8-KOther Events

TRAVELERS COMPANIES, INC. 8-K Report (Jul 16, 2002)

Filed July 16, 2002For Securities:TRV

Summary

This 8-K filing from The St. Paul Companies, Inc. (which is the registrant, though the request mentioned Travelers Companies, Inc.) dated July 16, 2002, primarily announces the company's adoption of Statement of Financial Accounting Standards (SFAS) No. 142, "Goodwill and Other Intangible Assets," effective in the first quarter of 2002. This new accounting standard significantly alters how goodwill and other intangible assets are treated, particularly by eliminating the amortization of goodwill. For investors, the key takeaway is the pro forma impact of this change on the company's net income and earnings per share for the years 2001, 2000, and 1999. By ceasing goodwill amortization, the company's reported net income and EPS are presented alongside the pro forma figures that reflect this change. Notably, the company will not record any goodwill amortization expense in 2002 as a result of this adoption, which could present a more favorable view of profitability compared to prior accounting methods.

Key Highlights

  • 1Adoption of SFAS No. 142: The St. Paul Companies, Inc. is implementing new accounting rules for goodwill and other intangible assets.
  • 2Cessation of Goodwill Amortization: Under SFAS No. 142, the company will no longer amortize goodwill.
  • 3Pro Forma Financials Provided: The filing includes pro forma net income and EPS figures for 2001, 2000, and 1999, illustrating the impact of no longer amortizing goodwill.
  • 4Positive Impact on Reported Earnings: Ceasing goodwill amortization removes a previously reported expense, thereby increasing net income and EPS on a pro forma basis.
  • 5No Goodwill Amortization in 2002: The company explicitly states that no goodwill amortization expense will be recognized in 2002 due to SFAS No. 142.
  • 6Shift in Accounting Treatment: The filing highlights the change from amortizing intangibles with useful lives to testing for impairment annually and not amortizing goodwill.

Frequently Asked Questions

SFAS No. 142 is a new accounting standard that changes how companies account for goodwill and other intangible assets. For The St. Paul Companies, the most significant effect is the discontinuation of goodwill amortization. Instead of expensing goodwill over time, it will be tested annually for impairment.

By ceasing the amortization of goodwill, the company's reported net income and earnings per share (EPS) are higher on a pro forma basis compared to the as-reported figures for the years 2001, 2000, and 1999. This means that a previously recognized expense is now removed, making the company appear more profitable.

No, as a direct result of implementing SFAS No. 142, The St. Paul Companies will not record any goodwill amortization expense in 2002.

This particular 8-K filing is from The St. Paul Companies, Inc. The registrant information clearly states 'THE ST. PAUL COMPANIES, INC.' as the issuer.