Unilever 2005 Annual Report Download - page 161

Financial Statements
Unilever Annual Report and Accounts 2005 161
Classification differences between IFRSs and US GAAP
Cash flow statement
Under US GAAP, various items would be reclassified within the consolidated cash flow statement. In particular, interest received and interest
paid would be part of net cash flow from operating activities. In addition, under US GAAP, cash and cash equivalents comprise cash balances
and cash equivalents with an original maturity at the date of investment of less than three months. Under Unilever’s presentation, cash and cash
equivalents are net of bank overdrafts. Cash flows from movements in bank overdrafts would be classified as part of cash flows from financing
activities under US GAAP. Cash flows from movements in bank overdrafts were €61 million for the year ended 31 December 2005 (2004:
€(134) million).
Recent accounting developments
In November 2004, the Financial Accounting Standards Board (FASB) issued FASB Statement No. 151 ‘Inventory Costs – an amendment of
ARB 43’ (FAS151). The standard clarifies that abnormal amounts of idle facility expense, freight, handling costs, and wasted materials (spoilage)
should be recognised as current-period charges. In addition, FAS 151 requires that the allocation of fixed production overheads to inventory
values be based on the normal capacity of the production facilities. The provisions of FAS 151 will be effective for inventory costs incurred
during reporting periods beginning after 15 June 2005. FAS 151 does not have an impact on the results of operations or financial position of
Unilever since the key elements are already applied in Unilever’s financial statements.
In December 2004, the FASB issued a revision of FASB Statement No. 123 – ‘Share-Based Payments’ (FAS 123(R)) which also supersedes APB
Opinion No. 25 – ‘Accounting for Stock Issued to Employees’. Generally the valuation methods contained in FAS 123(R) are similar to those in
FAS 123, but FAS 123(R) requires all share-based payments to employees, including grants of employee share options, to be charged to the
statement of income. Pro forma disclosure is no longer an alternative. With limited exceptions, the amount charged to the statement of income
for share options will be measured based on the grant date fair value of the option amortised over the period to the date of vesting of the
award. FAS 123(R) is effective for annual reporting periods beginning after 15 June 2005. The company is currently evaluating the provisions of
this Statement. The adoption of FAS 123(R) is not expected to have a significant impact on the consolidated results of operations or financial
position of Unilever as Unilever adopted the fair value measurement provisions of FAS 123 in 2003.
In March 2005 the FASB issued Financial Interpretation No. 47 ‘Accounting for Conditional Asset Retirement Obligations’ (FIN 47), which
clarifies the term conditional asset retirement obligation used in FAS 143. Unilever will apply the standard to the financial year beginning on
1 January 2006; this is not expected to have a material impact on the consolidated results of operations or financial position of Unilever.
In May 2005 the FASB issued FASB Statement No. 154 ‘Accounting changes and error corrections’ (FAS 154) as a replacement of APB Opinion
No. 20 ‘Accounting changes’ and FASB Statement No. 3 ‘Reporting Accounting Changes in Interim Financial Statements’, which has to be
applied for financial years beginning on or after 15 December 2005. It requires retrospective application, and Unilever will apply the standard to
the financial year beginning on 1 January 2006. The adoption is not expected to have a material effect on the consolidated results of operations
or financial position of Unilever.
Documents on display in the United States
Unilever files and furnishes reports and information with the United States Securities and Exchange Commission (SEC). Such reports and
information can be inspected and copied at the SEC’s public reference facilities in Washington DC, Chicago and New York. Certain of our
reports and other information that we file or furnish to the SEC are also available to the public over the internet on the SEC’s website at
www.sec.gov.
Additional information for US investors (continued)
Unilever Group