Company Quick10K Filing
Slack Technologies
Price-0.00 EPS-1
Shares544 P/E0
MCap-0 P/FCF0
Net Debt-774 EBIT-448
TEV-774 TEV/EBIT2
TTM 2019-10-31, in MM, except price, ratios
10-Q 2020-07-31 Filed 2020-09-08
10-Q 2020-04-30 Filed 2020-06-04
10-K 2020-01-31 Filed 2020-03-12
10-Q 2019-10-31 Filed 2019-12-04
10-Q 2019-07-31 Filed 2019-09-05
S-1 2019-04-26 Public Filing
8-K 2020-09-08 Earnings, Exhibits
8-K 2020-06-19
8-K 2020-06-04
8-K 2020-04-06
8-K 2020-04-06
8-K 2020-03-18
8-K 2020-03-12
8-K 2020-02-10
8-K 2019-12-02
8-K 2019-09-04
8-K 2019-06-19
8-K 2019-06-14
8-K 2019-06-10

WORK 10Q Quarterly Report

Part I. Financial Information
Item 1. Financial Statements
Note 1. Description of Business and Summary of Significant Accounting Policies
Note 2. Revenue and Contract Costs
Note 3. Fair Value Measurements
Note 4. Business Combination
Note 5. Balance Sheet Components
Note 6. Operating Leases
Note 7. Debt and Financing Arrangements
Note 8. Commitments and Contingencies
Note 9. Stockholders' Equity
Note 10. Interest Income and Other Income, Net
Note 11. Income Taxes
Note 12. Net Loss per Share Attributable To Slack Common Stockholders
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II. Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 5. Other Information
Item 6. Exhibits
EX-3.2 exhibit32-amendedandre.htm
EX-31.1 exhibit311-7312010xq.htm
EX-31.2 exhibit312-7312010xq.htm
EX-32.1 exhibit321-7312010xq.htm

Slack Technologies Earnings 2020-07-31

Balance SheetIncome StatementCash Flow
1.21.00.70.50.20.02018201820192020
Assets, Equity
0.20.1-0.0-0.2-0.3-0.42018201820192020
Rev, G Profit, Net Income
0.10.10.0-0.0-0.1-0.12018201820192020
Ops, Inv, Fin

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 10-Q

(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended July 31, 2020
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from       to
Commission file number: 001-38926
Slack Technologies, Inc.
(Exact name of registrant as specified in its charter)

Delaware26-4400325
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
500 Howard Street
San Francisco, California 94105
(Address of principle executive offices including zip code)

(415) 630-7943
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Class A Common Stock, $0.0001 par value per share
WORK
The New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes or No.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes or No.
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes or  No
There were 483,125,892 shares of the registrant’s Class A common stock outstanding and 87,398,710 shares of the registrant’s Class B common stock outstanding as of August 17, 2020.







TABLE OF CONTENTS
Page




NOTE ABOUT FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the federal securities laws, which are statements that involve substantial risks and uncertainties. Forward-looking statements generally relate to future events or our future financial or operating performance. In some cases, you can identify forward-looking statements because they contain words such as “may,” “will,” “shall,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential,” or “continue” or the negative of these words or other similar terms or expressions that concern our expectations, strategy, plans, or intentions. Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements about:
the effect of uncertainties related to the global COVID-19 pandemic on U.S. and global economies, our business, results of operations, financial condition, demand for Slack, sales cycles, customer retention, and the health of our customers' businesses;
our future financial performance, including our revenue, cost of revenue, and operating expenses;
our ability to maintain the security and availability of Slack;
our ability to increase the number of organizations on Slack and paid customers;
our ability to grow or maintain our Net Dollar Retention Rate;
our ability to achieve widespread adoption;
our ability to optimize the pricing for Slack;
our ability to effectively manage our growth and future expenses;
our ability to maintain our network of partners;
our ability to enhance Slack to respond to new technologies and requirements of organizations on Slack;
our estimated market opportunity;
the future benefits to be derived from new third-party applications and integrations;
our ability to maintain, protect, and enhance our intellectual property;
our ability to comply with modified or new laws and regulations applying to our business;
the attraction and retention of qualified employees and key personnel;
our anticipated investments in sales and marketing and research and development;
the sufficiency of our cash, cash equivalents, and investments to meet our liquidity needs;
our ability to service the interest on our convertible notes and repay such notes, to the extent required;
our ability to successfully defend litigation brought against us; and
the increased expenses associated with being a public company.
We caution you that the foregoing list may not contain all of the forward-looking statements made in this Quarterly Report on Form 10-Q.
You should not rely upon forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Quarterly Report on Form 10-Q primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, results of operations, and prospects. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties, and other factors described in the section titled “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Quarterly Report on Form 10-Q. The results, events, and circumstances reflected in the forward-looking statements may not be achieved or occur, and actual results, events, or circumstances could differ materially from those described in the forward-looking statements.
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The forward-looking statements made in this Quarterly Report on Form 10-Q relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this Quarterly Report on Form 10-Q to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q or to reflect new information or the occurrence of unanticipated events, except as required by law. We may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures, or investments we may make.
In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this Quarterly Report on Form 10-Q, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and you are cautioned not to unduly rely upon these statements.
_________________

Unless the context requires otherwise, we are referring to Slack Technologies, Inc. together with its subsidiaries when we use the terms the “Company,” “we,” “our,” or “us.”
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
SLACK TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
As of
July 31, 2020January 31, 2020
ASSETS
Current assets:
Cash and cash equivalents$1,316,395 $498,999 
Marketable securities216,957 269,593 
Accounts receivable, net
111,950 145,844 
Prepaid expenses and other current assets58,340 55,967 
Total current assets1,703,642 970,403 
Restricted cash38,490 38,490 
Strategic investments42,826 28,814 
Property and equipment, net98,729 102,340 
Operating lease right-of-use assets185,911 197,830 
Intangible assets, net18,019 13,530 
Goodwill76,204 48,598 
Other assets37,306 41,701 
Total assets$2,201,127 $1,441,706 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable$12,778 $16,893 
Accrued compensation and benefits68,154 65,196 
Accrued expenses and other current liabilities23,823 32,123 
Operating lease liability30,707 30,465 
Deferred revenue382,675 375,263 
Total current liabilities518,137 519,940 
Convertible senior notes, net630,326  
Operating lease liability, noncurrent185,166 196,378 
Deferred revenue, noncurrent732 1,451 
Other liabilities67 38 
Total liabilities1,334,428 717,807 
Commitments and contingencies (Note 8)
Stockholders’ equity:
Common stock
57 56 
Additional paid-in-capital2,235,200 1,945,446 
Accumulated other comprehensive income (loss)929 (71)
Accumulated deficit(1,386,680)(1,236,621)
Total Slack Technologies, Inc. stockholders’ equity849,506 708,810 
Noncontrolling interest17,193 15,089 
Total stockholders’ equity866,699 723,899 
Total liabilities and stockholders’ equity$2,201,127 $1,441,706 
See accompanying notes to condensed consolidated financial statements.
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SLACK TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended July 31,Six Months Ended July 31,
2020201920202019
Revenue$215,864 $144,973 $417,514 $279,794 
Cost of revenue28,387 31,106 53,989 49,680 
Gross profit187,477 113,867 363,525 230,114 
Operating expenses:
Research and development94,201 217,769 185,426 268,872 
Sales and marketing109,122 136,392 219,442 203,230 
General and administrative52,788 123,356 103,442 160,100 
Total operating expenses256,111 477,517 508,310 632,202 
Loss from operations(68,634)(363,650)(144,785)(402,088)
Interest expense(11,552)(208)(14,394)(321)
Interest income and other income, net6,952 3,319 11,660 10,509 
Loss before income taxes(73,234)(360,539)(147,519)(391,900)
Provision (benefit) for income taxes(81)(923)61 (403)
Net loss(73,153)(359,616)(147,580)(391,497)
Net income (loss) attributable to noncontrolling interest1,695 (54)2,479 1,397 
Net loss attributable to Slack$(74,848)$(359,562)$(150,059)$(392,894)
Basic and diluted net loss per share:
Net loss per share attributable to Slack common stockholders, basic and diluted$(0.13)$(0.98)$(0.27)$(1.58)
Weighted-average shares used in computing net loss per share attributable to Slack common stockholders, basic and diluted564,351 368,533 560,921 249,222 

See accompanying notes to condensed consolidated financial statements.
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SLACK TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(In thousands)
(Unaudited)
Three Months Ended July 31,Six Months Ended July 31,
2020201920202019
Net loss$(73,153)$(359,616)$(147,580)$(391,497)
Other comprehensive income (loss), net of tax:
Change in unrealized gain or loss on marketable securities75 (41)1,000 379 
Other comprehensive income (loss), net of tax75 (41)1,000 379 
Comprehensive loss(73,078)(359,657)(146,580)(391,118)
Comprehensive income (loss) attributable to noncontrolling interest1,695 (54)2,479 1,397 
Comprehensive loss attributable to Slack$(74,773)$(359,603)$(149,059)$(392,515)
See accompanying notes to condensed consolidated financial statements.
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SLACK TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In thousands)
(Unaudited)
Common StockAdditional Paid-In-CapitalAccumulated Other Comprehensive Income (Loss)Accumulated DeficitNoncontrolling Interest Total Stockholders' Equity
SharesAmount
Balance at January 31, 2020555,360 $56 $1,945,446 $(71)$(1,236,621)$15,089 $723,899 
Exercise of stock options1,062  1,932    1,932 
Vesting of early exercised stock options  2    2 
Issuance of common stock upon settlement of restricted stock units (RSUs)4,724       
Equity component of convertible senior notes, net of issuance costs  223,622    223,622 
Purchases of capped calls related to convertible senior notes  (105,570)   (105,570)
Other comprehensive income   925   925 
Issuance of common stock for employee share purchase plan820  16,610    16,610 
Stock-based compensation  53,711    53,711 
Net income (loss)    (75,211)784 (74,427)
Balance at April 30, 2020561,966 56 2,135,753 854 (1,311,832)15,873 840,704 
Exercise of stock options766  1,693    1,693 
Vesting of early exercised stock options  972    972 
Issuance of common stock upon settlement of restricted stock units (RSUs)5,016 1 (1)    
Other comprehensive income   75   75 
Distributions to noncontrolling interest holders     (375)(375)
Shares issued related to a business combination1,660  39,495    39,495 
Stock-based compensation  57,288    57,288 
Net income (loss)    (74,848)1,695 (73,153)
Balance at July 31, 2020569,408 $57 $2,235,200 $929 $(1,386,680)$17,193 $866,699 

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Convertible Preferred StockCommon StockAdditional Paid-In-CapitalAccumulated Other Comprehensive LossAccumulated DeficitNoncontrolling Interest Total Stockholders' Equity
SharesAmountSharesAmount
Balance at January 31, 2019373,372 $1,392,101 127,573 $13 $105,633 $(498)$(665,563)$9,920 $841,606 
Exercise of stock options  2,694  2,907    2,907 
Vesting of early exercised stock options    88    88 
Issuance of restricted stock awards (RSAs)  505       
Other comprehensive income     420   420 
Stock-based compensation    3,639    3,639 
Net income (loss)      (33,332)1,451 (31,881)
Balance at April 30, 2019373,372 1,392,101 130,772 13 112,267 (78)(698,895)11,371 816,779 
Exercise of stock options  8,046 1 6,804    6,805 
Vesting of early exercised stock options    69    69 
Cancellation of restricted stock awards (RSAs)  (10)      
Repurchase of early exercised stock options  (2)      
Conversion of convertible preferred stock to common stock in connection with direct listing(373,372)(1,392,101)373,372 37 1,392,064     
Issuance of common stock upon settlement of restricted stock units (RSUs)  30,388 3 (3)    
Other comprehensive loss     (41)  (41)
Stock-based compensation    285,787    285,787 
Net loss      (359,562)(54)(359,616)
Balance at July 31, 2019 $ 542,566 $54 $1,796,988 $(119)$(1,058,457)$11,317 $749,783 
See accompanying notes to condensed consolidated financial statements.
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SLACK TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Six Months Ended July 31,
20202019
Cash flows from operating activities:
Net loss$(147,580)$(391,497)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization13,641 12,657 
Stock-based compensation110,999 289,426 
Amortization of debt discount and issuance costs12,619  
Noncash operating lease expense17,343  
Amortization of deferred contract acquisition costs6,898 3,290 
Net amortization of bond premium (discount) on debt securities available for sale381 (1,736)
Change in fair value of strategic investments(5,820)(2,884)
Other non-cash charges(218)(359)
Changes in operating assets and liabilities:
Accounts receivable33,548 15,258 
Prepaid expenses and other assets(4,539)(10,161)
Accounts payable(4,038)(1,436)
Operating lease liabilities(16,371) 
Accrued compensation and benefits2,955 19,758 
Deferred revenue5,703 44,650 
Other current and long-term liabilities(2,321)9,229 
Net cash provided by (used in) operating activities23,200 (13,805)
Cash flows from investing activities:
Purchases of marketable securities(100,302)(59,553)
Maturities of marketable securities147,913 268,951 
Sales of marketable securities5,650 166,074 
Net cash acquired from a business combination6,571  
Purchases of property and equipment(8,743)(28,269)
Purchase of strategic investments(9,025)(5,470)
Proceeds from liquidation of strategic investments789 2,858 
Net cash provided by investing activities42,853 344,591 
Cash flows from financing activities:
Proceeds from issuance of convertible senior notes, net of issuance costs841,329  
Purchases of capped calls related to convertible senior notes(105,570) 
Proceeds from exercise of stock options4,599 10,275 
Payments of contingent consideration for acquisitions(5,250)(5,000)
Issuance of common stock for employee stock purchase plan16,610  
Distributions to noncontrolling interest holders(375) 
Other financing activities (556)
Net cash provided by financing activities751,343 4,719 
Net increase in cash, cash equivalents and restricted cash817,396 335,505 
Cash, cash equivalents and restricted cash at beginning of period537,489 201,260 
Cash, cash equivalents and restricted cash at end of period$1,354,885 $536,765 
Supplemental disclosure of cash flow information:
Cash paid for income taxes
$1,894 $455 
Non-cash investing and financing activities:
Increase (decrease) in purchases of property and equipment included in liabilities
$(1,349)$1,476 
Fair value of common stock issued as consideration for a business combination
$39,495 $ 
Vesting of early exercised stock options
$974 $157 
Unrealized short-term gain on marketable securities
$991 $505 
See accompanying notes to condensed consolidated financial statements.
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SLACK TECHNOLOGIES, INC.
Notes to Condensed Consolidated Financial Statements
Note 1.    Description of Business and Summary of Significant Accounting Policies
Business
Slack Technologies, Inc. (the “Company” or “Slack”) operates a business technology software platform that brings together people, applications, and data and sells its offering under a software-as-a-service model. The Company was incorporated in Delaware in 2009 as Tiny Speck, Inc. In 2014, the Company changed its name to Slack Technologies, Inc. and publicly launched its current offering. The Company is headquartered in San Francisco, California.
Fiscal Year
The Company’s fiscal year ends on January 31. References to fiscal year 2021, for example, refer to the fiscal year ended January 31, 2021.
Basis of Presentation and Consolidation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”), regarding interim financial reporting. The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly owned and majority-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. The condensed consolidated financial statements include 100% of the accounts of wholly owned and majority-owned subsidiaries and the ownership interest of minority investors is recorded as noncontrolling interest.
The unaudited condensed consolidated balance sheet as of January 31, 2020 included herein was derived from the audited financial statements as of that date, but does not include all disclosures, including certain notes required by U.S. GAAP on an annual reporting basis. In management's opinion, the unaudited condensed consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the balance sheets, statements of comprehensive loss, statements of stockholders’ equity, and statements of cash flows for the interim periods, but are not necessarily indicative of the results of operations to be anticipated for the full fiscal year or any future period.
These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K filed with the SEC on March 12, 2020.
Convertible Senior Notes
In April 2020, the Company issued $862.5 million aggregate principal amount of 0.50% convertible senior notes due April 15, 2025 in a private offering, including the initial purchasers’ exercise in full of their option to purchase additional notes (the “Notes”). See Note 7 for additional details.
Use of Estimates
The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. These estimates are based on information available as of the date of the condensed consolidated financial statements. On a regular basis, management evaluates these estimates and assumptions; however, actual results could materially differ from these estimates due to risks and uncertainties, including uncertainty in the current economic environment related to the outbreak of the novel coronavirus pandemic (“COVID-19”).
The Company’s most significant estimates and judgments involve revenue recognition, stock-based compensation including the estimation of fair value of common stock, valuation of strategic investments, valuation of acquired goodwill and intangibles from acquisitions, period of benefit for deferred contract acquisition costs, fair value of the liability and equity components of the Notes, and uncertain tax positions.
Concentration of Credit Risk
Financial instruments that potentially subject the Company to a concentration of credit risk primarily consist of cash and cash equivalents, restricted cash, marketable securities, and accounts receivable. For cash, cash equivalents, restricted cash, and marketable securities, the Company is exposed to credit risk in the event of default by the financial institutions to the extent of
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the amounts recorded on the accompanying condensed consolidated balance sheets that are in excess of federal insurance limits. For accounts receivable, the Company is exposed to credit risk in the event of nonpayment by customers to the extent of the amounts recorded on the accompanying condensed consolidated balance sheets. The Company sells its services to a wide variety of customers. If the financial condition or results of operations of any significant customers deteriorates substantially, operating results could be adversely affected. To reduce credit risk, management performs credit evaluations of the financial condition of significant customers. The Company does not require collateral from its credit customers and maintains reserves for estimated credit losses on customer accounts when considered necessary. Actual credit losses may differ from the Company’s estimates.
No customer accounted for 10% or greater of total accounts receivable as of July 31, 2020 and January 31, 2020. There were no customers representing 10% or greater of revenue for the three and six months ended July 31, 2020 and 2019.
Summary of Significant Accounting Policies
The Company’s significant accounting policies are discussed in “Index to Consolidated Financial Statements–Note 1. Description of Business and Summary of Significant Accounting Policies” in the Notes to Consolidated Financial Statements in its Annual Report on Form 10-K filed with the SEC on March 12, 2020. There have been no significant changes to these policies during the six months ended July 31, 2020, except for the accounting policy for the Notes issued in April 2020.
Convertible Senior Notes
The Notes are accounted for in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Subtopic 470-20, Debt with Conversion and Other Options. Pursuant to ASC Subtopic 470-20, issuers of certain convertible debt instruments, such as the Notes, that have a net settlement feature and may be settled wholly or partially in cash upon conversion are required to separately account for the liability (debt) and equity (conversion option) components of the instrument. The carrying amount of the liability component of the instrument is computed by estimating the fair value of a similar liability without the conversion option using a market-based approach. The amount of the equity component is then calculated by deducting the fair value of the liability component from the principal amount of the instrument. The difference between the principal amount and the liability component represents a debt discount that is amortized to interest expense over the respective term of the Notes using the effective interest rate method. The equity component is not remeasured as long as it continues to meet the conditions for equity classification. In accounting for the issuance costs related to the Notes, the allocation of issuance costs incurred between the liability and equity components was based on their relative values.
Recently Adopted Accounting Standards
In June 2016, the FASB issued Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments - Credit Losses (Topic 326) Measurement of Credit Losses on Financial Instruments