EMC 2003 Annual Report Download - page 52

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Total $255,467 $ (187,620) $(57,961) $ (3,597) $6,289
Reduction in
Cost of Sales
Inventory
Scrapped and
Charged Against
the Reserve
2001
Category
Initial
Provision
Inventory
Sold
Favorable
Vendor
Settlements
Ending
Balance
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, we recorded a pre-tax charge of $106.6 million for other than temporary declines in equity investments. These investments were in privately-
held companies, primarily in the storage industry, many of which were 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, we determined that the
decline in these investments was other than temporary and recognized an impairment loss.
76
EMC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATMENTS
Impact of the 2002 and 2001 Restructuring Programs
The 2002 and 2001 restructuring programs have been completed, although our ability to sell and sublet facilities is subject to appropriate market
conditions. The expected cash impact of the charges is $402.1 million, of which $101.9 million was paid in 2003 and an aggregate of $190.3 million was paid
in 2002 and 2001. The remaining accrual balances primarily relate to the consolidation of facilities that will be paid over the respective lease terms through
2012.
Other Restructuring Programs
During 1999, we recorded a charge of $223.6 million relating to restructuring, merger and other special charges primarily associated with our acquisition
of Data General. In 1998, we recorded a charge of $135.0 million related to a Data General restructuring program and certain asset write-downs resulting from
the program. During 2003, the Data General restructuring accrual was reduced by $16.1 million. The reduction resulted from management's decision to utilize
a facility for Documentum, LEGATO and certain of our other operations that we had previously vacated. Additionally, we favorably resolved a previously
recognized contractual obligation.
The amounts charged against the established provisions for the 1999 and 1998 restructuring programs for each of the three years ended December 31, is
as follows (table in thousands):
2003
Category
Beginning
Balance
Adjustment to
the
Provision
Current Year
Utilization
Ending
Balance
Workforce reduction $ 19,158 $ (8,533) $ (4,800) $ 5,825
Consolidation of excess facilities 14,607 (7,575) (564) 6,468
Total $ 33,765 $ (16,108) $ (5,364) $12,293
2002
Category
Workforce reduction $ 19,265 $ – $ (107) $19,158
Consolidation of excess facilities 14,607 – – 14,607
Total $ 33,872 $ – $ (107) $33,765
2001
Category
Workforce reduction $ 23,374 $ – $ (4,109) $19,265
Asset disposal and other exit costs 2,820 – (2,820) –
Consolidation of excess facilities 15,552 – (945) 14,607
Total $ 41,746 $ – $ (7,874) $33,872
The remaining balance as of December 31, 2003 relates to a remaining lease obligation that will be paid through 2015 and executive severance.
77