Results based on US GAAP
March 27 2003 - 2:01AM
UK Regulatory
RNS Number:2594J
Aegon N.V.
26 March 2003
RESULTS BASED ON US ACCOUNTING PRINCIPLES
The consolidated financial statements of AEGON N.V. have been prepared in
accordance with Dutch accounting principles.
This release and its attachment contain a summary of the effect on AEGON's
shareholders' equity and net income of the application of US GAAP, which differ
in certain respects from those generally accepted in the Netherlands (Dutch
accounting principles). The information contained herein does not affect the
results published on 6 March 2003.
In 2002, net income in accordance with Dutch accounting principles was EUR 1,547
million while net income in accordance with US GAAP was a loss of EUR 2,230
million. The largest part of the difference is explained by:
Impairment on shares
Under DAP, AEGON held a positive revaluation account at December 31, 2002 of EUR
2,598 million. This is after a charge of EUR 1,057 million (2001: EUR 36
million) reflecting impairment losses on shares due to an other than temporary
decline in market value. Under US GAAP these impairment losses are charged to
net income.
Change in treatment of goodwill
Effective January 1, 2002 under US GAAP (SFAS 142) goodwill is no longer
amortized but is tested for impairment annually. In accordance with the
transitional rules of SFAS 142, an impairment charge of EUR 1,295 million was
recorded during the first six months of 2002, primarily related to the
Transamerica non-insurance business (refer to Form 6-K). This is in accordance
with the estimate already given in the 2001 Form 20-F.
The total charge in 2002 for goodwill impairment under US GAAP amounted to EUR
1,965 million (2001: EUR 496 million amortized). The impairment of EUR 670
million in the second half of 2002 pertains to the AEGON USA insurance
operations. The goodwill write-offs were already taken against shareholders'
equity in 2000 for the Transamerica Finance Corporation and in 1999 for the
AEGON USA insurance operations.
For an overview refer to the attached Information based on US Accounting
Principles as has been published by AEGON since 1986. On March 29 AEGON's 2002
Annual Report will be available on the company's website (www.aegon.com).
Disclaimer
Forward-looking statements
The statements contained in this press release that are not historical facts are
forward-looking statements as defined in the U.S. Private Securities Litigation
Reform Act of 1995. Words such as "believe", "estimate", "intend", "may",
"expect", "anticipate", "predict", "project", "counting on", "plan", "continue",
"want", "forecast", "should", "would", "is confident" and "will" and similar
expressions as they relate to us are intended to identify such forward-looking
statements. These statements are not guarantees of future performance and
involve risks, uncertainties and assumptions that are difficult to predict. We
undertake no obligation to publicly update or revise any forward-looking
statements. Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of their dates.
All forward-looking statements are subject to various risks and uncertainties
that could cause actual results to differ materially from expectations,
including, but not limited to, the following:
* changes in general economic conditions, particularly in the United States,
The Netherlands and the United Kingdom;
* changes in the performance of financial markets, including emerging
markets, including:
* the frequency and severity of defaults by issuers in our fixed income
investment portfolios; and
* the effects of corporate bankruptcies and/or accounting restatements (such
as Enron and WorldCom) on the financial markets and the resulting decline in
value of equity and debt securities we hold;
* the frequency and severity of insured loss events;
* changes affecting mortality, morbidity and other factors that may affect
the profitability of our insurance products;
* changes affecting interest rate levels;
* changes affecting currency exchange rates, including the euro/US dollar
and euro/UK pound exchange rates;
* increasing levels of competition in the United States, The Netherlands,
the United Kingdom and emerging markets;
* changes in laws and regulations, particularly those affecting our
operations, the products we sell and the attractiveness of certain products
to our consumers;
* regulatory changes relating to the insurance industry in the jurisdictions
in which we operate;
* acts of God, acts of terrorism and acts of war;
* changes in the policies of central banks and/or foreign governments;
* customer responsiveness to both new products and distribution channels;
* competitive, legal, regulatory, or tax changes that affect the
distribution cost of or demand for our products; and
* our failure to achieve anticipated levels of earnings or operational
efficiencies as well as other cost saving initiatives.
The Hague, March 26, 2003
--------------------------------------------------------------------------------
Inquiries:
AEGON N.V.
Group Communications Investor Relations
Phone : +31 (0)70 344 83 44 NL +31 (0)70 344 83 05
USA +1 410 576 45 77
Web site: www.aegon.com
Information based on US Accounting Principles
The consolidated financial statements of AEGON N.V. have been prepared in
accordance with Dutch accounting principles which differ in certain respects
from those generally accepted in the United States (US GAAP). The following
information is a summary of the effect on the Group's shareholders' equity and
net income of the application of US GAAP, which is in further detail included in
the Form 20-F report filed with the Securities and Exchange Commission. This
report is as usual available on request, free of charge, and can also be
retrieved from the EDGAR database of the SEC at www.sec.gov and via
www.aegon.com.
Shareholders'
equity
December 31, Net income
Amounts in EUR millions 2002 2001 2002 2001 2000
Amounts in accordance with Dutch
accounting principles 14,231 15,923 1,547 2,397 2,066
Real estate -804 -847 -48 -61 -59
The Netherlands: appraisal value
United States: cost less
depreciation
Debt securities 3,411 933 - - -
The Netherlands: amortized cost
for bonds and
private
placements
United States: market value
Goodwill 3,372 5,918 -1,965 -496 -433
The Netherlands: charged to
shareholders'
equity
United States: capitalized and
tested for
impairment.
Before 2002
capitalized and
amortized over
various periods
not exceeding
20 years
Technical provisions (including
deferred policy acquisition costs) -999 689 -155 -96 -34
The Netherlands: calculated on
recent
assumptions
United States: calculated on
assumptions
when the
policy was
issued or on
recent
assumptions
Realized gains and losses on bonds
and private placements 245 189 8 276 -348
The Netherlands: deferred and
released to
income over
the estimated
average remaining
maturity term
United States: recognized as
income when
realized
Realized gains and losses on shares
and real estate - - -2,251 -1,160 999
The Netherlands: added to the
revaluation
account.
From this reserve
amounts are released
to income, so that
together with the
direct yield, a
30 year moving
average total
rate of return
is recognized.
United States: recognized as
income when
realized
______ ______ ______ ______ ______
Carried forward 19,456 22,805 -2,864 860 2,191
Shareholders'
equity
December 31, Net Income
In EUR millions 2002 2001 2002 2001 2000
Brought forward 19,456 22,805 -2,864 860 2,191
Deferred taxation (including taxation
on US GAAP adjustments) -1,140 -934 123 418 155
The Netherlands: calculated
using
discounted
tax rates
United States: calculated
using nominal
tax rates
Derivatives -750 -377 182 -236 -
The Netherlands : recognized in
same period and
likewise as
related
investments
and debt
United States: valued at market
value, with
changes included
in earnings,
except when
hedge
accounting
is applied
Balance of other items -12 -825 329 -410 242
Certain expenses are recorded in
different periods on the
two bases of accounting.
______ ______ ______ ______ ______
Amounts in accordance with US GAAP 17,554 20,669 -2,230 632 2,588
Net income in accordance with US GAAP -2,230 632 2,588
Other comprehensive income, net of tax:
Foreign currency translation adjustments -2,692 701 659
Unrealized gains (losses) on available
for sale securities during the period -673 -621 212
Reclassification adjustment for (gains)
losses included in net income 1,193 377 -821
Cumulative effect of accounting change
of adopting FAS 133 - 49 -
______ ______ ______
Comprehensive income in accordance
with US GAAP -4,402 1,138 2,638
In 2002 major differences between amounts on Dutch accounting principles and
those on US GAAP compared to the amounts of prior years are explained as
follows:
The goodwill amortization in 2002 primarily reflects impairments for
Transamerica Finance Corporation (EUR 1,234 million) and AEGON USA insurance
operations.
Realized and unrealized gains and losses by their nature can show large
fluctuations. Included in realized gains and losses on shares and real estate
are EUR 1,057 million (2001: EUR 36 million and 2000: nil) impairment losses due
to an other than temporary decline in market value and the reversal of the
indirect return of EUR 758 million (2001: EUR 723 million and 2000: EUR 595
million).
An EUR 318 million loss on the total return swaps has been included in 2002 net
income on the line derivatives.
The balance of other items includes the effect of the sale of Mexico which under
DAP has been reported in 2001. In 2000 the result of the sale of Labouchere and
of other divestitures has been included in the balance of other items.
Comprehensive income is the change in shareholders' equity during the year from
transactions and other events and circumstances from non-owner sources. It
includes all changes in shareholders' equity during the year except those
resulting from investments by owners and distributions to owners.
This information is provided by RNS
The company news service from the London Stock Exchange
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