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4. RESTRUCTURING COSTS AND OTHER SPECIAL CHARGES
On April 16, 2001, the Company announced a restructuring program, which included a worldwide workforce reduction, consolidation
of excess facilities, and restructuring of certain business functions. The liability for restructuring costs is recorded in other accrued
liabilities in the Consolidated Balance Sheets. The following table summarizes the activity related to the liability for restructuring costs
and other special charges as of July 31, 2004 (in millions):
Consolidation Impairment of
of Excess Goodwill
Workforce Facilities and and Purchased
Reduction Other Charges Intangible Assets Total
Initial charge in the third quarter of fiscal 2001 $ 397 $ 484 $ 289 $1,170
Noncash charges (71) (141) (289) (501)
Cash payments (265) (18) — (283)
Balance at July 28, 2001 61 325 — 386
Adjustments(1) (35) 128 — 93
Cash payments (26) (131) — (157)
Balance at July 27, 2002 — 322 — 322
Adjustments(2) — 45 — 45
Cash payments — (72) — (72)
Balance at July 26, 2003 — 295 — 295
Cash payments(3) — (230) — (230)
Balance at July 31, 2004 $ — $ 65 $ — $ 65
Note 1: Due to changes in previous estimates, in fiscal 2002, the Company reclassified $35 million of restructuring liabilities related
to the workforce reduction charges to consolidation of excess facilities and other charges. The initial estimated workforce reduction
was approximately 6,000 regular employees. Approximately 5,400 regular employees were terminated, and the liability was paid. In
addition, during fiscal 2002, the Company increased the restructuring liabilities related to the consolidation of excess facilities and other
charges by $93 million, which was recorded during the third quarter of fiscal 2002, due to changes in real estate market conditions.
The increase in restructuring liabilities was recorded as expenses related to research and development ($39 million), sales and marketing
($42 million), general and administrative ($8 million), and cost of sales ($4 million) in the Consolidated Statements of Operations.
Note 2: During fiscal 2003, the Company increased the restructuring liabilities related to the consolidation of excess facilities and
other charges by a total of $45 million, which was recorded during the first quarter and fourth quarter of fiscal 2003, due to changes
in real estate market conditions. The increase in restructuring liabilities was recorded as expenses related to research and development
($18 million), sales and marketing ($18 million), general and administrative ($4 million), and cost of sales ($5 million) in the Consolidated
Statements of Operations.
Note 3: Cash payments include payments of approximately $204 million on lease obligations that were terminated.
2004 ANNUAL REPORT 51