Note 7               Non-Recurring and Other Restructuring Related Charges: During the first quarter of 2001, we launched an initiative to discontinue product lines that no longer fit our current focus and growth strategy and to consolidate unproductive and duplicative facilities. The non–recurring charges and restructuring related charges associated with this program totaled $70.9 million ($46.4 million net of tax) for the quarter ended January 31, 2001. The restructuring plans are to be completed by the end of the first quarter of fiscal year 2002. An additional $5.5 million ($3.5 million net of tax) related to prior year acquisition integration and restructuring initiatives was also incurred in the first quarter of 2001. As of January 31, 2001, a total of $19.1 million of these charges and initatives had been expended and $57.3 million was accrued as a future liability. Non-recurring and restructuring related charges by category of expenditures are as follows for the quarter ended January 31, 2001 (in millions):

                           Inventory and committed sales contract related charges represent losses incurred to write down the carrying value of inventory and costs of exiting and maintaining certain committed sales contracts for product lines that have been discontinued. Revenues and gross margins from these product lines were not material to our consolidated operations.

                           Employee severance costs relate to the closure of facilities, elimination of product lines and general terminations resulting from reduced sales forecasts. We reduced our workforce by approximately 1,100 employees during the first quarter of 2001. These terminations occurred across all business segments. As of January 31, 2001, substantially all of the affected employees had been terminated.

                           The write-down of fixed assets primarily relates to fixtures and equipment that will no longer be used as a result of the discontinuation of certain product lines as well as to facility closures. These fixtures and equipment were written down to their realizable value. By centralizing certain key functional areas and exiting certain unprofitable product lines, we intend to increase operating efficiencies and, ultimately, profit growth in the long term.

                           Contract termination costs represent the administrative expenses needed to complete certain committed sales contacts. These costs are primarily due to our decision to exit certain product lines.

                           Other expenses primarily represent lease termination costs and other costs associated with facility closures.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

                           We are exposed to market risk from changes in foreign exchange rates. To mitigate the risk from these exposures, we have instituted a balance sheet hedging program. The objective of this program is to protect our net monetary assets and liabilities from fluctuations due to movements in foreign exchange rates. This program operates in markets where hedging costs are beneficial. We attempt to minimize exposure to currencies in which hedging instruments are unavailable or prohibitively expensive by managing our operating activities and net asset positions.  The majority of hedging instruments utilized are forward contracts with maturities of less than one year. Foreign exchange contracts reduce our overall exposure to exchange rate movements, since gains and losses on these contracts offset losses and gains on the underlying exposure. Our policy prohibits the use of derivative financial instruments for trading and other speculative purposes.

                           As documented in the Liquidity and Capital Resources section as well as Note 4 to the Unaudited Consolidated Financial Statements, we own common stock in several publicly held companies in the telecommunications or technology industries. Due to material changes in the fair value of such common stock, we have recorded a $400.3 million unrealized loss, $252.2 million net of income tax effects, in shareowners’ investment as of January 31, 2001. Assuming an immediate decrease of 20% and 50% in the portfolio stock price from the closing price on January 31, 2001, the hypothetical reduction in shareowners’ investment related to these holdings is estimated to be $66.1 million and $165.2 million, respectively (net of income tax effects), or 2.6% and 6.4%, respectively, of total shareowners’ investment at January 31, 2001.