Accelerated depreciation relates to long-lived assets that will be taken out of service prior to the end of their normal service period due to manufacturing consolidations, technol- ogy standardization, plant closures or strategic choices to discontinue initiatives. The Company has shortened the estimated useful lives of such assets, resulting in incremental depreciation expense. For segment and management report- ing purposes, normal depreciation expense is reported by the business segments, with the incremental accelerated depreciation reported in the corporate segment. Accelerated depreciation and write-downs are charged to cost of products sold for manufacturing assets and marketing, re- search, administrative and other expense for all other assets. 

Asset write-downs relate to establishment of new fair-value bases for assets held for sale or disposal and for assets whose future cash flow expectations have declined significantly as a direct result of restructuring decisions. Assets held for sale or disposal represent excess capacity that is in the process of being removed from service as well as businesses held for sale within the next 12 months. Such assets are written down to the net amount expected to be realized upon sale or disposal. Assets continuing in operation, but whose nominal cash flows are no longer sufficient to recover existing book values, are written down to estimated fair value, generally determined by reference to discounted expected future cash flows. Write-downs of assets that will continue to be used were approximately $45 million before tax ($33 million after tax) in 2002, $160 million before tax ($133 million after tax) in 2001 and $0 in 2000. Asset write-downs are not expected to significantly impact future annual depreciation expense. 

Other contains charges incurred as a direct result of restruc- turing decisions including relocation, training, discontinua- tion of initiatives and the establishment of global business services and the new legal and organization structure. These costs are charged to the applicable income statement line item based on the underlying nature of the charge. 

Most restructuring accruals are classified as current liabilities. Reserve balances were $245 million, $460 million and $88 million at June 30, 2002, 2001 and 2000, respectively. During the current year, approximately 60% of restructuring charges were cash compared to 40% in 2001 and 55% in 2000. Going forward, approximately 60% of future charges are expected to be cash – primarily separations. 

Savings from the restructuring program are difficult to 

estimate, given the nature of the activities, the corollary benefits achieved, timing and the degree of reinvestment. Overall, the program is expected to deliver nearly $2 billion in after tax annual savings by fiscal 2004. Estimated incremen- tal savings were $700 million in 2002, $235 million in 2001 and $65 million in 2000. Incremental savings in 2003 are es- timated to be approximately $400 to $500 million after tax. 

## Forward-Looking Statements 

The Company has made and will make certain forward- looking statements in the Annual Report and in other contexts relating to volume growth, increases in market shares, financial goals and cost reduction, among others. 

These forward-looking statements are based on assumptions and estimates regarding competitive activity, pricing, product introductions, economic conditions, technological innova- tion, currency movements, governmental action and the development of certain markets. Among the key factors necessary to achieve the Company’s goals are: (1) the successful integration of the Company’s new organization structure, including achievement of expected cost and tax savings; (2) the ability to achieve business plans, including growing volume profitably, despite high levels of competitive activity, especially with respect to the product categories and geographical markets in which the Company has chosen to focus; (3) the ability to maintain key customer relationships; (4) the achievement of growth in significant developing markets such as China, Turkey, Mexico, the Southern Cone of Latin America, the countries of Central and Eastern Europe and the countries of Southeast Asia; (5) the ability to successfully manage regulatory, tax and legal matters, including resolution of pending matters within current estimates; (6) the successful and timely execution of planned brand divestitures; (7) the ability to successfully implement, achieve and sustain cost improvement plans in manu- facturing and overhead areas; (8) the ability to successfully manage currency (including currency issues in Latin America), interest rate and certain commodity cost exposures; and (9) the ability to manage the continued political and/or economic uncertainty in Latin America and the Middle East, as well as any political and/or economic uncertainty due to terrorist activities. If the Company’s assumptions and estimates are incorrect or do not come to fruition, or if the Company does not achieve all of these key factors, then the Company’s actual performance could vary materially from the forward-looking statements made herein. 

