Apple 1999 Annual Report Download - page 53

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 4--SPECIAL CHARGES
RESTRUCTURING OF OPERATIONS
1996 AND 1997 RESTRUCTURING ACTIONS
In the second quarter of 1996, the Company announced and began to implement a restructuring plan designed to reduce costs and return the
Company to profitability. The restructuring plan was necessitated by decreased demand for the Company's products and the Company's
adoption of a new strategic direction. These actions resulted in a charge during 1996 of $179 million. During 1997, the Company announced
and began to implement supplemental restructuring actions to meet the foregoing objectives of the plan. The Company recognized a $217
million charge during 1997 for the estimated incremental costs of those actions. All material restructuring actions contemplated under the plan
were essentially complete at the end of fiscal 1998. The combined 1996 and 1997 restructuring actions consisted of terminating approximately
4,200 full-time employees; canceling or vacating certain facility leases as a result of those employee terminations; writing down certain land,
buildings, and equipment to be sold as a result of downsizing operations and outsourcing various operational functions; and canceling contracts
for projects and technologies that were not critical to the Company's core business strategy. The restructuring actions under the plan resulted in
cash expenditures of $293 million and noncash asset write-downs of $95 million from the second quarter of 1996 through September 25, 1999.
Of the combined 1996 and 1997 restructuring charges of $396 million, approximately $3 million was determined to be excess during the fourth
quarter of 1999 and was reversed. The remaining balance of $5 million as of September 25, 1999 is comprised of payments over the next two
years on leases and contracts that had been terminated prior to fiscal 1999. The Company expects the remaining accrual will result in cash
expenditures of $5 million over the next two years.
The following table depicts the restructuring activity through September 25, 1999, associated with the 1996 and 1997 restructuring actions
described above (in millions):
(a): Cash;
(b): Noncash.
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PAYMENTS TO
EMPLOYEES PAYMENTS ON WRITE-DOWN OF PAYMENTS ON
INVOLUNTARILY CANCELED FACILITY OPERATING ASSETS CANCELED
TERMINATED(A) LEASES (A) TO BE SOLD (B) CONTRACTS (A) TOTAL
------------- ----------------- ---------------- ------------- --------
Net Additions during 1996...... $ 81 $ 19 $ 54 $ 25 $ 179
Spending during 1996........... (48) (4) (7) (3) (62)
---- ---- ---- ---- -----
Balances as of September 27,
1996......................... 33 15 47 22 117
Net Additions during 1997...... 131 19 38 29 217
Spending during 1997........... (88) (9) (46) (11) (154)
---- ---- ---- ---- -----
Balances as of September 26,
1997......................... 76 25 39 40 180
Adjustments during 1998........ 6 4 3 (13) --
Spending during 1998........... (72) (15) (42) (20) (149)
---- ---- ---- ---- -----
Balances as of September 25,
1998......................... 10 14 -- 7 31
Adjustments during 1999........ (2) (2) -- 1 (3)
Spending during 1999........... (8) (8) -- (7) (23)
---- ---- ---- ---- -----
Balances as of September 25,
1999......................... $ -- $ 4 $ -- $ 1 $ 5
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