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The group’s net income
(loss) and earnings (loss) per share for the three financial years ended 31
March 2001 and shareholders’ equity at 31 March 2001 and 2000 under US
Generally Accepted Accounting Principles (US GAAP) are shown further in the
United States Generally Accepted Accounting Principles Section (see
Consolidated financial statements). Differences between UK GAAP and US GAAP
include results of the differing accounting treatment of pension costs,
redundancy costs, intangible assets, goodwill, deferred taxation,
capitalisation of interest, financial instruments, contributing assets to joint
ventures, stock compensation, directories in progress and dividends. Cash flow
information under the US GAAP presentation is also shown further in this
document.
SFAS No. 133, Accounting
for Derivative Instruments and Hedging Activities as amended by SFAS No. 137
and SFAS No. 138, became effective for BT on 1 April 2001. SFAS No. 133, which
requires the group to record all derivatives on the balance sheet at fair
value, introduces new rules in respect of hedge accounting and the recognition
of movements in fair value through the income statement. BT expects that it
will not designate any of its derivative instruments as qualifying hedge
instruments under SFAS No. 133 and, accordingly, the group expects to record
changes in the fair value of its derivative instruments in current earnings
each period. The group expects that the one-time pre-tax charge for the initial
adoption of SFAS No. 133 to be recorded against US GAAP income will not be
material. The group expects to record an unrealised pre-tax loss of
approximately £143 million in shareholders’ equity for the quarter ending 30
June 2001. These transition adjustments will be calculated using the assumption
that none of the hedging relationships that existed prior to the adoption of
SFAS No. 133 will qualify for hedge accounting after the adoption of SFAS No.
133. At this time, the group plans no significant change to its risk management
strategies due to the adoption of SFAS No. 133. |
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