Intel 2007 Annual Report Download - page 43

Table of Contents
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATION (Continued)
During 2007, we incurred an additional $54 million in asset impairment charges as a result of softer than anticipated market
conditions related to the Colorado Springs facility. Also, we recorded land and building write-downs related to certain
facilities in Santa Clara, California. In addition, during the fourth quarter we incurred $85 million in asset impairment charges
related to the anticipated divestiture of our NOR flash memory business. The impairment charges were determined using the
revised fair value, less selling costs, that we expected to receive upon completion of the divestiture. See “Note 13:
Divestitures” in Part II, Item 8 of this Form 10-K
for further information on this divestiture, which is expected to be completed
during the first quarter of 2008.
The following table summarizes the restructuring and asset impairment activity for 2006 and 2007:
We recorded the additional accruals, net of adjustments, as restructuring and asset impairment charges on the consolidated
statements of income. The remaining accrual as of December 29, 2007 was related to severance benefits that we recorded as a
current liability within accrued compensation and benefits on the consolidated balance sheets.
From the third quarter of 2006 through the fourth quarter of 2007, we incurred a total of $1.1 billion in restructuring and asset
impairment charges related to this plan. These charges included a total of $527 million related to employee severance and
benefit arrangements due to the termination of approximately 9,900 employees, of which 7,700 employees had left the
company as of December 29, 2007. A substantial majority of these employee terminations affected employees within
manufacturing, information technology, and marketing. Of the employee severance and benefit charges incurred as of
December 29, 2007, we had paid $400 million. The restructuring and asset impairment charges also included $544 million in
asset impairment charges.
We estimate that employee severance and benefit charges to date will result in gross annual savings of approximately
$1.0 billion, a portion of which we began to realize in the third quarter of 2006. We are realizing these savings within
marketing, general and administrative expenses, cost of sales, and R&D. Our outlook for the first quarter of 2008 is for
additional restructuring and asset impairment charges of $100 million. We may incur additional restructuring charges in the
future for employee severance and benefit arrangements, as well as facility-related or other exit activities.
Amortization of Acquisition
-Related Intangibles and Costs. Amortization of acquisition-related intangibles and costs was
$16 million in 2007 ($42 million in 2006 and $126 million in 2005). The decreased amortization each year compared to the
previous year was primarily due to a portion of the intangibles related to prior acquisitions becoming fully amortized.
36
Employee Severance
(In Millions)
and Benefits
Asset Impairments
Total
Accrued restructuring balance as of December 31, 2005
$
—
$
—
$
—
Additional accruals
238
317
555
Adjustments
—
—
—
Cash payments
(190
)
—
(
190
)
Non
-
cash settlements
—
(
317
)
(317
)
Accrued restructuring balance as of December 30, 2006
$
48
$
—
$
48
Additional accruals
299
227
526
Adjustments
(10
)
—
(
10
)
Cash payments
(210
)
—
(
210
)
Non
-
cash settlements
—
(
227
)
(227
)
Accrued restructuring balance as of December 29, 2007
$
127
$
—
$
127