Apple 2000 Annual Report Download - page 52

Download and view the complete annual report

Please find page 52 of the 2000 Apple annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 85

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 4--SPECIAL CHARGES (CONTINUED)
of 1999 reflects $3 million of excess reserves related to prior restructuring actions. The $21 million cost of these actions was comprised of $11
million for contract cancellation charges associated with the closure of the Company's outsourced data center, substantially all of which had
been spent by the end of the third quarter of 2000, and $10 million for contract cancellation charges related to supply and development
agreements previously discontinued, substantially all of which had been utilized by the end of the first quarter of fiscal 2000.
During the second quarter of 1999, the Company took certain actions to improve the flexibility and efficiency of its manufacturing operations
by moving final assembly of certain of its products to third-party manufacturers. These restructuring actions resulted in the Company
recognizing a charge to operations of approximately $9 million during the second quarter of 1999. The charge was comprised of $6 million for
severance benefits to be paid to employees involuntarily terminated, $2 million for the write-
down of operating assets to be disposed of, and $1
million for payments on canceled contracts. These actions resulted in the termination of approximately 580 employees and were substantially
completed as of September 25, 1999.
2000 RESTRUCTURING ACTIONS
During the first quarter of 2000, the Company initiated restructuring actions resulting in recognition of an $8 million restructuring charge. This
charge was comprised of $3 million for the write-off of various operating assets and $5 million for severance payments to approximately 95
employees associated with consolidation of various domestic and international sales and marketing functions. Of the $5 million accrued for
severance, $2.5 million had been spent by September 30, 2000, and the remainder is expected to be spent over the following two quarters. Of
the $3 million accrued for the write-off of various assets, substantially all was utilized by the end of the second quarter of 2000.
EXECUTIVE BONUS
During the first quarter of 2000, the Company's Board of Directors approved a special executive bonus for the Company's Chief Executive
Officer for past services in the form of an aircraft with a total cost to the company of approximately $90 million, the majority of which is not
tax deductible. Approximately half of the total charge is the cost of the aircraft. The other half represents all other costs and taxes associated
with the bonus. This executive bonus has been presented outside selling, general, and administrative expenses as a special charge.
TECHNOLOGY ACQUISITION
In May 1998, the Company acquired certain technology that was under development and had no alternative future use. The acquisition resulted
in the recognition of $7 million of purchased in-process research and development, which was charged to operations upon acquisition.
49