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primarily due to the completion of the deferred compensation amortization associated with certain employees’ stock option vesting periods and
the cancellation of unvested stock options that were held by employees whose employment was terminated.
During 2003, we continued to implement our 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:
We implemented our work plan to streamline our operations and activities around our core markets and leadership strategies during 2001 in
light of the significant downturn in both the telecommunications industry and the economic environment, and capital market trends impacting
our operations and expected future growth rates. This work plan was adjusted during 2001, 2002 and 2003 to reflect the continued decline in
the industry and economic environment, and in the capital markets. In addition, we initiated activities in 2003 to exit certain leased facilities
and leases for assets no longer used across all segments.
In 2003, we recorded special charges of $284, net of revisions of $53, related to our restructuring work plan and contract settlement and lease
costs. Workforce reduction charges of $199 related to the cost of severance and benefits associated with approximately 1,800 employees
notified of termination during 2003 which extended across all segments. Net revisions of $44 to reduce prior accruals primarily related to
termination benefits where actual costs were lower than our original estimates across all segments. During 2003, the workforce reduction
provision balance was drawn down by cash payments of $274 and by a non-cash pension settlement loss of $41. The remaining provision is
expected to be substantially drawn down by the end of 2005. Contract settlement and lease costs were $64 and consisted of negotiated
settlements to cancel or renegotiate contracts and net lease charges related to leased facilities (comprised of office, warehouse and
manufacturing space) and leased furniture that were identified as no longer required across all segments. These lease costs, net of anticipated
sublease income, included non-cancelable lease terms from the date leased facilities ceased to be used and termination penalties.
69
S
p
ecial char
g
es
Contract Intan
g
ible
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 impairment –
–
––595595
Other special charges 952 225 475 – 27 1,679
Revisions to
p
rior 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.