Unilever 2001 Annual Report Download - page 99

Unilever Annual Report & Accounts and Form 20-F 2001
ADDITIONAL INFORMATION FOR US INVESTORS
Unilever Group
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Pensions
Under Unilever´s accounting policy the expected costs of providing
retirement pensions are charged to the profit and loss account
over the periods benefiting from the employees´ services. Variations
from expected cost are similarly spread. Under US GAAP, pension
costs and liabilities are calculated in accordance with Statement
of Financial Accounting Standards No. 87 (SFAS 87), which
requires the use of a prescribed actuarial method and a
prescribed set of measurement principles.
Investments
Unilever accounts for current investments, which are liquid funds
temporarily invested, at their market value.
Unilever accounts for changes in the market value of current
investments as interest receivable in the profit and loss account
for the year. Under US GAAP, such current asset investments are
classified as ‘available for sale securities’ and changes in market
rates, which represent unrealised gains or losses, are excluded from
earnings and taken to stockholders’ equity. Unrealised gains and
losses arising from changes in the market values of securities
available for sale are not material.
Unilever accounts for fixed investments other than in joint ventures
at cost less any amounts written off to reflect a permanent
diminution in value. Under US GAAP such investments are held
at fair value. The difference is not material.
Dividends
The proposed final ordinary dividends are provided for in the
Unilever accounts in the financial year to which they relate.
Under US GAAP such dividends are not provided for until they
become irrevocable.
Cash flow statement
Under US GAAP various items would be reclassified within the
consolidated cash flow statement. In particular, interest received,
interest paid and taxation would be part of net cash flow from
operating activities, and dividends paid would be included within
net cash flow from financing. In addition, under US GAAP cash and
cash equivalents comprise cash balances and current investments
with an original maturity at the date of investment of less than
three months. Under Unilever’s presentation, cash includes only
cash in hand or available on demand less bank overdrafts.
Movements in those current investments which are included under
the heading of cash and cash equivalents under US GAAP form
part of the movement entitled ‘Management of liquid resources’ in
the cash flow statements. At the end of 2001 the balance of such
investments was €9 million (2000: €58 million, 1999: €28 million).
Recently issued accounting pronouncements
United States SAB 101 ‘Revenue Recognition in Financial Statements’
is effective for the fourth quarter of fiscal year 2000. The SAB
provides a summary of certain of the SEC staff’s views in applying
generally accepted accounting principles in the United States to
revenue recognition in financial statements. SAB 101 does not have a
material effect on Unilever’s financial position or results of operations.
United States EITF 00-10 ‘Accounting for Shipping and Handling
Fees and Costs’ issued 21 November 2000 provides guidance on
accounting classification for shipping and handling revenues and
costs. The application of EITF 00-10 would not have a material
effect on Unilever’s financial position or results of operations.
United States EITF 01-09 ‘Accounting for Consideration Given
by a Vendor to a Customer or a Reseller of the Vendor’s Products’
issued early in 2002 codifies and reconciles the consensus on certain
interpretative issues, primarily United States EITF 00-14, 00-22 and
00-25 which address the recognition, measurement and profit and
loss account classification of certain sales incentives. The required
implementation date of this pronouncement would be 1 January
2002 except for certain provisions which would have been effective
as of 1 April 2001. Unilever has assessed the impact of this new
standard. It would have an impact on turnover but would have no
material effect on Unilever’s net results.
United States EITF 00-16 ‘Recognition and Measurement of Employer
Payroll Taxes on Employee Stock-Based Compensation’ issued
12 October 2000 requires that payroll taxes incurred in connection
with stock-based compensation be recognised as an expense upon
exercise. Unilever recognises these payroll taxes, which are not
material, over the life of the share option in accordance with UK
accounting standards.
In June 2001, the FASB issued SFAS 141, ‘Business Combinations’.
SFAS 141 applies to all business combinations initiated after 30 June
2001. This Statement eliminates the pooling-of-interests method of
accounting and further clarifies the criteria for recognition of
intangible assets separately from goodwill.
In June 2001, the FASB also issued SFAS 142 ‘Goodwill and Other
Intangible Assets’. SFAS 142 eliminates the amortisation of goodwill
and certain intangible assets and initiates an annual review for
impairment, as measured under US GAAP. The amortisation provisions
apply to goodwill and other intangible assets acquired after 30 June
2001. Goodwill and other intangible assets acquired prior to 30 June
2001 will be affected upon adoption. Because of the extensive effort
needed to comply with adopting SFAS 141 and SFAS 142, it is not
practicable to estimate reasonably the impact these Statements would
have on the Unilever’s financial statements at the date of this report.
In August 2001, FASB issued SFAS 143, ‘Accounting for Asset
Retirement Obligations’. This statement is effective for fiscal years
beginning after 15 June 2002 and requires that obligations associated
with the retirement of a tangible long-lived asset to be recorded as a
liability when those obligations are incurred, with the amount of the
liability initially measured at fair value. Upon initially recognising a
liability for an asset retirement obligation, an entity must capitalise
the cost by recognising an increase in the carrying amount of the
related long-lived asset. FASB 143 would not have a material impact
on Unilever’s financial position or results of operations.
In October 2001, the FASB issued SFAS 144, ‘Accounting for the
Impairment or Disposal of Long-Lived Assets’. SFAS 144 provides
guidance on the accounting for the impairment or disposal of
long-lived assets. SFAS 144 requires that long-lived assets that are
to be disposed of by sale be measured at the lower of book value
or fair value less cost to sell. This eliminates the requirement that
discontinued operations be measured at net realisable value or that
entities be included under ‘discontinued operations’ in the financial
statements amounts for operating losses that have not yet occurred.
Additionally, SFAS 144 expands the scope of discontinued operations
to include all components of an entity with operations that (a) can be
distinguished from the rest of the entity and (b) will be eliminated
from the ongoing operations of the entity in a disposal transaction.
SFAS 144 is effective for financial statements issued for fiscal years
beginning after 15 December 2001 and, generally, its provisions are
to be applied prospectively. Unilever is currently assessing the impact
of this new standard, but it would not have a material effect on
Unilever’s financial position or results of operations.
Documents on display in the United States
Unilever files reports and information with the United States
Securities and Exchange Commission (SEC), and such reports
and information can be inspected and copied at the SEC’s public
reference facilities in Washington DC, Chicago and New York.