<PAGE> 1
EXHIBIT 99.1
ANSA LOGISTICS LIMITED
REPORT AND ACCOUNTS
FOR THE 10 MONTHS ENDED 31 DECEMBER 1999
<PAGE> 2
ANSA LOGISTICS LIMITED
DRAFT
<TABLE>
<CAPTION>
Pages
<S> <C>
Report of the auditors 1
Profit and loss account 2
Balance sheet 3
Cash flow statement 4 - 5
Notes to the financial statements 6 - 17
</TABLE>
<PAGE> 3
ANSA LOGISTICS LIMITED 1
AUDITORS' REPORT TO THE MEMBERS OF
ANSA LOGISTICS LIMITED
We have audited the balance sheet of Ansa Logistics Limited as at
December 31, 1999 and the profit and loss account, statement of total recognized
gains and losses and cash flows of Ansa Logistics Limited for the ten months
ended December 31, 1999, all expressed in pounds sterling and prepared on the
basis set forth in Note 1 to the financial statements. As described in Note 26,
these financial statements are the responsibility of the company's directors.
Our responsibility is to express an opinion on these financial statements based
on our audit.
We conducted our audit in accordance with generally accepted auditing
standards in the United Kingdom, which are substantially the same as auditing
standards generally accepted in the United States. Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Ansa Logistics
Limited as at December 31, 1999, and the profits, total recognized gains and
cash flows of Ansa Logistics Limited for the 10 months ended December 31, 1999
in accordance with generally accepted accounting principles in the United
Kingdom.
The financial statements have been prepared in accordance with
accounting principles generally accepted in the United Kingdom which differ in
certain respects from those generally accepted in the United States. The effects
of the major differences in the determination of net income and shareholders'
equity are shown in Note 25 to the financial statements.
/S/ PricewaterhouseCoopers
Chartered Accountants
Bristol, England
March 29, 1999, except for the information set out in Note 25 for which the date
is June 29, 2000.
<PAGE> 4
ANSA LOGISTICS LIMITED 2
PROFIT AND LOSS ACCOUNT
FOR THE 10 MONTHS ENDED 31 DECEMBER 1999
<TABLE>
<CAPTION>
10 months ended
31 December 1999
----------------
Notes
<S> <C> <C>
(pound)'000
TURNOVER - CONTINUING OPERATIONS 2 53,669
Cost of sales (38,163)
-----------
GROSS PROFIT - CONTINUING OPERATIONS 15,506
Administrative expenses (11,945)
-----------
OPERATING PROFIT - CONTINUING OPERATIONS 3,561
Interest payable and similar charges 5 (107)
Interest receivable and similar income 6 73
-----------
PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION 7 3,527
Tax on profit on ordinary activities 8 (1,442)
-----------
RETAINED PROFIT FOR THE FINANCIAL PERIOD 16 2,085
===========
</TABLE>
The company has no recognised gains and losses other than the profit above and
therefore no separate statement of total recognised gains and losses has been
presented.
There is no difference between the profit on ordinary activities before taxation
and the profit for the financial period, and their historical cost equivalents.
<PAGE> 5
ANSA LOGISTICS LIMITED 3
BALANCE SHEET
AT 31 DECEMBER 1999
<TABLE>
<CAPTION>
31 December 1999
----------------
Notes
(pound)'000 (pound)'000
<S> <C> <C> <C>
TANGIBLE FIXED ASSETS 9 4,480
CURRENT ASSETS
Stocks 10 397
Debtors 11 13,213
Cash at bank and in hand 55
-------
13,665
CREDITORS: AMOUNTS FALLING DUE
WITHIN ONE YEAR 12 (15,632)
-------
NET CURRENT LIABILITIES (1,967)
------
TOTAL ASSETS LESS CURRENT LIABILITIES 2,513
PROVISIONS FOR LIABILITIES AND CHARGES 13 (428)
------
NET ASSETS 2,085
======
CAPITAL AND RESERVES
Called up share capital ((pound)1) 15 -
Profit and loss account 16 2,085
------
EQUITY SHAREHOLDERS' FUNDS 17 2,085
======
</TABLE>
The financial statements on pages 2 to 14 were approved by the board of
directors on March 22, 2000 and were signed on its behalf by:
/s/ D C Pound
-------------
D C Pound
Director
<PAGE> 6
ANSA LOGISTICS LIMITED 4
CASH FLOW STATEMENT
FOR THE 10 MONTHS ENDED 31 DECEMBER 1999
<TABLE>
<CAPTION>
10 months ended
31 December 1999
----------------
Notes (pound)'000 (pound)'000
<S> <C> <C> <C>
NET CASH INFLOW FROM CONTINUING OPERATING ACTIVITIES
(reconciliation to operating profit on page 9) 1,984
RETURNS ON INVESTMENTS AND SERVICING OF FINANCE
Interest received 73
Interest paid (107)
------
(34)
TAXATION (364)
CAPITAL EXPENDITURE
Purchase of tangible fixed assets (5,901)
--------
(4,315)
--------
FINANCING
Issue of ordinary shares ((pound)1) -
--------
DECREASE IN CASH IN THE PERIOD 18 (4,315)
========
</TABLE>
<PAGE> 7
ANSA LOGISTICS LIMITED 5
RECONCILIATION OF OPERATING PROFIT TO NET CASH OUTFLOW FROM
OPERATING ACTIVITIES
<TABLE>
<CAPTION>
10 months ended
31 December 1999
----------------
<S> <C>
(pound)'000
CONTINUING OPERATING ACTIVITIES
Operating profit 3,561
Depreciation on tangible fixed assets 1,421
Increase in stocks (397)
Increase in debtors (13,213)
Increase in creditors 10,184
Increase in provisions for liabilities and charges 428
----------
NET CASH INFLOW FROM CONTINUING OPERATING ACTIVITIES 1,984
==========
</TABLE>
<PAGE> 8
ANSA LOGISTICS LIMITED 6
NOTES TO THE FINANCIAL STATEMENTS
FOR THE 10 MONTHS ENDED 31 DECEMBER 1999
1 ACCOUNTING POLICIES
These financial statements have been prepared under the historical cost
convention and in accordance with applicable accounting standards. The directors
consider that the accounting policies set out below are suitable and are
supported by reasonable and prudent judgements and estimates.
TURNOVER
Turnover, which excludes value added tax and trade discounts, represents the
value of services supplied.
TANGIBLE FIXED ASSETS
Land and buildings are stated at cost. Other tangible fixed assets are stated at
their purchase price, together with any incidental expenses of acquisition.
Depreciation is calculated so as to write off the cost of tangible fixed assets,
less their estimated residual values, on a straight line basis over the expected
useful economic lives of the assets concerned. The principal lives used for this
purpose are:
<TABLE>
<S> <C>
Motor vehicles 4 - 8 years
Fixtures and fittings 5 years
Leasehold land and buildings 5 years
</TABLE>
STOCKS AND WORK IN PROGRESS
Stocks and work in progress are stated at the lower of cost and net realisable
value. In general, cost is determined on a first in first out basis. Net
realisable value is the price at which stocks can be sold in the normal course
of business. Provision is made where necessary for obsolete, slow moving and
defective stocks.
FOREIGN CURRENCIES
Trading transactions denominated in foreign currencies are translated into
sterling at the exchange rate ruling when the transaction was entered into.
Monetary assets and liabilities denominated in foreign currencies are translated
into sterling at the exchange rates ruling at the balance sheet date. Exchange
gains or losses are included in operating profit.
DEFERRED TAXATION
Provision is made for deferred taxation, using the liability method, on all
material timing differences to the extent that it is probable that a liability
or asset will crystallise.
<PAGE> 9
ANSA LOGISTICS LIMITED 7
PENSION ARRANGEMENTS
From 29 October 1999 the company has been the principal employer of the Ansa
Logistics Pension Plan, a defined benefit scheme. Pension costs charged to the
profit and loss account represent contributions paid by the company into that
fund and into a previous employers' fund.
The fund will be valued every three years by a professionally qualified actuary,
who will determine whether additional contributions are required from the
company to meet the liabilities of the scheme. Where additional contributions
are required the costs will be spread over the expected average remaining
service lives of members of the scheme.
The company provides no other post retirement benefits to its employees.
OPERATING LEASES
Costs in respect of operating leases are charged on a straight-line basis over
the lease term.
2 TURNOVER
The whole of the turnover arises in the United Kingdom and relates to the
transport of motor vehicles. Turnover consists of the amount of goods and
services supplied during the year, net of value added tax.
3 DIRECTORS' EMOLUMENTS
<TABLE>
<CAPTION>
10 months ended
31 December 1999
----------------
(pound)'000
<S> <C>
Aggregate emoluments 80
Company pension contributions to money purchase scheme 0
==========
</TABLE>
J C Merry and P J Nuttall are employed by AutoLogic Holdings plc, one of the
shareholders and they are remunerated by that company in respect of their
services for the group. Their emoluments are dealt with in the accounts of
AutoLogic Holdings plc. The directors receive no emoluments from the company,
nor is any charge levied on the company by the shareholding company in respect
of directors' emoluments.
<PAGE> 10
ANSA LOGISTICS LIMITED 8
4 EMPLOYEE INFORMATION
The average monthly number of persons (including executive directors) employed
during the period was:
<TABLE>
<CAPTION>
10 months ended
31 December 1999
----------------
Number
<S> <C>
Drivers 265
Hourly paid 298
Staff 100
--------------
663
==============
</TABLE>
<TABLE>
<CAPTION>
10 months ended
31 December 1999
----------------
<S> <C>
(pound)'000
STAFF COSTS (FOR THE ABOVE PERSONS):
Wages and salaries 19,296
Social security costs 1,823
Other pension costs (see note 14) 1,403
--------------
22,522
==============
</TABLE>
5 INTEREST PAYABLE AND SIMILAR CHARGES
<TABLE>
<CAPTION>
10 months ended
31 December 1999
----------------
(pound)'000
<S> <C>
Interest payable on bank loans and overdrafts 83
Interest payable on loan from group undertakings 3
Other interest 21
--------------
107
==============
</TABLE>
6 INTEREST RECEIVABLE AND SIMILAR INCOME
<TABLE>
<CAPTION>
10 months ended
31 December 1999
----------------
(pound)'000
<S> <C>
Interest on group undertakings 62
Interest on bank deposits 11
--------------
73
==============
</TABLE>
<PAGE> 11
ANSA LOGISTICS LIMITED 9
7 PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION
<TABLE>
<CAPTION>
10 months ended
31 December 1999
----------------
(pound)'000
<S> <C>
PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION IS STATED
AFTER CHARGING:
Depreciation of tangible fixed assets 1,421
Auditors' remuneration - for audit services 30
- for non-audit services 31
Hire of plant and machinery under operating leases 111
Hire of other assets under operating leases 884
==============
</TABLE>
8 TAX ON PROFIT ON ORDINARY ACTIVITIES
<TABLE>
<CAPTION>
10 months ended
31 December 1999
----------------
(pound)'000
<S> <C>
UNITED KINGDOM CORPORATION TAX CHARGE
AT 30%:
Current period 1,442
==============
</TABLE>
9 TANGIBLE FIXED ASSETS
<TABLE>
<CAPTION>
Short
leasehold Fixtures
Freehold land and Plant & and Motor
Property buildings Machinery fittings vehicles Total
(pound)'000 (pound)'000 (pound)'000 (pound)'000 (pound)'000 (pound)'000
<S> <C> <C> <C> <C> <C> <C>
COST
Additions
Disposals 425 2,344 378 19 2,735 5,901
(3) (3)
--------------------------------------------------------------------------------------
AT 31 DECEMBER 1999 425 2,344 375 19 2,735 5,898
--------------------------------------------------------------------------------------
ACCUMULATED DEPRECIATION
Charge for year -- (334) (66) (4) (1,017) (1,421)
Disposals 3 3
--------------------------------------------------------------------------------------
AT 31 DECEMBER 1999 -- (334) (63) (4) (1,017) (1,418)
--------------------------------------------------------------------------------------
NET BOOK VALUE
AT 31 DECEMBER 1999 425 2,010 312 15 1,718 4,480
--------------------------------------------------------------------------------------
</TABLE>
<PAGE> 12
ANSA LOGISTICS LIMITED 10
10 STOCKS
<TABLE>
<CAPTION>
1999
----
(pound)'000
<S> <C>
Tyres, parts, protective clothing and consumables 298
Fuel and oil 99
------------
397
============
</TABLE>
11 DEBTORS
<TABLE>
<CAPTION>
1999
----
(pound)'000
<S> <C>
AMOUNTS FALLING DUE WITHIN ONE YEAR
Trade debtors 1,081
Amounts owed by related companies 9,088
Other debtors 2,327
Prepayments 717
------------
13,213
============
</TABLE>
12 CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
<TABLE>
<CAPTION>
1999
----
(pound)'000
<S> <C>
Bank overdraft (see below) 4,370
Trade creditors 2,013
Amounts owed to related companies 1,148
Other creditors 451
Corporation tax 1,078
Other taxation and social security payable 1,078
Accruals 5,494
------------
15,632
============
</TABLE>
The bank overdraft is secured by floating charges over the assets of the
company.
<PAGE> 13
ANSA LOGISTICS LIMITED 11
13 PROVISIONS FOR LIABILITIES AND CHARGES
<TABLE>
<CAPTION>
Dilapidation
Provision
(pound)'000
<S> <C>
Charged to profit and loss account 428
Utilised during the year -
------------
AT 31 DECEMBER 1999 428
============
</TABLE>
The dilapidation provision relates to the estimated costs of restoring assets
held under operating leases to a condition stipulated within the terms of the
lease. These relate to leases which expire within one year.
DEFERRED TAXATION
The potential deferred tax asset, none of which has been recognised in the
financial statements, is as follows :
<TABLE>
<CAPTION>
1999
(pound)'000
Amounts
unprovided
<S> <C>
TAX EFFECTS OF TIMING DIFFERENCES BECAUSE OF:
Excess of tax allowances over depreciation 258
Other short term timing differences 20
============
278
============
</TABLE>
14 PENSION SCHEME ARRANGEMENTS
From 1 May 1999 to 28 October 1999, the company contributed (pound)1,024,000 to
a previous employers' pension scheme.
Since 29 October 1999, the company has participated in a final salary pension
scheme. The assets of the scheme are held separately from those of the companies
in the scheme in an independently administered fund. Contributions of
(pound)46,000 were due to the scheme at 31 December 1999 and are included in
other creditors. The pension costs for the company scheme for the year were
(pound)379,000. Total contributions being (pound)1,403,000 as shown in note 4.
<PAGE> 14
ANSA LOGISTICS LIMITED 12
15 CALLED-UP SHARE CAPITAL
<TABLE>
<CAPTION>
1999
----
<S> <C>
AUTHORISED
100 Ordinary shares of(pound)1 each 100
--------------
100
--------------
ISSUED, ALLOTTED & FULLY PAID UP
1 Ordinary share of(pound)1 1
--------------
1
--------------
</TABLE>
The 1 (pound)1 ordinary share was subscribed for cash consideration of (pound)1
on 18 February 1999.
16 RESERVES
<TABLE>
<CAPTION>
Profit and
loss account
(pound)'000
<S> <C>
Profit for the period 2,085
--------------
At 31 December 1999 2,085
==============
</TABLE>
17 RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
<TABLE>
<CAPTION>
1999
(pound)'000
<S> <C>
Issue of share capital ((pound)1) -
Profit for the financial period 2,085
--------------
Closing shareholders' funds 2,085
==============
</TABLE>
18 RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT
<TABLE>
<CAPTION>
1999
(pound)'000
<S> <C>
Decrease in cash in the period (4,315)
-------------
CHANGES IN NET DEBT RESULTING FROM CASH FLOWS (4,315)
-------------
NET DEBT AT 31 DECEMBER 1999 (4,315)
=============
</TABLE>
<PAGE> 15
ANSA LOGISTICS LIMITED 13
19 ANALYSIS OF NET DEBT
<TABLE>
<CAPTION>
At 31 December 1999
-------------------
Cash
Flow
(pound)'000 (pound)'000
<S> <C> <C>
Cash at bank and in hand 55 55
Overdrafts (4,370) (4,370)
------------- -----------
Debt due within one year (4,315) (4,315)
Debt due after more than one year - -
============= ===========
TOTAL (4,315) (4,315)
============= ===========
</TABLE>
20 CONTINGENT LIABILITIES
The company has given an unlimited multilateral cross company guarantee to its
bankers in respect of Autocar Logistics Limited. Autocar Logistics Limited is
owned by the same shareholders as Ansa Logistics Limited.
The company is a participant in a banking arrangement under which all surplus
cash balances are held as collateral for bank facilities advanced to Autocar
Logistics Limited. In addition the company has issued an unlimited guarantee to
the bank to support these facilities.
21 FINANCIAL COMMITMENTS
At 31 December 1999 the company has annual commitments under non-cancelable
operating leases expiring as follows:
<TABLE>
<CAPTION>
Motor
Land and vehicles and
Buildings Trailers
1999 1999
(pound)'000 (pound)'000
<S> <C> <C>
Expiring within one year 38 -
Expiring between two to five years 899 861
Expiring after five years 84 334
---------- -----------
1,021 1,195
========== ===========
</TABLE>
<PAGE> 16
ANSA LOGISTICS LIMITED 14
22 CAPITAL AND OTHER COMMITMENTS
Capital expenditure that has been contracted for but has not been provided for
in the financial statements is nil.
23 RELATED PARTY TRANSACTIONS
a) The company contracts with AutoLogic Holdings plc. The company made
purchases of (pound)2,842,000 (ex vat) from AutoLogic Holdings plc. All
of these transactions were at arms length and in the ordinary course of
business. Nothing was owing to AutoLogic Holdings plc at the balance
sheet date.
b) The company contracts with Walon Limited, a subsidiary of AutoLogic
Holdings plc. The company made purchases of (pound)1,453,000 (ex vat)
from Walon Ltd. All of these transactions were at arms length and in the
ordinary course of business. A net amount of (pound)98,000 was owing to
Walon Limited at the balance sheet date.
c) The company contracts with Walon NV, a subsidiary undertaking of
AutoLogic Holdings Plc. The company made purchases of (pound)18,000 from
Walon NV during the period. All of these transactions were at arms length
and in the ordinary course of business. Nothing was owing to Walon NV at
the balance sheet date.
d) The company contracts with Walon BV, a subsidiary undertaking of
AutoLogic Holdings Plc. The company made purchases of (pound)18,000 from
Walon BV during the period. All of these transactions were at arms length
and in the ordinary course of business. Nothing was owing to Walon BV at
the balance sheet date.
e) The company contracts with Autocar Logistics Limited, a joint venture
undertaking of AutoLogic Holdings Plc and Axis International Inc. The
company made sales of (pound)51,794,000 (ex vat) to Autocar Logistics
Limited and made purchases of (pound)2,827,000 (ex vat) during the
period. All of these transactions were at arms length and in the ordinary
course of business. A net amount of (pound)8,031,000 was owing from
Autocar Logistics Limited at the balance sheet date.
24 ULTIMATE AND IMMEDIATE PARENT COMPANIES
The directors regard AutoLogic Holdings plc and Axis International Inc as the
joint parent and controlling parties of Ansa Logistics Limited. Each company
holds 50% of the share capital of Ansa Logistics Limited. As a result, Ansa
Logistics Limited has no single ultimate holding company.
<PAGE> 17
ANSA LOGISTICS LIMITED 15
25 SUMMARY OF DIFFERENCES BETWEEN UK GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
AND US GENERALLY ACCEPTED ACCOUNTING PRINCIPLES
The company's financial statements have been prepared in accordance with
accounting principles generally accepted in the United Kingdom (UK GAAP), which
differs in certain significant respects from those generally accepted in the
United States (US GAAP). The effect of the application of US GAAP to net income
and shareholders' equity is set out in the tables below.
RECONCILIATION OF PROFIT TO US GAAP
<TABLE>
<CAPTION>
Notes 10 months ended
31 December 1999
----------------
(pound)'000
<S> <C> <C>
Net income under UK GAAP 2,085
US GAAP adjustments
Deferred taxes - application of FAS 109 a 278
Deferred tax on US GAAP adjustments a 21
Pensions - application of FAS 87 b (71)
------------------
Net income under US GAAP 2,313
==================
</TABLE>
RECONCILIATION OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
Notes At 31 December 1999
-------------------
(pound)'000
<S> <C> <C>
Shareholders' equity under UK GAAP 2,085
US GAAP adjustments
Deferred taxes - application of FAS 109 a 278
Deferred tax on US GAAP adjustments a 21
Pensions - application of FAS 87 b (71)
------------------
Shareholders' equity under US GAAP 2,313
==================
</TABLE>
a Deferred taxes
Under UK GAAP the company provides for deferred tax in respect of the tax
attributable to timing differences only to the extent that such timing
differences are expected to reverse in the foreseeable future. US GAAP requires
recognition of all deferred tax assets and liabilities for temporary differences
using enacted tax rates in effect at year end in accordance with Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes". A
valuation allowance is posted to the extent that it is more likely than not that
all or part of the deferred tax assets will not be realised. Deferred tax has
also been calculated in respect of the US GAAP adjustments.
b Pensions
Under UK GAAP, the expected cost of providing retirement benefits are charged to
the profit and loss account over the periods benefiting from the employees'
services. Variations from
<PAGE> 18
ANSA LOGISTICS LIMITED 16
expected cost are similarly spread. Under US GAAP, pension costs and liabilities
are calculated in accordance with Statement of Financial Accounting Standards
No. 87, which requires the use of a prescribed actuarial method and a set of
measurement principles.
Cash flow information
Under UK GAAP, the company complies with Financial Reporting Standard 1
(revised) "Cash Flow Statements" (FRS 1), the objective and principles of which
are similar to those set out in Statement of Financial Accounting Standards No.
95, "Statement of Cash Flows" (SFAS 95). The principal difference between the
two standards is in respect of classification. Under UK GAAP, cash flows are
presented separately for operating activities, returns on investments and
servicing of finance, taxation, capital expenditure, and financial investment,
acquisition and disposals, equity dividends paid, management of liquid resources
and financing. Under US GAAP, only three categories of cash flow activity are
reported-operating activities, investing activities and financing activities.
Under UK GAAP cash paid or received for interest and income taxes is presented
separately from operating activities and dividends paid are presented separately
from financing activities. Under US GAAP cash flows from operating activities
are based on net income which includes interest and income taxes. Under US GAAP
dividends paid would be included within financing activities. Under UK GAAP,
cash is defined as cash in hand and deposits repayable on demand. The US GAAP
cash flow statement reports changes in cash and cash equivalents which includes
short term highly liquid investments with an original maturity of three months
or less but excludes bank overdrafts.
UK investors regard free cash flow as the cash available annually to be
allocated between a number of options including capital expenditure, payment of
dividends and the financing of acquisitions.
Under a US GAAP presentation the following amounts would have been reported:
<TABLE>
<CAPTION>
10 months ended
31 December 1999
----------------
(pound)'000
<S> <C>
Net cash provided by operating activities 1,586
Net cash used in investment activities (5,901)
Net cash provided by (used in) financing activities -
----------------
Net decrease in cash and cash equivalents (4,315)
Cash and cash equivalents at inception -
----------------
Cash and cash equivalents at 31 December 1999 (4,315)
----------------
</TABLE>
Related party transactions
As disclosed in Note 23 to the financial statements, the majority of the
turnover in the period was with Autocar Logistics Limited, which acts as
intermediary in billings under contracts that Autocar Logistics Limited enters
into with its customers.
<PAGE> 19
ANSA LOGISTICS LIMITED 17
Autocar Logistics Limited is also a joint venture company, with the same two
shareholders as Ansa Logistics Limited.
Revenue recognition
On December 3, 1999, the Securities and Exchange Commission ("SEC") issued Staff
Accounting Bulletin No. 101 "Revenue Recognition in Financial Statements" ("SAB
101"). SAB 101 provides the SEC staff's views on the recognition of revenue,
including up-front fees. SAB 101 states that in certain circumstances the SEC
believes that up-front fees, even if non-refundable, should be deferred and
recognised systematically over the term of the customer relationship. SAB 101
requires the company to adopt the accounting guidance contained therein for the
fiscal year ended December 31, 2000. The company is currently assessing the
financial impact of complying with SAB 101. It is anticipated that applying the
accounting guidance of SAB 101 will have a material effect on the financial
position and results of operations of the company.
26 UNITED KINGDOM COMPANY LAW REQUIREMENTS (UNAUDITED)
The directors are required by United Kingdom company law to prepare financial
statements for each financial year that give a true and fair view of the state
of affairs of the company and the group as at the end of the financial year and
of the profit or loss of the group for that period.
The directors confirm that suitable accounting polices have been used and
applied consistently, and reasonable and prudent judgements and estimates have
been made in the preparation of the financial statements for the ten months
ended 31 December 1999. The directors also confirm the applicable accounting
standards have been followed.
The directors are responsible for keeping proper accounting records, for
safeguarding the assets of the company and of the group and hence for taking
responsible steps for the prevention and detection of fraud and other
irregularities.
