of operating assets during 1996, 1997, and 1998. Declining revenue has also led to a decrease in variable selling, general, and administrative expenses during both 1997 and 1998. Additionally, changes during 1998 in the Company's distribution channel policies and business model, including contraction and focus of the Company's product line and simplification of the Company's internal and external distribution channels, led to a reduction in selling expenses during 1998. 

The Company believes that selling, general, and administrative expenditures will increase in absolute dollars in 1999 compared to 1998 but decrease slightly as a percentage of net sales. The foregoing statements are forward looking. The Company's actual results could differ because of several factors, including those set forth below in the subsection entitled "Factors That May Affect Future Results and Financial Condition." 

SPECIAL CHARGES 

IN-PROCESS RESEARCH AND DEVELOPMENT 

In May 1998, the Company acquired certain technology that was under development and had no alternative future uses. The acquisition resulted in the recognition of $7 million of purchased in-process research and development, which was charged to operations upon acquisition. 

In February 1997, the Company acquired all of the outstanding shares of NeXT Software, Inc. (NeXT). NeXT had developed, marketed, and supported software that enables customers to implement business applications on the Internet/World Wide Web, intranets and enterprise-wide client/server networks. Of the total purchase price of $427 million, $375 million was allocated to purchased in-process research and development and $52 million was allocated to goodwill and other intangible assets. The purchased in-process research and development was charged to operations upon acquisition, and the goodwill and other intangible assets are being amortized on a straight-line basis over two to three years. 

RESTRUCTURING COSTS 

In 1996, the Company announced, and began to implement, a restructuring plan aimed at reducing costs and returning the Company to profitability. These actions resulted in a net charge during 1996 of $179 million. During 1997, the Company announced and began to implement supplemental restructuring actions to meet the objectives of the plan. The Company recognized a $217 million charge during 1997 for the estimated incremental costs of those actions. The combined restructuring actions consist of terminating approximately 4,200 full-time employees, approximately 4,000 of whom have been terminated from the second quarter of 1996 through September 25, 1998; canceling or vacating certain facility leases as a result of those employee terminations; writing down certain land, buildings, and equipment to be sold as a result of downsizing operations and outsourcing various operational functions; and canceling contracts for projects and technologies that are not critical to the Company's core business strategy. As of September 25, 1998, a balance of $31 million remains in accrued restructuring costs of which $10 million remains for severance payments to employees who have already been terminated as of September 25, 1998, or who