Reliant FORM 10-K manual Special charges, Year ended December 31

7.Special charges

During 2003, Nortel Networks continued to implement its restructuring work plan initiated in 2001. In addition, as described below, certain exit activities were initiated in 2003.

Special charges recorded from January 1, 2001 to December 31, 2003 were as follows:

				Contract					Intangible
			settlement			Plant and				asset
	Workforce		and lease			equipment				impair-
		reduction		costs	write downs			Other		ments		Total
Provision balance as of January 1, 2001	$	45	$	–	$	–	$	–	$	–	$	45
Goodwill impairment		–		–		–		–		11,426		11,426
Other special charges		1,174		897		1,000		39		407		3,517
Revisions to prior accruals		42		(108)		(59)		(2)		–		(127)
Cash drawdowns		(1,003)		(110)		–		(8)		–		(1,121)
Non-cash drawdowns		14		–		(941)		–		(11,833)		(12,760)
Foreign exchange and other adjustments		10		(2)		–		–		–		8
Provision balance as of December 31, 2001	$	282	$	677	$	–	$	29	$	–	$	988
Goodwill impairment		–		–		–		–		595		595
Other special charges		952		225		475		–		27		1,679
Revisions to prior accruals		(132)		8		(55)		–		–		(179)
Cash drawdowns		(788)		(286)		–		(20)		–		(1,094)
Non-cash drawdowns		(100)		–		(420)		–		(622)		(1,142)
Foreign exchange and other adjustments		(2)		(4)		–		–		–		(6)
Provision balance as of December 31, 2002(a)	$	212	$	620	$	–	$	9	$	–	$	841
Other special charges		199		64		74		–		–		337
Revisions to prior accruals		(44)		19		(28)		–		–		(53)
Cash drawdowns		(274)		(275)		–		(9)		–		(558)
Non-cash drawdowns		(41)		–		(46)		–		–		(87)
Foreign exchange and other adjustments		12		28		–		–		–		40
Provision balance as of December 31, 2003(a)	$	64	$	456	$	–	$	–	$	–	$	520

(a)As of December 31, 2003 and 2002, the short-term provision balance was $206 and $507, respectively, and the long-term provision balance was $314 and $334, respectively, which was included in long-term provisions, as a component of other liabilities.

Regular full-time (“RFT”) employee notifications included in special charges were as follows:

	Employees (approximate)
	Direct(a)	Indirect(b)	Total
RFT employee notifications by period:
During 2001	13,900	22,200	36,100
During 2002	3,400	9,300	12,700
During 2003	400	1,400	1,800
RFT employee notifications for the three years ended December 31, 2003	17,700	32,900	50,600

(a)Direct employees included employees performing manufacturing, assembly, test and inspection activities associated with the production of Nortel Networks products.

(b)Indirect employees included employees performing manufacturing management, sales, marketing, research and development and administrative activities.

Year ended December 31, 2003

For the year ended December 31, 2003, Nortel Networks recorded total special charges of $284, which was net of revisions of $53 related to prior accruals.

Workforce reduction charges of $199 were related to severance and benefit costs associated with approximately 1,800 employees notified of termination. The workforce reduction was primarily in the U.S., Canada and EMEA and extended across all segments.

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