Unilever 2001 Annual Report Download - page 98

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Unilever Annual Report & Accounts and Form 20-F 2001
ADDITIONAL INFORMATION FOR US INVESTORS
Unilever Group
>95
Financial Statements
The consolidated accounts of the Unilever Group have been prepared
in accordance with accounting principles which differ in certain
respects from those generally accepted in the United States (US GAAP).
The principal differences are set out below.
Goodwill and other intangibles
Prior to 1 January 1998 Unilever wrote off goodwill and all other
intangible assets arising on the acquisition of new interests in group
companies and joint ventures directly to profit retained in the year
of acquisition. Under US GAAP goodwill and identifiable intangibles,
principally trade marks, are capitalised and amortised over their
estimated useful lives.
There is no difference between the accounting policy applied to
goodwill and intangible assets purchased after 1 January 1998 and
US GAAP as applicable up to the end of 2001.
Profit or loss on disposal of businesses
Unilever calculates profit or loss on sale of businesses after writing
back any goodwill previously charged directly to reserves. Under
US GAAP the profit or loss on disposal of the businesses is stated
net of the relevant unamortised goodwill included on the balance
sheet and the cumulative currency retranslation differences recognised
through the statement of total recognised gains and losses.
Restructuring costs
Under Unilever’s accounting policy certain restructuring
costs relating to employee terminations are recognised when a
restructuring plan has been announced. Under US GAAP, additional
criteria must be met before such charges are recognised.
Interest
Unilever treats all interest costs as a charge to the profit and loss
account in the current period. Under US GAAP interest incurred
during the construction periods of tangible fixed assets is capitalised
and depreciated over the life of the assets.
Derivative financial instruments
Transition adjustment
Unilever has applied the provisions of SFAS 133 ‘Accounting for
Derivative Instruments and Hedging Activities’ in this divergence
statement as from 1 January 2001. In accordance with the transition
provisions of SFAS 133, an adjustment of 6 million (net of tax of
3 million) was recorded as the cumulative effect of a change in
accounting principle to recognise the fair value of all the Group’s
derivative financial instruments and hedge items under US GAAP.
In addition, Unilever has recorded a one-time unrealised loss of
85 million (net of tax of 37 million) to consolidated other
comprehensive income under US GAAP. During the year ended
31 December 2001, a reclassification from other comprehensive
income to net income of 21 million was recorded as a result of
the underlying hedged transactions which impacted earnings.
Hedging policy
Unilever’s accounting policies in respect of derivative financial
instruments are described in the accounting information and
policies on page 53. Unilever has not designated any of its
derivative instruments as qualifying hedge instruments under
SFAS 133 and, accordingly, this divergence statement assumes
that derivative financial instruments are valued at fair value and
that changes in their value are reflected in earnings.
€million €million
2001 2000
Capital and reserves as reported in the consolidated balance sheet 7 195 8 169
Attributable to: NV 5 056 6 300
PLC 2 139 1 869
US GAAP adjustments:
Goodwill 2 303 2 926
Identifiable intangibles 3 009 3 067
Restructuring costs 166 185
Interest 432 487
Other comprehensive income effect of derivative financial instruments transition adjustment (101) –
Derivative financial instruments (128) –
Pensions and similar liabilities 538 437
Dividends 1 059 937
Taxation effect of above adjustments (920) (1 133)
Net increase 6 358 6 906
Capital and reserves under US GAAP 13 553 15 075
Attributable to: NV 9 340 11 086
PLC 4 213 3 989
The aggregate amounts included in the consolidated Unilever Group capital and reserves (Unilever accounting principles) in respect of
cumulative currency translation adjustments are as follows:
€ million €million €million
2001 2000 1999
Balance 1 January (3 663) (3 411) (3 761)
Arising during the year (1 069) (252) 350
Balance 31 December (4 732) (3 663) (3 411)
The aggregate amounts of foreign currency transaction gains and (losses) charged in
the consolidated profit and loss account are: (30) 8 (2)