EMC 2002 Annual Report Download - page 59

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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 total consolidated basis and by segment for the years ended December 31, 2002 and 2001 consist
of the following (tables in thousands):
Year ended December 31, 2002
Information Storage Products Information Storage Services Other Total
Balance, beginning of the year $ 186,741 $ 1,615 $ — $188,356
Goodwill acquired 5,091 — — 5,091
Finalization of purchase price allocations 11,583 — — 11,583
Balance, end of the year $ 203,415 $ 1,615 $ — $205,030
Year ended December 31, 2001
Information Storage Products Information Storage Services Other Total
Balance, beginning of the year $ 168,884 $ 7,454 $ — $176,338
Goodwill acquired 89,323 1,804 — 91,127
Amortization expense (49,064) (3,325) — (52,389)
Impairment losses (22,402) (4,318) — (26,720)
Balance, end of the year $ 186,741 $ 1,615 $ — $188,356
In the third quarter of 2001, in connection with its restructuring charge (see Note C), EMC recognized an impairment loss of $33.1 million, consisting
of $26.7 million of goodwill and $6.4 million of other intangible assets. The impairment charge is equal to the amount by which the assets' carrying amount
exceeded the present value of their estimated discounted future cash flows. The goodwill impairment charge included $22.4 million in the information storage
products segment and $4.3 million in the information storage services segment. The other intangible assets impairment charge consisted of $6.4 million in the
information storage products segment. The impairment charges are classified in EMC's statement of operations within restructuring and other special charges.
C. Restructuring and Other Special Charges
Due to the declines in revenues experienced in 2002 and 2001, in each of those years, EMC implemented a restructuring program to reduce its cost
structure and focus its resources on the highest potential growth areas of its business. In 2002 and 2001, EMC recognized restructuring and other special
charges of $100.0 million and $825.2 million, respectively. The 2002 charge consisted of $140.9 million associated with the 2002 restructuring program, an
$8.9 million loss on assets disposed of within the fourth quarter of 2002 associated with the 2002 restructuring program and $11.8 million of additional
restructuring costs associated with the 2001 restructuring program. Offsetting these costs in 2002 was a $61.6 million reduction in the third quarter 2001
provision for excess and obsolete inventory.
The 2001 charge consisted of a $310.0 million provision for excess and obsolete inventory, $408.6 million for restructuring activities and $106.6
million for other than temporary declines in equity investments.
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