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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in millions, except per-share data and unless otherwise indicated)
Note 9 – Restructuring and Asset
Impairment Charges
We have engaged in a series of restructuring
programs related to downsizing our employee base,
exiting certain activities, outsourcing certain internal
functions and engaging in other actions designed to
reduce our cost structure and improve productivity.
Management continues to evaluate our business and,
therefore, there may be supplemental provisions for new
plan initiatives as well as changes in estimates to amounts
previously recorded, as payments are made or actions are
completed.
Asset impairment charges were also incurred in
connection with these restructuring actions for those
assets made obsolete as a result of these programs.
The net restructuring and asset impairment charges
in the Consolidated Statements of Income totaled $385,
$366 and $86 in 2006, 2005 and 2004, respectively.
Detailed information related to restructuring program
activity during the three years ended December 31, 2006
is outlined below (in millions):
Restructuring Activity
Severance and
Related Costs
Lease
Cancellation and
Other Costs
Asset
Impairments(1)
Legacy
Programs(2) Total
Ending Balance December 31, 2003 $ 143 $ 36 $— $ 42 $ 221
Restructuring Provision ...................... 95 8 1 2 106
Reversals of prior accruals .................... (11) — — (9) (20)
Net current year charges(3) ................ 84 8 1 (7) 86
Charges against reserve and currency ........... (157) (21) (1) (11) (190)
Ending Balance December 31, 2004 ........... $ 70 $ 23 $— $ 24 $ 117
Restructuring Provision ...................... 371 12 15 1 399
Reversals of prior accruals .................... (21) (6) — (6) (33)
Net current year charges(3) ................ 350 6 15 (5) 366
Charges against reserve and currency ........... (203) (10) (15) (19) (247)
Ending Balance December 31, 2005 ........... $ 217 $ 19 $— $— $ 236
Restructuring Provision ...................... 351 39 30 — 420
Reversals of prior accruals .................... (33) (2) — — (35)
Net current year charges(3) ................ 318 37 30 — 385
Charges against reserve and currency ........... (242) (12) (30) — (284)
Ending Balance December 31, 2006 ........... $ 293 $ 44 $— $— $ 337
(1) Charges associated with asset impairments represent the write-down of the related assets to their new cost basis
and are recorded concurrently with the recognition of the provision.
(2) Legacy Programs, includes the runoff activity of several predecessor restructuring programs which were initiated
between 2000 and 2001.
(3) Represents amount recognized within the Consolidated Statements of Income for the years shown.
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