BT 2004 Annual Report Download - page 129

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ii Net income and shareholders’ equity reconciliation statements
The following statements summarise the material estimated adjustments, gross of their tax effect, which
reconcile net income and shareholders’ equity from that reported under UK GAAP to that which would have been
reported had US GAAP been applied.
Net income
Years ended 31 March
2004
£m
2003
£m
2002
£m
Net income applicable to shareholders under UK GAAP 1,417 2,686 995
Adjustment for:
Sale and leaseback of properties (85) (114) (1,178)
Pension costs (428) (177) (106)
Redundancy charges 20 – (140)
Capitalisation of interest, net of related depreciation (23) (17) 398
Goodwill 12 (35) 11
Mobile licences, software and other intangible asset capitalisation and
amortisation, net –(26) (32)
Financial instruments (82) 731 23
Deferred gain –– 313
Impairment (24) (24) 147
Employee share plans (8) (11) (8)
Property rationalisation provision (142) 147 –
Disposals of businesses –130 254
Deferred taxation 4976 (1,320)
661 4,266 (643)
Tax effect of US GAAP adjustments 222 (132) (89)
Net income (loss) as adjusted for US GAAP 883 4,134 (732)
Basic earnings (loss) per American Depositary Share as adjusted for US GAAP
a
£1.02 £4.80 £(0.88)
Diluted earnings (loss) per American Depositary Share as adjusted for US GAAP
a
£1.02 £4.77 £(0.88)
a
Each American Depositary Share is equivalent to ten ordinary shares.
In the 2004 and 2003 financial years all the adjustments relate to continuing operations (2002 – £2,009 million
reduction in relation to discontinued operations). Net income from continuing operations was £883 million (2003
– £4,134 million, 2002 – £1,680 million loss).
The adjustments to net income relating to discontinued operations are £nil (2003 – £nil, 2002 –
£282 million).
Shareholders’ equity
At 31 March
2004
£m
2003
£m
Shareholders’ equity under UK GAAP 3,094 2,642
Adjustment for:
Sale and leaseback of properties (1,377) (1,292)
Pension costs (5,714) (6,371)
Redundancy charges 20 –
Capitalisation of interest, net of related depreciation 195 225
Goodwill 124 113
Financial instruments (8) 86
Impairment 100 124
Property rationalisation provision 5147
Deferred taxation (59) (63)
Dividend declared after the financial year end 454 366
(3,166) (4,023)
Tax effect of US GAAP adjustments 1,711 1,765
Shareholders’ equity as adjusted for US GAAP (1,455) (2,258)
iii Minority interests
Under US GAAP, the income to minority interests would have been unchanged (2003 – £27 million reduction,
2002 – £26 million reduction) after adjusting for goodwill amortisation and accounting for associates and joint
ventures. Net assets attributable to minority interests would have been unchanged (2003 – unchanged) after
adjusting for financial instruments.
BT Annual Report and Form 20-F 2004128 United States Generally Accepted Accounting Principles