WISTA 2008 Annual Conference International Financial Reporting Standards- Impacts and opportunities for your company October 17, 2008

Page 1 History ► IASB (International Accounting Standards Board) / IASC (Committee) was formed in the early 1970‘s, about the same time as the FASB ► Early standards allowed many options ► Efforts were made to harmonize standards in the early 1990s ► Some early adopters came from countries with multinational companies but few local accounting rules (e.g., Switzerland, Australia) ► IASB was restructured in 2001 and began issuing IFRSs (International Financial Reporting Standards) in 2003

Page 2 Momentum for a Global GAAP Global GAAP Enhances Transparency and Comparability Facilitates Accounting and Reporting Reduces Cost of Capital

Page 3 What are the global markets doing? ► Every major non-US capital market is moving to IFRS ► Adoption of IFRS in the EU in 2005 ► 8,000 companies ► Lead the transition to IFRS globally ► Over 100 countries around the world require or permit IFRS ► IFRS is becoming the predominant accounting framework outside the US Top 10 Global Capital Markets USUS GAAP – moving towards IFRS JapanConvergence to IFRS UKIFRS FranceIFRS CanadaConvergence to IFRS GermanyIFRS Hong KongHKFRS (equivalent to IFRS) SpainIFRS SwitzerlandIFRS or US GAAP AustraliaAIFRS (equivalent to IFRS)

Page 4 SEC IFRS proposed Roadmap ► On 27 August 2008, the SEC agreed to issue a proposed "Roadmap" related to the use of IFRS by US companies ► Comment period of 60 days begins when the actual proposal is printed in Federal Register; SEC will consider comment letters and then presumably finalize a roadmap ► Roadmap will propose the following mandatory conversion dates: ► Large accelerated filers – years ending after 12/15/14 ► Accelerated filers – years ending after 12/15/15 ► Non-accelerated filer – years ending after 12/15/16 ► Roadmap also expected to provide for early adoption of IFRS in 2009 by a limited number of very large companies that meet specified criteria

Page 5 SEC IFRS proposed Roadmap (cont’d) ► The SEC identified four milestones to be considered when making a final decision in 2011 whether to proceed with mandatory adoption of IFRS ► Improvements in accounting standards (i.e., convergence) ► Accountability and funding of IASCF ► Improvements in the use of XBRL (use of data) ► Improvements in IFRS education and training ► Roadmap includes expectation of an SEC “call to action” by 2011, which means voting on whether to mandate the use of IFRS ► The timing of approval by the SEC could be affected by new administration and Commissioners.

Page 6 What is the burning platform? Timing is still critical (e.g., for large accelerated filer) 2012 and 2013 statements filed under US GAAP Run US GAAP and IFRS parallel IFRS statements are published with comparatives for 2013 and 2012 Fiscal 2011 Fiscal 2012 Fiscal 2013 Fiscal 2010 Awareness and knowledge of IFRS Preparation of convergence plan New IFRS standards Change management, project structure and governance (budget implications, resourcing, etc.) Impact assessment Training Design and implementation of process, control and systems Modification of business operations, tax, regulatory and HR programs Drafting new accounting policies Restate opening balance sheet Restate opening balance sheet Fiscal 2014 First year of IFRS Reporting 2014 First year of IFRS Reporting 2014 Fiscal 2009 First quarter comparative First year of IFRS Reporting 2014 First year of IFRS Reporting 2014 Secure resources

Page 7 How a company might respond ► Presume that milestones will be met ► IASCF funding, continued convergence efforts and the use of XBRL likely will be achieved because those activities are already being addressed ► Education may be more judgmental, but many activities to address this are being planned ► Anticipate eventual IFRS conversion ► Determine the company’s conversion date based on the proposed conversion timetable and consider whether the company might elect to adopt earlier (i.e., if SEC subsequently allows earlier adoption) ► Perform diagnostic to determine scope and breadth of conversion ► Begin to understand the implications and choices under IFRS 1 First- time Adoption of International Financial Reporting Standards ► Begin the planning process and identify a skilled project management team ► Start preparing the company for the diagnostic/conversion

Page 8 IFRS conversion: questions to be answered ► How does the company plan to approach the conversion to IFRS? ► IFRS conversion is a business-wide change management exercise ► The full support of the board, audit committee and senior management is critical ► Boards and audit committees should pay close attention to management’s approach to conversion ► What are the key areas that need to be addressed during conversion? ► What is the timeline for the company’s IFRS conversion project and what resources will be required? ► What can we learn from the conversion experience in Canada, Europe and other countries?

Page 9 How do we start? Ask the right questions Key questionsKey considerations 1 If allowed by the SEC, should we consider early voluntary adoption? 2 Are there tough implementation challenges or efficiency opportunities that we should identify and address now before there is a time constraint? 3 Are there existing or planned initiatives/ projects that may be significantly affected by IFRS? ► Potential for reporting harmonization with reduction in different statutory reports (cost, speed, control) ► Certain differences drive changes to financial results (earnings, equity) ► Competitors/peers may drive early adoption Key indicators of tough challenges or cost savings opportunities Key decision factors Key initiatives and projects likely to be significantly affected by IFRS ► Manually intensive accounting, consolidation, and financial reporting processes ► Multiple cross-GAAP reconciliation procedures ► Inconsistent global chart of accounts ► Consistency of global accounting policies and procedures ► Shared service center deployment ► Global ERP implementations ► Trial balance/chart of account redesign ► Global finance transformation ► Process standardization ► Global policy and procedure development/deployment ► Tax strategies 4 You may already be on IFRS in international subsidiaries Standardized global statutory IFRS reporting ► First time application cannot be undone, so inefficiencies may already be built-in to subsidiaries’ IFRS accounts ► Possibility IFRS has been interpreted inconsistently in the same group by different subsidiaries; needs to be rectified in order to ultimately gain efficiencies ► Centralize control over subsidiary locations to eliminate future inconsistent policy choices

Page What is the impact of IFRS conversion? More than an accounting exercise — many time-sensitive considerations ► Accounting and reporting represent approx % of conversion efforts ► System changes for capturing and reporting data ► Significant impact on all aspects of the tax cycle — planning, provision, compliance and controversy ► Important to the alignment of internal and external reporting ► Increasing complexity of IFRS and speed of change requires more technical resources ► Changes to internal audit plans ► Consider the impact on : ► Subsidiary decisions regarding IFRS accounting policies on the parent ► Data capture for accounting and management reporting ► Availability of technical resources ► Investor relations – change management for shareholders ► Acquisitions and dispositions ► KPIs need to be recallibratted due to the basis of accounting changing ► Executive compensation calculations and the basis of incentive pay ► Debt covenants and potential impact of IFRS-reported results