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Table of Contents
EMC CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)
Changes in the carrying amount of goodwill, net, on a consolidated basis and by segment for the years ended December 31, 2006 and 2005 consist of
the following (tables in thousands):
Year Ended December 31, 2006
Information
Storage
Content
Management
and Archiving
VMware
Virtual
Infrastructure
RSA
Information
Security
Total
Balance, beginning of the year $ 2,043,193 $ 1,317,797 $ 522,517 $ — $ 3,883,507
Goodwill acquired 647,499 64,484 76,504 1,423,438 2,211,925
Tax deduction from exercise of stock options (2,358) (7,905) (489) (1,018) (11,770)
Finalization of purchase price allocations (31,014) (8,188) 525 (26,652) (65,329)
Reduction in income tax valuation allowance — (1,172) — — (1,172)
Balance, end of the year $ 2,657,320 $ 1,365,016 $ 599,057 $ 1,395,768 $ 6,017,161
Year Ended December 31, 2005
Information
Storage
Content
Management
and Archiving
VMware
Virtual
Infrastructure
RSA
Information
Security
Total
Balance, beginning of the year $ 1,693,895 $ 1,063,838 $ 526,681 $ — $ 3,284,414
Goodwill acquired 362,739 265,146 4,427 — 632,312
Tax deduction from exercise of stock options (4,822) (5,644) — — (10,466)
Finalization of purchase price allocations (8,619) (4,936) (8,591) — (22,146)
Reduction in income tax valuation allowance — (607) — — (607)
Balance, end of the year $ 2,043,193 $ 1,317,797 $ 522,517 $ — $ 3,883,507
We test the goodwill balances for impairment at least annually. There was no impairment in 2006, 2005 or 2004.
C. Restructuring Charges
In 2006, 2005 and 2004, we incurred restructuring charges of $162.6 million, $84.2 million and $38.6 million, respectively.
The 2006 charge consisted of $129.4 million for employee termination benefits associated with reduction in workforce efforts, a $29.7 million charge
associated with abandoned assets for which we will no longer derive a benefit, a $5.7 million charge associated with vacating excess facilities and a $10.9
million charge for other contract terminations. Partially offsetting these amounts were net adjustments of $13.1 million associated with prior years'
restructuring programs.
The 2005 charge consisted of $84.1 million for employee termination benefits associated with workforce rebalancing and reductions in force efforts and
$0.4 million of costs associated with vacating excess facilities. Partially offsetting these amounts were net adjustments of $0.3 million associated with prior
years' restructuring programs.
The 2004 charge 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 $12.0 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 activity for each charge is explained in the following sections.
2006 Restructuring Programs
The activity for the 2006 restructuring programs for the year ended December 31, 2006 is presented below (tables in thousands):
Category
Initial
Provision
Utilization
During 2006
Ending Balance
Non-Cash
Portion of the
Provision