· SFAS Nos. 141 and 142 (issued in June 2001) supercede Accounting Principles Board ("APB") Opinions Nos. 16 and 17, respectively. SFAS No. 144 (issued in August 2001) replaces SFAS No. 121.

· All business combinations initiated after June 30, 2001 must use the purchase method of accounting. The pooling method of accounting is prohibited except for transactions occurring prior to July 1, 2001.

· Intangible assets acquired in a business combination must be reported apart from goodwill if such assets are (i) capable of being separated or divided from the entity; and (ii) arise from contractual or other legal rights. In SFAS No. 141, intangible assets that meet the "separable" and/or "contractual-legal" criterion for recognition include, but are not limited to, the following:

Marketing-related, such as trademarks, trade names and mastheads;

Customer-related, such as customer lists and relationships;

Creative-type, such as plays, books, literary rights, musical works and artistic recordings;

Contract-based, such as licensing agreements, leases and operating rights; and

Technology-based, such as patents, unpatented technology, computer software, databases and trade secrets.

· All acquired goodwill must be assigned to reporting units for the purposes of impairment testing. A reporting unit is an operating segment or one level below an operating segment, referred to as a component (within the meaning of SFAS No. 131). A component of an operating segment is a reporting unit if the component constitutes a business for which discrete financial information is available and segment management regularly reviews the operating results of that component.

· Goodwill and other intangible assets with indefinite lives are not to be amortized. Rather, they are to be tested for impairment annually and whenever there is an "impairment indicator."

· Goodwill should be tested for impairment using a two-step approach:

(i) Compare the fair value of the reporting unit’s stockholder’s equity, including its goodwill, to its carrying amount basis. If the fair value exceeds carrying amount, then no impairment is indicated and no further testing procedures are required. However, if converse circumstances apply, then step two is activated.

(ii) If the fair value of the reporting unit’s stockholders’ equity, including its goodwill, is less than the carrying amount, then determine the implied fair value of goodwill (i.e., by deducting the fair value of tangible and other identifiable intangible assets from the fair value of the reporting unit). An impairment loss is recognized to the extent that carrying value exceeds the implied fair value of goodwill.

· Other intangible assets recognized on the balance sheet should also be tested for impairment by comparing their respective fair values to their corresponding carrying value basis.

· Intangible assets with finite lives are subject to amortization over their remaining useful lives. These intangible assets should be reviewed for impairment in accordance with the procedures outlined in SFAS No. 144.

· The carrying amount of goodwill and other intangible assets related to acquisitions implemented prior to July 1, 2001 should be accounted for in conformance with the new Statements.

· SFAS No. 142 is effective for fiscal years beginning after December 15, 2001. Companies should perform the first test of impairment within six months of initially applying the Statement. Regardless of the full adoption date, the non-amortization provisions of SFAS No. 142 are effective for all business combinations and other transactions completed after June 30, 2001.

With the issuance of these three new Statements, the GAAP landscape has changed dramatically. The valuation and impairment tests of the new FASB Statements require supportable, well-documented and credible analyses, such as those long provided by Management Planning, Inc. ("MPI"). In this regard, MPI stands ready to be of immediate service to you in the accomplishment of your financial reporting compliance objectives.

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