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Differences in Accounting Standards

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See the attached file.

Exhibit 9-1
Reconciliation of Non-U.S. GAAP to U.S. GAAP
Unilever Group
Excerpts from the 2006 Form 20-F Filed with the EC - Footnote No.34

34 Divergences From United States GAAP
Unilever's consolidated accounts are prepared in accordance with accounting principles which differ in some respects from
those applicable in the United States. The following is a summary of the effect on the Group's net profit, combined earn-
ings per share and equity of the application of accounting principles generally accepted in the United States (US GAAP).

million million million
2006 2005 2004

Net profit as reported in the consolidated income statement 5,015 3,975 2,941

US GAAP adjustments: (12) (279) (152)
Restructuring costs 23 (224) 275
Pensions and similar obligations (464) (265) (230)
Profit/(loss) on disposal of group companies (167) (217) (11)
Currency retranslation written back on disposals (81) (102) (8)
Sale and leaseback (28) (56) -
Financial Instruments (41) (6) (66)
Taxation effect of above adjustments including differences in deferred tax accounting 178 70 159
Other (38) (41) (41)
Net increase/(decrease) (630) (1,120) (74)
Net income under US GAAP 4,385 2,855 2,867
Attributable to:

Minority Interests 270 209 181
Shareholders equity 4,115 2,646 2,686

Combined earnings per share under U.S. GAAP

From continuing operations
Basic earnings per share 0.98 0.68 0.84
Diluted earnings per share 0.93 0.68 0.80

From Total Operations
Basic earnings per share 1.45 0.90 0.92
Diluted 1.38 0.88 0.87

2,006 2,005

Total equity as reported in the consolidated balance sheet 11,672 8,765
US GAAP adjustments:
Goodwill 4,171 4,531
Indefinite-lived intangible assets 1,246 1,402
Restructuring costs 171 153
Pensions and similar obligations 31 1,085
Taxation effect of above adjustments including differences in deferred tax accounting (464) (896)
other 241 356
Net Increase/ (decrease) 5,396 6,631

Equity under US GAAP 17,068 15,396

Attributable to:
Minority interests 442 404
Shareholders equity 16,626 14,992

Need to Solve
Differences in accounting standards. Although efforts are being made to converge U.S. accounting standards with
International Accounting Standards, differences still exist. The SEC allows foreign registrants to file financial statements
prepared on the basis of either U.S. GAAP, International Accounting Standards, or their own national GAAP. However,
if the U.S. GAAP is not employed, companies must provide reconciliation to U.S. GAAP.

1) Given the information contained in Exhibit 9-1, discuss whether it appears that the International Accounting Standard
regarding accounting for pensions is more or less conservative than U.S. GAAP.

2) Given the information contained in Exhibit 9-1, compute the return on average equity for the year 2006 as reported and as
based on U.S. GAAP. Comment on the significance of these calculations.

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The differences in accounting standards are examined in the solution.

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Question 1
Given that one of the adjustments for U.S. GAAP presented in Exhibit 9-1 is a reduction for pensions and similar obligations to the net profits as reported in the consolidated income statement based on the International Financial Reporting Standards of the International Accounting Standards, ...

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