NEWS RELEASE 05/22/02

FASB Issues Exposure Draft That Expands Disclosure Requirements for Guarantees

Norwalk, CT, May 22, 2002—In an effort to improve disclosures about loan guarantees, the Financial Accounting Standards Board (FASB) has issued an Exposure Draft of a proposed Interpretation, Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others. The Exposure Draft is available on the FASB’s website at www.fasb.org or may be obtained by contacting the FASB Order Department at 800-748-0659. The comment period concludes on June 21, 2002.

The proposed Interpretation would clarify and expand on existing disclosure requirements for guarantees, including loan guarantees. It also would require that at the time a company issues a guarantee, the company must recognize a liability for the fair value, or market value, of its obligations under that guarantee. By improving its disclosures and accounting, a company provides a more representationally faithful picture of its financial position and the risk it has assumed.

The Interpretation does not address the subsequent measurement of the guarantor’s recognized liability over the term of the guarantee. It also would incorporate, without change, the guidance in FASB Interpretation No. 34, Disclosure of Indirect Guarantees of Indebtedness of Others, which is being superseded.

This guidance would not apply to guarantee contracts issued by insurance companies, a lessee’s residual value guarantee embedded in a capital lease, contingent rents and price rebates. The provisions related to recognizing a liability at inception for the fair value of the guarantor’s obligations would not apply to product warranties or to guarantees accounted for as derivatives.

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.

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