BT 2001 Annual Report Download - page 127

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III Minority interests
Under US GAAP, the loss to minority interests would have been reduced by »122 million (2000 --- loss increased by »10 million,
1999 --- income reduced by »12 million) after adjusting for goodwill amortisation and accounting for associates and joint ventures.
Net assets attributable to minority interests would have been »32 million higher (2000 --- »82 million higher) after adjusting for
¢nancial instruments.
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’’. 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 (loss),
basic earnings (loss) per share and diluted earnings (loss) per share under US GAAP would have been »(2,419) million loss
(2000 --- »1,347 million pro¢t, 1999 --- »2,560 million pro¢t), (37.1)p loss (2000 --- 20.8p, 1999 --- 39.7p) and (37.1)p loss (2000 --- 20.3p,
1999 --- 38.8p), 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 33 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 £ows are presented for operating activities; returns on investments and servicing of ¢nance; taxation;
capital expenditure and ¢nancial investments; acquisitions and disposals; dividends paid to the company’s shareholders;
management of liquid resources and ¢nancing. SFAS No. 95 requires a classi¢cation of cash £ows as resulting from operating,
investing and ¢nancing activities.
Cash £ows 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 £ows from purchases, sales and maturities of trading
securities, while not separately identi¢ed 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 ¢nancing activities under US GAAP.
The following statements summarise the statements of cash £ows 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.
2001
£m
2000
£m
1999
£m
Net cash provided by operating activities 5,515 4,003 3,876
Net cash used in investing activities (22,785) (9,104) (950)
Net cash provided by (used in) financing activities 18,311 4,697 (1,665)
Net increase (decrease) in cash and cash equivalents 1,041 (404) 1,261
Effect of exchange rate changes on cash (15) (1) 33
Cash and cash equivalents under US GAAP at beginning of year 1,255 1,660 366
Cash and cash equivalents under US GAAP at end of year 2,281 1,255 1,660
Short-term investments with original maturities of less than three months (1,869) (1,002) (1,558)
Cash at bank and in hand under UK GAAP at end of year 412 253 102
BT Annual report and Form 20-F 127