NEWS RELEASE 01/25/06

THE FINANCIAL ACCOUNTING STANDARDS BOARD ISSUES PROPOSAL TO CREATE A FAIR VALUE OPTION FOR FINANCIAL ASSETS AND LIABILITIES

Exposure Draft Seeks to Reduce Complexity in Accounting for Financial Instruments

Norwalk, CT, January 25, 2006—The Financial Accounting Standards Board (FASB) today issued an Exposure Draft that would provide companies with the option to report selected financial assets and liabilities at fair value. Under the option, any changes in fair value would be included in earnings. The proposed Standard seeks to reduce both complexity in accounting and volatility in earnings caused by differences in the existing accounting rules.

Current GAAP uses different measurement attributes for different assets and liabilities, which can lead to earnings volatility. The proposed Standard helps to mitigate this type of accounting-induced volatility by enabling companies to achieve a more consistent accounting for changes in the fair value of related assets and liabilities without having to apply complex hedge accounting provisions.

Under this proposal, entities would be able to measure at fair value financial assets and liabilities selected on a contract-by-contract basis. They would be required to display those values separately from those measured under different attributes on the face of the balance sheet. Furthermore, the proposal would require companies to provide additional information that would help investors and other users of financial statements to more easily understand the effect on earnings.

“The option to measure related financial instruments at fair value should simplify accounting and encourage the display of more relevant and understandable information for investors and other users of financial statements,” said Leslie F. Seidman, FASB member and Board collaborator on the project. “Today’s proposal also helps achieve further convergence with the International Accounting Standards Board, which has previously adopted a fair value option for financial instruments.”

A copy of the proposal may be downloaded from the FASB’s website at www.fasb.org.

The Financial Accounting Standards Board invites public comment on this and all Exposure Drafts. The comment deadline for today’s Exposure Draft is April 10, 2006. Comment letters should be submitted electronically to director@fasb.org or via regular mail to:

Technical Director
Financial Accounting Standards Board
401 Merritt 7
PO Box 5116
Norwalk, CT 06856-5116

About the Financial Accounting Standards Board

Since 1973, the Financial Accounting Standards Board has been the designated organization in the private sector for establishing standards of financial accounting and reporting. Those standards govern the preparation of financial reports and are officially recognized as authoritative by the Securities and Exchange Commission and the American Institute of Certified Public Accountants. Such standards are essential to the efficient functioning of the economy because investors, creditors, auditors, and others rely on credible, transparent, and comparable financial information. For more information about the FASB, visit our website at www.fasb.org.