EMC 2005 Annual Report Download - page 30

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Table of Contents
The 2005 restructuring programs included two separate reductions in force, one that commenced in the first quarter of 2005 that covered approximately
60 employees and a second that commenced in the fourth quarter of 2005 that covered approximately 1,000 employees. These actions impacted our major
business functions and major geographic regions. Approximately 67% of the affected employees are or were based in North America, excluding Mexico, and
33% are or were based in Europe, Latin America, Mexico and the Asia Pacific region. As of December 31, 2005, approximately 80 employees have been
terminated. Management plans to re-allocate the headcount from the fourth quarter charge to other areas of the business to enhance research and development
activities and sales. The restructuring programs impacted the EMC information storage products, EMC multi-platform software, EMC services and other
businesses segments.
The 2005 restructuring programs are expected to be completed by the end of 2006, with the remaining cash expenditures relating to workforce
reduction expected to be substantially paid by the end of 2007. The expected cash impact of the 2005 restructuring charges is $84.6, of which $4.8 was paid in
2005.
2004 Restructuring Programs
The activity for the 2004 restructuring programs for the years ended December 31, 2005 and 2004 is presented below:
2005
Category
Beginning
Balance
Adjustments
to the
Provision
During 2005
Utilization
During 2005
Ending Balance
Workforce reductions $ 16.3 $ (1.0) $ (9.6) $ 5.7
Elimination of excess facilities 1.7 (0.5) (1.1) 0.1
Total $ 18.0 $ (1.5) $ (10.7) $ 5.8
2004
Category
Initial
Provision
Adjustments
to the
Provision
During 2004
Utilization
During 2004
Ending Balance
Workforce reductions $ 26.8 $ (2.4) $ (8.1) $ 16.3
Elimination of excess facilities 2.2 — (0.5) 1.7
Total $ 29.0 $ (2.4) $ (8.6) $ 18.0
The 2004 restructuring programs included two separate reductions in force, one that commenced in the first quarter of 2004 and a second that
commenced in the fourth quarter of 2004, aggregating approximately 400 employees across our major business functions and all major geographic regions. As
of December 31, 2005, substantially all of the employees have been terminated. The remaining cash expenditures relating to workforce reduction are expected
to be paid by the end of 2006. The expected cash impact of the 2004 restructuring charge was $25.1, of which $8.6 was paid in 2004 and $10.7 was paid in
2005.
The $2.4 reversal to the provision for workforce reduction in 2004 was attributable to a decrease in the original number of individuals identified for
reduction.
The 2004 restructuring programs impacted the EMC information storage products, EMC multi-platform software and EMC services segments.
2003 Restructuring Program
The activity for the 2003 restructuring program for the years ended December 31, 2005, 2004 and 2003 is presented below:
2005
Category
Beginning
Balance
Adjustments
to the
Provision
During 2005
Utilization
During 2005
Ending Balance
Workforce reduction $ 1.3 $ (0.4) $ (0.5) $ 0.5
Elimination of excess facilities 5.5 (1.3) (4.1) —
Total $ 6.8 $ (1.7) $ (4.6) $ 0.5
24