TD Bank 2006 Annual Report Download - page 117

TD BANK FINANCIAL GROUP ANNUAL REPORT 2006 Financial Results 113
SUBSEQUENT EVENTS
NOTE 30
On November 20, 2006, the Bank announced its intention to
acquire all of the outstanding common shares of TD Banknorth
that it does not already own. The acquisition will be accounted
for by the purchase method. The offer provides minority share-
holders of TD Banknorth cash of US$32.33 per TD Banknorth
share. Total consideration will be approximately $3.6 billion
(US$3.2 billion). The offer is subject to approval by regulators
and TD Banknorth shareholders, including an affirmative vote
by the holders of a majority of the outstanding common shares
not held by the Bank or its affiliates, and, if approved, is expected
to close by April 30,2007. Upon completion of the going-private
transaction, TD Banknorth will become a wholly-owned
subsidiary of the Bank.
Accounting for Servicing Financial Assets
Effective November 1, 2007, the Bank will be required to adopt
the FASB guidance on servicing financial assets. This guidance
will require the Bank to measure its servicing rights at fair value
initially, and allow the Bank to choose either to amortize them
over the term of the servicing rights, or to re-measure them at
fair value through net income. The Bank is in the process of
assessing the impact of this guidance on the Bank’s Consolidated
Financial Statements.
Income Taxes
Effective November 1, 2007, the Bank will be required to adopt
the FASB interpretation on income taxes. The guidance provides
additional information on how to recognize, measure and dis-
close income tax benefits and liabilities. The Bank is in the
process of assessing the impact of this guidance on the Bank’s
Consolidated Financial Statements.
Defined Benefit Pension and Other Postretirement Plans
Effective November 1, 2007, the Bank will be required to adopt
the FASB guidance on accounting for defined benefit pension
and other postretirement plans. The new guidance will require
the Bank to recognize the funded status of its defined benefit
pension and other postretirement plans on its Consolidated
Balance Sheet. The Bank will also be required to recognize as
acomponent of other comprehensive income, gains or losses
and prior service costs or credits that arise during the period but
are not recognized as components of the period’s net benefit
expense. Effective November 1, 2008, the Bank will no longer be
permitted to measure its defined benefit plan up to three months
earlier than the Financial Statement date of October 31; instead,
the plans will need to be measured as at October 31. The FASB
guidance also requires the Bank to provide for increased disclo-
sures of its defined benefit pension and other postretirement
plans. The Bank is in the process of assessing the impact of this
guidance on the Bank’s Consolidated Financial Statements.
Fair Value Measurements
Effective November 1, 2008, the Bank will be required to adopt
the FASB guidance on fair value measurements. The guidance
creates a fair value hierarchy in which the highest priority for fair
value measurement assumptions is given to quoted prices in
active markets and the lowest priority is given to unobservable
data. The new guidance will primarily impact the Bank’s fair value
measurements relating to financial instruments and also requires
the Bank to make increased disclosures about its fair value meas-
urements. The Bank is in the process of assessing the impact of
this guidance on the Bank’s Consolidated Financial Statements.