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F-42
7. S
p
ecial char
g
es
During 2003, Nortel Networks continued to implement its restructuring work plan initiated in 2001. In addition, as described below,
certain exit activities were initiated in 2003.
Special charges recorded from January 1, 2001 to December 31, 2003 were as follows:
Regular full-time (“RFT”) employee notifications included in special charges were as follows:
Year ended December 31, 2003
For the year ended December 31, 2003, Nortel Networks recorded total special charges of $284, which was net of revisions of $53 related
to prior accruals.
Workforce reduction charges of $199 were related to severance and benefit costs associated with approximately 1,800 employees notified
of termination. The workforce reduction was primarily in the U.S., Canada and EMEA and extended across all segments.
Contract Intangible
settlement Plant and asset
Workforce and lease equipment impair-
reduction costs write downs Other ments Total
Provision balance as of January 1, 2001 $ 45 $ – $ – $ – $ – $ 45
Goodwill impairment – – – – 11,426 11,426
Other special charges 1,174 897 1,000 39 407 3,517
Revisions to prior accruals 42 (108) (59) (2) – (127)
Cash drawdowns (1,003) (110) – (8) – (1,121)
Non-cash drawdowns 14 – (941) – (11,833) (12,760)
Foreign exchange and other adjustments 10 (2) – – – 8
Provision balance as of December 31, 2001 $ 282 $ 677 $ – $ 29 $ – $ 988
Goodwill im
p
airmen
t
–
– – – 595 595
Other special charges 952 225 475 – 27 1,679
Revisions to prior accruals (132) 8 (55) – – (179)
Cash drawdowns (788) (286) – (20) – (1,094)
Non-cash drawdowns (100) – (420) – (622) (1,142)
Foreign exchange and other adjustments (2) (4) – – – (6)
Provision balance as of December 31, 2002
(a)
$ 212 $ 620 $ – $ 9 $ – $ 841
Other special charges 199 64 74 – – 337
Revisions to prior accruals (44) 19 (28) – – (53)
Cash drawdowns (274) (275) – (9) – (558)
Non-cash drawdowns (41) – (46) – – (87)
Foreign exchange and other adjustments 12 28 – – – 40
Provision balance as of December 31, 2003
(a)
$ 64 $ 456 $ – $ – $ – $ 520
(a) As of December 31, 2003 and 2002, the short-term provision balance was $206 and $507, respectively, and the long-term provision balance was $314 and $334,
respectively, which was included in long-term provisions, as a component of other liabilities.
Employees (approximate)
Direct
(a)
Indirect
(b)
Total
RFT employee notifications by period:
During 2001 13,900 22,200 36,100
Durin
g
2002 3,400 9,300 12,700
During 2003 400 1,400 1,800
RFT em
p
lo
y
ee notifications for the three
y
ears ended December 31, 2003 17,700 32,900 50,600
(a) Direct employees included employees performing manufacturing, assembly, test and inspection activities associated with the production of Nortel Networks
products.
(b) Indirect employees included employees performing manufacturing management, sales, marketing, research and development and administrative activities.