Unilever 2002 Annual Report Download - page 123

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Goodwill and identifiable intangible assets that have indefinite lives are assessed annually for impairment. Within six months of the initial
application of SFAS 142, management completed an impairment assessment and have concluded that there is no impairment of goodwill
or identifiable intangible assets with indefinite lives.
An analysis of goodwill by reporting segment is given below:
Spreads Health & Home care and
Savoury and and cooking wellness and Ice cream and professional Other
€million dressings products beverages frozen foods cleaning Personal care operations Total
As at 1 January 2002 16 620 212 1 685 1 135 733 633 – 21 018
Currency retranslation (2 540) (32) (255) (171) (112) (97) – (3 207)
Acquisitions/disposals 126 100 (36) (17) (168) 26 – 31
As at 31 December 2002 14 206 280 1 394 947 453 562 – 17 842
Had the Group accounted for its goodwill and identifiable intangible assets that have indefinite lives under SFAS 142 for the years ending
31 December 2001 and 2000, the impact on reported results would have been as follows:
€million €million
2001 2000
Net income under US GAAP 1 506 1 266
Amortisation, net of tax:
Goodwill 1 266 624
Intangibles 404 141
Adjusted net income under US GAAP 3 176 2 031
Adjusted net income per share 3.18 2.01
Adjusted diluted net income per share 3.09 1.96
Indefinite lived intangible assets principally comprise trademarks and have a net book value of 6 726 million as at 31 December 2002.
Finite lived intangible assets principally comprise technologies and have a net book value of 567 million, net of accumulated amortisation
of 72 million, as at 31 December 2002. Amortisation expense recorded in the year in respect of finite lived intangible assets was
36 million. This expense is not expected to change materially over the next five years.
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 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 3million)
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 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 2002, a reclassification
of derivative losses from other comprehensive income to net income of 40 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 68. 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.
Unilever Annual Report & Accounts and Form 20-F 2002
120 Additional information for US investors
Unilever Group