NEWS RELEASE 6/15/00

FASB Issues Amendment to Derivatives Standard

Norwalk, CT, June 15, 2000—The Financial Accounting Standards Board today issued an amendment of Statement 133, Accounting for Certain Derivative Instruments and Certain Hedging Activities. The new Statement addresses a limited number of issues causing implementation difficulties for a large number of entities getting ready to apply Statement 133.

The new Statement amends Statement 133 such that:

• The normal purchases and normal sales exception is expanded.

   

• The specific risks that can be identified as the hedged risk are redefined so that in a hedge of interest rate risk the risk of changes in a benchmark interest rate would be the hedged risk.

   

• Recognized foreign-currency-denominated assets and liabilities may be the hedged item in fair value hedges or cash flow hedges.

   

• Intercompany derivatives may be designated as the hedging instruments in cash flow hedges of foreign currency risk in the consolidated financial statements even if those intercompany derivatives are offset by unrelated third-party contracts on a net basis.

Certain Board decisions based on recommendations of the FASB's Derivatives Implementation Group to clarify Statement 133 also have been incorporated in the Statement.

The Statement is the result of the Board's decision, after listening to its constituents, to address a limited number of issues using the following criteria:

• Implementation difficulties would be eased for a large number of entities.

   

• There would be no conflict with or modifications to the basic model of Statement 133.

   

• There would be no delay in the effective date of Statement 133.

Statement 138 is available for purchase from the FASB Order Department, telephone (800) 748-0659.