EMC 2004 Annual Report Download - page 77

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Table of Contents
EMC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Reduction in
Cost of Sales
Inventory
2003 Scrapped and Favorable
Beginning Charged Against Inventory Vendor Ending
Category Balance the Reserve Sold Settlements Balance
Excess and obsolete EMC owned inventory $ 6,289 $ (5,401) $ – $ – $ 888
Reduction in
Cost of Sales
Inventory
2002 Scrapped and Favorable
Beginning Charged Against Inventory Vendor Ending
Category Balance the Reserve Sold Settlements Balance
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
Impact of the 2003, 2002 and 2001 Restructuring Programs
The 2003, 2002 and 2001 restructuring programs have been completed, although our ability to sublet facilities is subject to appropriate market conditions.
The expected cash impact of the charges is $439.5 million, of which $347.6 million was paid in 2001 through 2004. 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 2004 and 2003, the Data General restructuring accrual was reduced by $4.5 million and $16.1 million, respectively. The reductions in
2004 and 2003 pertaining to the workforce reduction liability resulted from our favorable resolution of previously recognized contractual obligations
associated with employee terminations. The reduction in 2003 for the consolidation of excess facilities resulted from management's decision to utilize a
facility for Documentum, LEGATO and certain of our other operations that we had previously vacated.
The amounts charged against the established provisions for the 1999 and 1998 restructuring programs for each of the three years ended December 31,
2004, 2003 and 2002 is as follows (table in thousands):
2004 Beginning Adjustment to the Current Year Ending
Category Balance Provision Utilization Balance
Workforce reduction $ 5,825 $ (4,877) $ (228) $ 720
Consolidation of excess facilities 6,468 339 (2,219) 4,588
Total $ 12,293 $ (4,538) $ (2,447) $ 5,308
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