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Technology Stocks : IFMX - Investment Discussion -- Ignore unavailable to you. Want to Upgrade?

To: ChuckS who wrote (10489)	4/29/1998 2:47:00 PM
From: Mark Finger	Read Replies (1) \| Respond to of 14631

From the 10K (page 28) at: sec.gov In June and again in September 1997, the Company approved plans to restructure its operations in order to bring expenses in line with forecasted revenues. In connection with these restructurings, the Company substantially reduced its worldwide headcount and consolidated facilities and operations to improve efficiency. The following analysis sets forth the significant components of the restructuring reserve at December 31, 1997: <TABLE> <CAPTION> RESTRUCTURING NON-CASH CASH ACCRUAL BALANCE AT EXPENSE COSTS PAYMENTS DECEMBER 31, 1997 ------------- ----------- ----------- ------------------- (IN MILLIONS) <S> <C> <C> <C> <C> Severance and benefits............... $ 21.9 $ -- $ 19.5 $ 2.4 Write-off of assets.................. 48.2 48.2 -- -- Facility charges..................... 34.7 7.7 3.8 23.2 Other................................ 3.4 2.2 .2 1.0 ------ ----- ----- ----- $ 108.2 $ 58.1 $ 23.5 $ 26.6 ------ ----- ----- ----- ------ ----- ----- ----- </TABLE> Severance and benefits represent the reduction of approximately 670 employees, primarily sales and marketing personnel, on a worldwide basis. Temporary employees and contractors were also reduced. Write-off of assets include the write-off or write-down in carrying value of equipment as a result of the Company's decision to reduce the number of Information Superstores throughout the world, as well as the write-off of equipment associated with headcount reductions. The equipment subject to the write-offs and write-downs consists primarily of computer servers, workstations, and personal computers that will no longer be utilized in the Company's operations. These assets were written down to their fair value less cost to sell. Facility charges include early termination costs associated with the closing of certain domestic and international sales offices. ---------------- Comments: as you can see from the above section, $48M of write-offs occurred related to equipment. There is only so much in personal computers and workstations that can be written off (I doubt that more than $2-3K per person), so I believe that you can only see only $1-2M there. Neither of the primary production facilities seems to have been affected, so this should not be production equipment. The primary remaining source of equipment would have been the "superstores" and and that probably accounted for the bulk of the equipment. Further, go back to the 10K filed originally in 3/97, and there is mention of about $45M of equipment obtained through "barter", which I understand was for the superstores. The two identified computers plus other computers may have been from that block intended for superstores (I cannot see them selling PC or normal workstations, but instead using them to upgrade existing developers). The telephone equipment may have been from the old Illustra offices (they moved to newer building in late 96 or in 97) because of overcrowding--further, it appears that few cuts were in Illustra ranks (most were in sales groups around the world). Just my guesses, but I think the write-offs for this equipment already occurred. So the only thing I expect is that there might be a minor adjustment depending on the final proceeds of the sale relative to the estimates, but probably only on the order of $1M. Mark