Notes
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161
JANUARY 1, 2004 DECEMBER 31, 2004
Notes French IFRS IFRS French IFRS IFRS
(in € millions) GAAP impact GAAP impact
Goodwill (j) 4,902 (147) 4,755 5,170 33 5,203
Other intangible assets (k) 1,836 (80) 1,756 1,883 (79) 1,804
Property, plant and equipment (l) 8,686 399 9,085 8,939 428 9,367
Investments in associates 75 3 78 61 3 64
Available-for-sale and other securities (m) 217 31 248 87 5 92
Other non-current assets (n) 1,521 (1,015) 506 1,375 (1,054) 321
Non-current assets 17,237 (809) 16,428 17,515 (664) 16,851
Inventories (o) 4,509 (26) 4,483 4,838 (21) 4,817
Trade accounts receivable (p) 4,240 299 4,539 4,467 322 4,789
Current tax receivable 187 0 187 157 (2) 155
Other accounts receivable (q) 848 (5) 843 942 (27) 915
Short-term loans (r) 160 (160) 0 69 (69) 0
Cash and cash equivalents 2,914 (1) 2,913 2,899 (1) 2,898
Current assets 12,858 107 12,965 13,372 202 13,574 TOTAL ASSETS 30,095 (702) 29,393 30,887 (462) 30,425 Shareholders’ equity 11,087 (1,082) 10,005 11,556 (883) 10,673 Minority interests (s) 223 (14) 209 250 (13) 237 Total equity 11,310 (1,096) 10,214 11,806 (896) 10,910 Participating securities (t) 170 (170) 0 170 (170) 0
Provisions for pensions
and other post-employment benefits (u) 2,305 534 2,839 2,249 501 2,750
Deferred tax liabilities (v) 599 (350) 249 548 (310) 238
Provisions for other liabilities and charges (w) 1,032 (73) 959 597 (49) 548
Long-term debt (x) 6,518 162 6,680 5,396 233 5,629
Non-current liabilities 10,624 103 10,727 8,960 205 9,165
Current portion of provisions
for other liabilities and charges 0 0 0 357 (4) 353
Current portion of long-term debt 550 17 567 1,335 3 1,338
Trade accounts payable 3,592 (22) 3,570 3,967 (13) 3,954
Current tax liabilities 221 0 221 249 0 249
Other payables and accrued expenses (y) 2,135 (66) 2,069 2,410 (103) 2,307
Short-term debt and bank overdrafts (z) 1,663 362 2,025 1,803 346 2,149
Current liabilities 8,161 291 8,452 10,121 229 10,350
j) Goodwill
The change in this item under IFRS is due to the measurement of goodwill arising on the acquisition of a foreign entity in that entity’s local currency rather than in euros as under French GAAP (see note b), and for the year ended December 31, 2004, the cancellation of goodwill amortization recognized under French GAAP (see note b). In addition, certain other intangible items, including purchased goodwill, acquired in business combinations were reclassified to goodwill in an amount of €44 million at December 31, 2004.
k) Other intangible assets
The change in this item under IFRS is due to the reclassification from intangible assets of (i) purchased goodwill to goodwill (see note j), and (ii) land use rights in China, India and Poland to other accounts receivable. It also reflects the elimination of start-up costs and other miscellaneous items against equity (see note c).
l) Property, plant and equipment
Retrospective application of IFRS led to a change in depreciation at January 1, 2004, which: (i) increased the carrying amount of property, plant and equipment, and (ii) decreased the amount of property, plant and equipment relating to previously capitalized borrowing costs (see note d). The impact of reclassifying operating leases as finance leases was an increase in property, plant and equipment and in net debt, amounting to €100 million at December 31, 2004. Various other reclassifications to property, plant and equipment were also recorded, including spare parts with a useful life of more than one year (previously recorded in inventories under French GAAP), in the amount of €19 million at December 31, 2004.
m) Available-for-sale and other securities
In accordance with IAS 39, the Group has marked-to-market its available-for-sale securities relating to its shares in listed, non-consolidated subsidiaries. This mainly related
to unrealized gains amounting to €29 million at January 1, 2004 on Vivendi Universal shares held by Compagnie de Saint-Gobain. The total impact on “available-for-sale and other securities” was a €5 million increase at December 31, 2004, as a result of the disposal of Vivendi Universal shares in the second half of 2004.
n) Other non-current assets
Other non-current assets decreased due to the following factors:
• The cancellation of the additional minimum liability accrual recognized in accordance with FAS 87 with a contra-entry to provisions for pensions and other post-employment benefits, in an amount of €1,021 million.
• The reclassification of loans to non-consolidated companies, representing €69 million at December 31, 2004.
• The elimination of unamortized actuarial gains and losses in respect of prepaid pension cost and other restatements.
o) Inventories
As explained in note l, spare parts with a useful life of more than one year were reclassified from inventories to property, plant and equipment.
p) Trade accounts receivable
In compliance with IAS 32 and IAS 39, receivables transferred under a securitization program in the United States have been taken back onto the Group’s consolidated balance sheet. As a result, the Group’s operating receivables increased, with a corresponding €378 million increase in short-term debt at December 31, 2004.
q) Other accounts receivable
The change in this item mainly relates to the restatement of financial instruments, partially offset by the reclassification of land use rights in China, India and Poland, which were recognized under intangible assets or property, plant and equipment under French GAAP.
r) Short-term loans
As explained in note n, this change relates
to the reclassification under financial assets of loans to non-consolidated companies in the amount of €69 million at December 31, 2004.
s) Minority interests
Mineracao Jundu Ltda (a construction materials company based in Brazil) was fully consolidated under French GAAP, as the Group exercises de facto operational control. As IAS 27 does not recognize de facto control, Mineracao Jundu Ltda has been proportionately consolidated in the IFRS financial statements. This change did not have an impact on shareholders’ equity, but did lead to a €12 million reduction in minority interests at December 31, 2004.
t) Participating securities
The application of IAS 32 and IAS 39 led to the reclassification of participating securities to long-term debt in the amount of €170 million.
u) Provisions for pensions and other post-employment benefits
The IFRS impact on the provision for pensions and other post-employment benefits is essentially attributable to the following factors:
• The recognition of actuarial gains and losses and past service cost relating to US and UK pension plans (see note e). • The change of method used to measure benefits accruing
from pension plans of certain US employees (see note e). • The cancellation of the additional minimum liability accrual
recognized in accordance with FAS 87 with a contra-entry to provisions for pensions and other post-employment benefits (see note n).
• The elimination of unamortized actuarial gains and losses in respect of prepaid pension cost (see note n).
• Various other restatements and reclassifications of other liabilities (see note y).
v) Deferred tax liabilities
Deferred tax liabilities decreased due to various restatements, primarily the adjustment to provisions for pensions and other post-employment benefits. The overall decrease was, however, partially offset by the increase caused by the adjustment of deferred tax liabilities recognized in respect of the Group’s retail brands (see note g).
w) Provisions for other liabilities and charges
As explained in note b, negative goodwill has been eliminated, with a corresponding increase in equity, or has been
reclassified as a deduction from goodwill.
x) Long-term debt
The impact of IFRS adjustments on long-term debt is due to the following:
• The reclassification of participating securities to long-term debt, in the amount of €170 million.
• The reclassification of a portion of the Océane bonds to equity in the amount of €101 million at December 31, 2004. • The recognition in the opening balance sheet of additional
accrued interest, following the recalculation of interest on the Océane bonds based on the market interest rate. This restatement represented €63 million at December 31, 2004. • The restatement of certain finance lease contracts with
an impact on long-term debt of €97 million at December 31, 2004.
• The reclassification and elimination of certain issue premiums.
• The marking to market of interest-rate and exchange-rate swaps.
y) Other payables and accrued expenses
Provisions relating to the medical coverage of US employees were reclassified from other payables and accrued expenses to provisions for pensions and other employee benefits.
z) Short-term debt and bank overdrafts
As explained in note p, the inclusion in the consolidated balance sheet of securitized receivables in the United States led to an increase in the Group’s operating receivables, with a corresponding increase in short-term debt. This item also included €33 million in negative adjustments to the value of financial instruments at December 31, 2004.