BT 2002 Annual Report Download - page 132

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II Net income and shareholders' equity reconciliation statements continued
Shareholders' equity
At 31 March
2002
£m
2001
£m
Shareholders' equity under UK GAAP (358) 12,054
Restatement for deferred tax under FRS 19 ±2,015
Shareholders equity under UK GAAP as previously reported (358) 14,069
Adjustment for:
Sale and leaseback of properties (1,178) ±
Pension costs (3,003) (2,755)
Redundancy costs ±(25)
Capitalisation of interest, net of related depreciation 250 620
Goodwill, net of accumulated amortisation 141 122
Mobile licences, software and other intangible asset capitalisation and amortisation 482 521
Financial instruments (592) (620)
Deferred gain ±(323)
Impairment 192 ±
Deferred taxation (474) (1,296)
Directories in progress ±(82)
Disposals of businesses 120 ±
Dividend declared after the ®nancial year end 173 ±
Shareholders' equity as adjusted for US GAAP (4,247) 10,231
III Minority interests
Under US GAAP, the income to minority interests would have been reduced by £26 million (2001 ± income reduced by
£122 million, 2000 ± loss increased by £10 million) after adjusting for goodwill amortisation and accounting for associates
and joint ventures. Net assets attributable to minority interests would have been £26 million higher (2001 ± £32 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 £(792) million loss (2001 ± £(2,419) million loss, 2000 ± £1,347 million pro®t), (9.5)p loss
(2001 ± (33.2)p loss, 2000 ± 18.6p) and (9.5)p loss (2001 ± (33.2)p loss, 2000 ± 18.2p), 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 34 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 ¯ows
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.
United States Generally Accepted Accounting Principles
BT Group Annual Report and Form 20-F 2002 131