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Differences from United States GAAP
Unilever Group
The consolidated accounts of the Unilever Group have been
prepared in accordance with accounting principles which differ
in certain respects from those generally accepted in the United
States (US GAAP).
The principal differences are set out below.
Profit on sale of chemicals businesses
Unilever calculates profit on sale of businesses after writing back
any goodwill previously charged directly to reserves. Under
US GAAP the profit on disposal of the discontinued speciality
chemicals businesses is stated net of the relevant unamortised
goodwill included on the balance sheet and the cumulative
currency retranslation differences recognised through the
statement of total recognised gains and losses.
Goodwill and other intangibles
Prior to 1 January 1998 Unilever wrote off goodwill and all other
intangible assets arising on the acquisition of new interests in
group companies and joint ventures directly to profit retained in
the year of acquisition. Under US GAAP goodwill and identifiable
intangibles, principally trade marks, are capitalised and amortised
against income over their estimated useful lives, not exceeding
40 years.
There is no difference between the accounting policy applied to
goodwill and intangible assets purchased after 1 January 1998
and US GAAP.
Restructuring costs
Under Unilever’s accounting policy certain restructuring costs
are recognised when a restructuring plan has been announced.
Under US GAAP certain additional criteria must be met before
such charges are recognised.
Interest
Unilever treats all interest costs as a charge to the profit and loss
account in the current period. Under US GAAP interest incurred
during the construction periods of tangible fixed assets is
capitalised and depreciated over the life of the assets.
Pensions
Under Unilever´s accounting policy the expected costs of
providing retirement pensions are charged to the profit and loss
account over the periods benefiting from the employees´ services.
Variations from expected cost are similarly spread. Under US
GAAP pension costs and liabilities are calculated in accordance
with Statement of Financial Accounting Standards No. 87 (SFAS
87), which requires the use of a prescribed actuarial method and
a set of measurement principles.
Investments
Unilever accounts for current investments, which are liquid funds
temporarily invested, at their market value.
Unilever accounts for changes in the market value of current
investments as interest receivable in the profit and loss account
for the year. Under US GAAP, such current asset investments are
classified as ‘available for sale securities’ and changes in market
rates, which represent unrealised gains or losses, are excluded
from earnings and taken to stockholders’ equity. Unrealised gains
and losses arising from changes in the market values of securities
available for sale are not material.
Unilever accounts for fixed investments other than in joint
ventures at cost less any amounts written off to reflect a
permanent diminution in value. Under US GAAP such investments
are held at fair value. The difference is not material.
Dividends
The proposed final ordinary dividends are provided for in the
Unilever accounts in the financial year in the year to which they
relate. Under US GAAP such dividends are not provided for until
they become irrevocable.
Cash flow statement
Under US GAAP various items would be reclassified within the
consolidated cash flow statement. In particular, interest received,
interest paid and taxation would be part of net cash flow from
operating activities, and dividends paid would be included within
net cash flow from financing. In addition, under US GAAP cash
and cash equivalents comprise cash balances and current
investments with an original maturity at the date of investment
of less than three months. Under Unilever’s presentation,
cash includes only cash in hand or available on demand
less bank overdrafts.
Movements in those current investments which are included
under the heading of cash and cash equivalents under US GAAP
form part of the movement entitled ‘Management of liquid
resources’ in the cash flow statements. At the end of 1999
the balance of such investments was Fl. 62 million (1998:
Fl. 6 622 million, 1997: Fl. 3 954 million).
Exceptional items
In accordance with United Kingdom Financial Reporting Standard
Number 3 (Reporting Financial Performance) certain nonoperating
exceptional items are shown separately in the profit
and loss account below operating profit and before interest.
Under US GAAP most non-operating exceptional items would
be included in operating profit from continuing operations.
The profit arising on disposal of the speciality chemicals
businesses in 1997 would be presented as a separate line
below income from continuing operations.
Discontinued operations
Unilever analyses turnover and operating profit between
continuing and discontinued operations. Under US GAAP the
operating profit from discontinued operations would be shown
on a separate line below income from continuing operations.