content_image/123722.jpg
indefinite-lived intangibles are evaluated annually for impairment. Beginning in 2002, such determination of fair value is based on valuation models that incorporate expected future cash flows and profitability projections. Prior to 2002, goodwill was amortized over periods not exceeding 40 years. 

Property, Plant and Equipment: Property, plant and equipment are recorded at cost reduced by accumulated depreciation. Depreciation expense is recognized over the assets’ estimated useful lives using the straight-line method. Estimated useful lives are based on Company averages and range from 3 to 20 years for machinery and equipment and 40 years for buildings. Estimated useful lives are periodically reviewed and, where appropriate, changes are made prospectively. 

Fair Values of Financial Instruments: Fair values of cash equivalents, short- and long-term investments and short-term debt approximate cost. The estimated fair values of other financial instruments, including debt, equity and risk management instruments, have been determined using market information and valuation methodologies, primarily discounted cash flow analysis. These estimates require considerable judgment in interpreting market data, and changes in assumptions or estimation methods could significantly affect the fair value estimates. 

Reclassifications: Certain reclassifications of prior years’ amounts have been made to conform to the current year presentation. 

## Note 2 Restructuring Program 

In 1999, concurrent with a reorganization of its operations into product-based global business units, the Company initiated a multi-year restructuring program. The program is designed to accelerate growth and deliver cost reductions by streamlining management decision- making, manufacturing and other work processes and discontinuing under-performing businesses and initiatives. Technology improvements as well as standardization of manufacturing and other work processes allow the Company to streamline operations, resulting in the consolida- tion of manufacturing activity and various business processes. 

Costs to be incurred include separation related costs, asset write-downs, accelerated depreciation and other costs directly related to the restructuring effort. 

Due to the nature of the charges and the duration of the program, estimates of the timing and amount of costs and savings require significant judgment and may change over time. Based on current estimates, the overall program is expected to result in total charges of $5.6 billion ($4.4 billion after tax) over the six-year period that began in 

1999. Through 2002, cumulative charges are $4.1 billion ($3.3 billion after tax). Under current accounting rules, many restructuring charges may not be recognized at project initiation, but rather are charged to expense as established criteria for recognition are met. This accounting yields ongoing charges over the entire restructuring period, rather than a large reserve at initiation. 

Before-tax restructuring activity was as follows: 

<img src='content_image/123722.jpg'>

Charges for the program are reflected in the corporate segment. 

## Separation Costs 

Employee separation charges relate to severance packages for approximately 7,400 people in 2002, 6000 people in 2001, 2800 people in 2000 and 400 people in 1999. The packages are predomi- nantly voluntary and are formula driven based on salary levels and past service. Severance costs related to voluntary separations are charged to earnings when the employee accepts the offer. The current and planned separations span the entire organization, including manufacturing, selling, research and administrative positions. 

