EMC 2008 Annual Report Download - page 108

Table of Contents
EMC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
be recognized through 2015. Total cash expenditures associated with the plan are expected to be in the range of $310.7 million to $335.7 million.
The 2008 charge consisted of the aforementioned fourth quarter restructuring program which aggregated $247.9 million, a third quarter charge of
$8.6 million and a net reduction of $6.2 million relating to restructuring programs from prior years. For purposes of presentation, $244.7 million of the 2008
charge is presented as a restructuring charge, $1.3 million is presented as a reduction of SG&A and $6.9 million, related to the impairment of strategic
investments, is presented within other expense, net on the consolidated income statement.
The fourth quarter 2008 charge consisted of $195.5 million for employee termination benefits associated with a reduction in workforce, a $28.0 million
charge for impaired long-lived assets, a $21.8 million charge associated with abandoned assets for which we will no longer derive a benefit and a $2.6 million
charge for contract terminations. These actions impacted substantially all of our functional organizations within our Information Storage, Content
Management and Archiving and RSA Information Security segments and affected employees in each of our major geographical areas. As of December 31,
2008, we had eliminated approximately 500 of the 2,400 positions. The asset impairment charge of $28.0 million consists of $21.1 million of capitalized
technology costs for which the forecasted cash flows from the assets are less than the assets' net book value. The impairment charge was equal to the amount
by which the assets' carrying amount exceeded its fair value, measured as the present value of their estimated discounted cash flows. The impairment charge
also included a $6.9 million charge for strategic investments for which the decline in their fair market value below their book value was considered other than
temporary. The fair market value relating to $4.8 million of the $6.9 million charged for strategic investments was based upon Level 2 inputs and the fair
market value relating to $2.1 million of the $6.9 million charge was based upon Level 3 inputs. See Note F.
The third quarter 2008 charge consisted of $5.5 million for employee termination benefits associated with a reduction in force of approximately 75
employees and $3.1 million for the consolidation of excess facilities and other items within our Information Storage, Content Management and Archiving and
RSA Information Security segments. As of December 31, 2008, all of these actions had been completed.
The 2007 charge consisted primarily of a $21.5 million charge to increase the severance expenses associated with the 2006 restructuring program and a
$13.3 million charge for employee termination benefits associated with a 2007 rebalancing program impacting approximately 450 positions. As of
December 31, 2008, all of these actions had been completed. These actions impacted our Information Storage, Content Management and Archiving and RSA
Information Security segments and affected employees in each of our major geographical areas. Partially offsetting these amounts were net adjustments of
$3.2 million associated with restructuring programs prior to 2006.
The 2006 charge consisted of a $129.4 million charge for employee termination benefits associated with a reduction in workforce, a $29.7 million charge
associated with abandoned assets for which we will no longer derive a benefit, a $10.9 million charge for contract terminations and a $5.7 million charge
associated with vacating excess facilities. Partially offsetting these amounts were net adjustments of $13.1 million associated with prior years' restructuring
programs. The 2006 charge for employee termination benefits covered approximately 1,350 employees worldwide. The workforce reduction's objective was
to further integrate EMC and the majority of the businesses we have acquired over the prior three years. These actions impacted substantially all of our
functional organizations and affected employees in each of our major geographical areas. As of December 31, 2008, substantially all of these actions had been
completed. The asset impairment charge of $29.7 million consisted primarily of internal infrastructure projects that management decided to no longer pursue.
The impairment charge was equal to the amount by which the assets' carrying amount exceeded its fair value, measured as the present value of their estimated
discounted cash flows. The 2006 charges impacted the Information Storage and Content Management and Archiving segments.
The activity for each charge is explained in the following sections.
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