Apple 2003 Annual Report Download - page 65

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beginning of 2001 and includes the effect of amortization of goodwill and other acquired identifiable intangible assets from that date. The
impact of the charge for IPR&D associated with the acquisition of PowerSchool has been excluded. This pro forma financial information is
presented for informational purposes only and is not necessarily indicative of the results of future operations that would have been achieved
had the acquisitions taken place at the beginning of 2001. Pro forma information follows (in millions, except per share amounts):
Note 5—Restructuring Charges
Fiscal 2003 Restructuring Actions
The Company recorded total restructuring charges of approximately $26.8 million during the year ended September 27, 2003, including
approximately $7.4 million in severance costs, a $5.0 million charge to write-off deferred compensation, $7.1 million in asset impairments and
a $7.3 million charge for lease cancellations. Of the $26.8 million, nearly all had been spent by the end of 2003, except for approximately
$400,000 of severance costs and approximately $4.5 million related to operating lease costs on abandoned facilities. During the third quarter of
2003, approximately $500,000 of the amount originally accrued for lease cancellations was determined to be in excess due to the sublease of a
property sooner than originally estimated and an approximately $500,000 shortfall was identified in the severance accrual due to higher than
expected severance costs related to the closure of the Company's Singapore manufacturing operations. These adjustments had no net effect on
reported operating expense.
During the second quarter of 2003, the Company's management approved and initiated restructuring actions that resulted in recognition of a
total restructuring charge of $2.8 million, including $2.4 million in severance costs and $400,000 for asset write-offs and lease payments on an
abandoned facility. Actions taken in the second quarter were for the most part supplemental to actions initiated in the prior two quarters and
focused on further headcount reductions in various sales and marketing functions in the Company's Americas and Europe operating segments
and further reductions associated with PowerSchool-related activities in the Americas operating segment, including an accrual for asset write-
offs and lease payments on an abandoned facility. The second quarter actions resulted in the termination of 93 employees, 92 were terminated
prior to the end of 2003.
During the first quarter of 2003, the Company's management approved and initiated restructuring actions with a total cost of $24 million that
resulted in the termination of manufacturing operations at the Company-owned facility in Singapore, further reductions in headcount resulting
from the shift in PowerSchool product strategy that took place at the end of fiscal 2002, and termination of various sales and marketing
activities in the United States and Europe. These restructuring actions will ultimately result in the elimination of 260 positions worldwide, all
but one of which were eliminated by the end of 2003.
Closure of the Company's Singapore manufacturing operations resulted in severance costs of $1.8 million and costs of $6.7 million to write-off
manufacturing related fixed assets, whose use ceased during the first quarter. PowerSchool related costs included severance of approximately
$550,000 and recognition of $5 million of previously deferred stock compensation that arose when PowerSchool was acquired by the
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Company in 2001 related to certain PowerSchool employee stockholders who were terminated in the first quarter of 2003. Termination of sales
and marketing activities and employees, principally in the United States and Europe, resulted in severance costs of $2.8 million and accrual of
costs associated with operating leases on closed facilities of $6.7 million. The total net restructuring charge of $23 million recognized during
the first quarter of 2003 also reflects the reversal of $600,000 of unused restructuring accrual originally made during the first quarter of 2002.
Except for certain costs associated with operating leases on closed facilities, the Company currently anticipates that all of the remaining accrual
for severance costs of approximately $400,000 will be spent by the end of the first quarter of fiscal 2004.
The following table summarizes activity associated with restructuring actions initiated during fiscal 2003 (in millions):
2001
Net sales
$
5,370
Net loss
$
(44
)
Basic loss per common share
$
(0.13
)
Diluted loss per common share
$
(0.13
)
Employee
Severance
Benefits
Deferred
Compensation
Write-off Asset Impairments Lease Cancellations Totals