EMC 2005 Annual Report Download - page 64

Download and view the complete annual report

Please find page 64 of the 2005 EMC annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 121

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121

Table of Contents
EMC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The 2004 charge consisted of $17.4 million of IPR&D charges associated with acquisitions 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 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 facilities.
The 2003 charge consisted of $29.1 million of IPR&D charges associated with acquisitions, $18.6 million of employee termination benefits associated
with a reduction in force, $2.8 million associated with vacating excess facilities, $10.5 million pertaining to an asset impairment and a net adjustment of $5.3
million associated with prior restructuring programs.
The activity for each charge is explained in the following sections.
2005 Restructuring Programs
The activity for the 2005 restructuring programs for the year ended December 31, 2005 is presented below (table in thousands):
Category
Initial
Provision
Utilization
During 2005
Ending
Balance
Workforce reductions $ 84,144 $ (4,361) $ 79,783
Elimination of excess facilities 423 (423) —
Total $ 84,567 $ (4,784) $ 79,783
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 which commenced in the fourth quarter of 2005 that covered approximately 1,000 employees. These actions impacted our major
business functions and all 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 R&D 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 million, of which $4.8
million 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 (tables in thousands):
2005
Category
Beginning
Balance
Adjustments
to the Provision
During 2005
Utilization
During 2005
Ending Balance
Workforce reductions $ 16,380 $ (1,074) $ (9,617) $ 5,689
Elimination of excess facilities 1,662 (459) (1,080) 123
Total $ 18,042 $ (1,533) $ (10,697) $ 5,812
2004
Category
Initial
Provision
Adjustments
to the Provision
During 2004
Utilization
During 2004
Ending Balance
Workforce reductions $ 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
56