Cisco 2011 Annual Report Download - page 104

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For purchased intangible assets with finite lives, the estimated future amortization expense as of July 30, 2011 is
as follows (in millions):
Fiscal Year Amount
2012 .............................................. $ 736
2013 .............................................. 621
2014 .............................................. 434
2015 .............................................. 366
2016 .............................................. 160
Thereafter .......................................... 46
Total .......................................... $2,363
5. Restructuring and Other Charges
In the second half of fiscal 2011, the Company initiated a number of key, targeted actions to address several
areas in its business model intended to accomplish the following: simplify and focus the Company’s organization
and operating model; align the Company’s cost structure given transitions in the marketplace; divest or exit
underperforming operations; and deliver value to the Company’s shareholders. The Company is taking these
actions to align its business based on its five foundational priorities: leadership in its core business (routing,
switching, and associated services) which includes comprehensive security and mobility solutions; collaboration;
data center virtualization and cloud; video; and architectures for business transformation. The following table
summarizes the activity related to the restructuring and other charges (in millions):
Voluntary Early
Retirement Program
Employee
Severance
Goodwill and Intangible
Assets Other Total
Fiscal 2011 Charges ..................... $453 $247 $ 71 $ 28 $ 799
Cash payments ......................... (436) (13) — — (449)
Non-cash items ........................ — — (71) (17) (88)
Restructuring liability as of July 30, 2011 .... $ 17 $234 $ — $ 11 $ 262
As part of the Company’s plan to reduce its operating expenses, the Company announced during fiscal 2011 its
intent to reduce its global workforce across all functions by approximately 6,500 employees, which includes
approximately 2,100 employees who elected to participate in a voluntary early retirement program. This global
workforce reduction represents approximately 9% of the Company’s regular full-time workforce. The employee
severance charge incurred during the fourth quarter of fiscal 2011 was approximately $214 million and was
related to approximately 2,600 employees, most of whom are expected to exit in early fiscal 2012. The remaining
employee severance charges during fiscal 2011 were related to the restructuring of the Company’s consumer
business that began during the third quarter of fiscal 2011.
The Company also incurred a charge of approximately $63 million related to a reduction to goodwill as a result
of the pending sale of its Juarez manufacturing operations. See Note 4. Approximately 5,000 employees of this
manufacturing operation will be transferred to the buyer upon completion of the transaction, which is expected to
occur in fiscal 2012. In connection with the restructuring of the Company’s consumer business related to the exit
of the Flip Video cameras product line in fiscal 2011, the Company recorded an intangible asset impairment of
$8 million. See Note 4.
The charges included in “Other” were primarily related to the consolidation of excess facilities and other charges
associated with the realignment and restructuring of the Company’s consumer business.
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