Not marked to market under other GAAP?
12c: If freestanding, derivative?
6a: Underlying, notional?
6b: Small initial net investment?
6c: Net settleable?
11a: Qualify for Scope Exception?
EITF 01-6: Indexed to Issuer’s Own Stock?
EITF 00-19: Classified in Equity?
Does the conversion option in a convertible instrument
require bifurcation from the host contract?
51
Today’s
focus
Copyright © 2007 Deloitte Development LLC. All rights reserved.
What’s left…
• Form vs. Substance: When is redemption akin to cash-settled conversion? When is ―conversion‖ akin to stock-settled redemption?
• Other Embeddeds: How are embedded puts/calls and contingent payments evaluated?
• Classification and Measurement: How is convertible preferred stock classified on the balance sheet? How is it subsequently measured?
• BCFs: What, when and how are beneficial conversion features evaluated?
• EPS: How is EPS reported for non-traditional convertibles (say, ones with participation rights or Instrument C)?
52
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Join us August 16th at 2 PM ET
as our Financial Reporting group
presents:
FIN 46(R): An Overview of
Consolidations
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Thank you for joining
today’s webcast.
To request CPE credit,
click the link below.
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Contact info
James Barker jabarker@deloitte.com
Michael Mueller mimueller@deloitte.com
Mark Bolton mbolton@deloitte.com
Magnus Orrell morrell@deloitte.com
Copyright © 2007 Deloitte Development LLC. All rights reserved.
Other Resources at www.Deloitte.com
•To locate webcasts, click on the Dbriefs Webcast link at www.deloitte.com. You can find archived webcasts located under “Webcast Archives; Financial Executives”.•To locate other publications, such as Heads Up and Accounting Roundup, visit the “Assurance Newsletters” page on www.deloitte.com.
Copyright © 2007 Deloitte Development LLC. All rights reserved.
Other Resources – Links
Accounting for Convertible Instruments:
An Overview (1st Installment of Series)
https://event.on24.com/eventRegistratio
n/prereg/register.jsp?clientid=404&eventi
d=40186&sessionid=1&key=8316554CA
EFC08D54E33EA29BA1A5C5C
Speech by SEC Staff - Stephanie
Hunsaker
http://www.sec.gov/news/speech/2006/s
pch121206slh.htm
Presentation by SEC Staff – Todd
Hardiman (beginning on page 88)
http://www.sec.gov/news/speech/slides1
20605jl.pdf
AICPA Convertible Debt, Convertible
Preferred Shares, Warrants, and Other
Equity-Related Financial Instruments
Working Draft
http://www.aicpa.org/Professional+Reso
urces/Accounting+and+Auditing/Account
ing+Standards/Working+Draft+of+Conve
rtible+Debt+Convertible+Preferred+Shar
es+Warrants+and+Other+Equi.htm
Copyright © 2007 Deloitte Development LLC. All rights reserved.
The information contained in this publication is for general purposes only and is not
intended, and should not be construed, as legal, accounting, or tax advice or
opinion provided by Deloitte & Touche to the reader. This material may not be
applicable or suitable for, the reader’s specific circumstances of needs. Therefore,
the information should not be used as a substitute for consultation with professional
accounting, tax, or other competent advisors. Please contact a local Deloitte &
Touche professional before taking any action based upon this information.
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successful, fast-growing global companies. Services are not provided by the Deloitte Touche Tohmatsu Verein, and, for regulatory and other reasons,
certain member firms do not provide services in all four professional areas.
As a Swiss Verein (association), neither Deloitte Touche Tohmatsu nor any of its member firms has any liability for each other’s acts or omissions.
Each of the member firms is a separate and independent legal entity operating under the names ―Deloitte,‖ ―Deloitte & Touche,‖ ―Deloitte Touche
Tohmatsu,‖ or other related names.
In the United States, Deloitte & Touche USA LLP is the U.S. member firm of Deloitte Touche Tohmatsu and services are provided by the subsidiaries
of Deloitte & Touche USA LLP (Deloitte & Touche LLP, Deloitte Consulting LLP, Deloitte Financial Advisory Services LLP, Deloitte Tax LLP, and their
subsidiaries), and not by Deloitte & Touche USA LLP. The subsidiaries of the U.S. member firm are among the nation’s leading professional services
firms, providing audit, tax, consulting, and financial advisory services through nearly 40,000 people in more than 90 cities. Known as employers of
choice for innovative human resources programs, they are dedicated to helping their clients and their people excel. For more information, please visit
the U.S. member firm’s Web site at www.deloitte.com
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