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GlaxoSmithKline logoAnnual Review 2004: New challenges - New thinking

Summary information under US GAAP for the year to 31 December 2004

The following is a summary of the material adjustments to profit and shareholders' funds which would be required if US Generally Accepted Accounting Principles (US GAAP) had been applied instead of UK GAAP.

Profit

   
2004
£m
  
2003
(restated)
£m
  
Profit attributable to shareholders under UK GAAP
4,302
 
4,478
  
US GAAP adjustments:
 
  
 
  
 
Product rights and goodwill
(1,620
 )
(2,371
 )
 
Fixed assets
(19
 )
28
 
 
Inventory
(13
 )
-
  
 
Disposal of interests in associates and subsidiaries
(78
 )
-
 
 
Equity investments
(30
 )
(31
 )
 
Employee costs
(458
 )
(494
 )
 
Derivative instruments and hedging
33
 
(41
 )
 
Guarantor obligations
19
 
(21
 )
 
Restructuring
(12
 )
98
 
 
Taxation
651
 
774
 
 
Variable interest entities and minority shareholders' put option
(43
 )
-
 
Net income under US GAAP
2,732
  
2,420
  
Basic income per share under US GAAP
47.6
 p
41.7
 p
Diluted income per share under US GAAP
47.5
 p
41.6
 p

Equity shareholders’ funds

 
2004
£m
 
2003
(restated)
£m
 
Equity shareholders' funds under UK GAAP
5,925
  
5,059
  
US GAAP adjustments:
 
 
 
Product rights and goodwill
31,976
  
33,638
  
 
Fixed assets
223
  
243
  
 
Marketable securities
49
  
84
  
 
Other investments
554
  
832
  
 
Inventory
1
  
-
  
 
Employee costs
(1,185
 )
(1,574
 )
 
Derivative instruments
(15
 )
26
  
 
Guarantor obligations
(2
 )
(21
 )
 
Restructuring
80
  
92
  
 
Dividends
683
  
808
  
 
Deferred taxation
(4,204
 )
(5,071
 )
 
Variable interest entities and minority shareholders' put option
(43
 )
-
  
Shareholders' equity under US GAAP
34,042
  
34,116
  

A summary of the material differences between UK and US GAAP that apply to the Group is set out in the Annual Report 2004.

During the year, the Group implemented FASB Staff Position (FSP) FAS 106-2, 'Accounting and Disclosure Requirements Related to the Medicare Prescription Drug, Improvement and Modernization Act of 2003' (the Act), superseding FSP 106-1. FSP 106-2 addresses the accounting implications of the Act for an entity that sponsors a post-retirement health care plan providing prescription drug benefits.

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