Reliant FORM 10-K manual Gain loss on sale of businesses and assets, Other income expense net

Gain (loss) on sale of businesses and assets

In 2003, gain on sale of businesses and assets of $4 was primarily due to the recognition of the remaining unamortized deferred gain related to the sale of substantially all of the assets of our Cogent Defence Systems, or CDS, business during the year ended December 31, 2001. The remaining unamortized deferred gain of $23 was recognized as a result of the sale of our 41% interest in EADS Telecom as discussed in “Developments in 2003 and 2004 — Other business developments — Ownership adjustment in our French and German operations”. This gain was partially offset by a loss due to retirement of fixed assets.

In 2002, gain on sale of businesses and assets of $21 was primarily related to:

•a gain of $29 on the sale of certain assets relating to our optical components business to Bookham;

•a gain of $41 related to a previously deferred gain associated with the sale of substantially all of the assets of our CDS business to EADS Telecom as well as the cancellation and replacement of a call option to acquire an additional approximate 7% ownership interest in NNF which was originally included as part of the consideration received on the sale of these assets; and

•a gain of $10 on the sale of certain assets of our Service Commerce operation support system business to MetaSolv, Inc; partially offset by

•a loss of $68 due to retirement of fixed assets.

In 2001, loss on sale of businesses and assets of $138 was primarily related to a $233 write down of our Service Commerce operation support system business to its net realizable value in the fourth quarter of 2001. The write down related primarily to goodwill and included the operations acquired on the acquisition of Architel Systems Corporation. Net realizable value was determined based on the anticipated proceeds on the sale of the business, which was completed on February 1, 2002. This loss was partially offset by net gains associated with both the outsourcing of certain activities as part of our continued supply chain transformation strategy that began in 1999 and the divestiture of certain non-core businesses in connection with our restructuring work plan. The loss was also partially offset by a gain of $37 associated with the sale of assets of our CDS business.

For additional information relating to these asset sales, see “Acquisitions, divestitures and closures” in note 10 and “Commitments” in note 14 of the accompanying consolidated financial statements.

Other income (expense) — net

In 2003, other income — net was $445, which primarily included:

•gain of $96 related to the sale of our interest in EADS Telecom in conjunction with the changes in ownership of our French and German operations;

•interest income of $75 on our short-term investments;

•gain of $30 related to a certain customer bankruptcy settlement;

•a payment of $25 received from a settlement related to intellectual property use;

•foreign exchange gains of $105 primarily related to day-to-day transactional activities;

•gain of $6 related to sale of our interest in Bookham;

•gain of $31 related to the sale of Arris Group, Inc., or Arris Group, shares. For additional information on our investment in Arris Group see “Results of operations — discontinued operations”;

•gain of $10 related to sale of certain minority investments;

•dividend income of $19 on our short-term investments; and

•royalty income of $15 from patented technology.

In 2002, other expense — net of $5 was primarily related to a foreign exchange loss of $65 and a $39 loss on the sale or write down of certain minority investments, partially offset by interest income of $88 on our short-term investments.

In 2001, other expense — net of $506 was primarily related to a foreign exchange loss of $152 and a $368 loss on the sale or write down of certain minority investments. This write down occurred during the third quarter of 2001 from our review of our investment portfolio, and was due to a change in our strategic focus relative to certain minority investments, as well as an other than temporary decline in carrying values caused by the continued significant downturn in both the industry and

71