Intentia Changes Accounting Standards

Basic Changes to Swedish Accounting Standards as of 2001 and 2002



Intentia Has Decided to Adapt Its Accounting and Reporting

To All of These Changes Beginning in 2001



Apr 17, 2001, 01:00 ET from Intentia International AB

    STOCKHOLM, Sweden, April 17 /PRNewswire/ -- As of January 1, 2001, a
 number of new Swedish Financial Accounting Standards Council
 (Redovisningsradet) recommendations take effect.  These changes are part of a
 more thoroughgoing revision of Swedish accounting standards to comply with
 International Accounting Standards (IAS).  The changes will affect the
 accounting practices of many listed Swedish companies.  Given the complexities
 involved in implementing some of the changes, Redovisningsradet decided in
 late 2000 to postpone them until January 1, 2002.  Among the areas covered by
 recommendations taking effect as of 2001 are income taxes, construction
 contracts and similar assignments, revenue, affiliated companies, earnings per
 share and interim reporting.  The areas covered by recommendations taking
 effect as of January 2002 include consolidated financial statements,
 intangible assets, write-downs, and provisions for contingent liabilities and
 impairment of assets.  Intentia's decision to follow all of these
 recommendations as of January 1, 2001 will affect the company's accounting and
 reporting practices.
     Intentia has always adopted a conservative approach to accounting.  One
 manifestation of that caution is the fact that production development expenses
 have not been capitalized.  Since the new recommendations prescribe
 capitalization of product development, and as an adaptation to US GAAP,
 Intentia has decided to follow more conservative accounting practices in
 specific upgrade agreements so as to include monthly revenue recognition over
 the period of an agreement.  The upgrade fees may be regarded as a contracted
 advance payment of product development expenses, which beginning now will be
 capitalized in part.
     As a result of this change and of stricter revenue recognition, the
 difference between signed and -revenue-recognized license agreements will be
 considerably greater.  That difference generates an influx of orders and a
 backlog of orders.  The backlog of orders, which is defined as contracted but
 not yet recognized license revenue, totaled SEK 551 million (after
 translation) at the end of 2000.  Of the opening backlog of orders in 2001,
 approximately 55% is expected to affect license revenue during the year.  The
 change in accounting principles will moderate Intentia's seasonal variations,
 while the establishment of a backlog of orders will improve predictability.
 In accordance with current accounting principles, revenue recognition has been
 revised retroactively to facilitate comparability among the various years.
     Product development expenses that arise during the development phase will
 be capitalized and therefore appear as an asset in the balance sheet.  A total
 of 25-35% of product development expenses is expected to be capitalized over
 time.  Although the adjustment of figures from previous years would enhance
 comparability, Intentia has not done so in deference to the fact that
 Redovisningsradet's recommendations do not so permit.
     The combination of the retroactive recalculation of revenue recognition
 and the absence of a similar adjustment for product development expenses
 reduces operating earnings for those particular years.  The negative impact on
 1999 and 2000 operating earnings totals SEK 135 million.  If product
 development expenses had been capitalized for those two years, the positive
 impact on operating earnings is estimated to have been more than
 SEK 100 million.
     Tax accounting has changed in that deferred tax is reported separately in
 the consolidated income statement, while deferred tax refund claims and tax
 liabilities are reported in the balance sheet.  Long-term tax assets, which
 are reported in the balance sheet, were in excess of SEK 330 million at the
 end of 2000.  The corresponding amount for the years through 2000 has had a
 positive impact on stockholders' equity.
     Intentia complies with Redovisningsradet's recommendations for preparing
 interim reports and annual reports and has decided to follow the new
 recommendations as of January 1, 2001.  The changes will affect Intentia's
 accounting practices, primarily in the areas of license revenue, product
 development and taxes.  Following is a review of Intentia's fundamental
 accounting principles in these areas.
 
     License revenue
     One basic prerequisite for Intentia to recognize a license revenue in
 earnings is that neither the license revenue nor its payment is conditional on
 a specific milestone in a project or on commitments other than the actual
 delivery of the license.  Agreements for which at least 80% of the total
 contracted license carries payment terms of 12 months or less are recognized
 in earnings, whereas agreements with longer times of payment are not
 recognized in earnings until they meet that criterion.  For Intentia to
 recognize a license revenue in earnings, a number of other basic conditions
 must be met.  The product being sold must be fully developed, and delivery
 must have been made.  The purchaser cannot be entitled to return all or part
 of the license rights, and it must be deemed probable that payment will be
 made.  Delivery is considered to have been made once the customer has received
 the merchandise or gained access to it on a customary data medium.
     In addition to the Movex system itself, Intentia sells upgrade rights that
 entitle its customers to obtain future releases of specific Movex application
 components.  But the agreements that grant these rights do not entail any
 obligation on Intentia's part to develop those releases.  Despite the absence
 of such obligations, Intentia has decided to linearly report revenue related
 to this kind of agreement over the period of the agreement.
 
     Product development
     According to Redovisningradet's Recommendation 15, a development project
 must be capitalized if it meets certain criteria.  Intentia's development
 effort consists of three phases:  research, development and maintenance.  Only
 expenses that arise during the development phase will be capitalized and
 therefore appear as an asset in the balance sheet.  There are a number of
 criteria that must be met during the development phase for all or part of a
 project to appear in the balance sheet.  It must be technically feasible to
 turn the project into a marketable or internally usable product, and the
 project must be expected to entail financial benefits for Intentia.  Moreover,
 expenses for the intangible assets must be calculable and attributable to
 assets, and Intentia must be expected to have the resources required to
 complete the development effort.
     The acquisition value of the intangible asset is the sum of the expenses
 that arise as of the date that the asset first meets all of the above
 criteria.  Among the expenses that are capitalized and therefore included in
 the acquisition value are those for salaries and other employment-related
 personnel costs, as well as for materials, services and other costs directly
 related to the development phase.  Indirect expenses that are needed to
 produce the asset and that can be attributed to the asset in a consistent,
 reasonable manner will also be capitalized.
     The depreciation period for capitalized product development is based on
 the nature of the asset and will not exceed five years.
 
     Income taxes
     Deferred tax is reported separately in the consolidated income statement.
 Deferred tax claims are reported as a fixed asset and deferred tax liabilities
 are reported as a provision.  Deferred tax claims attributable to deficit
 deductions are reported insofar as it is probable that the deductions can be
 applied against surpluses for future tax purposes.  Deficit deductions deemed
 as meeting these criteria totaled SEK 193 million at the end of 2000.
     Impact on Intentia's reported earnings and shareholders' equity
 Intentia is revising its accounting principles in accordance with
 Redovisningsradet's Recommendation 5 on the revision of accounting principles,
 including the adjustment of opening shareholders' equity.  For the sake of
 comparability, revenue recognition for 1998, 1999 and 2000 has been
 recalculated in accordance with the new principles.  That process normally
 involves the retroactive introduction of a new accounting principle and the
 adjustment of data for all comparison years.  However, Recommendation 15
 prohibits the application of this principle to intangible fixed assets.  As a
 result, product development expenses for previous years have not been
 adjusted.
     In terms of Recommendation 9 on income taxes, Intentia has adjusted only
 the 1999 and 2000 comparison years, since it is deemed unfeasible to
 recalculate earlier years with sufficient accuracy.
 
     Recalculated income statements, balance sheets and cash flow analyses for
 1999 and 2000
     In accordance with the Recommendation on the revision of accounting
 principles, Intentia's interim report for January-March 2001 will specify the
 change in shareholders' equity and the impact of the new principles in their
 entirety.  Previous years will have been recalculated and financial ratios
 adjusted.  Prior to the publication of the interim report, the recalculated
 figures for previous years will be available at www.intentia.com .
 
     The following income statements, balance sheets and cash flow analyses
 contain the recalculated figures for 1999 and 2000.
 
 
     Development Backlog License                         1999           2000
 
     Opening backlog license                              426            408
     Orders received                                      756          1,157
     Recognized new principles                            774          1,005
     Closing backlog                                      408            560
 
 
 
                              As stated in the Annual   Restated based on the
                                  Report 2000            new recommendations
 
     Income Statement Group    1999          2000         1999          2000
 
     License revenue            756         1,157          774         1,005
 
     Net revenue              3,062         3,398        3,080         3,245
 
     Gross earnings           1,253           981          999         1,101
 
     Indirect expenses       -1,379        -1,420       -1,379        -1,420
     Items affecting
      comparability              56                         56
     Operating earnings        -260          -137         -242          -290
 
     Earnings before tax       -277          -244         -259          -396
 
     Current tax                -65           -55          -65           -55
     Deferred tax                 8             1           -9           110
     Minority interests          -9            -2          -12            -3
     Loss for the year         -343          -300         -345          -344
 
 
     Balance Sheet Group 12-31-1999    12-31-2000   12-31-1999    12-31-2000
 
     Long-term tax assets        --            --          228           336
     Other fixed assets         695           682          695           682
     Total fixed assets         695           682          923         1,018
     Current assets and
      liquid funds            2,201         2,265        2,103         2,113
     TOTAL ASSETS             2,896         2,947        3,026         3,131
 
     Total stockholders'
      equity                    642           355          471           133
     Minority interests          14            14           10            13
     Long-term liabilities
      and provisions          1,164          952         1,164           952
     Current liabilities      1,076         1,625        1,381         2,033
     TOTAL STOCKHOLDERS'
      EQUITY AND LIABILITIES  2,896         2,947        3,026         3,131
 
 
     Cash Flow Statement Group 1999          2000         1999          2000
 
     Cash flow from operating
      activities before change
       in working capital      -198         -149          -180          -302
 
     Change in working capital  -91         -377          -109          -224
     Cash flow from operating
      activities               -289         -526          -289          -526
 
     About Intentia International AB (publ)
     Over the past few years, Intentia International AB has concentrated on
 positioning itself to meet the demands it anticipated would arise from the new
 e-economy era.  Intentia has developed its Movex product from a traditional
 ERP system to a complete e-collaboration solution that can manage all the
 demands of the new economy.  Movex offers Intentia's customers the key to
 success, with its applications for customer relationship management (CRM),
 enterprise resource planning (ERP), supply chain planning & execution (SCPE),
 partner relationship management (PRM), business performance management (BPM)
 and e-business.
     Intentia is well-positioned to respond to market needs when the "e"
 (electronic) evolves into "c" (collaboration), working hard to satisfy
 customers through its organization of more than 3,800 professionals serving in
 excess of 3,500 customers in over 40 countries around the world.  Intentia is
 a public company traded on the Stockholm Stock Exchange (XSSE) under the
 symbol INT B.
     Visit Intentia's Web site at www.intentia.com .
 
 

SOURCE Intentia International AB
    STOCKHOLM, Sweden, April 17 /PRNewswire/ -- As of January 1, 2001, a
 number of new Swedish Financial Accounting Standards Council
 (Redovisningsradet) recommendations take effect.  These changes are part of a
 more thoroughgoing revision of Swedish accounting standards to comply with
 International Accounting Standards (IAS).  The changes will affect the
 accounting practices of many listed Swedish companies.  Given the complexities
 involved in implementing some of the changes, Redovisningsradet decided in
 late 2000 to postpone them until January 1, 2002.  Among the areas covered by
 recommendations taking effect as of 2001 are income taxes, construction
 contracts and similar assignments, revenue, affiliated companies, earnings per
 share and interim reporting.  The areas covered by recommendations taking
 effect as of January 2002 include consolidated financial statements,
 intangible assets, write-downs, and provisions for contingent liabilities and
 impairment of assets.  Intentia's decision to follow all of these
 recommendations as of January 1, 2001 will affect the company's accounting and
 reporting practices.
     Intentia has always adopted a conservative approach to accounting.  One
 manifestation of that caution is the fact that production development expenses
 have not been capitalized.  Since the new recommendations prescribe
 capitalization of product development, and as an adaptation to US GAAP,
 Intentia has decided to follow more conservative accounting practices in
 specific upgrade agreements so as to include monthly revenue recognition over
 the period of an agreement.  The upgrade fees may be regarded as a contracted
 advance payment of product development expenses, which beginning now will be
 capitalized in part.
     As a result of this change and of stricter revenue recognition, the
 difference between signed and -revenue-recognized license agreements will be
 considerably greater.  That difference generates an influx of orders and a
 backlog of orders.  The backlog of orders, which is defined as contracted but
 not yet recognized license revenue, totaled SEK 551 million (after
 translation) at the end of 2000.  Of the opening backlog of orders in 2001,
 approximately 55% is expected to affect license revenue during the year.  The
 change in accounting principles will moderate Intentia's seasonal variations,
 while the establishment of a backlog of orders will improve predictability.
 In accordance with current accounting principles, revenue recognition has been
 revised retroactively to facilitate comparability among the various years.
     Product development expenses that arise during the development phase will
 be capitalized and therefore appear as an asset in the balance sheet.  A total
 of 25-35% of product development expenses is expected to be capitalized over
 time.  Although the adjustment of figures from previous years would enhance
 comparability, Intentia has not done so in deference to the fact that
 Redovisningsradet's recommendations do not so permit.
     The combination of the retroactive recalculation of revenue recognition
 and the absence of a similar adjustment for product development expenses
 reduces operating earnings for those particular years.  The negative impact on
 1999 and 2000 operating earnings totals SEK 135 million.  If product
 development expenses had been capitalized for those two years, the positive
 impact on operating earnings is estimated to have been more than
 SEK 100 million.
     Tax accounting has changed in that deferred tax is reported separately in
 the consolidated income statement, while deferred tax refund claims and tax
 liabilities are reported in the balance sheet.  Long-term tax assets, which
 are reported in the balance sheet, were in excess of SEK 330 million at the
 end of 2000.  The corresponding amount for the years through 2000 has had a
 positive impact on stockholders' equity.
     Intentia complies with Redovisningsradet's recommendations for preparing
 interim reports and annual reports and has decided to follow the new
 recommendations as of January 1, 2001.  The changes will affect Intentia's
 accounting practices, primarily in the areas of license revenue, product
 development and taxes.  Following is a review of Intentia's fundamental
 accounting principles in these areas.
 
     License revenue
     One basic prerequisite for Intentia to recognize a license revenue in
 earnings is that neither the license revenue nor its payment is conditional on
 a specific milestone in a project or on commitments other than the actual
 delivery of the license.  Agreements for which at least 80% of the total
 contracted license carries payment terms of 12 months or less are recognized
 in earnings, whereas agreements with longer times of payment are not
 recognized in earnings until they meet that criterion.  For Intentia to
 recognize a license revenue in earnings, a number of other basic conditions
 must be met.  The product being sold must be fully developed, and delivery
 must have been made.  The purchaser cannot be entitled to return all or part
 of the license rights, and it must be deemed probable that payment will be
 made.  Delivery is considered to have been made once the customer has received
 the merchandise or gained access to it on a customary data medium.
     In addition to the Movex system itself, Intentia sells upgrade rights that
 entitle its customers to obtain future releases of specific Movex application
 components.  But the agreements that grant these rights do not entail any
 obligation on Intentia's part to develop those releases.  Despite the absence
 of such obligations, Intentia has decided to linearly report revenue related
 to this kind of agreement over the period of the agreement.
 
     Product development
     According to Redovisningradet's Recommendation 15, a development project
 must be capitalized if it meets certain criteria.  Intentia's development
 effort consists of three phases:  research, development and maintenance.  Only
 expenses that arise during the development phase will be capitalized and
 therefore appear as an asset in the balance sheet.  There are a number of
 criteria that must be met during the development phase for all or part of a
 project to appear in the balance sheet.  It must be technically feasible to
 turn the project into a marketable or internally usable product, and the
 project must be expected to entail financial benefits for Intentia.  Moreover,
 expenses for the intangible assets must be calculable and attributable to
 assets, and Intentia must be expected to have the resources required to
 complete the development effort.
     The acquisition value of the intangible asset is the sum of the expenses
 that arise as of the date that the asset first meets all of the above
 criteria.  Among the expenses that are capitalized and therefore included in
 the acquisition value are those for salaries and other employment-related
 personnel costs, as well as for materials, services and other costs directly
 related to the development phase.  Indirect expenses that are needed to
 produce the asset and that can be attributed to the asset in a consistent,
 reasonable manner will also be capitalized.
     The depreciation period for capitalized product development is based on
 the nature of the asset and will not exceed five years.
 
     Income taxes
     Deferred tax is reported separately in the consolidated income statement.
 Deferred tax claims are reported as a fixed asset and deferred tax liabilities
 are reported as a provision.  Deferred tax claims attributable to deficit
 deductions are reported insofar as it is probable that the deductions can be
 applied against surpluses for future tax purposes.  Deficit deductions deemed
 as meeting these criteria totaled SEK 193 million at the end of 2000.
     Impact on Intentia's reported earnings and shareholders' equity
 Intentia is revising its accounting principles in accordance with
 Redovisningsradet's Recommendation 5 on the revision of accounting principles,
 including the adjustment of opening shareholders' equity.  For the sake of
 comparability, revenue recognition for 1998, 1999 and 2000 has been
 recalculated in accordance with the new principles.  That process normally
 involves the retroactive introduction of a new accounting principle and the
 adjustment of data for all comparison years.  However, Recommendation 15
 prohibits the application of this principle to intangible fixed assets.  As a
 result, product development expenses for previous years have not been
 adjusted.
     In terms of Recommendation 9 on income taxes, Intentia has adjusted only
 the 1999 and 2000 comparison years, since it is deemed unfeasible to
 recalculate earlier years with sufficient accuracy.
 
     Recalculated income statements, balance sheets and cash flow analyses for
 1999 and 2000
     In accordance with the Recommendation on the revision of accounting
 principles, Intentia's interim report for January-March 2001 will specify the
 change in shareholders' equity and the impact of the new principles in their
 entirety.  Previous years will have been recalculated and financial ratios
 adjusted.  Prior to the publication of the interim report, the recalculated
 figures for previous years will be available at www.intentia.com .
 
     The following income statements, balance sheets and cash flow analyses
 contain the recalculated figures for 1999 and 2000.
 
 
     Development Backlog License                         1999           2000
 
     Opening backlog license                              426            408
     Orders received                                      756          1,157
     Recognized new principles                            774          1,005
     Closing backlog                                      408            560
 
 
 
                              As stated in the Annual   Restated based on the
                                  Report 2000            new recommendations
 
     Income Statement Group    1999          2000         1999          2000
 
     License revenue            756         1,157          774         1,005
 
     Net revenue              3,062         3,398        3,080         3,245
 
     Gross earnings           1,253           981          999         1,101
 
     Indirect expenses       -1,379        -1,420       -1,379        -1,420
     Items affecting
      comparability              56                         56
     Operating earnings        -260          -137         -242          -290
 
     Earnings before tax       -277          -244         -259          -396
 
     Current tax                -65           -55          -65           -55
     Deferred tax                 8             1           -9           110
     Minority interests          -9            -2          -12            -3
     Loss for the year         -343          -300         -345          -344
 
 
     Balance Sheet Group 12-31-1999    12-31-2000   12-31-1999    12-31-2000
 
     Long-term tax assets        --            --          228           336
     Other fixed assets         695           682          695           682
     Total fixed assets         695           682          923         1,018
     Current assets and
      liquid funds            2,201         2,265        2,103         2,113
     TOTAL ASSETS             2,896         2,947        3,026         3,131
 
     Total stockholders'
      equity                    642           355          471           133
     Minority interests          14            14           10            13
     Long-term liabilities
      and provisions          1,164          952         1,164           952
     Current liabilities      1,076         1,625        1,381         2,033
     TOTAL STOCKHOLDERS'
      EQUITY AND LIABILITIES  2,896         2,947        3,026         3,131
 
 
     Cash Flow Statement Group 1999          2000         1999          2000
 
     Cash flow from operating
      activities before change
       in working capital      -198         -149          -180          -302
 
     Change in working capital  -91         -377          -109          -224
     Cash flow from operating
      activities               -289         -526          -289          -526
 
     About Intentia International AB (publ)
     Over the past few years, Intentia International AB has concentrated on
 positioning itself to meet the demands it anticipated would arise from the new
 e-economy era.  Intentia has developed its Movex product from a traditional
 ERP system to a complete e-collaboration solution that can manage all the
 demands of the new economy.  Movex offers Intentia's customers the key to
 success, with its applications for customer relationship management (CRM),
 enterprise resource planning (ERP), supply chain planning & execution (SCPE),
 partner relationship management (PRM), business performance management (BPM)
 and e-business.
     Intentia is well-positioned to respond to market needs when the "e"
 (electronic) evolves into "c" (collaboration), working hard to satisfy
 customers through its organization of more than 3,800 professionals serving in
 excess of 3,500 customers in over 40 countries around the world.  Intentia is
 a public company traded on the Stockholm Stock Exchange (XSSE) under the
 symbol INT B.
     Visit Intentia's Web site at www.intentia.com .
 
 SOURCE  Intentia International AB