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Table of Contents
EMC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Changes in the carrying amount of goodwill, net, on a consolidated basis and by segment for the years ended December 31, 2004 and 2003 consist of the
following (tables in thousands). Information for 2003 has been reclassified due to changes in the reported segments (see Note Q).
Year Ended December 31, 2004
EMC
Information Software VMware
Information Storage Group Products
Storage and Management Products and and Other
Products Services Services Services Businesses Total
Balance, beginning of the year $ 551,888 $ 1,615 $ 2,158,174 $ – $ – $ 2,711,677
Goodwill acquired – – 33,116 527,273 – 560,389
Tax deduction from exercise of stock options – – (20,694) (592) – (21,286)
Finalization of purchase price allocations – – 37,450 – – 37,450
Reduction in income tax valuation allowance – – (3,816) – – (3,816)
Balance, end of the year $ 551,888 $ 1,615 $ 2,204,230 $ 526,681 $ – $ 3,284,414
Year Ended December 31, 2003
EMC
Information Software VMware
Information Storage Group Products
Storage and Management Products and and Other
Products Services Services Services Businesses Total
Balance, beginning of the year $ 57,888 $ 1,615 $ 145,527 $ – $ – $ 205,030
Goodwill acquired 494,000 – 2,009,368 – – 2,503,368
Tax deduction from exercise of stock options – – (1,600) – – (1,600)
Finalization of purchase price allocations – – 4,879 – – 4,879
Balance, end of the year $ 551,888 $ 1,615 $ 2,158,174 $ – $ – $ 2,711,677
We test the goodwill balances for impairment at least annually. There was no impairment in 2004, 2003 or 2002.
C. Restructuring and Other Special Charges
We implemented restructuring programs to reduce our cost structure and focus our resources on the highest potential growth areas of our business. The
restructuring and other special charges were $56.1 million, $66.3 million and $150.4 million in 2004, 2003 and 2002, respectively.
The 2004 charge consisted of $17.4 million of IPR&D charges associated with acquisitions ($15.2 million related to VMware) and $38.7 million of
restructuring charges. The 2004 restructuring programs consisted of $24.5 million of employee termination benefits associated with reductions in force and
$2.1 million of costs associated with vacating excess facilities. The remaining $12.1 million of charges was associated with prior restructuring programs,
primarily relating to additional rent expense for vacated facilities. The additional rent expense was attributable to a revised estimate of the time needed to
sublet the facilities. 69