BT 1999 Annual Report Download - page 100

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99
UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
III Minority Interests
Under US GAAP, the minority interest charge would have been reduced by £12m (1998 – £5m, 1997 – £nil) after adjusting for
goodwill amortisation and accounting for associates and joint ventures. Net assets attributable to minority interests would have
been £88m higher (1998 – £81m higher) after adjusting for goodwill, investments and other items.
IV Accounting for share options
Under UK GAAP, the company does not recognise compensation expense for the fair value, at the date of grant, of share options
granted under the employee share option schemes. Under US GAAP, the company adopted the disclosure-only option in SFAS
No. 123 “Accounting for Stock-Based Compensation” in the year ended 31 March 1997. Accordingly, the company accounts
for share options in accordance with APB Opinion No. 25 “Accounting for Stock Issued to Employees”, under which no
compensation expense is recognised. Had the group expensed compensation cost for options granted in accordance with SFAS
No. 123, the group’s pro forma net income, basic earnings per share and diluted earnings per share under US GAAP would have
been £2,560m (1998 – £1,432m, 1997 – £2,126m), 39.7p (1998 – 22.4p, 1997 – 33.6p) and 38.8p (1998 – 22.1p, 1997 – 33.2p),
respectively. The SFAS No. 123 method of accounting does not apply to share options granted before 1 January 1995, and
accordingly, the resulting pro forma compensation costs may not be representative of that to be expected in future years.
See note 31 for the SFAS No. 123 disclosures of the fair value of options granted under employee schemes at date of grant.
V Consolidated statements of cash flows
Under UK GAAP, the Consolidated Statements of Cash Flows are presented in accordance with UK Financial Reporting Standard
No. 1 (FRS 1). The statements prepared under FRS 1 present substantially the same information as that required under SFAS
No. 95.
Under SFAS No. 95 cash and cash equivalents include cash and short-term investments with original maturities of three months
or less. Under FRS 1 cash comprises cash in hand and at bank and overnight deposits, net of bank overdrafts.
Under FRS 1, cash flows are presented for operating activities; returns on investments and servicing of finance; taxation; capital
expenditure and financial investments; acquisitions and disposals; dividends paid to the company’s shareholders; management
of liquid resources and financing. SFAS No. 95 requires a classification of cash flows as resulting from operating, investing and
financing activities.
Cash flows under FRS 1 in respect of interest received, interest paid (net of that capitalised under US GAAP) and taxation would
be included within operating activities under SFAS No. 95. Cash flows from purchases, sales and maturities of trading securities,
while not separately identified under UK GAAP, would be included within operating activities under US GAAP. Capitalised interest,
while not recognised under UK GAAP, would be included in investing activities under US GAAP. Dividends paid would be included
within financing activities under US GAAP.
The following statements summarise the statements of cash flows as if they had been presented in accordance with US GAAP,
and include the adjustments which reconcile cash and cash equivalents under US GAAP to cash at bank and in hand reported
under UK GAAP.
1999 1998 1997
£m £m £m
)))))))))))%!!!!!00005
Net cash provided by operating activities 3,876 3,847 5,066
Net cash used in investing activities (950) (4,198) (2,589)
Net cash used in financing activities (1,665) (1,647) (1,517)
00000000001051!!!50000
Net increase (decrease) in cash and cash equivalents 1,261 (1,998) 960
Effect of exchange rate changes on cash 33 21 (14)
Cash and cash equivalents under US GAAP at beginning of year 366 2,343 1,397
00000000001051!!!50000
Cash and cash equivalents under US GAAP at end of year 1,660 366 2,343
Short-term investments with original maturities of less than 3 months (1,558) (304) (2,317)
00000000001051!!!50000
Cash at bank and in hand under UK GAAP at end of year 102 62 26
00000000001051!!!50000