EMC 2002 Annual Report Download - page 63

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Table of Contents
EMC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
2001 Inventory Provision
The amounts charged and adjusted against the 2001 established provisions for excess and obsolete inventory is set forth below (tables in thousands).
The activity is reflected within cost of sales in the statement of operations.
Beginning Balance
Inventory Scrapped and Charged Against the
Reserve
Reduction in
Cost of Sales
Ending Balance
2002
Category Inventory Sold Favorable Vendor Settlements
Excess and obsolete EMC
owned
inventory $ 226,175 $ (182,852) $ (37,034) $ — $ 6,289
Excess and obsolete purchase
obligations 29,292 (4,768) (20,927) (3,597) —
Total $ 255,467 $ (187,620) $ (57,961) $ (3,597) $ 6,289
Beginning Balance
Current Year Provision
Inventory Scrapped and
Charged Against the Reserve
Reduction in
Cost of Sales
Ending Balance
2001
Category Inventory Sold Favorable Vendor Settlements
Excess and obsolete
EMC owned
inventory $ — $ 280,499 $ (54,324) $ — $ — $ 226,175
Excess and obsolete
purchase
obligations — 29,500 (208) — — 29,292
Total $ — $ 309,999 $ (54,532) $ — $ — $ 255,467
Other Charges
In 2001, EMC recorded a pre-tax charge of $106.6 million for other than temporary declines in equity investments. These investments are in privately-
held companies, primarily in the storage industry, many of which are in the start-up or development stage. These investments are carried at cost, subject to
adjustment for impairment. Due to the continued global economic slowdown in 2001, as well as the downturn in the storage industry, EMC determined that
the decline in these investments was other than temporary and recognized an impairment loss.
Cash Impact of the 2001 Restructuring Program
The 2001 restructuring program has been substantially completed, although EMC's ability to sell and sublet facilities is subject to appropriate market
conditions. The expected cash impact of the charge is $266.5 million, of which $55.4 million was paid in 2001 and $110.7 million was paid in 2002. The
remaining accrual balance primarily relates to the consolidation of facilities that will be paid over the respective lease terms through 2015.
Data General Restructuring Charges
During 1999, EMC recorded a charge of $223.6 million related to restructuring, merger and other special charges primarily associated with the
acquisition of Data General. In 1998, EMC recorded a charge of $135.0 million related to a Data General restructuring program and certain asset write-downs
resulting from the program.
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