1. TODAY'S PANEL HERSHEL GERSON VP INVESTMENT BANKING JIM VIECELI PARTNERJIM PITRATPARTNER

2. TODAY'S OBJECTIVESINVESTMENT BANKING HERSHEL GERSON CREDIT SUISSE Current State of the Leveraged Finance MarketReview of 2009 M&A Activity2010: What Lies AheadLEGAL JIM VIECELI MANATT, PHELPS & PHILLIPS, LLP2010 Proxy Season Antitakeover Measures / Review Defensive Profile M&A in 2010? FINANCIAL REPORTING JIM PITRAT SINGERLEWAKBusiness Combinations Fair Value Revenue Recognition Non-GAAP Measures 3. INVESTMENT BANKING 4. CAPITAL MARKETS AND M&A HERSHEL GERSON, VP INVESTMENT BANKING CREDIT SUISSERESURGENCE OF THE LEVERAGED FINANCE MARKETSEquity markets have been on an unprecedented bull run during 2009 after thecredit crisis of late 2007 / 2008A stabilizing economy, low benchmark rates, and record investor returns in 2009continue to fuel demandA wave of liquidity has been driving more aggressive deal terms leveragehigher, pricing lower, looser covenants1. Despite a dearth of new CLO formation, significant refunding of loans has left existing CLOs with large cash balances to deployPent-up demand from investors and significant cash balances in investors pocketsdrove record issuance in 20091. Record positive inflows into high yield mutual funds continue to drive demand2. High yield new issuance of $195 billion in 2009 is a new recordBridge financing has emerged for well-structured, good credit storiesSecondary levels in institutional loans have come back in 2009 5. CAPITAL MARKETS AND M&A HERSHEL GERSON, VP INVESTMENT BANKING CREDIT SUISSE Leveraged loan new issue volume ($ billions)$24.0 $18.0$11.9$10.5$7.2$8.3$12.0$4.4 $6.5 $7.7 $9.5$3.5 $3.5$1.6 $3.1 $6.0 $11.6 $11.7 $5.9 $3.7 $10.2$8.8$1.6 $8.6$5.0$3.3$2.3$6.2 $6.5 $5.7 $5.8 $5.6$3.9 $2.4$5.4 $3.1 $2.9 $2.9$3.8 $3.4 $2.6 $4.0 $1.4$1.1 $2.3 $2.0 $1.3$1.3 $0.0 $0.6 $0.5$0.9 Jan-08 Feb-08 Mar-08 Apr-08 May-08 Jun-08 Jul-08 Aug-08 Sep-08 Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 Institutional($BB)Pro Rata($BB)Source: Standard & Poors LCD.Weekly Institutional Loan Repayments Historical avg. bid/ask of institutional flow names ($ billions)(Bid/Ask as a % of par)LTM Weekly Avg: $1.55bn $15.0$100 Bid: 92.3100Ask: 92.595 $12.0$809085$9.0$60 807570$6.0$40 6560 8 7 9 9 4/ 8 /7 08/ 9 2/ 9 12 9/2 8 2/ 8 /2 9 9 9 9 9 8 /2 8 2/ 08 8 8 /2 8 12 7/2 99 /2 0 0 /5 009/ 200 14 0 17 0 12 0 26 0 28 0 31 09/ 200 0/1 0016 00 21 00 23 0 28 00 30 0 19 0 23 0 25 0 0/1 0014 101$3.0$2010 201/ 201/ /201/ /204/ /205/ /206/ /207/ /206/ /20 8/ 011 /202/ /203/ /204/ /2011 /202/ /202/ /210 2 5 0 / //13/5/ 12 $- $- 1/2/20091/9/2009 1/16/2009 1/23/2009 1/30/2009 2/6/20092/13/20092/13/20092/20/20092/27/20093/6/2009 3/13/2009 3/20/2009 3/27/2009 4/3/20094/10/20094/17/20094/24/20095/1/2009 5/8/20095/15/20095/22/20095/29/20096/5/2009 6/12/2009 6/19/2009 6/26/2009 7/3/20097/10/20097/17/20097/24/20097/31/20098/7/2009 8/14/2009 8/21/2009 8/28/2009 9/4/20099/11/20099/18/20099/25/200910/2/200910/9/200910/16/2009 10/23/200910/30/2009 11/6/2009 11/13/200911/20/2009 11/27/200912/4/200912/11/2009 12/18/200912/25/2009 12/31/20091/8/2010 1/15/2010 1/22/2010 1/29/2010 2/5/20102/12/2010Bid Ask Weekly repaymentCumulative repaymentSource: S&P / Portfolio Management Data.Source: S&P / Portfolio Management Data. 6. CAPITAL MARKETS AND M&AHERSHEL GERSON, VP INVESTMENT BANKING CREDIT SUISSE THE HIGH YIELD NEW ISSUE MARKET HAS BEEN CHARACTERIZED BY MARKET WINDOW OPENING AND CLOSING The high yield primary market re-opened in 2009 and early 2010 after a 1 year period of periodic window openings HY New Issuance vs. CS HY Index YTW$35.0 23.00%Window openingWindow openingWindow openinglasted 11 weeks 21.00% $30.0Window opening lasted 9 weeks19.00% $25.017.00% $20.015.00% 32 33 $15.0 26 25 13.00% $3.2 25 25 12322 $10.020 2117 1711.00% 16 15 151311 11 1112$5.0989.00%5 55 4 2 3 2221 1 11 1$0.00 17.00% JanMarMay Jul SeptNov JanMar May Jul Sept NovJanMarMay JulSeptNovJan '07'07 '07'07'07 '07 '08 '08 '08 '08'08 '08 '09 '09'09 '09 '09'09'10New Issuance Forward CalendarCS HY Index YTW 7. CAPITAL MARKETS AND M&AHERSHEL GERSON, VP INVESTMENT BANKING CREDIT SUISSEINVESTOR CASH LEVELS REMAIN HIGH, HOWEVER THERE HAS BEEN RECENT PULL BACK Weekly inflows to HY mutual funds ($mm)1,500$21.3 billion entered high yield mutual fundsin 2009, the largest total since 20031,0005000 (500)$984 million is thelargest outflow sinceSeptember 2005(1,000)(1,500)8/1/08 9/12/08 10/24/08 12/5/08 1/16/09 2/27/09 4/9/09 5/22/09 7/02/098/13/099/24/0911/6/09 12/18/09 1/29/10Inflows/Outflows to HY Mutual funds ($mm) 8. CAPITAL MARKETS AND M&AHERSHEL GERSON, VP INVESTMENT BANKING CREDIT SUISSE 2010: WHAT LIES AHEAD Continued economic recovery will be a key driver 1. With the credit crisis fresh in their minds, investors will continue to closelymonitor the macroeconomic environment in 2010 2. Although there is currently a perception that the worst is behind us, concernsover Federal Reserve rate policy, unemployment, housing and inflation willcontinue to be key drivers of both primary and secondary market activity 3. Any indications of a double dip recession or significantly higher default rates willtest the strength of the recent recovery Investors 1. Dedicated high yield investors (mutual funds, insurance and pension funds)continue to have significant cash available to put into the markets 2. Leveraged loan market investors also have liquidity from significant loanbuybacks in the high yield market Strong pipeline continues 1. While there has been a recent pullback in the high yield market, the leveragedloan market continues to look for new issues to invest capital 2. Increased LBO activity will also be a key driver in 2010 new issue supply 3. Impending maturity debt towers will continue to drive refinancings andextensions 9. CAPITAL MARKETS AND M&AHERSHEL GERSON, VP INVESTMENT BANKING CREDIT SUISSEREVIEW OF 2009 M&A ACTIVITY The value of worldwide M&A totaled $2.1 trillion for full year 2009, a 28% decrease from 2008 levels and the slowest annual period for M&A since 20041. Fourth quarter activity was up 32% from third quarter 2009 indicating that we may seeimprovement in 2010Government-related M&A represented a noteworthy portion of M&A activity, accounting for nearly 17% of overall M&A activity, highest percentage on recordPrivate equity backed M&A volume was down 44% over last year and the slowest year since 20021. However, as a percentage of overall M&A activity, private equity activity represented11% in 2009 compared with 10% in 2008U.S. target bankruptcy transactions increased 704% over volume in 2008, to $76.8 billion1. Notable transactions were GM's US$42.9 billion Section 363 asset sale and Delphi Corp'sreorganization valued at US$10.9 billionGovernment M&A investments in US targets accounted for 8% of total M&A volume, as the US Treasury stepped in to bail out distressed companies 10. CAPITAL MARKETS AND M&AHERSHEL GERSON, VP INVESTMENT BANKING CREDIT SUISSE GLOBAL ANNOUNCED AND COMPLETED TRANSACTIONS (Dollar value of transactions in billions) 1,600 1,527.41,4001,316.0 1,296.1 1,200 1,125.81,173.9 1,000938.9 1,052.9918.7 941.5963.2875.8870.0860.4 845.8813.7 849.3814.3782.7874.3 850.0800734.5 726.5 712.7 774.1696.1 757.1 668.1684.2676.9740.9 615.1 627.9 625.4671.2600 635.9517.3639.1 636.4664.5519.5609.7 606.3 500.7 499.8 556.4 473.9451.0461.5 461.2415.1 412.0 405.2518.0471.6 410.2477.3498.4400341.8 380.3431.7 330.0 339.9312.2 402.1 409.1361.2 282.8382.0266.0 290.5 380.1323.9 314.2 309.0295.6 242.5298.7 269.5 305.5 253.7200 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2000 20012002 200320042005 2006200720082009 AnnouncedCompleted 11. CAPITAL MARKETS AND M&AHERSHEL GERSON, VP INVESTMENT BANKING CREDIT SUISSE GLOBAL ANNOUNCED INDUSTRY DOLLAR VOLUME AND NUMBER OF DEALS DECREASED IN MOST INDUSTRIES IN 2009 Dollar volumeNumber of deals 121.8% Media (7.0%) ~ 40.2%Natural Resources 3.1%9.1%Healthcare (10.2%)6.1%Mining 36.7% 2.6% General Industrials(15.3%) (15.0%)Insurance (17.2%)(17.8%) Paper / Forest Products(1.8%)(26.2%)Technology (16.6%) (30.9%) Real Estate (2.3%) (32.9%)Chemicals (13.0%)(37.6%) Retail (9.8%)(41.8%) Banking / Finance 4.0% (46.5%) Utilities 12.0%(48.8%)Telecom(18.0%) (54.6%)Gaming / Lodging(12.3%)(69.3%)Food / Consumer Products(8.9%) 12. CAPITAL MARKETS AND M&AHERSHEL GERSON, VP INVESTMENT BANKING CREDIT SUISSE ANNOUNCED US DOLLAR VOLUME IN 2009 WAS DOWN 29% FROM A YEAR AGO Cash consideration continues to be popular as equity markets remain volatileUS announced transactions($ in billions) 13,407 14,52011,9579,955 10,986 12,016 10,748 11,132 7,698$2,0399,5928,523 9,0456,710 7,817 7,036 7,716 $1,9005,569$1,622$1,545 $1,718$1,307$1,131$912 $764 $842$870$515 $631 $440 $573 $235 $3381993 1994 1995 1996 1997 1998 1999 2000 20012002 2003 2004 2005 2006 2007 2008 2009 Dollar Volume # of Deals Source: Thomson Reuters.Types of consideration offered Percentage by dollar volume 23% 19% 17% 24% 32%19%36% 36% 28% 41% 27% 28%40% 39% 45% 37% 41%51% 48%47% 30%60%48% 31%48% 47% 50% 32%47% 52% 54% 44%49% 34% 36% 33% 47% 46% 78%37%37% 51% 45%38%35%12%20% 17% 12% 18% 15% 25% 25% 27% 19% 26% 25% 22% 16% 13% 16% 2% 3%1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Stock swaps Stock and cash All cash Source: Thomson Reuters. 13. CAPITAL MARKETS AND M&AHERSHEL GERSON, VP INVESTMENT BANKING CREDIT SUISSE S&P 500 TRADING MULTIPLES ARE RELATIVELY LOW BY HISTORICAL STANDARDSMarket performance150 125 100755025 20012002 200320042005 2006 2007 20082009S&P 500 DJ Industrial Average NASDAQ C omposite IndexSource: FactSet. S&P 500 trading multiples 30.0x 26.4xAverage:22.4x 24.1x25.0x 17.1x 21.2x18.9x 19.1x 17.5x20.0x 16.4x16.5x 17.8x 17.5x16.1x 15.8x 16.3x 17.3x16.2x14.1x13.5x 15.3x 15.4x13.8x14.9x15.0x 12.5x12.5x10.0x3.8x 3.7x 4.2x 3.3x 2.5x 2.5x 2.6x 2.6x 2.6x2.0x 1.5x 1.6x 1.8x 2.4x 2.3x 2.1x 1.9x 2.1x 2.6x 2.0x 1.9x 1.7x 1.9x 5.0x 1.8x 0.0x1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 NTM P/E P/E to earnings growth ('PEG')Source: Thomson Financial Securities Data Company.Note: Yearly NTM P/E multiples and PEG ratios represent averages. 14. CAPITAL MARKETS AND M&AHERSHEL GERSON, VP INVESTMENT BANKING CREDIT SUISSE GLOBAL HOSTILE VOLUME IN 2009 IS SIGNIFICANTLY LOWER THAN ITS BEEN IN RECENT YEARS ($ in billions, percentages by dollar volume) 19% 13%13% 14% 11% 12% 12%9%9% 10%9% 7% 7% 8%6%6%5%3% 4% 5% 233188 ~ 167 159 166143146 151 $856 145136 132 137 132111110 115 115~~ 1059782$719 $188 $244 $261 $259 ~$571 $397 $150$159$113$126$96 $105$52 $60$64$33$31$28 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Hostile volume $% of total announcedNumber of global announced hostile offersSource: Thomson Reuters. Note: Hostile volume as a percentage of global dollar volume of announced and withdrawn deals. 15. CAPITAL MARKETS AND M&A HERSHEL GERSON, VP INVESTMENT BANKING CREDIT SUISSEMOST UNSOLICITED BIDS LEAD TO A LOSS OF INDEPENDENCE 100%10%8%16% 90% 21%21% 22%20% 23% 25%26%26%28% 30%29%29%33% 33% 36% 80% 43% 40% 70%37% 60%34% 58%64%47%42% 32% 50% 44%41%54%35% 50%33%50%30%38% 50% 51% 29% 37% 40% 30% 47% 44% 20% 38%33% 33% 36%35%34% 29%32%31%32% 29% 28% 26% 28% 24% 23%22% 10% 20%0%1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Remained independentHostile offer successful Sold to third party 16. CAPITAL MARKETS AND M&A HERSHEL GERSON, VP INVESTMENT BANKING CREDIT SUISSE FINANCIAL SPONSORS HAVE BEEN SIGNIFICANT PLAYERS IN MANY M&A SITUATIONSFinancial Sponsor M&A was at a 10-year high until the sharp decline due to the overall marketdownturn beginning in the second half of 2007Firms continue to be eager to deploy remaining capital from large funds raised in the last few yearsGlobal sponsor deal volume Debt multiples ($ in billions)$1,0516.5x 6.2x5.4x $846 5.5x 5.3x 4.7x 4.8x4.9x 4.6x4.5x4.2x 4.1x4.0x 4.0x$4903.5x$410 25.9%2.5x $218 $221 22.0% 18.1% $115$106 $120$99 14.0%$49$49 3.3% $70 11.2%10.7% 1.5x 2.9%1.9%2.9%4.0% 8.8% 9.0% 1999 2001 20032005200720091997 1998 1999 2000 2001 2002 2003 2004200520062007 20082009FLD / EBITDA SLD / EBITDASponsor deal volume Other sr. debt / EBITDASub debt / EBITDASponsor deal volume as percent of total M&A volume 17. CAPITAL MARKETS AND M&AHERSHEL GERSON, VP INVESTMENT BANKING CREDIT SUISSE2010 M&A OUTLOOKExpect momentum from 4Q 2009 to continue in 2010 with industry expertspredicting a 25-30% increase in dollar volume over last year1. Financially strong companies, which have spent the last several quarters improving their balance sheets and accumulating cash, are well positioned to make strategic acquisitionsPrivate equity will be back in force1. Excess of $1 trillion of capital committed to alternative investment funds and financial sponsors anxious to get back in the game2. Banks have begun to lend again indicating that financing is available for the right situationsWe should see several Government sales in 20101. With the unprecedented infusions in 2008 and 2009, many governments will be looking to sell those stakesEmerging markets will play an important part in the revival of global M&Ain 20101. China, with a huge sum of available cash, will be an significant player in cross border acquisitions 18. CAPITAL MARKETS AND M&A HERSHEL GERSON, VP INVESTMENT BANKING CREDIT SUISSE IN THE CURRENT M&A MARKET, COMPANIES NEED TO BE BOTH PROACTIVE AND PROTECTIVE Be proactive: 1. Reevaluate your ideal acquisitions. Companies and divisions of companiesonce deemed unavailable should be reconsidered 2. Assess your competitive position if your industry is consolidating rapidly.Dont be the odd man out 3. Seriously consider divestitures or spin-offs of non-core businesses Be protective: 1. Review your companys vulnerability to a hostile offer and the ability tomaximize shareholder value in the face of such an offer. Just say no israrely enough 2. Know your alternatives 3. Have an ongoing sense of value 4. In negotiating a friendly or agreed deal, secure lock-ups to protect the deal 19. LEGAL 20. LEGAL JIM VIECELI, PARTNER MANATT, PHELPS & PHILLIPS2010 PROXY SEASON High-profile issues affecting an industry or causing market volatility tend to lead the SEC to increased regulation. Recent proxy rules reflect increased focus of SEC on disclosing how executive compensation arrangements encourage and reward risk-taking by executives.SEC is also reducing burdens to shareholder access and proxy contests.Expansion of acceptable shareholder proposals. 21. LEGALJIM VIECELI, PARTNER MANATT, PHELPS & PHILLIPSANTITAKEOVER MEASURES AND REVIEW OF DEFENSIVE PROFILES Turbulent markets disproportionately impact smaller companies in various M&A and financing issues 1. Increased vulnerability to takeover bids and activist shareholders. 2. Capital-raising becomes more complex. Buyers and Sellers' ability to agree on a price is affected by availability of financing1. Buyers struggle to obtain debt financing on acceptable terms.2. Valuations are depressed.3. Sellers believe valuations are temporary and inadequate.Breeding ground for Shareholder Activism1. Depressed stock price.2. Failure to effectively communicate with shareholders.3. Shareholders perceive that opportunities have been missed or management is steering in the wrong direction.4. Weaker financial results. 22. LEGALJIM VIECELI, PARTNER MANATT, PHELPS & PHILLIPSANTITAKEOVER MEASURES AND REVIEW OF DEFENSIVE PROFILES Even though Buyers face a challenging debt financing market, a depressed stock price may also incentivize bids for control 1. Bids based on historically low prices that do not provide full valueto stockholders. 2. Buyers can obtain control without paying the "control premium."Time to review the Defensive Profile and Takeover Defenses1. Review of Defensive Profile can be done efficiently and assesses strengths and weaknesses.2. Implement takeover defenses.Poison Pill1. Poison pills went out of vogue because of focus on corporate governance and shareholder rights.2. 2008: First year-over-year increase in adoption of poison pills.3. 2008: 3X as many companies amended pill to extend expiration than to accelerate expiration. 23. LEGALJIM VIECELI, PARTNER MANATT, PHELPS & PHILLIPSANTITAKEOVER MEASURES AND REVIEW OF DEFENSIVE PROFILESBenefits of Poison Pill1. Cost-effective defense: Issue rights to existing shareholders to purchase at a steep discount (typically 50%) shares of common stock if third party acquires a specified percentage of voting stock.2. Dilutes voting percentage owned by third party.3. Acquisition becomes prohibitively expensive.4. Drives parties to negotiating table instead of allowing raider to accumulate shares and make a tender offer.5. Discourages raiders who want control without paying a premium.6. Makes it harder for activists to put the company in "play."Beware of Hostile Note Holders: "Loan to Own" 1. Common strategy among funds/investors that deal in distressed debt. 2. Strategic parties may buy a competitor's debt. 24. LEGALJIM VIECELI, PARTNER MANATT, PHELPS & PHILLIPSM&A IN 2010? Increased focus on bridging valuation gap1. Seller financing2. Earn-out3. Equity-sharing arrangements4. Mix of forms of consideration5. Joint Ventures6. NOLsNew M&A partners 1. Strategic financial partners 2. Family offices 3. High-net-worth individualsTrends in 2010?1. Asset SalesAll or substantially all.Division or unit.Specific asset(s). 25. LEGALJIM VIECELI, PARTNER MANATT, PHELPS & PHILLIPSM&A IN 2010? (continued) Trends in 2010?1. .2. More Strategic BuyersPremium on ready access to Capital Markets.Buyers need to consider timing and structuring of financing wellin advance of a deal. 3. Joint VenturesAlternative for strategic players.Allows for "proof of concept" and breathing room indetermination of valuation. 4. Distressed M&ADebt for equity swaps.Receivers with power to sell assets.ABCs.Foreclosures.Chapter 11: Section 363 and Reorganizations.Time is usually most vital resource. 26. FINANCIAL REPORTING 27. FINANCIAL REPORTINGJIM PITRAT, PARTNER SINGERLEWAKBUSINESS COMBINATIONS LESSONS LEARNEDFAIR VALUEEMERGING ISSUES IN REVENUE RECOGNITIONNON-GAAP MEASURES 28. FINANCIAL REPORTING JIM PITRAT, PARTNER SINGERLEWAK BUSINESS COMBINATIONS LESSONS LEARNEDMore acquisitions are Qualifying as Business Combinations.Difficulties and Complexity in Valuing Contingencies.Difficulties and Complexities in Valuing Contractual Commitments. Minority Interest Valuations are an afterthought.In-Process Research and Development Challenges.Distressed Acquisitions and Bargain Purchases. Intangible asset identification and impact of FAS 157. 29. FINANCIAL REPORTINGJIM PITRAT, PARTNER SINGERLEWAK BUSINESS COMBINATIONS LESSONS LEARNEDAsset Acquisitions:1. Research and development assets acquired in an asset acquisitionto be capitalized, even if such assets had no alternative future use,and2. Contingent consideration issued in an asset acquisition continue tobe accounted for under relevant GAAP and, if recognized3. Included as part of the cost of the asset acquisition. 30. FINANCIAL REPORTINGJIM PITRAT, PARTNER SINGERLEWAKFAIR VALUEFair Value of a liability ASU No. 2009-05 that amendsSubtopic 820-10-351. A quoted price in an active market for an identical liability is deemed torepresent a Level 1 measurement.2. Absent a quoted price, Fair Value should be measured using one of thefollowing valuation techniques: The quoted price of an identical liability traded as an asset. The quoted price for similar liabilities. A valuation technique acceptable under ASC 820. If Fair Value is measured using the price of the liabilitytraded as an asset1. Not adjusted for the effect of a restriction on a sale of the asset.2. Should be adjusted for factors specific to the asset that are notapplicable to the fair value of the liability. 31. FINANCIAL REPORTING JIM PITRAT, PARTNER SINGERLEWAK FAIR VALUEInterim Statements Disclosures:1. The disclosures in annual financial statements required by SFASNo. 107 (FASB ASC 825-10) must also be presented in interimstatements.2. Interim disclosures apply to the Fair Value of all of the entity'sfinancial instruments (whether or not they are recognized in thebalance sheet).3. The Fair Value information must be presented together with relatedcarrying amounts in a form that is clear and how relates toamounts reported in the balance sheet.4. Methods and significant assumptions used to estimate fair valueshould be disclosed. 32. FINANCIAL REPORTING JIM PITRAT, PARTNER SINGERLEWAKEMERGING ISSUES IN REVENUE RECOGNITIONSoftware Arrangements1. ASU 2009-14 amends Subtopic 985-605 (Software Revenue).2. Excludes from its scope all tangible products containing software andnon-software components that operate together to deliver the product'sessential functionality.3. iPhone example.4. If an arrangement includes both software deliverables covered by andnon-software deliverables arrangement consideration should be allocatedin accordance with other relevant GAAP (multiple elements guidance). Effective for revenue arrangements entered into or materiallymodified in fiscal years beginning on or after June 15, 2010,early application is permitted 33. FINANCIAL REPORTINGJIM PITRAT, PARTNER SINGERLEWAKEMERGING ISSUES IN REVENUE RECOGNITION(continued) Multiple Element Arrangements1. Creates the Concept of Estimated Selling Price (ESP).No more Objective and Reliable Evidence of FV.2. Consideration allocated based on Selling Price Allocated based on Relative Selling Prices.Does away with the residual method.3. Hierarchy for ESPVSOE, Third-Party Evidence, Estimate.4. Estimation may be problematic from an audit perspective. 34. FINANCIAL REPORTING JIM PITRAT, PARTNER SINGERLEWAKEMERGING ISSUES IN REVENUE RECOGNITIONMultiple Element Arrangements 1. 2. .(continued) 3. . 4. .5. The amended guidance is effective for revenue arrangementsentered into or materially modified in fiscal years beginning on orafter June 15, 2010.6. Early application is permitted.7. Extensive Disclosures is required if early adopted. 35. FINANCIAL REPORTING JIM PITRAT, PARTNER SINGERLEWAKNON-GAAP MEASURESThe SEC has issued Compliance and Disclosure Interpretation (CDIs),"Non-GAAP Financial Measures," No omission of nonrecurring items if occurred in preceding 2 years or reasonablyexpected in the next 2 years. Cash flow per share is prohibited, but Non-GAAP earnings per share may be presented and reconciled to GAAP EPS. The presentation of free cash flow, which is typically calculated as operating cashflow minus capital expenditures, is permitted, but The manner of its computation must be clearly described and accompanied by areconciliation. 36. FINANCIAL REPORTINGJIM PITRAT, PARTNER SINGERLEWAKNON-GAAP MEASURES (continued) Except for EBIT and EBITDA, a non-GAAP measure of liquidity may not exclude cash charges or liabilities.It is generally not appropriate to present a full non-GAAP income statement for purposes of reconciling non-GAAP measures to GAAP measures.EBIT and EBITDA 1. If presented as a performance measure, EBIT or EBITDA should be reconciled to net income as presented in the GAAP income statement. 2. A reconciliation to "operating income" is not appropriate.Other Changes related to Segments, Foreign Issues and Forms 8-k. 37. CONCLUSIONTHANK YOU FOR YOUR ATTENDANCE. www.manatt.com www.SingerLewak.comwww.credit-suisse.com 11355 West Olympic Boulevard 10960 Wilshire Blvd., Suite 1100 2121 Avenue of the StarsLos Angeles, CA 90064 Los Angeles, CA 90024 Los Angeles, CA 90067-5058310.312.4000 310.477.3924 310.282.6100