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F-26
Cost of revenues
For the year ended December 31, 2002, the decrease to cost of revenues of $64 was comprised primarily of reductions of approximately
$43 to inventory provisions and related accruals (such as accounts payable and contract manufacturer related accruals, including
approximately $39 for a correction to the accounting for a spares inventory management program which should have been treated as
warranty costs), approximately $19 decrease related to customer and contract related accruals and other accruals for such items as
vacation and fringe benefits, partially offset by an increase of approximately $15 for warranty costs.
For the year ended December 31, 2001, the decrease to cost of revenues of $88 was comprised primarily of reductions of approximately
$84 to contract and customer related accruals and approximately $72 for inventory provisions and related accruals (such as accounts
payable and contract manufacturer related accruals, including approximately $16 for correction to the accounting for a spares inventory
management program which should have been treated as warranty costs), partially offset by increases of approximately $53 for warranty
costs and approximately $14 for a correction to the accounting for retention bonuses associated with an acquisition.
Selling, general and administrative expense
For the year ended December 31, 2002, the decrease of $115 to selling, general and administrative expense was comprised primarily of
reductions of approximately $45 related to contract amendments and settlements with certain service providers, approximately $30 for
salary and fringe benefit related accruals, approximately $29 from the reversal of rent expense associated with certain facilities for
corrections to accounting for sale-leaseback transactions, approximately $13 related to the capitalization of certain software development
costs under SOP 98-1, “Accounting for Software Development Costs”, and decreases to other accruals, partially offset by a net increase
of $19 in bad debt expense.
For the year ended December 31, 2001, the decrease of $233 to selling, general and administrative expense was comprised primarily of
reductions of approximately $88 from the reversal of bad debt expense related to revenue and receivables that had been reversed as part
of the Second Restatement, approximately $52 from adjustments to customer and contractual accruals, approximately $41 for the reversal
of items previously expensed related to reciprocal agreements with customers (the offset was a reduction to revenues primarily in prior
periods), approximately $30 related to contract amendments and settlements with certain service providers and decreases to other
accruals.
R
esearch and development expense
For the year ended December 31, 2002, the decrease of $89 in research and development expense was primarily the result of a decrease
of approximately $68 to correctly treat certain software repair costs as warranty costs, reductions to accruals related to various research
and development projects and to other accruals for such items as vacation and fringe benefits.
For the year ended December 31, 2001, the decrease of $54 in research and development expense was primarily the result of a decrease
of approximately $36 to correctly treat certain software repair costs as warranty costs, reductions to accruals related to various research
and development projects and to other accruals for such items as vacation and fringe benefits.
2002 2001
Other adjustments
Cost of revenues $64 $88
Selling, general and administrative expense 115 233
Research and development expense 89 54
(Gain) loss on sale of businesses and assets 4 3
Other income (ex
p
ense)
—
ne
t
19 (22)
Interest expense (19) (2)
Income tax benefit (expense) 15 (401)
Minority interests — net of tax 26 (12)
Equity in net loss of associated companies — net of tax 1–
Decrease (increase) to net loss $ 314 $ (59)