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The
group’s net income (loss) and earnings (loss) per
share for the three financial years ended 31 March 2003
and shareholders’ equity at 31 March 2003 and 2002
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 document.
In
July 2001, the Financial Accounting Standards Board
(FASB) 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
July 2002, the FASB issued SFAS No. 146, ‘‘Accounting
for Costs Associated with Exit or Disposal Activities’’
which is applicable to disposals initialised after 31
December 2002. The Statement requires costs associated
with exit or disposal activities to be recognised when
the costs are incurred rather than at the date of the
commitment to an exit or disposal plan. Accordingly,
we have reflected the impact of SFAS No. 146 in the
2003 financial year. SFAS No. 146 may apply to future
activities which are not currently envisaged and accordingly
it is not possible to assess the future impact of SFAS
No. 146 on any such activities at this time.
In
December 2002, the FASB issued SFAS No. 148, ‘‘Accounting
for Stock Based Compensation – Transition and Disclosure
– an amendment of FASB Statement No. 123’’
which is applicable to financial years beginning after
15 December 2002. The Statement permits two additional
transition methods for an entity voluntarily adopting
fair value based accounting for stock based compensation.
It also amends the disclosure requirements to require
prominent disclosure about the effects on reported net
income of an entity’s accounting policy decisions
with respect to stock based employee compensation. This
Statement does not have a significant impact on the
consolidated financial statements as SFAS No. 123 continues
to be satisfied for disclosure purposes only.
In
April 2003 the FASB issued SFAS No. 149 ‘‘Amendment
of Statement 133 on Derivative Instruments and Hedging
Activities’’. This Statement amends and clarifies
financial accounting and reporting for derivative instruments,
including certain derivative instruments embedded in
other contracts (collectively referred to as derivatives)
and for hedging activities under SFAS No. 133, ‘‘Accounting
for Derivative Instruments and Hedging Activities’’.
BT is currently evaluating the impact of this change.
In
November 2002, the FASB issued FASB Interpretation No.
(FIN) 45, ‘‘Guarantor’s Accounting and
Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others’’. FIN
45 requires that certain guarantees must be recognised
at fair value. FIN 45 also requires disclosure of detailed
information about each guarantee or group of guarantees.
The disclosure requirements are effective for financial
statements ending after 15 December 2002. The recognition
and measurement provisions of FIN 45 are applicable
to guarantees issued or modified after 31 December 2002.
FIN 45 could have an impact on the future results of
BT depending on guarantees issued; however, at this
time the adoption of this statement did not have a material
impact on BT’s consolidated financial statements.
In
January 2003, the FASB issued FIN 46, ‘‘Consolidation
of Variable Interest Entities – an Interpretation
of Accounting Research Bulletin (ARB) No. 51’’.
FIN 46 requires the primary beneficiary to consolidate
a variable interest entity (VIE) if it has a variable
interest that will absorb a majority of the entity’s
expected losses if they occur, receive a majority of
the entity’s expected residual returns if they
occur, or both. FIN 46 applies immediately to VIEs created
after 31 January 2003, and to VIEs in which the entity
obtains an interest after that date. This statement
is not expected to have a material impact on BT’s
consolidated financial statements.
In
November 2002, the Emerging Issues Task Force (EITF)
reached a consensus on EITF 00-21, ‘‘Revenue
Arrangements with Multiple Deliverables’’.
The consensus addresses how to account for arrangements
that may involve multiple revenue generating activities,
for example, the delivery or performance of multiple
products, services, and/or rights to use assets. In
applying this guidance, separate contracts with the
same party, entered into at or near the same time, will
be presumed to be a package, and the consideration will
be measured and allocated to the separate units based
on their relative fair values. This consensus guidance
will be applicable to agreements entered into after
15 June 2003. BT is currently evaluating the impact
of this new pronouncement.
In
January 2003, the EITF reached a consensus on EITF 02-18,
‘‘Accounting for Subsequent Investments in
an Investee after Suspension of Equity Method Loss Recognition’’.
This consensus states that if the additional investment,
in whole or in part, represents the funding of prior
losses, the investor should recognise previously suspended
losses. When appropriate to recognise prior losses,
the amount recognised would be limited to the amount
of the additional investment determined to represent
the funding of prior losses. The consensus is effective
for additional investments made after 5 February 2003.
This consensus is not expected to have a material impact
on BT’s consolidated financial statements.
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