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Table of Contents
EMC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The 2003 charge consisted of $29.1 million of IPR&D charges associated with the LEGATO and Documentum acquisitions, $18.6 million of employee
termination benefits associated with reductions in force, $2.8 million associated with vacating excess facilities, $10.5 million pertaining to an asset
impairment and $5.3 million associated with prior restructuring programs.
The 2002 charge consisted of $44.5 million of employee termination benefits associated with reductions in force, $58.0 million associated with vacating
excess facilities, $21.5 million pertaining to asset impairments, $16.9 million associated with contractual and other obligations for which we no longer derive
an economic benefit and $11.8 million associated with a prior restructuring program. For purposes of presentation, $2.3 million of the charge was classified
within selling, general and administrative expenses within the statement of operations.
The activity for each charge is explained in the following sections.
2004 Restructuring Programs
The activity for the 2004 restructuring programs for the year ended December 31, 2004 is presented below (tables in thousands):
Adjustments
2004 to the
Initial Provision Utilization Ending
Category Provision During 2004 During 2004 Balance
Workforce reduction $ 26,849 $ (2,378) $ (8,091) $ 16,380
Elimination of excess facilities 2,200 (66) (472) 1,662
Total $ 29,049 $ (2,444) $ (8,563) $ 18,042
The 2004 restructuring programs included two separate reductions in force, one which commenced in the first quarter of 2004 and the second which
commenced in the fourth quarter of 2004, aggregating approximately 400 employees across our major business functions and all major geographic regions.
Approximately 72% of the affected employees are or were based in North America, excluding Mexico, and 28% are or were based in Europe, Latin America,
Mexico and the Asia Pacific region. As of December 31, 2004, approximately 180 employees have been terminated.
The 2004 restructuring programs are expected to be completed by the end of 2005, with the remaining cash expenditures relating to workforce reduction
expected to be substantially paid by the end of 2006. Amounts relating to the elimination of excess facilities will be paid over the respective lease terms
through 2005. The expected cash impact of the 2004 restructuring charge is $26.6 million, of which $8.6 million was paid in 2004.
The $2.4 million reversal to the provision for workforce reduction was attributable to a decrease in the number of individuals included in the reduction in
force which commenced in the first quarter of 2004.
The 2004 restructuring programs impacted our information storage products, information storage and management services and EMC Software Group
products and services segments. 70