Apple 2002 Annual Report Download - page 57

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related costs associated with the 19 remaining positions.
71
During the first quarter of 2002, the Company's management approved and initiated restructuring actions with a total cost of approximately
$24 million. These restructuring actions will result in the elimination of approximately 425 positions worldwide, 415 of which were eliminated
by September 28, 2002, at a cost of $8 million. Positions were eliminated primarily in the Company's operations, information systems, and
administrative functions. In addition, these restructuring actions also included significant changes in the Company's information systems
strategy resulting in termination of equipment leases and cancellation of existing projects and activities. Related lease and contract cancellation
charges totaled $12 million, and charges for asset impairments totaled $4 million. Of the original $24 million restructuring charge made during
the first quarter of 2002, approximately $23 million had been spent as of September 28, 2002 and approximately $250,000 was reversed during
the second quarter of 2002 due to lower actual costs than originally estimated for certain lease commitments and severance benefits. The
remaining $1 million accrual relates primarily to future payments on abandoned operating leases.
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 before the end of 2000, and the remainder was spent in 2001. Of the $3 million accrued for the write-
off
of various assets, substantially all was utilized before the end 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 was not
tax deductible. Approximately half of the total charge is for the cost of the aircraft. The other half represents all other costs and taxes associated
with the bonus. In the fourth quarter of 2002, all significant work and payments associated with the aircraft were complete. Of the original
$90 million accrual, $2.4 million remained unspent at the end of fiscal 2002 and was reversed.
Technology Acquisition
As discussed in Note 4, during both 2002 and 2001 in its acquisition of Emagic and PowerSchool, respectively, the Company acquired certain
technology that was under development and had no alternative future use. This resulted in the recognition of purchased in-process research and
development in the amount of $551,000 for Emagic and $10.8 million for PowerSchool, which was charged to operations upon acquisition.
72
Note 6—Income Taxes
The provision for income taxes consisted of the following (in millions):
2002
2001
2000
Federal:
Current $
8
$
(20
) $
9
Deferred
(28
)
(8
)
239
(20
)
(28
)
248
State:
Current
2
—
—
Deferred
7
(10
)
23
9
(10
)
23
Foreign:
Current
29
21
37