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Financial review: US GAAP

The group's net income (loss) and earnings (loss) per share for the three financial years ended 31 March 2002 and shareholders' equity at 31 March 2002 and 2001 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 leasing transactions, pension costs, redundancy costs, intangible assets, goodwill, deferred taxation, capitalisation of interest, financial instruments, contributing assets to joint ventures, stock compensation, and dividends. Cash flow information under the US GAAP presentation is also shown further in this site.

In July 2001, the Financial Accounting Standards Board (FASB) issued SFAS No. 141 "Business Combinations" which supersedes APB Opinion 16 "Business Combinations". For business combinations initiated after 30 June 2001 SFAS No. 141 requires the purchase method of accounting to be used and disallows the pooling of interests method. SFAS No. 141 also sets out specific criteria for the recognition of intangible assets separately from goodwill and requires unallocated negative goodwill to be written off immediately as an extraordinary gain. The adoption of SFAS No. 141 will not have a material impact on BT's results of operations, financial position or cash flows.

SFAS No. 142 "Goodwill and Other Intangible Assets" was also issued in July 2001. SFAS No. 142 is applicable to financial years commencing after 15 December 2001. SFAS No. 142 supersedes APB Opinion 17 "Intangible Assets" and requires the discontinuance of the amortisation of goodwill and intangible assets with indefinite lives. These assets will be subject to an impairment review at least annually.

At 1 April 2002 BT has purchased goodwill of Ł237 million which has been reviewed in accordance with SFAS No. 142 and no impairment charge is required on adoption of SFAS No. 142. This is being amortised over its remaining useful life of 17 years in the UK GAAP financial statements.

In July 2001, the FASB also issued SFAS No. 143 "Accounting for Asset Retirement Obligations" which is applicable to financial years commencing after 15 June 2002. SFAS No. 143 requires that the fair value of a liability for an asset retirement obligation be recognised in the period in which it is incurred if it is possible to make a reasonable estimate of the fair value. The associated asset retirement costs are required to be capitalised as part of the carrying value of the long lived asset. The adoption of SFAS No. 143 is not expected to have a material impact on the consolidated financial statements.

In August 2001, the FASB issued SFAS No. 144 "Accounting for the Impairment or Disposal of Long Lived Assets" which is applicable to financial years beginning after 15 December 2001. SFAS No. 144 supersedes SFAS No. 121 "Accounting for Long Lived Assets and for Long Lived Assets to be Disposed Of". The adoption of SFAS No. 144 is not expected to have a material impact on the consolidated financial statements.

In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections". The Statement updates, clarifies and simplifies existing accounting pronouncements. BT is currently evaluating the impact of this statement on its consolidated financial statements.


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