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In 2003, we continued to strengthen our liquidity position. As of December 31, 2003, our primary source of liquidity was cash. At
December 31, 2003, we had cash of $3,997 excluding $63 of restricted cash and cash equivalents. We believe this cash will be sufficient to
fund the changes to our business model in accordance with the strategic plan (see “Business overview — Our strategic plan and outlook”),
manage our investments and meet our customer commitments for at least the next 12 months. However, if capital spending by service
providers and other customers changes from what we currently expect, we may be required to adjust our current business model. As a result,
our revenues and cash flows may be materially lower than we expect and we may be required to further reduce our investments or take other
measures in order to meet our cash requirements. In the future, we may seek additional funds from liquidity generating transactions and other
sources of external financing. We continue to routinely monitor the capital markets for opportunities to improve our capital structure and
financial flexibility. Our ability and willingness to access the capital markets is based on many factors including market conditions and overall
financial objectives. Currently our ability is limited due to the impact of the delay in filing the Reports and the findings of the Independent
Review and related matters. We cannot provide any assurance that our net cash requirements will be as we currently expect, that we will
continue to have access to the EDC Support Facility when and as needed or that liquidity generating transactions or financings will be available
to us on acceptable terms. In addition, we have not assumed the need to make any payments in respect of judgments, settlements, fines or other
penalties in connection with our pending civil litigation or investigations related to the First Restatement and Second Restatement, which could
have a material adverse effect on our financial condition or liquidity, other than anticipated professional fees and expenses. See “Risk
factors/forward looking statements”.
In 2003, our cash flows from operating activities were $85 due to net earnings from continuing operations of $262, less adjustments of $24 for
non-cash and other items and $153 related to the change in our operating assets and liabilities. The use of cash of $153 resulting from the
change in our operating assets and liabilities was primarily due to:
The net decrease of $11 related to accounts payable and accrued liabilities and other operating assets and liabilities was mainly a result of:
As a result of previously incurred tax losses and tax credits, we do not expect that we will have to make significant cash income tax payments
in the foreseeable future.
Cash flows used in investing activities were $85 and were primarily due to $172 in plant and equipment expenditures and $58 associated with
acquisitions of certain investments and businesses including the ownership adjustment in our French and German operations. These amounts
were partially offset by proceeds of $107 from the sale of certain investments and businesses which we no longer considered strategic and
proceeds of $38 primarily from the sale of plant and equipment in the
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• net cash of $200 from a reduction in restricted cash and cash equivalents primarily due to the release of restricted cash upon the
utilization of our EDC Support Facility as well as the release of other restrictions on cash through cancellation, renegotiation and/or
fulfillment of our contractual obligations with certain customers;
• net cash of $18 from income taxes; and
• net cash of $429 from inventory primarily related to product shipments exceeding additions to inventories during 2003; more than
offset by
• $231 related to accounts receivable primarily due to a significant increase in billings in the fourth quarter of 2003 as a result of the
substantial increase in revenues in the fourth quarter of 2003 compared to the fourth quarter of 2002;
• $558inrestructuringrelatedcashoutflows;and
• a net decrease of $11 related to accounts payable and accrued liabilities and other operating assets and liabilities.
• contributions to our defined benefit pension plans of approximately $300;
• the settlement of the liability associated with the put option related to the sale of our interest in EADS Telecom in conjunction with
the changes in ownership of our French and German operations;
• payments of certain contract manufacturer and supplier accruals;
• settlement of certain obligations related to our internal information systems infrastructure;
• activities associated with our outsourcing contracts; partially offset by
• cash collections of outstanding customer financing amounts associated with certain customers;
• reduction of certain customer contract settlement costs; and
• the proportionate decrease in these assets and liabilities as a result of the decline in sales volumes and the associated size of our
business.