Companies Reevaluating Derivative Strategies; Study by Solution133.com Reveals Increased Apprehension Regarding Impact of FAS 133.

Business Editors

NEW YORK--(BUSINESS WIRE)--Nov. 29, 2000

American companies are becoming more risk averse and are favoring simple and stable financial instruments, according to a recent survey of senior executives from Fortune 1000 companies conducted by Solution133.com.(TM) The report released today, "Tackling FAS 133 - Implications for Corporate America," found that many companies have begun to, or are contemplating, altering their use of derivatives because of new requirements in FAS 133.

FAS 133, adopted in June 2000, requires that a company report all derivatives on its balance sheet at their fair market value, describe its risk management strategies and the reasons for undertaking a particular hedge and calculate a hedge's effectiveness.

"Many companies find themselves facing the great unknown," said Stan Friedman, chairman and CEO of Solution 133.com, LLC. "Senior executives clearly have a great deal of apprehension about the impact of FAS 133 on their day-to-day business operations and hedging strategies. Moreover, there is related concern that FAS 133 will result in greater earnings and stock price volatility."

The results of the survey reflect an increasing concern that these requirements expose a company to an unprecedented degree of outside scrutiny. The Solution133.com survey also reveals:

- 85% of companies with more than $1 billion in sales/revenue utilized interest
rate swaps to hedge their risk.

- Nearly all (96%) of the companies surveyed indicated they have assigned a
senior executive to monitor their FAS 133 activities.

- Of the 75% of the companies using derivatives, a majority indicated that they
would avoid using more customized or targeted derivatives, opting to stay with
"plain vanilla" until they fully understand the possibility of any earnings
ramifications.

"There has been considerable debate about how FAS 133 will alter the derivative landscape and what its final impact will be on relations between companies and their investors," added Mr. Friedman. "In some cases, compliance with FAS 133 will require a onetime transaction adjustment, perhaps resulting in multi-million dollar charges against net income. In today's volatile market, investors may view such fluctuations negatively and manage their portfolio accordingly."

Solution 133.com, LLC was established as a joint venture by PricewaterhouseCoopers, the world's largest professional services organization, and Gifford Fong Associates, a leading California-based consulting firm specializing in the valuation and risk analysis of derivatives and their portfolios for financial risk management purposes. A copy of the report is available at www.solution133.com.

Gifford Fong Associates (GFA) provides consulting services and proprietary analytical tools to the financial and legal communities. Established in 1974, the privately held San Francisco area-based firm specializes in assisting Fortune 500 companies, national governments, and large institutional investors with analyses of derivative products, fixed-income portfolios, asset allocation models and credit analysis modeling. GFA has close ties with leading professional organizations such as the Association for Investment Management and Research (AIMR) and the Institute for Quantitative Research in Finance (The Q Group). GFA has created research endowments at the Graduate School of Business of Stanford University, the University of California at Berkeley Haas School of Business, and the Sloan School of Management at the Massachusetts Institute of Technology (MIT).

With a worldwide network of 7000 professionals, PricewaterhouseCoopers' Financial Advisory Services ("FAS") practice provides creative solutions and ideas that increase value to clients during critical periods and when they are making important decisions that define their future. The FAS business is organized along five product lines. The Business Recovery Services, Dispute Analysis & Investigations, and Corporate Value Consulting product lines are the largest in the world. Our Dispute Analysis & Investigations product line was ranked number one in the US by readers of Euromoney's International Commercial Litigation. The Project Finance & Privatization product line rated second in Privatisation International's global league table by number of privatization financial advisory assignments and number one in Project Finance International's global ranking by number of project finance advisory mandates. The Mergers & Acquisitions product line was second in the world in number of deals completed, according to Securities Data Company.

PricewaterhouseCoopers (www.pwcglobal.com) is the world's largest professional services organization. Drawing on the knowledge and skills of more than 150,000 people in 150 countries, we help our clients solve complex business problems and measurably enhance their ability to build value, manage risk and improve performance in an Internet-enabled world.

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