UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the Month of December, 1998
TELEGLOBE INC.
(Translation of registrant's name into English)
1000, rue de La Gauchetiere ouest, Montreal, Quebec H3B 4X5 Canada
(Address of principal executive offices)
(Indicate by check mark whether the registrant files or will
file annual reports under cover of Form 20-F or Form 40-F.)
Form 20-F____ Form 40-F X
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(Indicate by check mark whether the registrant by furnishing the
information contained in this form is also thereby furnishing the
information to the Commission pursuant to Rule 12g3-2(b) under the
Securities Exchange Act of 1934.)
Yes _____ No X
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(If "Yes" is marked, indicate below the file number assigned to the
registrant in connection with Rule 12g3-2(b): 82-_______.)
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act, of
1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
TELEGLOBE INC.
By: /s/ Andre Bourbonnais
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Name: Andre Bourbonnais
Title: Vice-President, Legal Affairs and
Corporate Secretary
Date: December 3, 1998
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UNAUDITED RECONCILIATION OF FINANCIAL STATEMENTS
FROM CANADIAN GAAP TO UNITED STATES GAAP
The consolidated financial statements of the Corporation have been
prepared in accordance with Canadian GAAP. The following adjustments would
be required in order to present the financial statements in accordance with
U.S. GAAP and with practices prescribed by The United States Securities and
Exchange Commission.
Under U.S. GAAP, the net income and earnings per common shares figures
for the nine month period ended September 30, 1998 would be as follows (in
millions of Canadian dollars except per share amounts):
Net income - as reported . . . . . . . . . . . . . . $149.6
Adjustments
Foreign exchange (a) . . . . . . . . . . . . . . . (7.0)
Purchase price of an acquired enterprise (b) . . . (0.2)
Purchase accounting (c) . . . . . . . . . . . . . . (0.2)
Income taxes (d) . . . . . . . . . . . . . . . . . (13.0)
Rent escalation (e) . . . . . . . . . . . . . . . . (0.1)
Real estate joint venture (f) . . . . . . . . . . . 0.3
Development stage enterprises (g) . . . . . . . . . (25.1)
Post-retirement benefits (h) . . . . . . . . . . . (0.2)
Gain on disposal of investment (i) . . . . . . . . 46.8
------
1.3
------
Net income per share - U.S. GAAP . . . . . . . . . . $150.9
======
Earnings per share - U.S. GAAP
Basic . . . . . . . . . . . . . . . . . . . . . . . $ 1.12
------
Diluted . . . . . . . . . . . . . . . . . . . . . . $ 1.11
------
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The application of U.S. GAAP as at September 30, 1998, would have a
significant effect on the following balance sheet items as reported (in
millions of Canadian dollars):
Current assets - Canadian GAAP . . . . . . . . . . . . $1.023.1
Development stage enterprises (g) . . . . . . . . . . (0.5)
Joint ventures (i) . . . . . . . . . . . . . . . . . (17.7)
--------
Current assets - U.S. GAAP . . . . . . . . . . . . . . $1,004.9
--------
Investments - Canadian GAAP $ 18.5
Real Estate joint venture (f) . . . . . . . . . . . . (1.1)
Development stage enterprises (g) . . . . . . . . . . (79.8)
Joint ventures (i) . . . . . . . . . . . . . . . . . 407.8
--------
Investments - U.S. GAAP $ 345.4
--------
Property, plant and equipment - Canadian GAAP . . . . . $1,408.0
Purchase accounting (c) . . . . . . . . . . . . . . . (0.1)
Joint ventures (j) . . . . . . . . . . . . . . . . . (505.2)
Venture accounting (k) . . . . . . . . . . . . . . . (6.7)
--------
$ 896.0
--------
Goodwill - Canadian GAAP . . . . . . . . . . . . . . . $ 87.9
Purchase price of an acquired enterprise (b) . . . . 7.2
Purchase accounting (c) . . . . . . . . . . . . . . . 7.7
Joint ventures (j) . . . . . . . . . . . . . . . . . (6.3)
--------
Goodwill - U.S. GAAP $ 96.5
--------
Deferred charges and other - Canadian GAAP . . . . . . $ 255.7
Foreign exchange (a) . . . . . . . . . . . . . . . . (17.0)
Development stage enterprises (g) . . . . . . . . . . (12.8)
Post-retirement benefits (h) . . . . . . . . . . . . (0.2)
Joint ventures (j) . . . . . . . . . . . . . . . . . (78.4)
--------
Deferred charges and other - U.S. GAAP . . . . . . . . $ 147.3
--------
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Current liabilities - Canadian GAAP . . . . . . . . . . $ 817.9
Rent escalation (e) . . . . . . . . . . . . . . . . . 7.2
Joint ventures (i) . . . . . . . . . . . . . . . . . (38.2)
--------
Current liabilities - U.S. GAAP . . . . . . . . . . . . $ 786.9
--------
Long term debt - Canadian GAAP . . . . . . . . . . . . $ 613.4
Joint ventures (i) . . . . . . . . . . . . . . . . . (160.0)
--------
Long term debt - U.S. GAAP . . . . . . . . . . . . . . $ 453.4
--------
Deferred income taxes - Canadian GAAP . . . . . . . . . $ 67.7
Income taxes (FAS 109) (d) . . . . . . . . . . . . . 1.6
--------
Deferred income taxes - U.S. GAAP . . . . . . . . . . . $ 69.3
--------
Other liabilities and deferred credits - Canadian GAAP $ 71.3
Development stage enterprises (g) . . . . . . . . . . (27.5)
Joint ventures (j) . . . . . . . . . . . . . . . . . (1.6)
--------
Other liabilities and deferred credits - U.S. GAAP . . $ 42.2
--------
Shareholders' equity - as reported . . . . . . . . . . $1,222.9
Cumulative adjustments
Foreign exchange (a) . . . . . . . . . . . . . . . . (17.0)
Purchase price of an acquired enterprise (b) . . . . 7.2
Purchase accounting (c) . . . . . . . . . . . . . . . 7.6
Income taxes (d) . . . . . . . . . . . . . . . . . . 32.8
Rent escalation (e) . . . . . . . . . . . . . . . . . (7.2)
Real estate joint venture (f) . . . . . . . . . . . . (1.1)
Development stage enterprises (g) . . . . . . . . . . (61.7)
Post-retirement benefits (h) . . . . . . . . . . . . (0.2)
Venture accounting (k) . . . . . . . . . . . . . . . (6.7)
Extraordinary item (l) . . . . . . . . . . . . . . . (30.1)
Cumulative translation adjustment (m) . . . . . . . . (8.2)
--------
Shareholders' equity - U.S. GAAP . . . . . . . . . . . $1,138.3
========
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Under U.S. GAAP, the cash flow figures for the nine month period ended
September 30, 1998, would be as follows (in millions of Canadian dollars):
Cash flow provided by (applied to):
Operating activities - Canadian GAAP . . . . . . $296.3
Foreign exchange (a) . . . . . . . . . . . . . (7.4)
Development stage enterprises (g) . . . . . . . (1.8)
Joint ventures (i) (52.6)
------
Operating activities - U.S. GAAP . . . . . . . . $234.5
------
Investing activities - Canadian GAAP . . . . . . $ 2.6
Foreign exchange (a) . . . . . . . . . . . . . 7.4
Development stage enterprises (g) . . . . . . . 1.8
Joint ventures (j) . . . . . . . . . . . . . . 69.3
------
Investing activities - U.S. GAAP . . . . . . . . $ 81.1
------
Financing activities and dividends - Canadian
GAAP . . . . . . . . . . . . . . . . . . . . . . $(63.7)
Joint ventures (j) . . . . . . . . . . . . . . 5.7
------
Financing activities and dividends - U.S. GAAP . $(58.0)
------
Increase in cash . . . . . . . . . . . . . . . . $257.6
Cash, beginning of year . . . . . . . . . . . . . 67.7
------
Cash, end of year . . . . . . . . . . . . . . . . $325.3
======
____________________
[FN]
(a) Foreign exchange
U.S. GAAP require immediate recognition in income of unrealized
foreign currency exchange gains and losses on long-term monetary items
with a fixed or ascertainable life whereas Canadian GAAP require that
these unrealized gains and losses be deferred and amortized.
(b) Purchase price of an acquired enterprise
Under U.S. GAAP, the difference between the discounted value and the
face value of an interest-free loan to employees under an employee
share purchase plan and the discount on the price of such shares
issued in contemplation of an acquisition of an enterprise are being
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considered in the determination of the purchase price and consequently
increases the goodwill.
(c) Purchase accounting
The deferred tax liability on non-deductible difference between the
recorded costs of acquired fixed assets and the tax bases of such
assets were recorded as goodwill and as a deferred tax liability under
U.S. GAAP rather than recorded as fixed assets under Canadian GAAP.
Consequently, a difference in depreciation expense occurs due to
different periods of depreciation on amortization and amounts of
goodwill and fixed assets.
(d) Income taxes
Under U.S. GAAP, deferred income taxes are calculated based on the
asset and liability method and are revalued each period using
currently enacted tax rates. Deferred income taxes for purposes of
Canadian GAAP, based on the deferral method, are measured at tax rates
prevailing at the time the provisions for deferred taxes are made. In
addition, the deferred tax impact of other reconciling items are
included.
(e) Rent escalation
U.S. GAAP require that total rental payments, including any rent
escalation clauses, be amortized on a straight-line basis over the
term of the leases.
(f) Real estate joint venture
U.S. GAAP require that the period of capitalization of costs ceases on
the date when the property is ready for its intended use. Under
Canadian GAAP, that period is determined to be the date when a
satisfactory level of occupancy has been achieved. Also, under U.S.
GAAP, total rental revenues, including any rent escalation clauses,
are amortized on a straight-line basis over the term of the leases.
(g) Development stage enterprises
U.S. GAAP require that development stage enterprises shall present
their financial statements in conformity with GAAP applicable to
established operating enterprises. Under Canadian GAAP, such
enterprises may defer expenditures during the pre-operating period.
(h) Post-retirement benefits
U.S. GAAP require accounting for post-retirement benefit plans on the
accrual basis. Under Canadian GAAP these costs are recorded when they
are incurred.
(i) Gain on disposal of investment
U.S. GAAP require that the closing date be the transaction date when
disposing of a financial asset. Under Canadian GAAP, the transaction
date is the effective date of the transaction and might be different
from the closing date. The sale of CGI shares is recorded in January
1998 for U.S. GAAP purposes and in December 1997 for Canadian GAAP
purposes. Also, U.S. GAAP require that the gain on sale to CGI of the
Insurance Systems subsidiary, recorded as discontinued operations, be
determined at the closing of the transaction in October 1998 whereas
under Canadian GAAP the gain is calculated based on the trading value
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of the CGI shares (part of the consideration received on the sale) on
the date of the letter of intent entered into with CGI in August 1998.
(j) Joint ventures
Interest in joint ventures are recognized using the proportionate
consolidation method under Canadian GAAP. Under U.S. GAAP, joint
ventures are accounted for using the equity method.
(k) Venture accounting
U.S. GAAP require that certain costs (like construction and financing
costs amongst others) be capitalized during the construction of an
asset only up to the date the asset is ready for resale. Also,
revenues from sales of the asset and the related cost of sales are
recognized in the statement of income when the sales occur. Under
Canadian GAAP, under certain circumstances, projects undertaken meet
the criteria of Venture accounting. Under this method, all costs and
revenues are entered into one account and carried forward as a net
figure in the balance sheet until the final result of the venture can
be estimated.
(l) Extraordinary item
U.S. GAAP require an enterprise to record the net effects of
discontinuing the application of the provisions applicable to
rate-regulated enterprises as an extraordinary item in the financial
statements. In 1996, Teleglobe Canada Inc., a subsidiary of
Teleglobe, became subject to a regulation based on price ceiling
instead of the previous rate of return on equity regulation. As a
result, the probable revenue asset, set up as a result of certain
deferred tax liability being recorded, was written off.
(m) Cumulative translation adjustment
U.S. GAAP require recording the cumulative translation adjustment net
of taxes in certain circumstances. Also, the cumulative translation
adjustment is adjusted to reflect the change in the net asset of one
of the self-sustaining joint venture.
(n) Comprehensive income
Comprehensive income for the nine month period ended September 30,
1998 is $158.7, which in addition of net income, include the change in
cumulative translation adjustment.
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