Financial statements - Notes to the consolidated financial statements
Note 37
2005 1
The Company has recognized differences related to restructuring provisions, the definition of probability related to provisions
for legal and tax claims, discounting of provisions and changes in the discount rates for asset retirement obligations.
Restructuring provisions and contingent liabilities
For US GAAP, onerous contracts and severance costs relating to restructuring provisions are recorded in accordance with SFAS
No. 146 "Accounting for Costs Associated with Exit or Disposal Activities ("SFAS No. 146"). One time termination costs are
measured initially at the communication date and have generally been accrued ratably over the employees' future service
period given the nature of the Company's restructuring activities. Application of SFAS No. 146 also requires the recognition of
provisions for contract termination costs at the "cease use date". Under IFRS restructuring provisions are recognized when the
Company has announced or begun implementing a restructuring plan, which results in timing differences in the recognition of
the restructuring provisions between IFRS and US GAAP.
For legal and tax claims, a provision is recognized under IFRS when a loss is "more likely than not" to occur while under
US GAAP, SFAS No. 5 "Accounting for Contingencies," a provision is recognized when a loss is "probable". Probable under
US GAAP is defined as "likely to occur" which is considered a higher threshold than "more likely than not".
Discounting
Under IFRS provisions are discounted where the effect of the time value of money is material. For US GAAP, certain provisions
can only be discounted when the payment pattern is fixed or reliably determinable. As a result certain provisions are
discounted under IFRS and are not discounted under US GAAP.
There is no difference between IFRS and US GAAP related to the initial recognition of asset retirement obligations. However
SFAS No. 143 "Accounting for Asset Retirement Obligations," does not permit the Company to revalue the obligation based
on changes in the discount rate unless upward revisions are made to the original estimate of undiscounted cash flows, whereas
under IFRS, the obligation is required to be revalued based on changes in the discount rate.
5 Real estate
RECONCILIATION OF NET INCOME (LOSS)
2004
Real estate
21
4
Sale and leaseback
12
11
Other
9
(7)
RECONCILIATION OF SHAREHOLDERS EQUITY
January 1,
2006
January 2,
2005
Real estate
(232)
(238)
Sale and leaseback
(210)
(210)
Other
(22)
(28)
Sale and leaseback gain recognition and continuing involvement
Under IFRS, if a sale and leaseback transaction transfers substantially all risks and rewards of ownership to the buyer-lessor
and the transaction is established at fair value, the gain or loss on the sale is recognized immediately in the consolidated
statements of operations. If such sale and leaseback transaction is established above fair value the excess of the sales price
over fair value should be deferred and amortized over the lease term. If the sale and leaseback does not transfer substantially
all risks and rewards of ownership to the buyer-lessor, any gain should be deferred and recognized ratably over the lease term.
Under US GAAP, if the criteria for sale and leaseback accounting are met, any profit or loss on a sale consummated at fair
value is generally deferred and amortized in proportion to the amortization of the leased asset for a capital lease and in
proportion to the related gross rental charges for an operating lease. In evaluating whether the criteria for sale and leaseback
accounting are met under US GAAP, any form of continuing involvement with the property, other than a normal leaseback
results in accounting for the transaction as a financing. As a result of these differences, certain gains that were recognized at
the date of sale and leaseback transactions under IFRS were deferred under US GAAP. The difference in net income is
192
