EMC 2006 Annual Report Download - page 32

Table of Contents
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, 2006, 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 2007. The expected cash impact of the 2004 restructuring charge is $22.9, of which $8.6 was paid in 2004, $10.7 was paid in 2005
and $3.1 was paid in 2006.
The reversal to the provision for workforce reduction in 2006, 2005 and 2004 was primarily attributable to a decrease in the original number of
individuals identified for termination and lower than expected severance benefits.
The 2004 restructuring programs impacted the Information storage and Content management and archiving segments.
Prior Year Restructuring Programs
Prior to 2004, we had instituted several restructuring programs. The activity for these programs for the years ended December 31, 2006, 2005 and 2004
is presented below:
2006
Category
Beginning
Balance
Adjustments to
the Provision
During 2006
Utilization
During 2006 Ending Balance
Workforce reduction $ 1.3 $ (0.5) $ (0.1) $ 0.7
Consolidation of excess facilities 65.3 (8.4) (16.8) 40.1
Other contractual obligations 2.4 0.3 (0.7) 1.9
Total $ 69.0 $ (8.6) $ (17.7) $ 42.7
2005
Category
Beginning
Balance
Adjustments to
the Provision
During 2005
Utilization
During 2005 Ending Balance
Workforce reduction $ 3.3 $ (0.7) $ (1.3) $ 1.3
Consolidation of excess facilities 91.3 2.1 (28.1) 65.3
Other contractual obligations 2.6 (0.2) — 2.4
Total $ 97.2 $ 1.2 $ (29.4) $ 69.0
2004
Category
Beginning
Balance
Adjustments to
the Provision
During 2004
Utilization
During 2004 Ending Balance
Workforce reduction $ 27.1 $ (11.7) $ (12.1) $ 3.3
Consolidation of excess facilities 106.3 23.7 (38.7) 91.3
Other contractual obligations 5.7 — (3.1) 2.6
Total $ 139.1 $ 12.0 $ (53.9) $ 97.2
The reductions to the provisions in 2006 for excess facilities were a result of higher than anticipated sublease income from facilities associated with our
2001 restructuring program. The net additions to the provisions in 2005 and 2004 were the result of higher than anticipated costs associated with vacating
facilities associated with our 2001 restructuring program. These additions were partially offset by a reduction in the number of individuals originally
identified for termination.
The prior year restructuring programs impacted the Information storage and Content management and archiving segments.
All restructuring programs, with the exception of the 2006 programs are substantially complete, although our ability to sublet facilities is subject to
appropriate market conditions. The remaining liability for the consolidation of excess facilities is expected to be paid through 2015.
As we continue to refine our business model, we will reassess our cost structure and asset deployment to assess whether additional changes are
necessary. Should we determine that additional restructuring programs will benefit our business, we may incur additional charges. If customer demand for
products changes, we may be required to write down the value of assets. Additionally, changes in our business model or market conditions could cause
goodwill or other assets to be impaired.
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