FOR IMMEDIATE RELEASE 99-157 Commission Staff Issues Accounting Bulletin Addressing Restructuring and Asset Impairment Charges Washington, DC, November 24, 1999 -- The staff of the Securities and Exchange Commission has released Staff Accounting Bulletin (SAB) No. 100, which provides guidance on the accounting for and disclosure of certain expenses and liabilities commonly reported in connection with restructuring activities and business combinations, and the recognition and disclosure of asset impairment charges. SABs are not rules or interpretations of the Commission; they represent interpretations and practices followed by staff of the Office of the Chief Accountant and the Division of Corporation Finance in administering the disclosure requirements of the federal securities laws. The SAB reiterates the currently existing criteria stated in Emerging Issues Task Force (EITF) Issue No. 94-3, Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring) (EITF 94-3), EITF Issue No. 95-3, Recognition of Liabilities in Connection with a Purchase Business Combination (EITF 95-3) and Statement of Financial Accounting Standards No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of (SFAS 121), and, also provides guidance on how the staff interprets and applies those criteria. It states that costs or charges falling within the scope of EITF 94-3, EITF 95-3, or SFAS 121, must be accounted for in accordance with the appropriate standard. It notes that EITF 94-3, EITF 95-3, and SFAS 121 should not be applied to events or circumstances falling outside their respective scopes. Furthermore, the SAB provides examples to illustrate the staffs' interpretations of how this accounting literature should be applied. Registrants are reminded of the disclosures required by EITF 94-3, EITF 95-3, and SFAS 121, as well as their required frequency. In addition, investors are informed of additional disclosures that the staff has requested to enhance financial statement transparency. It provides the staff's views regarding assessing and measuring enterprise level goodwill for impairment in accordance with Accounting Principles Board Opinion No. 17, Intangible Assets. The SAB also states that depreciable lives, amortization periods, and salvage values of long-lived assets need to be reviewed, and where appropriate, changed on a timely basis. Finally, the SAB provides the staff's views regarding the measurement of liabilities and other loss accruals assumed in a purchase business combination. The SAB fulfills a promise made by SEC Chairman Arthur Levitt last fall that the staff would communicate more broadly its interpretations as to the accounting for and disclosure of restructuring and asset impairment charges. Chairman Levitt's remarks were in response to an increasing practice of some registrants using restructuring charges to inappropriately impact, or manage, reported earnings. Lynn Turner, the Commission's Chief Accountant, said, "I believe that the views of the staff communicated in the SAB will serve to level the playing field, address uncertainty in the preparer community, and emphasize the transparency necessary for investors to receive high quality information by achieving greater comparability in the application of accounting requirements." For further information concerning the SAB, contact Paul Kepple or Eric Casey in the Office of the Chief Accountant at (202) 942-4400, or Robert Bayless in the Division of Corporation Finance at (202) 942-2960. # # #